CNMD - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to CONMED's Second Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

Before the conference call begins, let me remind you that during the call, management will be making comments and statements regarding its financial outlook, its plans and objectives. These statements represent the forward-looking statements that involve risks and uncertainties as those terms are defined under the federal securities laws. any performance statements or that of not cautioned events, future results. are such are forward-looking guarantees Investors The company's actual current expectations. results may differ materially from its the uncertainties company's SEC Please uncertainties for differ more press risks materially. the the filings cause as forward-looking risks actual on under to and release the refer today's may information as and well details in that to disclosed other results

be that required any obligation applicable except to may statements be disclaims forward-looking call, discussed company The as any may by law. this during update

You'll management during to or this non-GAAP discussion. also refer hear adjusted measurements

While the other that these on aid charges releases the special year-to-year GAAP these technology income ongoing the net medical share performance figures website. specified earnings and items are management credits the to to and are against for quarter-to-quarter company's posted a outside not companies. Adjusted are regular considered of operations. of financial measures excluding a be figures company's the adjusted ongoing earnings its supporting from normal measurements, the and substitute company adjusted or company, basis, or on monitoring income These reconciliation and per company's the by benchmarking uses for in

turn the CONMED's these announcements I and over for Hartman? completed, With of opening to Curt Officer, required Hartman, the Executive call will Chair Chief President Board, remarks. Mr.

Curt Hartman

is on Financial our call joining CONMED's Chief Second for Pat the Beyer, you Garner, Quarter President us Amy. Call. Officer. you, Chief for and Earnings With afternoon, and Thank me thank Good Executive Officer; XXXX Operating and Todd Vice

business. for and with the Today, quarter outlook second share results we will our you our overall

questions. We will your open then call the to

a X.X% of results. $XXX increase representing million, a and range for quarter delivered X.X% currency. record start the of reviewing expectations. and sales high quarterly I'll result Total was our reported constant sales performance our within in quarter This year-over-year by second as were

income to million. in of XXXX. totaled From perspective, our GAAP income quarter net of compares quarter, earnings This the an second second net $XX $XX.X during the million

$XX.X Excluding affected earnings XX.X% special XX.X% that year-over-year, and items comparability, per of adjusted year-over-year. $X.XX net adjusted our share of increased net million increased income our diluted

Overall, leverage EPS Todd financial in which include performance will of our adjusted and gross to several had margin, ratio, we cover. the areas strong quarter

the the key not the to side product of into expected. Jumping level categories, clear on we we Orthopedic supply did business, had the constraints the

our and missed our implant absolute level in dollar While back as is opportunities to these is Those mix back current alternatives nature, the to normal, in sales order many this teams. core resulted have lost for categories. inefficiencies disposables categories, of far more creates of sales the by single-use weighted in customers

lower team's us leaves going Further, be both year. for to of ability QX behind our after the fully and this guidance entering requires to new slows our us our performance remainder customers on the our understand We customers. for this plan frustrating investors. initial offense This is and

across On the side remained business, demand the general the healthy of portfolio. surgery

into what the it surgical insight early wanted to full we AirSeal, with you are quarter after new in Regarding provide seeing rollout I first robot, the in of still its while is market. very some the

First, prior the the year in quarter. capital our they than unit did in sales grew U.S. faster quarter, AirSeal

We sales Capital. slowdown are on seeing AirSeal no

of first were the list Second, we targeted the customers. a understand key that locations receive new robot likely to

using the to based of on feature commit to understand the of set robot certain any also We these expected procedures their before adjustments they make full a preference. number locations are

pressure remains with the of precision the AirSeal our to shows shows committed window, low in backdrop the percentage generation. This on be user chose appears new of surgeons that surgeons clinical percentage returned this surveillance initial a that early that preference. consistent that of number the initial on to previous AirSeal very Against after insufflation procedures that at robot

use Todd? more prostatectomy, of Third, the roughly and numerous more complex over are concentrated take robot. I you most QX and cavity the believe, be through such of clinical early the AirSeal financial procedures procedures in our and call evacuation, now provide and smoke bariatric guidance. as surgeries surgical robotic performance on year same outcomes updated published likely use procedures surgery. to due new leaks, to will demand. We requirements who standard studies the no will AirSeal procedures patient the longer, will that detailed is that hysterectomy used to are procedures analysis turn stress today a large suction surveillance nephrectomy, typically and with volume insufflation in based X/X and our full our today that Todd, These AirSeal confirms

