ResMed today announced results for its quarter ended December 31, 2017.
Revenue increased 13% to $601.3 million; up 11% on a constant currency basis
|
| [22-January-2018] |
|
SAN DIEGO, Jan. 22, 2018 /PRNewswire/ -- ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended December 31, 2017. Revenue for the quarter was $601.3 million, a 13 percent increase compared to the same period of the prior year. "We had a strong quarter with double-digit revenue and operating profit growth" said Mick Farrell, ResMed's chief executive officer. "Our masks have performed well around the world, device sales are solid, and our cloud-based software continues to grow rapidly. Our operating excellence initiatives are achieving leverage in the business with more runway ahead." Farrell concluded, "We recently announced our first ResMed branded portable oxygen concentrator, called Mobi, which will launch in the current quarter. Mobi exemplifies patient-centered innovation and our commitment to pioneer products and create value with services and solutions that improve patients' quality of life, reduce the impact of chronic disease and save healthcare costs globally." Analysis of second quarter results Second quarter revenue in United States, Canada and Latin America, excluding Brightree, was $329.2 million, a 12 percent increase over the same period of the prior year. Brightree revenue for the second quarter was $38.7 million, an increase of 14 percent compared to the same period of the prior year. Revenue in Europe, Asia and other markets was $233.4 million, an increase of 8 percent on a constant currency basis, compared to the same period of the prior year. Gross margin in the second quarter was 58.2 percent, lower than the prior year's quarter gross margin of 58.3 percent mainly due to declines in average selling prices, which were partially offset by manufacturing and procurement efficiencies. Income from operations for the quarter was $146.0 million, a 51 percent increase compared with the quarter ended December 31, 2016. Non-GAAP income from operations for the quarter was $157.3 million, a 20 percent increase compared to the same period of the prior year. Selling, general and administrative expenses were $151.8 million, a 9 percent increase over the same period in the prior year, or a 6 percent increase on a constant currency basis. SG&A expenses improved to 25.2 percent of revenue in the quarter, compared with 26.3 percent reported in the quarter ended December 31, 2016. Research and development expenses were $40.6 million, or 6.8 percent of revenue. R&D expenses increased by 6 percent compared with the same period last year, or a 4 percent increase on a constant currency basis. Amortization of acquired intangible assets was $11.3 million during the quarter, which is consistent with the same period last year. Stock-based compensation costs incurred during the quarter of $12.0 million consisted of expenses associated with employee equity grants and our employee stock purchase plan. Net income for the quarter was $9.5 million, an 88 percent decrease compared to the same period of the prior year. Non-GAAP net income was $143.8 million, a 39 percent increase compared to the prior year. Non-GAAP measures adjust for amortization of acquired intangibles, impact of U.S. tax reform on income tax expense, restructuring expenses, litigation settlement expenses, acquisition related expenses and the Astral battery field safety notification expenses. GAAP diluted earnings per share for the quarter decreased by 87 percent to $0.07. Non-GAAP diluted earnings per share of $1.00 were 37 percent higher compared with the same period of the prior year. Cash flow from operations for the quarter was $132.6 million compared to net income in the current quarter of $9.5 million. During the quarter we paid $49.9 million in dividends. Impact of U.S. tax reform on income tax expense On December 22, 2017 "H.R.1", originally known as the Tax Cuts and Jobs Act, was enacted into law ("U.S. tax reform"). ASC 740 Income Taxes requires companies to recognize the effect of any tax laws during the period in which they are enacted. Accordingly, the company performed preliminary calculations and based on these, recognized additional income tax expense of $126.6 million for the three and six months ended December 31, 2017. The U.S. tax reform significantly revises the U.S. corporate income tax by, among other things, imposing a one-time transition tax on unremitted foreign earnings, lowering the corporate income tax rate from 35 percent to 21 percent and implementing a territorial tax system in regard to foreign earnings. The one-time transition tax on unremitted foreign earnings results in additional income tax expense of $119.9 million, of which $10.5 million has been recorded as income taxes payable and $109.4 million has been recorded as long-term income taxes payable. The lower corporate tax rate results in a reduction of net deferred tax assets and an increase in income tax expense of $6.7 million. Share repurchase program During the quarter, the company repurchased 100,000 shares at a cost of $8.5 million, as part of its ongoing capital management program. Dividend program The ResMed board of directors today declared a quarterly cash dividend of $0.35 per share. The dividend will have a record date of February 8, 2018, payable on March 15, 2018. The dividend will be paid in U.S. currency to holders of ResMed's common stock trading on the New York Stock Exchange. Holders of Chess Depositary Instruments trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be February 7, 2018 for common stock holders and for CDI holders. ResMed has received a waiver from the ASX's settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from February 7, 2018 through February 8, 2018, inclusive. Webcast details ResMed will discuss its second quarter fiscal year 2018 results today on its webcast at 1:30 p.m. U.S. Pacific Time. The live webcast of the call can be accessed on ResMed's investor relations website at investor.resmed.com. Please go to this section of the website and click on the icon for the "Q2 2018 earnings webcast" to register and listen to the live webcast. A replay of the earnings webcast will be available on ResMed's investor relations website approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately two hours after the webcast by dialing 800-585-8367 (U.S.) and +1 416-621-4642 (outside U.S.) and enter the passcode 2385139. The telephone replay will be available until February 5, 2018. About ResMed ResMed (NYSE: RMD, ASX: RMD), a world-leading connected health company with more than 4 million cloud-connected devices for daily remote patient monitoring, changes lives with every breath. Its award-winning devices and software solutions help treat and manage sleep apnea, chronic obstructive pulmonary disease and other respiratory conditions. Its 6,000-member team strives to improve patients' quality of life, reduce the impact of chronic disease and save healthcare costs in more than 120 countries. Safe harbor statement Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements- including statements regarding ResMed's projections of future revenue or earnings, expenses, new product development, new product launches and new markets for its products, litigation, and tax outlook- are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Additional risks and uncertainties are discussed in ResMed's periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.
