Warsaw, IN . . . December 15, 2004 . . . (NASDAQ:BMET)
BIOMET ANNOUNCES RECORD SECOND QUARTER RESULTS
Biomet, Inc. today reported record sales and earnings results for its second quarter ended November 30, 2004. Net sales increased 18% to $456,674,000, while operating income increased 11% to $139,648,000 and increased 16%, as adjusted, to $147,050,000. Net income increased 10% to $91,199,000 and increased 16%, as adjusted, to $96,030,000, while diluted earnings per share increased 13% to $0.36 and increased 19%, as adjusted, to $0.38. The Company's reported results reflect the acquisition of Merck KGaA's interest in the Biomet Merck joint venture on March 19, 2004, as well as the acquisition of Interpore International, Inc. on June 18, 2004. Adjusted results, which are non-GAAP measures, exclude acquisition costs, including inventory step-up and write off of in-process research and development. A reconciliation to comparable GAAP measures is included in this press release.
At its meeting on December 10, 2004, the Board of Directors of Biomet increased the size of its board by one and immediately filled that opening with the appointment of Sandra A. Lamb to the Company's Board of Directors. Ms. Lamb is currently serving as President and CEO of Lamb Advisors LLC, which provides strategic management consulting services to nonprofit organizations, and has over 35 years of Wall Street, corporate, and nonprofit experience addressing financially complex and critical strategic issues. From 1983 through 2002, Ms. Lamb was managing director at the investment banking firm of Lazard Freres & Co. LLC where she held executive responsibility working with corporate clients on all aspects of buying and selling businesses and other financial advisory assignments. Prior to 1983, she was a portfolio manager at The MONY Group. Dane A. Miller, Ph.D., Biomet's President and Chief Executive Officer noted, "We are confident that Ms. Lamb's strong background in finance will be an asset to Biomet's Board of Directors and are pleased that she has accepted this appointment."
Dr. Miller also stated, "We are pleased with Biomet's second quarter operating results which were led by strong growth in the Company's reconstructive, spinal hardware and orthobiologic product lines. Continued market acceptance of recently introduced products and minimally-invasive knee instruments propelled the growth of the Company's reconstructive product lines during the second quarter. In the important domestic market for reconstructive devices, Biomet's reconstructive products increased 22% during the second quarter. Worldwide total hip, knee, extremity and dental reconstructive sales grew 9%, 25%, 18% and 17%, respectively, during the recently completed quarter. Additionally, sales of the Company's spinal hardware and orthobiologic spinal products increased 124% worldwide during the second quarter as Biomet continues to broaden its line of spinal products and technologies through the recent acquisition of Interpore International, Inc."
Excluding the impact of foreign currency, which increased second quarter sales by $9.6 million, net sales increased 15% during the second quarter of fiscal year 2005. United States and international sales, excluding the effects of foreign currency, increased 17% and 12%, respectively, during the second quarter. Additionally, excluding the impact of the acquisition of Interpore International, Inc., United States and international sales increased 13% and 9%, respectively.
Reconstructive device sales increased 20% worldwide to $301,385,000 during the second quarter of fiscal year 2005. On a constant currency basis, worldwide reconstructive device sales increased 16%. Knee sales increased 25% worldwide during the second quarter and 30% in the United States. Knee sales increased 22% worldwide, constant currency. Biomet's industry-leading knee sales growth continues to be driven by new product introductions, in addition to the
Company's broad line of total knee systems and minimally-invasive, unicondylar knee systems. Additionally, Biomet's Microplasty minimally-invasive and quad-sparing total knee instruments continue to receive excellent market acceptance.
During the second quarter, hip sales increased 9% worldwide and 6% in the United States. Excluding the impact of foreign currency, hip sales increased 6% worldwide. Biomet's M2a 38 metal-on-metal system and the Company's broad line of porous coated stems continue to lead hip sales growth.
Extremity sales increased 18% worldwide during the second quarter of fiscal year 2005 and 21% in the United States. On a constant currency basis, extremity sales increased 15% worldwide. Sales of dental reconstructive implants increased 17% worldwide and 16% in the United States during the second quarter. Worldwide dental reconstructive implant sales increased 14%, constant currency. Sales of bone cements and accessories increased 36% worldwide during the second quarter and 82% in the United States. Excluding the effect of foreign currency, sales of bone cements and accessories increased 30% worldwide.
