Delaware | 77-0154833 | |
(State or other jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Exhibit No. | Description | |
99.1 | Press release dated October 19, 2016 describing the Company's results for its second quarter ended September 30, 2016 and other financial information. |
NATUS MEDICAL INCORPORATED (Registrant) | ||||||
Dated: October 19, 2016 | By: | /s/ Jonathan A. Kennedy | ||||
Executive Vice President and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press release dated October 19, 2016 describing the Company's results for its second quarter ended September 30, 2016 and other financial information. |
• | Reports third quarter revenue of $90.9 million |
• | Reports third quarter GAAP earnings per share of $0.40 and non-GAAP of $0.39 |
• | Reports GAAP gross margin of 63.9% and non-GAAP gross margin of 64.6% |
• | Achieves cash flow from operations of $35.5 million, adjusted cash flow of $22.4 million |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Quarter Ended | Year to Date | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Revenue | $ | 90,906 | $ | 94,583 | $ | 274,193 | $ | 275,915 | |||||||
Cost of revenue | 32,194 | 35,520 | 102,542 | 104,468 | |||||||||||
Intangibles amortization | 612 | 683 | 1,818 | 2,048 | |||||||||||
Gross profit | 58,100 | 58,380 | 169,833 | 169,399 | |||||||||||
Gross profit margin | 63.9 | % | 61.7 | % | 61.9 | % | 61.4 | % | |||||||
Operating expenses: | |||||||||||||||
Marketing and selling | 19,746 | 22,495 | 61,578 | 65,345 | |||||||||||
Research and development | 7,689 | 7,700 | 22,596 | 21,867 | |||||||||||
General and administrative | 12,822 | 10,031 | 37,225 | 33,239 | |||||||||||
Intangibles amortization | 2,409 | 2,036 | 6,741 | 5,165 | |||||||||||
Restructuring | 197 | 42 | 1,315 | 358 | |||||||||||
Total operating expenses | 42,863 | 42,304 | 129,455 | 125,974 | |||||||||||
Income from operations | 15,237 | 16,076 | 40,378 | 43,425 | |||||||||||
Other income/(expense), net | (893 | ) | 7 | (412 | ) | (1,203 | ) | ||||||||
Income before tax | 14,344 | 16,083 | 39,966 | 42,222 | |||||||||||
Provision for income tax expense | 1,182 | 5,151 | 7,754 | 12,842 | |||||||||||
Net income | $ | 13,162 | $ | 10,932 | $ | 32,212 | $ | 29,380 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.41 | $ | 0.34 | $ | 0.99 | $ | 0.91 | |||||||
Diluted | $ | 0.40 | $ | 0.33 | $ | 0.97 | $ | 0.89 | |||||||
Weighted-average shares: | |||||||||||||||
Basic | 32,388 | 32,432 | 32,476 | 32,279 | |||||||||||
Diluted | 32,981 | 33,253 | 33,077 | 33,194 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) | |||||||||||
(in thousands) | |||||||||||
September 30, | June 30, | December 31, | |||||||||
2016 | 2016 | 2015 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and investments | $ | 106,521 | $ | 96,284 | $ | 82,469 | |||||
Accounts receivable, net | 84,870 | 93,102 | 99,080 | ||||||||
Inventories | 51,654 | 43,620 | 48,572 | ||||||||
Other current assets | 22,789 | 12,925 | 11,235 | ||||||||
Total current assets | 265,834 | 245,931 | 241,356 | ||||||||
Property and equipment, net | 18,127 | 17,174 | 16,967 | ||||||||
Goodwill and intangible assets | 194,693 | 192,173 | 194,002 | ||||||||
Deferred income tax | 12,694 | 12,809 | 12,782 | ||||||||
Other assets | 19,236 | 18,005 | 14,389 | ||||||||
Total assets | $ | 510,584 | $ | 486,092 | $ | 479,496 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 17,107 | $ | 18,836 | $ | 23,660 | |||||
Short-term borrowings | — | 10,000 | — | ||||||||
Accrued liabilities | 38,711 | 37,306 | 42,137 | ||||||||
Deferred revenue | 33,334 | 11,262 | 11,311 | ||||||||
Total current liabilities | 89,152 | 77,404 | 77,108 | ||||||||
Deferred income tax | 3,819 | 3,839 | 3,897 | ||||||||
Other long-term liabilities | 8,358 | 8,632 | 7,781 | ||||||||
Total liabilities | 101,329 | 89,875 | 88,786 | ||||||||
Total stockholders’ equity | 409,255 | 396,217 | 390,710 | ||||||||
Total liabilities and stockholders’ equity | $ | 510,584 | $ | 486,092 | $ | 479,496 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |||||||
(in thousands) | |||||||
Quarter Ended | |||||||
September 30, 2016 | September 30, 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 13,162 | $ | 10,933 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for losses on accounts receivable | 180 | 362 | |||||
Excess tax benefit on the exercise of stock options | — | (933 | ) | ||||