For investors For media
Agnes Lee Jayme Rubenstein
O: 858-836-5971 O: 858-836-6798
investorrelations@resmed.com news@resmed.com
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Net revenue $601,273 $530,397 $1,124,932 $995,846
Cost of sales 251,481 221,326 469,535 412,522
Astral field safety
notification expenses (1) - - - 5,070
-------------------------- --- --- --- -----
Gross profit 349,792 309,071 655,397 578,254
------------ ------- ------- ------- -------
Operating expenses:
Selling, general and
administrative 151,816 139,307 295,666 268,158
Research and development 40,643 38,190 78,058 72,637
Restructuring expenses (1) - 4,413 - 4,413
Litigation settlement expenses
(1) - 8,500 - 8,500
Acquisition related expenses
(1) - 10,076 - 10,076
Amortization of acquired
intangible assets (1) 11,317 11,690 23,099 23,431
------------------------ ------ ------ ------ ------
Total operating expenses 203,776 212,176 396,823 387,215
------------------------ ------- ------- ------- -------
Income from operations (1) 146,016 96,895 258,574 191,039
------------------------- ------- ------ ------- -------
Other income (expenses), net:
Interest income (expense), net (2,791) (2,437) (5,706) (4,929)
Other, net (1,460) 1,749 (2,618) 3,021
---------- ------ ----- ------ -----
Total other income (expenses),
net (4,251) (688) (8,324) (1,908)
------------------------------ ------ ---- ------ ------
Income before income taxes 141,765 96,207 250,250 189,131
Income taxes (1) 132,238 19,464 154,599 36,282
--------------- ------- ------ ------- ------
Net income (1) $9,527 $76,743 $95,651 $152,849
------------- ------ ------- ------- --------
Basic earnings per
share $0.07 $0.54 $0.67 $1.08
Diluted earnings per
share $0.07 $0.54 $0.67 $1.08
Non-GAAP diluted
earnings per share
(1) $1.00 $0.73 $1.66 $1.34
Basic shares outstanding 142,715 141,310 142,511 141,048
Diluted shares outstanding 143,855 142,097 143,757 141,982
(1) See the reconciliation of non-
GAAP financial measures in the
table at the end of the press
release.
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited - In thousands)
December 31, June 30,
2017 2017
---- ----
ASSETS
Current assets:
Cash and cash equivalents $858,899 $821,935
Accounts receivable, net 482,934 450,530
Inventories 296,062 268,319
Prepayments and other current
assets 116,454 103,219
----------------------------- ------- -------
Total current assets 1,754,349 1,644,003
-------------------- --------- ---------
Property, plant and equipment, net 401,537 394,241
Goodwill 1,075,315 1,064,874
Other intangibles, net 240,027 261,800
Deferred income taxes and other
non-current assets 92,772 103,569
------------------------------- ------ -------
Total non-current assets 1,809,651 1,824,484
------------------------ --------- ---------
Total assets $3,564,000 $3,468,487
------------ ---------- ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Current liabilities:
Accounts payable 78,351 92,763
Accrued expenses 189,368 186,295
Deferred revenue 53,284 51,918
Income taxes payable 16,276 29,150
Short-term debt 1,019,132 -
--------------- --------- ---
Total current liabilities 1,356,411 360,126
------------------------- --------- -------
Non-current liabilities:
Deferred revenue 63,289 53,235
Deferred income taxes 13,141 13,822
Other long term liabilities 2,217 2,427
Long-term debt - 1,078,611
Long-term income taxes payable 109,414 -
------------------------------ ------- ---
Total non-current liabilities 188,061 1,148,095
----------------------------- ------- ---------
Total liabilities 1,544,472 1,508,221
----------------- --------- ---------
STOCKHOLDERS' EQUITY:
Common stock 572 569
Additional paid-in capital 1,409,993 1,379,130
Retained earnings 2,312,335 2,316,237
Treasury stock (1,555,152) (1,546,611)
Accumulated other comprehensive
income (148,220) (189,059)
------------------------------- -------- --------
Total stockholders' equity $2,019,528 $1,960,266
-------------------------- ---------- ----------
Total liabilities and
stockholders' equity $3,564,000 $3,468,487
--------------------- ---------- ----------
RESMED INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)
Six Months Ended
December 31,
2017 2016
---- ----
Cash flows from
operating
activities:
Net income $95,651 $152,849
Adjustment to
reconcile net
income to cash
provided by
operating
activities:
Depreciation and
amortization 58,945 55,504
Stock-based
compensation costs 23,958 22,802
Impairment of cost-
method investments 2,254 206
Changes in fair
value of business
combination
contingent
consideration - 10,076
