Biomet's First-Quarter Net Sales Rise 3.3 Percent
Robust growth in sports, extremities and trauma products helped boost Biomet Inc.'s first-quarter net sales by 3.3 percent.
Sports, extremities and trauma (S.E.T.) sales swelled 17.4 percent worldwide (18.8 percent in constant currency) and 18.1 percent domestically in the three months ended Aug. 31, according to the company's most recent earnings report.
Large joint sales also helped bolster Biomet's overall first-quarter performance:Knee sales grew 3.5 percent worldwide (4.8 percent in constant currency) and 5 percent domestically while hip revenue rose 1.9 percent globally (3.7 percent in constant currency) and 2.9 percent in the UnitedStates.
Reported net income remained flat at $31.1 million but adjusted net income jumped 33.8 percent compared with Q1 2013, reaching $80.8 million. Consolidated net sales of $730.7 million increased 3.3 percent (4.3 percent in constant currency) worldwide from $707.4 million during the first quarter of fiscal year 2013. Excluding the effect of foreign currency, consolidated net sales increased 4.3 percent during the first quarter.
U.S. net sales increased 3.9 percent during the fourth quarter to $469.9 million, while Europe net sales increased 6 percent (2 percent in constant currency) to $151.5 million and international (primarily Canada, South America, Mexico and the Pacific Rim) net sales decreased 2.6 percent (but climbed 8.8 percent in constant currency) to $109.3 million.
Special items (pre-tax) totaled $99.7 million during the first quarter of fiscal year 2014, compared with $165.1 million during the first quarter of FY13.
Reported operating income was $96.4 million during the first quarter, compared with operating income of $69 million during the Q1 of fiscal 2013. Excluding special items, adjusted operating income totaled $196.1 million during the first quarter compared with $191.7 million during the prior year period.
Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) during the first quarter of FY14 totaled $246.3 million, or 33.7 percent of net sales, compared with $237.8 million, or 33.6 percent of net sales, for the first quarter of fiscal 2013.
Interest expense decreased to $87.6 million from $117.1 million at the end of Q1 of 2013, primarily due to lower average interest rates on term loans and lower bond interest from refinancing activities.
Reported cash flow from operations totaled $50.8 million during the first quarter, compared with reported cash flow of $85.5 million in the same period of fiscal 2013. Free cash flow (operating cash flow minus capital expenditures) was $4.3 million, which reflected $101.3 million of cash interest paid in the quarter, compared with free cash flow of $32.4 million, reflecting $62.5 million of cash interest paid during the first quarter of FY13. The increase in cash interest is a result of a change in timing of interest payments due to the company's debt refinancing activities.
“We have had a great start to fiscal year 2014. We are very pleased with the uptick in our fiscal first quarter hip and knee sales with worldwide constant currency growth at 4 percent and 5 percent, respectively, despite having one less selling day in the quarter," Biomet President/CEO Jeffrey R. Binder said. "Our sports, extremities and trauma sales remained strong during the quarter with double digit growth worldwide."
Recent Refinancing Activities
On Sept. 10, Biomet retired a 67.3 million euros ($221.4 million) principal amount of euro-denominated term loans. On Sept. 25, the Warsaw, Ind.-based firm completed an $870.5 million U.S. dollar-denominated term loan offering, the proceeds of which were used to retire the remaining euro-denominated term loan principal balance of 657.7 million euroes ($870.2 million).