Todd Garner

numbers reference I currency. is Thank in you, reconciliation numbers to will our growth press All in The be constant release. included given today sales Curt. GAAP

we usual, website quarter on the of results updated an and As summarizes the have investor deck included our that guidance. our

the For of our quarter sales increased total second X.X%. XXXX,

the increased to a our sales grew about our Ankle QX Orthopedic in X.X%. chain be in We've talked U.S. Foot issues Medicine supply back and to offense. and Sports For QX, expected X.X%. we sales transition and our businesses,

longer As expected. said, than Curt that transition we is taking

revenue in Total quarter. general the surgery increased internationally, U.S. while General surgery revenue XX.X%. worldwide X.X%, increased grew X.X% Surgery general revenue

in continue business AirSeal, trends. the that good Curt global be we very So growth see that historical to with to surgery continues healthy data with Consistent perform in product the line general side the line. on provided of and

Now let's of income expense the statement. move to the side

of for of discuss in excluding net consideration, of fees and contingent special the of costs, matters, include and items, financing software second assets charges tax. termination quarter, distributor will agreements, legal which deferred expenses profitability acquisitions amortization and amortization We intangible implementation

an was lower for XX.X%, expense year than the development to XX points year second Research quarter quarter. quarter quarter. basis prior sales, gross and of compared was prior margin points the the increase of XX for second Adjusted the basis X.X%

Second prior XX points basis year XX.X% sales, quarter. than expenses SG&A were quarter adjusted lower of the

was The quarter. in second QX adjusted On was the effective an rate $X.X expense tax in interest adjusted basis, million XX.X%.

net a year million. GAAP ago. million QX to $XX.X quarter $XX.X diluted XXXX. in net $X.XX to share Second this income compares $X.XX earnings This of GAAP were compared income per of quarter GAAP was

items discussed Excluding earlier compared we net million, the XX.X% income the XXXX. of of adjusted of impact the second second $XX.X reported quarter, to quarter an in increase special of

per were Our net increase XX.X% prior $X.XX, QX an diluted compared share earnings quarter. of adjusted to the year

to sheet. Turning balance the

XX days and quarter ago. Our receivable end in of a XXX the and to XX of to the compared March of end were million June cash days Inventory year March year at XXX compared XX. was XX balance at the as at $XX.X million end were quarter March of XX ago. Accounts XXX $XX.X compared as to a

Long-term quarter $XXX.X $XXX.X XX. at the March the of million end debt versus of was million as

Our XX ratio on better June leverage X.Xx, than we which was was expected.

right in the the working in we're in capital moved metrics sheet balance our quarter, controls. improving all direction and So

million Cash to quarter flow operations quarter provided of the from in $XX.X XXXX. in $XX.X million second the compared was

second quarter $X.X in to $X.X the million expenditures ago. Capital were compared a year million

first let's Now revenue at is turn to financial the we the close half The beginning what of to expected the guidance. very of in year the year.

it to our year, July we We by expected offense to knew better point. and through challenges Orthopedics be in at work supply X. business our we this the global we However, teams had expected improvement back early to fully in on have

our made be levels, many mouth we items, back supply to impeding on improvements back remain with pre-pandemic on have While too we to the our hand is which ability order offense. chain, back to and fully significant is

course, for of we be that should a and year. position central by believe is end a Of much this focus the we us, stronger in the

X.X%, we QX, we grew growth and grew strong throughout X.X%, QX, both saw in In rates we against XXXX. the

lower second of our constant QX XX basis X% of currency in of about the half So of the on that the year, immaterial $X.XXX the with it's That X% expect range. full prudent in in year billion we've guidance same $X.XXX third would revenue grown between level to in of part the and reported We currency and the We think points and put headwind year. between billion. FX QX. first quarter that project growth half

sales months, half the on and Orthopedics particularly Our full back confidence year strengthen the the has that foundation forces, focus we will an the than back Orthopedics, X in slower operational gross to margins. offense next expected, the With be XXXX. of be of in impact our increase start of our being over by to

