Biomet (NASDAQ:BMET)
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Biomet, Inc. (NASDAQ:BMET) today reported record sales
and earnings results for its first quarter ended August 31, 2005. Net
sales increased 11% to $484,903,000. Operating income increased 41% to
$151,410,000 from $107,232,000 and increased 8%, on an adjusted basis,
from $140,254,000. Net income increased 66% to $100,299,000 from
$60,433,000 and increased 10%, as adjusted, from $91,023,000. Diluted
earnings per share increased 67% to $0.40 from $0.24 and increased
11%, on an adjusted basis, from $0.36. The Company's 2004 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 for
last year, which are non-GAAP financial measures exclude amortization
of inventory step-up and write-off of in-process research and
development related to these acquisitions. A reconciliation to
comparable GAAP measures is included in this press release.
President and Chief Executive Officer Dane A. Miller, Ph.D.,
stated, "The Company's record first quarter results are attributable
to continued strong sales of orthopedic reconstructive devices and
dental reconstructive implants. We continue to invest in sales and
marketing initiatives in order to solidify our long-term growth
prospects in the musculoskeletal products marketplace."
Excluding the impact of foreign currency, which increased first
quarter sales by $3.7 million, net sales increased 10%. First quarter
sales in the United States increased 7%, while international sales
increased 16%, on a constant currency basis.
During the first quarter of fiscal year 2006, worldwide
reconstructive device sales increased 15% to $323,815,000. Excluding
the effects of foreign currency, reconstructive device sales increased
14% worldwide during the quarter. Knee sales increased 17% worldwide
and 16% in the United States during the first quarter. On a constant
currency basis, knee sales increased 16% worldwide. Revenue growth for
knees during the first quarter continued to be driven by strong demand
for Biomet's recent product introductions for total and
unicompartmental knee replacement procedures.
Hip sales increased 12% worldwide and 7% in the United States
during the first quarter. Worldwide hip sales increased 11%, constant
currency. The Company's metal-on-metal acetabular systems, porous
coated hip stems and second generation highly crosslinked polyethylene
components experienced increased market penetration during the first
quarter.
Extremity sales increased 13% worldwide and 8% in the United
States during the first quarter. Excluding the impact of foreign
currency, worldwide extremity sales increased 12% during the quarter.
Dental reconstructive implant sales increased 15% worldwide during the
first quarter and 14% in the United States. On a constant currency
basis, worldwide dental reconstructive implant sales increased 14%.
Sales of bone cements and accessories increased 16% worldwide and 9%
in the United States during the first quarter. Sales of bone cements
and accessories increased 15% worldwide, constant currency.
Worldwide fixation sales increased 2% to $64,179,000 during the
first quarter of fiscal year 2006 and increased 2% worldwide, on a
constant currency basis. Lorenz Surgical's craniomaxillofacial
fixation sales increased 15% worldwide and increased 10% in the United
States during the first quarter. Craniomaxillofacial fixation sales
increased 14% worldwide, constant currency. Internal fixation sales
increased 6% worldwide and in the United States during the first
quarter. Excluding the effect of foreign currency, internal fixation
sales increased 6% worldwide. Electrical stimulation device sales
decreased 4% worldwide during the first quarter and decreased 2% in
the United States. Worldwide external fixation sales decreased 5% and
decreased 11% in the United States during the quarter. On a constant
currency basis, worldwide external fixation sales decreased 5%.
During the first quarter of fiscal year 2006, spinal product sales
increased 5% worldwide to $55,326,000, while growth was flat in the
United States. Spinal product sales increased 4% worldwide, on a
constant currency basis. Sales of spinal implants and orthobiologics
for the spine increased 14% worldwide and 8% in the United States,
while spinal stimulation sales decreased 7% worldwide and in the
United States during the first quarter.
Worldwide sales of Biomet's "other products" increased 4% to
$41,583,000 during the first quarter of fiscal year 2006 and increased
3% in the United States. Excluding the effects of foreign currency,
sales of "other products" increased 3% worldwide. Arthroscopy sales
increased 17% worldwide and 14% in the United States during the first
quarter. On a constant currency basis, arthroscopy sales increased 16%
worldwide. During the first quarter, softgoods and bracing sales
decreased 7% worldwide and decreased 6% in the United States.
Softgoods and bracing sales decreased 7% worldwide, constant currency.
Dr. Miller concluded, "We are pleased with Biomet's sales
performance during the first quarter of fiscal year 2006. The Company
experienced accelerating worldwide constant currency growth this
quarter compared to last quarter in reconstructive products, internal
fixation, craniomaxillofacial fixation and arthroscopy products.
Additionally, we are pleased with the operational progress and new
product line-up at our EBI subsidiary. Consequently, we remain
comfortable with the range of analysts' sales and earnings estimates
of $497 million to $506 million and $0.42 to $0.44 per share for the
second quarter of fiscal year 2006."