Fixation sales were flat at $60,328,000 during the second quarter of fiscal year 2005 and decreased 1% worldwide, constant currency. Lorenz Surgical's craniomaxillofacial fixation sales increased 5% worldwide and 1% in the United States during the second quarter. Worldwide craniomaxillofacial fixation sales increased 3%, constant currency. Sales of electrical stimulation products decreased 4% worldwide and in the United States during the second quarter. External fixation sales increased 3% worldwide during the second quarter and decreased 5% in the United States. Excluding the impact of foreign currency, external fixation sales increased 2% worldwide. Internal fixation sales decreased 2% worldwide and decreased 11% in the United States during the second quarter. On a constant currency basis, worldwide internal fixation sales decreased 5% during the second quarter.
Spinal product sales increased 37% to $53,232,000 and increased 30% in the United States during the second quarter of fiscal year 2005. Spinal sales increased 36% worldwide, constant currency. Domestic sales of spinal implants and orthobiological products for the spine increased 124%, while domestic spinal stimulation sales decreased 8% during the second quarter.
Sales of Biomet's "other products" increased 15% to $41,729,000 and increased 10% in the United States during the second quarter of fiscal year 2005. On a constant currency basis, "other product" sales increased 13% worldwide. Arthroscopy sales increased 19% worldwide during the second quarter and increased 16% in the United States. On a constant currency basis, arthroscopy sales increased 18% during the second quarter of fiscal year 2005. Softgoods and bracing sales decreased 2% worldwide, in the United States and on a constant currency basis during the second quarter.
Dr. Miller concluded, "Biomet finished the quarter with strong momentum in the key reconstructive product categories. Consequently, we remain comfortable with the range of analysts' sales and earnings estimates of $468 million to $487 million and $0.39 to $0.40 per share for the third quarter of fiscal year 2005."
Biomet, Inc and its subsidiaries design, manufacture and market products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy. The Company's product portfolio encompasses reconstructive products, including orthopedic joint replacement devices, bone cements and accessories, and dental reconstructive implants; fixation products, including electrical bone growth stimulators, internal and external orthopedic fixation devices, craniomaxillofacial implants and bone substitute materials; spinal products, including spinal stimulation devices, spinal hardware and orthobiologics; and other products, such as arthroscopy products and softgoods and bracing products. Headquartered in Warsaw, Indiana, Biomet and its subsidiaries currently distribute products in more than 100 countries.
For further information contact Greg W. Sasso, Vice President, Corporate Development and Communications at (574) 372-1528 or Barbara Goslee, Manager, Corporate Communications at (574) 372-1514.
This press release contains certain statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Although the Company believes that the assumptions, on which the forward-looking statements contained herein are based, are reasonable, any of those assumptions could prove to be inaccurate given the inherent uncertainties as to the occurrence or non-occurrence of future events. There can be no
assurance that the forward-looking statements contained in this press release will prove to be accurate. Some of the factors that could cause actual results to differ from those contained in forward-looking statements made in this press release include the success of the Company's principal product lines, the Company's ability to develop and market new products and technologies in a timely manner, government regulation, currency exchange rate fluctuations, reimbursements from third party payors, litigation, and other risk factors as set forth from time to time in the Company's filings with the SEC. The inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's objectives will be achieved. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.
All of Biomet's financial information may be obtained on our website at www.biomet.com or you may contact us by e-mail at investor.relations@biometmail.com.
All trademarks are owned by Biomet, Inc., or one of its subsidiaries.