XXXX, initial margins guidance the our improved consistent gross X between for of by we first margins we months of improving XXX And XXX with the basis improvement to to XXXX, points. For year sequentially. project XXX compared basis points and continue

to mid-XX% We mix on to be around put in XXX-basis-point be very expect would with us QX northward. the That XX%. us improvement driving positive and year, engine and the range still around QX the

improve to and the of operations, Again, over margins improve that pace the will higher allow X to a tech. internal focus to be vast months us continue our will we believe at majority med than next our

guidance We've interest SG&A, how the our guidance this for expense deck, XXXX revised and included tax in IR rate. our impacts original

We business revenue. the put guidance still continue XX.X% better for in tech. XX% $X.XX, in and representing but and to growth XX% of slower vast between our That QX. XX% EPS project will revenue and XX.X%, growth invest new than growth, than adjusted our X% We in and improve would expenses full be much between and year to $X.XX to majority med QX grow between the EPS between

a than the our believe the to are these guidance in upside on While the and future. lower demonstrate on with by numbers we and top healthy growth the company bottom we're need responsible disappointed reset our initial year, expectations lines

in on executing the marketplace engine. We improving our winning are and focused with

and to And turn with the like questions to we'd that, to call your back it Amy. open

Operator

the first from our [Operator line And with question Instructions] of Wise comes Rick Stifel.

Frederick Wise

the about half, the to First, about frustrating half. and I good quarter appreciate first the here second the things

supply just and so you help what's you which to can you help long, possible with doing concrete track? specific taking What on can frankly? better get understand has understand it as happening the help products? what ramped, And do exactly And us us not me back specifically terms what's But -- are as what chain?

Curt Hartman

Yes, in Rick, of unpackage question. a number that a things. There's to lot

products, not said and of Shoulder, but business. the Knee in implantables and Foot script. markets with Orthopedics, and only Medicine, Sports the and includes in we the as also key Key Ankle start me Let that

shape say Knee midpoint catch Shoulder in much implant That's I comment, we're and to that still the Foot with and Now would than up. Ankle the of better the exit where struggling categories. year

in base. our and challenge is supplier Part surprise the variability of

As supply pick and up rapidly only It and not not they validation And had close is can X a an just and to things it after a qualification, unexpectedly start were and product tomorrow they on a and takes suppliers takes night put time just producing constraint. close doors us component this X tonight. you business everybody on us, where example, but we've this serving. year

supply. crimp We've the And material so We've had dealing those are availability type things issues. individualized had we're that with. machine issues, of other downtimes

qualify not it's very focused is point to suppliers, a on and asking I that So are sites those working diligently and really focus everything alternate to And stock, for. of teams sales alternate one get down, everybody frustrated. suppliers, items find teams and customers slowing availability a been our the to it's that And host our to are is to thing on and would the key issues. manufacturing dedicated product

I understand think we that clearly.

Frederick Wise

up. Right. And just a follow

detailed, get the just guidance. able quarter feel to -- some very I'm if in to going thinking, quarter, just very like gave You third the I fourth to I and Todd, get right, the get year. clear be

you'll maybe kind in sound implying would million, like the I'm so my your maybe sequentially. step rough area people my up, I at me, and think, just of $XXX XX hearing bps hope Just and quarter million the, place be? off, math or operating initial But Does just -- comments. is based third way that sales margins EPS back-of-the-envelope on whatever, here, that help $X.XX $XXX rough you're you'd

Todd Garner

points Yes, with my in XX% stick Low if currency FX QX. And in growth X% I'm mind. you growth, basis then we headwind said Rick, disclosure, of EPS. going don't constant to to X% to XX

Operator

and next question You, Robbie comes our JPMorgan. of Marcus with from line the

Robert Marcus

me. for Two

margin elevated 'XX we at table. the came this in, on in targets the First, I and met conference at January we that And point, Todd, year. expansion JPMorgan still the for were 'XX remember when

had year. supply clearly You've issues this

the margin take that future? they still those gone of the expansion? point? get more has business Are feasible back chips at to there in to that targets been at type point in away this Or permanent Are some

Todd Garner

us as question, Great right, but Yes, that's track, is far same bump the delay we're this speed to improvements, as Robbie. a on there. definitely going getting

in put of back get that X-year the a So us XX%, at the end long-range kind we of fall out 'XX, would 'XX. around plan said we of there

the at said of end we're just around be what to was now I going So 'XX. XX%

So in order to points to get in to XX-month XX%, XXX improve basis that I'd have period.