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 and reorganization efforts with respect to its EBI operations,
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, revenue and earnings estimates, 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.
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Three Months Ended
------------------
2005 2004
---- ----
Net Sales $484,903 $438,160
Cost of Sales 134,495 118,970
Cost of Sales, current period
impact of inventory step-up - 7,002
--------- ---------
Gross Profit 350,408 312,188
S, G, & A 178,182 160,460
R & D 20,816 18,476
In-process research and development - 26,020
--------- ---------
Operating Income 151,410 107,232
Other Income (Expense), Net 558 (728)
--------- ---------
Income Before Taxes
And Minority Interest 151,968 106,504
Income Taxes 51,669 48,503
Income Taxes related to inventory
step-up - (2,432)
--------- ---------
Net Income $100,299 $60,433
========= =========
Earnings per Share
Basic .40 .24
Diluted .40 .24
Basic Shares Outstanding 249,582 253,856
Diluted Shares Outstanding 250,656 255,950
U.S. sales $317,326 $296,304
Foreign sales 167,577 141,856
Reconstructive sales $323,815 $282,482
Fixation sales 64,179 62,713
Spinal product sales 55,326 52,909
Other product sales 41,583 40,056
Consolidated Balance Sheets August 31, 2005 May 31, 2005
Assets
Cash and Investments $193,623 $177,074
Accounts and notes receivable, net 455,821 479,745
Inventories 471,659 469,791
Other current assets 110,624 108,712
Fixed Assets, net 326,820 322,887
Goodwill 432,255 435,621
Other Assets 101,602 102,747
----------- -----------
Total Assets $2,092,404 $2,096,577
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities $518,375 $501,391
Other Liabilities 29,819 31,255
Stockholders' Equity 1,544,210 1,563,931
----------- -----------
Total Liabilities and
Stockholders' Equity $2,092,404 $2,096,577
=========== ===========
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Management uses non-GAAP financial measures, such as net sales,
excluding the impact of foreign currency, operating income as
adjusted, net income as adjusted, and diluted earning per share as
adjusted. The term "as adjusted", a non-GAAP financial measure, refers
to financial performance measures that exclude the following charges:
(a) the 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. Inventory stepped-up to its current fair market value in an
acquisition and subsequently sold, results in a higher cost of goods
sold during the periods in which the stepped-up inventory is sold,
thus overstating cost of goods sold and understating gross margins
versus historical and future periods in which the inventory sold
represents the actual cost of products manufactured. In-process
research and development written off as of the closing date of an
acquisition is a one time event that is not indicative of future
results. The Company's management believes that the presentation of
these measures provides useful information to investors. These
measures may assist investors in evaluating the Company's operations,
period over period. Management uses these measures internally for
evaluation of the performance of the business, including the
allocation of resources and the evaluation of results relative to team
member performance compensation targets. Investors should consider
these non-GAAP measures only as a supplement to, not as a substitute
for or as superior to, measures of financial performance prepared in
accordance with GAAP.
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BIOMET, INC.
Reconciliation of non-GAAP financial information to GAAP
financial information
RESULTS FOR THE QUARTERS ENDED AUGUST 31
(in thousands, except per share data)
2005 2004
---- ----
Percent Percent
Amount of Sales Amount of Sales
--------- --------- --------- ---------
Operating income, as reported $151,410 31.2% $107,232 24.5%
Inventory step-up -- -- 7,002 1.6
In-process research and
development -- -- 26,020 5.9
--------- --------- --------- ---------
Operating income, as adjusted $151,440 31.2% $140,254 32.0%
========= ========= ========= =========
Net income, as reported $100,299 20.7% $60,433 13.8%
Inventory step-up -- -- 7,002 1.5
In-process research and
development -- -- 26,020 5.9
Tax effect of inventory
step-up -- -- (2,432) (.4)
--------- --------- --------- ---------
Net income, as adjusted $100,299 20.7% $91,023 20.8%
========= ========= ========= =========
2005 2004
---- ----
Basic Diluted Basic Diluted
--------- --------- --------- ---------
Earnings per share, as reported $0.40 $0.40 $0.24 $0.24
Inventory step-up -- -- .03 .03
In-process research and
development -- -- .10 .10
Tax effect of inventory
step-up -- -- (.01) (.01)
--------- --------- --------- ---------
Earnings per share, as adjusted $0.40 $0.40 $0.36 $0.36
THREE MONTHS ENDED AUGUST 31, 2005
Sales Growth
Sales Growth in Local
As Reported FX Impact Currencies
2005
----
U.S. sales 7% -% 7%
Foreign sales 18 2 16
Total sales 11 1 10
Reconstructive sales 15% 1% 14%
Fixation sales 2 - 2
Spinal product sales 5 1 4
Other product sales 4 1 3
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