Tornier N.V. (NASDAQ: TRNX), a global medical device company focused on
providing surgical solutions to orthopaedic extremity specialists,
reported today its financial results for the fourth quarter and fiscal
year ended December 30, 2012.
Revenue for the fourth quarter of 2012 reached $79.0 million compared to
fourth quarter 2011 revenue of $69.0 million, an increase of 14.5% as
reported and 16.0% in constant currency. Revenue for the fiscal year
2012 was $277.5 million compared to 2011 revenue of $261.2 million, an
increase of 6.3% as reported and 9.4% in constant currency. Revenue for
the fourth quarter and full year included $8.0 million of revenue from
the acquisition of OrthoHelix Surgical Designs, Inc., which closed
October 4, 2012.
Fourth quarter 2012 revenue of Tornier's extremities product categories
totaled $64.7 million compared to $54.4 million a year ago, growth of
18.9% as reported and 19.8% in constant currency. Revenue of Tornier's
extremities product categories for the fiscal year 2012 was $224.9
million compared to $204.9 million a year ago, growth of 9.8% as
reported and 11.8% in constant currency.
Giving pro forma effect to the OrthoHelix acquisition to include
OrthoHelix revenue in prior periods, Tornier's 2012 fourth quarter and
full year constant currency revenue growth was 6.7% and 8.2%,
respectively, and Tornier's fourth quarter and full year extremities
product constant currency revenue increased 7.9% and 10.0%, respectively.
Dave Mowry, President and Chief Executive Officer of Tornier, commented,
"We are pleased with our revenue performance during the fourth quarter
as we closed and began the integration of our OrthoHelix acquisition,
and as we faced continued challenges related to our U.S. distribution
channel transition and a weak economy in Europe. Based on the benefits a
strengthened U.S. distribution channel and new products such as the Ascend
Flex convertible shoulder system will yield, we are excited about
our prospects to return to double-digit, constant currency revenue
growth on a pro forma basis during the second half of 2013."
The Company's fourth quarter 2012 adjusted EBITDA, as defined in the
GAAP to non-GAAP reconciliation provided later in this release, was
$11.0 million, or 13.9% of reported revenue, compared to $8.3 million,
or 12.1% of revenue, in the same quarter of the prior year, an increase
of 31.5%. Adjusted EBITDA for the fiscal year 2012 reached $32.9
million, or 11.9% of revenue, compared to $28.6 million, or 11.0% of
revenue, in 2011, representing an increase of 15.1%.
Mr. Mowry continued, "Despite challenges, we were able to improve our
adjusted EBITDA margin during the fourth quarter and fiscal year 2012.
As we enter 2013, we are committed to making the investments in our
distribution channel and expanded product portfolio which are necessary
to return to and sustain double-digit revenue growth and adjusted EBITDA
margin improvement, and to increase shareholder value."
Fourth Quarter 2012 Revenue Highlights
Revenue of the Company's large joints and other product lines was $14.3
million, an increase of 1.7% over the same quarter in 2011 on a constant
currency basis. In the fourth quarter, this product category decreased
to 18% of reported global revenue.
On a geographic basis as compared to the fourth quarter of 2011,
Tornier's international revenue increased 3.7% as reported and 7.1% in
constant currency, representing 42% of reported global revenue. Revenue
in the United States increased by 23.6% and represented 58% of reported
First Quarter 2013 Outlook
Fiscal Year 2013 Outlook
Tornier will host a conference call today at 4:30 p.m. Eastern time to
discuss its fourth quarter 2012 financial results and its initial
outlook for 2013. The conference call will be available to interested
parties through a live audio webcast available through the Company's
website at www.tornier.com.
Those without internet access may join the call from within the U.S. by
dialing 1-877-673-5355; outside the U.S., dial +1-760-666-3805.
A telephone replay will be available for two weeks following the call by
dialing (855) 859-2056 for domestic participants and (404) 537-3406 for
international participants. When prompted, please enter the replay pin
number 92470331. For those who are not available to listen to the live
webcast, the call will be archived for one year on Tornier's website.
Statements contained in this release that relate to future, not past,
events are forward-looking statements under the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based on
current expectations of future events and often can be identified by
words such as "expect," "should," "project," "anticipate," "intend,"
"will," "may," "believe," "could," "would," "continue," "outlook,"
"guidance," "future," "prospects," other words of similar meaning or the
use of future dates. Examples of forward-looking statements in this
release include Tornier's financial guidance for the first quarter of
2013 and for the full year 2013, Tornier's anticipated growth prospects,
expansion of adjusted EBITDA and above market double-digit growth and
Tornier's expectations with respect to new products, including in
particular the Ascend Flex. Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
Uncertainties and risks may cause Tornier's actual results to be
materially different than those expressed in or implied by Tornier's
forward-looking statements. For Tornier, such uncertainties and risks
include, among others, Tornier's future operating results and financial
performance, fluctuations in foreign currency exchange rates, the effect
of global economic conditions, the European sovereign debt crisis, and
austerity measures, risks associated with Tornier's international
operations and expansion, risks associated with Tornier's recent
acquisition of OrthoHelix and subsequent integration activities, changes
in Tornier's arrangements with its distributors and independent sales
agencies and transition to direct selling models in certain geographies
and territories, the timing of regulatory approvals and introduction of
new products, physician acceptance, endorsement, and use of new
products; the effect of regulatory actions, changes in and adoption of
reimbursement rates, potential product recalls, competitor activities,
Tornier's leverage and access to credit under its credit facility
agreement, and the costs and effects of litigation and changes in tax
and other legislation. More detailed information on these and other
factors that could affect Tornier's actual results are described in
Tornier's filings with the U.S. Securities and Exchange Commission,
including its most recent annual report on Form 10-K and subsequent
quarterly reports on Form 10-Q. Tornier undertakes no obligation to
update its forward-looking statements.