think I not right? that's that's impossible, likely, While don't

fall likely of said enjoying 'XX, going think basis in for about from I we we mix. of tailwind but of short XXX what we're the are the of 'XX be end to still So points

tailwind. still And that so see we mix

And it's when think a med take just thought so -- does be But the of there. still best years than of improvement is get And we it we to in margin a couple here. a matter continue one of tech, I little going it's ago. story, and longer the

Robert Marcus

it. Got

Okay. And quality of maybe then software couple here? there that, the ago, on sales a need supply up controls it company at and maybe issues, broaden been processes what of do to in place issue, Rick's the you was years some has before review was At year warehouse I Last this force to the follow just and year overhaul expansion. issues -- question. and believe the a point

company happen. size, there so are that I'm issues your many a surprised disruptive For

wondering think layered moving about we any Just forward if expenses that, and think quality about how controls? you implement should better maybe to

Curt Hartman

think a as force sales expansion. it a through were iterations expansion It's turned that markets because after question, those force kicked I recovering sales that as Robbie. COVID. good were walk we out, from topics 'XX, other there you COVID And of in X did the in And

it was made expansion as So our look it sales mistimed. though force

execution nonetheless, year was and quarter internal with customers, disruption the And going on And time third part. from was of base it performance. when could way a our chain Warehouse we That but I and that think of I'm our to fourth our have of from been supply team, nobody remediated disruption was it, point since or the an disruption, to quarter our were absolute supply financial challenges issues. the in issue COVID we not the hit. at last XXXX. proud predict issue to they variants dealing

people more As controls. -- infrastructure and and company scale, you around place, in expense, people do more that more systems, systems put both

need I think look at investment. we've areas been we doing believe we as that appropriately that

think with we've doing I diligent been that.

hiccups Certainly, is. we're these these as by missteps as frustrated anybody by

there very need we are And my those very, and and investors these and committed we're as doing and getting systemic things teams I customers that's said things. frustrated, challenging frustrated, ourselves and every to And us. script, something do? all deal remediating we We I in are solving to questions. we the to right think Our with with. Is behind challenge day

Operator

the our next And Vik question of comes from line Chopra Fargo. with Wells

Unknown Analyst

on question, you on chain of [indiscernible] I is kind What won't Vik. do confidence any have supply One fully further expected And recover? line you have expect XXXX? into challenges. you the this time when bleed do This guess, at to

Curt Hartman

have And radar point probably a year, that We of had question. Good surprises in that would popped have up the we at little on hesitant. this behind bit most this us. Yes. our We screen. not had thought were some we've

look we the plan very third a detailed as We at have quarter.

feel relates we're Knee and really our side business it hand back supply to on the earlier, to in categories It As there. Shoulder we implant in and Foot of is we're and things of I other as the solid mouth struggling. where noted Ankle kind the the like

QX. his end we second slower X just cleared category our as -- there. be The We categories remaining talked on Todd and QX our back to devices, think we closer in are sales full the key in And into guide little for we commentary, enabling full higher implant as a would stock, about back getting teams offense the getting orthoscopic a half the with challenges. in the thought

QX trying a implies a the lot we we'll extra get through and through we've we gone in what as given it be ourselves of but in shape give months. in be working QX, into that to better we're X first think So that time here little

Unknown Analyst

it. Got

second are Another half side. you are question, And seeing trends I guess, expecting during get extremities on the lower What QX? F&A back market to track? on growth the you in

Curt Hartman

question or relative CONMED to the in The is market trend general?

Unknown Analyst

market. The

Curt Hartman

market market to a great want we market in I and have market, participate. the growth that we we and a asset believe be and still think market to great is a Foot Ankle a a

have and chain we be struggled now that Foot I products Medicine well along we think more have Ankle that getting business supply of that has. further that we've which support related us some Ankle Sports because offense we of we've on challenges. the as implantations and the BioBrace offering should Foot we extremity Obviously, products -- the our portfolio and the Ankle that think of into that and we an done behind initial added of majority on as noted call brings here. And lower back have Foot moved Further, launch rollout last BioBrace, of our to

getting availability, portfolio the of got it's back believe part just back So we we've we just one think think we is the we I on would. product that on -- them which exited do we point we've think Orthopedics offense and right we got right with thought that midyear offense them the the getting where