Depreciation and amortization | 4,424 | 4,168 | |||||
Loss on disposal of property and equipment | 11 | — | |||||
Warranty reserve | 960 | 1,618 | |||||
Share-based compensation | 1,954 | 1,891 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 11,705 | (5,714 | ) | ||||
Inventories | (6,704 | ) | (2,134 | ) | |||
Prepaid expenses and other assets | (11,320 | ) | (3,332 | ) | |||
Accounts payable | (1,376 | ) | 5,103 | ||||
Accrued liabilities | (2,464 | ) | 3,406 | ||||
Deferred revenue | 24,871 | (830 | ) | ||||
Deferred income tax | 106 | 867 | |||||
Net cash provided by operating activities | 35,509 | 15,405 | |||||
Investing activities: | |||||||
Acquisition of businesses, net of cash acquired | (9,699 | ) | — | ||||
Purchases of property and equipment | (74 | ) | (615 | ) | |||
Purchase of intangible assets | 32 | (268 | ) | ||||
Purchase of short-term investments | (34,921 | ) | — | ||||
Net cash used in investing activities | (44,662 | ) | (883 | ) | |||
Financing activities: | |||||||
Proceeds from stock option exercises and Employee Stock Purchase Program purchases | 343 | 371 | |||||
Excess tax benefit on the exercise of stock options | — | 933 | |||||
Repurchase of common stock | (1,503 | ) | (3,837 | ) | |||
Taxes paid related to net share settlement of equity awards | (1,362 | ) | (2,654 | ) | |||
Deferred debt issuance costs | (533 | ) | — | ||||
Payments on borrowings | (10,000 | ) | — | ||||
Net cash used in financing activities | (13,055 | ) | (5,187 | ) | |||
Exchange rate changes effect on cash and cash equivalents | (2,476 | ) | (372 | ) | |||
Net increase in cash and cash equivalents | (24,684 | ) | 8,963 | ||||
Cash and cash equivalents, beginning of period | 96,284 | 82,469 | |||||
Cash and cash equivalents, end of period | $ | 71,600 | $ | 91,432 |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||||
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED) | |||||||
(in thousands, except per share amounts) | |||||||
Quarter Ended | |||||||
September 30, 2016 | September 30, 2015 | ||||||
GAAP based results: | |||||||
Income before provision for income tax | $ | 14,344 | $ | 16,083 | |||
Non-GAAP adjustments: | |||||||
Intangibles Amortization - Cost of revenue | 612 | 683 | |||||
Intangibles Amortization - Operating expense | 2,409 | 2,036 | |||||
Restructuring 1 | 197 | 42 | |||||
Direct costs of acquisitions (M&S) 2 | (2,827 | ) | — | ||||
Direct costs of acquisitions (G&A) | 379 | — | |||||
Direct costs of acquisitions (OI&E) | 37 | — | |||||
Non-GAAP income before provision for income tax | 15,151 | 18,844 | |||||
Income tax expense, as adjusted | 2,370 | 5,900 | |||||
Non-GAAP net income | $ | 12,781 | $ | 12,944 | |||
Non-GAAP earnings per share: | |||||||
Basic | $ | 0.39 | $ | 0.40 | |||
Diluted | $ | 0.39 | $ | 0.39 | |||
Weighted-average shares used to compute | |||||||
Basic non-GAAP earnings per share | 32,388 | 32,432 | |||||
Diluted non-GAAP earnings per share | 32,981 | 33,253 | |||||
GAAP Gross profit | 58,100 | 58,380 | |||||
Amortization of intangibles | 612 | 683 | |||||
Non-GAAP Gross Profit | 58,712 | 59,063 | |||||
Non-GAAP Gross Margin | 64.6 | % | 62.5 | % | |||
GAAP Operating profit | 15,237 | 16,076 | |||||
Amortization of intangibles | 3,021 | 2,719 | |||||
Restructuring and other charges | (2,251 | ) | 42 | ||||
Non-GAAP Operating profit | 16,007 | 18,837 | |||||
Non-GAAP Operating margin | 17.6 | % | 19.9 | % |
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES | |||||
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED) | |||||
(in thousands, except per share amounts) | |||||
Quarter Ended | |||||
September 30, 2016 | September 30, 2015 | ||||
GAAP Provision for income tax expense | 1,182 | 5,151 | |||
Effect of accumulated change of pretax income | 621 | 869 | |||
Effect of change in annual expected tax rate | 567 | (123 | ) | ||
Non-GAAP Income tax expense, as adjusted | 2,370 | 5,897 | |||
Quarter Ended | Year to Date | ||||
December 31, 2016 | December 31, 2016 | ||||
GAAP EPS Guidance | $0.46 - $0.49 | $1.43 - $1.46 | |||
Amortization of Intangibles | 0.08 | 0.34 | |||
Restructuring | — | 0.04 | |||
Recall Accrual | — | 0.01 | |||
Direct cost of acquisitions | — | (0.09) | |||
Tax effect | (0.02) | (0.1) | |||
Non-GAAP EPS Guidance | $0.52 - $0.55 | $1.63 - $1.66 |
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