Tornier is a global medical device company focused on serving
extremities specialists who treat orthopaedic conditions of the
shoulder, elbow, wrist, hand, ankle and foot. The Company's broad
offering of over 100 product lines includes joint replacement, trauma,
sports medicine, and biologic products to treat the extremities, as well
as joint replacement products for the hip and knee in certain
international markets. Since its founding approximately 70 years ago,
Tornier's "Specialists Serving Specialists" philosophy has fostered a
tradition of innovation, intense focus on surgeon education, and
commitment to advancement of orthopaedic technology stemming from its
close collaboration with orthopaedic surgeons and thought leaders
throughout the world. For more information regarding Tornier, visit www.tornier.com.
Use of Non-GAAP Financial Measures
To supplement Tornier's consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles (GAAP),
Tornier uses certain non-GAAP financial measures in this release.
Reconciliations of the non-GAAP financial measures used in this release
to the most comparable U.S. GAAP measures for the respective periods can
be found in tables later in this release immediately following the
detail of revenue by geography. Non-GAAP financial measures have
limitations as analytical tools and should not be considered in
isolation or as a substitute for Tornier's financial results prepared in
accordance with GAAP.
Three Months Ended
* - Represents Pro forma Revenue adjustment for closing
date of OrthoHelix acquisition related to the respective period.
Special charges includes anticipated charges relating to the
integration of OrthoHelix, U.S. sales channel efforts to create a
dedicated upper extremities and a lower extremities channel, and
conversion to a direct sales channel in certain U.S. and
Tornier believes the non-GAAP financial measures presented above provide
additional meaningful information for measuring Tornier's financial
performance and are measures frequently used by Tornier's management, as
well as securities analysts and investors. Tornier uses the non-GAAP
financial measures as supplemental measures of its performance and
believes such measures facilitate operating performance comparisons from
period to period and company to company by factoring out potential
differences caused by charges not related to Tornier's regular, ongoing
business, including non-cash charges, certain large and unpredictable
charges, acquisitions, dispositions and tax positions. Tornier's
management uses the non-GAAP financial measures to assess the
performance of Tornier's core operations, analyze underlying trends in
Tornier's businesses, establish operational goals and forecasts, and
evaluate Tornier's performance period over period and in relation to the
operating results of its competitors. Tornier's management uses the
non-GAAP financial measures to help allocate its resources to both
ongoing and prospective business initiatives and to help make budgeting
and spending decisions, for example, between product development
expenses, research and development expenses, and selling, general and
administrative expenses. Tornier's management is evaluated on the basis
of several of these non-GAAP financial measures when determining
achievement of performance incentive compensation goals.
Tornier believes that non-GAAP financial measures have limitations as
analytical tools since they do not reflect all of the amounts associated
with Tornier's operating results as determined in accordance with GAAP
and should only be used to evaluate Tornier's operating results in
conjunction with the corresponding GAAP measures. Accordingly, revenue
on a constant currency basis should not be used as a substitute for
revenue, EBITDA, adjusted EBITDA, adjusted net income (loss) and
adjusted net income (loss) per share should not be used as a substitute
for net income or net income per share; adjusted EBITDA margin should
not be used as a substitute for net margin or operating margin; free
cash flow should not be used as a substitute for cash flows from
operations; and adjusted gross margin and gross margin percentage should
not be used as a substitute for gross margin or gross margin as a
percentage of revenue, in each case as determined in accordance with
GAAP. Neither EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted
net income (loss), adjusted net income (loss) per share, free cash flow,
adjusted gross margin and gross margin as a percentage of revenue,
should be an indication of whether cash flow will be sufficient to fund
Tornier's cash requirements. Additionally, the calculation of non-GAAP
financial measures is not based on any comprehensive or standard set of
accounting rules or principles. Accordingly, Tornier's definitions of
revenue on a constant currency basis, EBITDA, adjusted EBITDA, adjusted
EBITDA margin, adjusted net income (loss), adjusted net income (loss)
per share, free cash flow, adjusted gross margin and gross margin as a
percentage of revenue, may differ from the definitions of other
companies using the same or similar names limiting, to some extent, the
usefulness of such measures for comparison purposes.
For further information regarding why Tornier believes that these
non-GAAP financial measures provide useful information to investors, the
specific manner in which management uses these measures, and some of the
limitations associated with the use of these measures, please refer to
Tornier's current report on Form 8-K filed today with the Securities and
Exchange Commission which attaches this release as an exhibit. This
current report on Form 8-K is available on the SEC's website at www.sec.gov.
or on Tornier's website at www.tornier.com.
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