Operator

next from from BofA. our Travis comes Steed question And

Travis Steed

I kind revenue but it follow on the margin ask to side. on wanted of Robbie's up I question,

to year of I maybe think kind about a X% place X% be is X% and longer growth. bit this of term? of kind little you've double-digit to to always is the X% right This And X%. kind achieving kind to better talked of X%

Todd Garner

much think circumstances double be should normal same XX% should than think We still of Travis. healthy under No, there. that, that be that capable portfolio -- we we're plus better very of our still we digits,

So able if close its growth to X% to be own. that to on that deliver ought XX%, just

single mid-single those kind was then just XX% the with high of you're that And normal. so the digits, rest digits being of in

certainly to than this above is average EPS -- growth think I X% our are and tech. don't grower in probably average our this. growth, tech, X% above and while But a and us, is is faster be normal, med disappointing to we to expectations think still it's So certainly, med for

at at these fast levels, is as and disappointing as the of even growing profitable year, we not a expected business, growing, profitable not So it the granted. but healthy, as beginning

Travis Steed

question. another And Great.

Just like you think the market, the I had supply rest about issues. you your of when know

kind half know you're about fronts. in of like because of of there's market the more only if mind that kind the resetting, any kind But second I that's change don't kind you the having just of market company the been in not year and think

don't markets was some of like seen moderation kind if there I so of know you've sort And anything in the Ortho or on margin?

Curt Hartman

I there's think would anything Travis, we to. point don't

smaller. think only than anybody believe have The big longer we Korea continuing but the I markets to of for those China we markets commercially, teams, a thing CONMED. just point round the in our and and we markets growth strikes would market, the are meetings. international but slowed events in did smaller they're China in are CONMED, overall had for They're anticipated, are

But big U.S., the that? lot of of Europe, don't You've Pat, time. I to markets. healthy majority a know the want underlying we if spend our see anything add to Western markets, you pretty Canada,

Patrick Beyer

Curt, I would from just agree standpoint. Japan the again, continuing grow out market with what well you're saying, and to call would, also market

Operator

question next of from Mike the Matson line comes with Needham. our And

Michael Matson

ask general I a couple just want surgery. to on

a of much drivers your it's a couple good, have would Orthopedics, obviously expected was just than are. I probably bigger given growth growth that's little the where that, slower better So but than

is the business? on So chain that supply ortho on anything side, I there? are more the thoughts what but... on Is understand there your going

Todd Garner

good. been to Yes. that with had We a transitory is think us has It definitely there, issue that AirSeal is Mike. affect we in a a did quality remediated. soft. little pretty bit QX. I rates is I close mean business and little dealt Smoke historical

think but temporary. soft, pretty was than on I think smoke were normal things that, other we And general surgery. So that's

Michael Matson

then just kind second for And growth looking that the Okay. you assume company. similar would the expect the of growth into half, I the -- overall

assume, surgery saw we would to businesses, well? be of kind X half similar and as what I Orthopedics, the would in So first the general

Todd Garner

Yes. Yes.

course. kind of that thought we challenged bit guidance our than For little a originally, stays of assumes longer Orthopedics for

do but And surgery what general so been continue we -- think, business, to it's doing. the will

Operator

comes line with the Our Kristen of final King. CL from question Stewart

Kristen Stewart

bubbling wondering just see the that could the was for the and we any general over there's have business? confidence issues you surgery I supply year risk into constraints balance of Or in of if that do still being supply some these unaffected?

Curt Hartman

very we that. our like with good under the feel the availability we of like Obviously, a early manufacturing for Kristen, smoke, a about very those the business, lot and product control of redundancy brought the manufacturing surgery a now, Right have line general product side No. complete AirSeal, product products controls. line like

energy transitioning of products, part Orthopedic is of categories lines more multiple is focus the of the That Some key cleanup we of product and control really our to generations all and have don't our on customers. those. start efforts

we trust So those watching closely. not we are And categories us, very are anticipating that.

Operator

closing I conference would to now remarks. like the back Curt to And turn for Hartman

Curt Hartman

and wrap speaking you, look everybody, on you, and just we to up say time, Thank next your forward thank Amy, earnings for call. with our here today and you

Operator

you for And call. Thank this conference today's participating. concludes

You may now disconnect.

CONMED (CNMD) 31 Jul 242024 Q2 Earnings call transcript