BIOMET, INC. - - QUARTERLY RESULTS |
|
FOR THE QUARTERS ENDED NOVEMBER 30 |
(in thousands, except per share data) |
| |
| Three Months Ended |
| | | | |
| 2004 | Adjustments* | As Adjusted* | 2003 |
| | | | |
Net Sales | $456,674 | | $456,674 | $387,561 |
Cost of Sales | 131,115 | ( 7,402) ( a) | 123,713 | 108,790 |
Gross Profit | 325,559 | 7,402 | 332,961 | 278,771 |
| | | | |
S, G, & A | 166,305 | | 166,305 | 136,664 |
R & D | 19,606 | - | 19,606 | 15,810 |
Operating Income | 139,648 | 7,402 | 147,050 | 126,297 |
| | | | |
Other Income (Expense), Net | 244 | - | 244 | 3,669 |
Income Before Taxes | | | | |
And Minority Interest | 139,892 | 7,402 | 147,294 | 129,966 |
Income Taxes | 48,693 | 2,571 (c) | 51,264 | 45,250 |
Income Before | | | | |
Minority Interest | 91,199 | 4,831 | 96,030 | 84,716 |
Minority Interest | - | - | - | 2,024 |
Net Income | 91,199 | 4,831 | 96,030 | 82,692 |
| | | | |
Earnings per Share | | | | |
Basic | .36 | | .38 | .32 |
Diluted | .36 | | .38 | .32 |
| | | | |
Basic Shares Outstanding | 252,944 | | 252,944 | 255,797 |
Diluted Shares Outstanding | 255,225 | | 255,225 | 257,599 |
| | | | |
| | | | |
U.S. sales | $309,006 | | | $264,702 |
Foreign sales | 147,668 | | | 122,859 |
| | | | |
Reconstructive sales | $301,385 | | | $ 252,083 |
Fixation sales | 60,328 | | | 60,295 |
Spinal product sales | 53,232 | | | 38,979 |
Other product sales | 41,729 | | | 36,204 |
| | | | |
| | | | |
| Six Months Ended |
| | | | |
| 2004 | Adjustments* | As Adjusted* | 2003 |
| | | | |
Net Sales | $894,834 | | $894,834 | $757,880 |
Cost of Sales | 257,087 | ( 14,404) (a) | 242,683 | 214,408 |
Gross Profit | 637,747 | 14,404 | 652,151 | 543,472 |
| | | | |
S, G, & A | 326,765 | | 326,765 | 269,061 |
R & D | 64,102 | ( 26,020) (b) | 38,082 | 30,558 |
Operating Income | 246,880 | 40,424 | 287,304 | 243,853 |
| | | | |
Other Income (Expense), Net | (484) | - | (484) | 6,690 |
Income Before Taxes | | | | |
And Minority Interest | 246,396 | 40,424 | 286,820 | 250,543 |
Income Taxes | 94,764 | 5,003 (c) | 99,767 | 87,229 |
Income Before | | | | |
Minority Interest | 151,632 | 35,421 | 187,053 | 163,314 |
Minority Interest | - | - | - | 4,144 |
Net Income | 151,632 | 35,421 | 187,053 | 159,170 |
| | | | |
Earnings per Share | | | | |
Basic | .60 | | .74 | .62 |
Diluted | .59 | | .73 | .62 |
| | | | |
Basic Shares Outstanding | 253,403 | | 253,403 | 256,325 |
Diluted Shares Outstanding | 255,586 | | 255,586 | 257,904 |
| | | | |
| | | | |
U.S. sales | $605,310 | | | $516,797 |
Foreign sales | 289,524 | | | 241,083 |
| | | | |
Reconstructive sales | $ 583,867 | | | $ 485,522 |
Fixation sales | 123,041 | | | 122,428 |
Spinal product sales | 38,979 | | | 76,946 |
Other product sales | 36,204 | | | 72,984 |
(a) Current period impact of inventory step-up related to the acquisition of the interest of Merck KGaA in the Biomet Merck joint venture and Interpore International, Inc.
(b) In-process research and development written off as of the closing date related to the acquisition of Interpore International, Inc.
(c) Tax effect of item (a) above.
*Adjusted results, which are non-GAAP financial measures, exclude acquisition costs, including inventory step-up and write off of in-process research and development. We have included these adjusted measures to provide management and investors with a better understanding of our results, because expenses related to these acquisitions in the current quarter and the remainder of fiscal year 2005 are not indicative of our future operating results.
Consolidated Balance Sheets | November 30, 2004 | | May 31, 2004 |
Assets | | | |
Cash and Investments | $ 174,305 | | $ 235,612 |
Accounts and notes receivable, net | 476,574 | | 465,949 |
Inventories | 446,711 | | 389,391 |
Other current assets | 115,421 | | 91,256 |
Fixed Assets, net | 298,797 | | 268,826 |
Goodwill | 439,335 | | 266,860 |
Other Assets | 106,598 | | 69,803 |
Total Assets | $2,057,741 | | $1,787,697 |
| | | |
Liabilities and Stockholders' Equity | | | |
Current Liabilities | $ 545,502 | | $ 313,402 |
Other Liabilities | 34,982 | | 26,085 |
Stockholders' Equity | 1,477,257 | | 1,448,210 |
Total Liabilities and Stockholders' Equity | $2,057,741 | | $1,787,697 |
| | | |
The above balance sheet includes the preliminary purchase price allocation in connection with the Interpore acquisition. The Company believes that changes, if any, when the purchase price allocation is finalized, will not be material.
* * *