Changes in operating
assets and
liabilities, net of
effect of
acquisitions:
Accounts receivable,
net (26,145) (7,080)
Inventories, net (20,760) (36,104)
Prepaid expenses,
net deferred income
taxes and other
current assets (2,858) (15,197)
Accounts payable,
accrued expenses
and other 95,489 23,086
----------------- ------ ------
Net cash provided by
operating
activities 226,534 206,142
-------------------- ------- -------
Cash flows from
investing
activities:
Purchases of
property, plant and
equipment (32,000) (29,247)
Patent registration
costs (4,624) (4,603)
Business
acquisitions, net
of cash acquired - (3,184)
Investments in cost-
method investments (3,725) (3,867)
Proceeds /
(Payments) on
maturity of foreign
currency contracts (3,330) 8,209
-------------------- ------ -----
Net cash used in
investing
activities (43,679) (32,692)
---------------- ------- -------
Cash flows from
financing
activities:
Proceeds from
issuance of common
stock, net 6,587 9,816
Purchases of
treasury stock (8,541) -
Proceeds from
borrowings, net of
borrowing costs 50,000 75,000
Repayment of
borrowings (110,000) (80,000)
Dividends paid (99,553) (92,865)
-------------- ------- -------
Net cash (used in) /
provided by
financing
activities (161,507) (88,049)
-------------------- -------- -------
Effect of exchange
rate changes on
cash 15,616 (28,689)
------------------ ------ -------
Net increase /
(decrease) in cash
and cash
equivalents 36,964 56,712
Cash and cash
equivalents at
beginning of period 821,935 731,434
-------------------- ------- -------
Cash and cash
equivalents at end
of period $858,899 $788,146
------------------- -------- --------
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(In US$ thousands, except share and per share data)
The measure, "non-GAAP income from operations" is reconciled with GAAP income from operations below:
Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP income from
operations $146,016 $96,895 $258,574 $191,039
Amortization of acquired
intangible assets (A) 11,317 11,690 23,099 23,431
Restructuring expenses (A) - 4,413 - 4,413
Litigation settlement expenses
(A) - 8,500 - 8,500
Acquisition related expenses
(A) - 10,076 - 10,076
Astral battery field safety
notification expenses (A) - - - 5,070
--------------------------- --- --- --- -----
Non-GAAP income
from operations $157,333 $131,574 $281,673 $242,529
---------------- -------- -------- -------- --------
The measures "non-GAAP net income" and "non-GAAP diluted earnings per share" are reconciled with GAAP net income and GAAP diluted earnings per share in the table below:
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
GAAP net income $9,527 $76,743 $95,651 $152,849
Amortization of acquired
intangible assets, net of tax
(A) 7,697 7,968 15,710 15,975
U.S. tax reform transition
impact (A) 119,880 - 119,880 -
U.S. tax reform impact on
deferred taxes (A) 6,723 - 6,723 -
Restructuring expenses, net of
tax (A) - 3,085 - 3,085
Litigation settlement
expenses, net of tax (A) - 5,392 - 5,392
Acquisition related expenses
(A) - 10,076 - 10,076
Astral battery field safety
notification expenses (A) - - - 3,549
--------------------------- --- --- --- -----
Non-GAAP net income
(A) $143,827 $103,264 $237,964 $190,926
------------------- -------- -------- -------- --------
Diluted shares outstanding 143,855 142,097 143,757 141,982
-------------------------- ------- ------- ------- -------
GAAP diluted
earnings per share $0.07 $0.54 $0.67 $1.08
------------------- ----- ----- ----- -----
Non-GAAP diluted
earnings per share
(A) $1.00 $0.73 $1.66 $1.34
------------------- ----- ----- ----- -----
(A) ResMed adjusts for the impact of
the amortization of acquired
intangibles, impact of U.S. tax
reform, restructuring expenses,
litigation settlement expenses,
acquisition related expenses and
the Astral battery field safety
notification expenses, from
their evaluation of ongoing
operations and believes
investors benefit from adjusting
these items to facilitate a more
meaningful evaluation of current
operating performance.
ResMed believes that non-GAAP
diluted earnings per share is an
additional measure of
performance investors can use to
compare operating results
between reporting periods.
ResMed uses non-GAAP
information internally in
planning, forecasting, and
evaluating the results of
operations in the current period
and in comparing it to past
periods. ResMed believes this
information provides investors
better insight in evaluating
ResMed's performance from core
operations and provides
consistent financial reporting.
Our use of non-GAAP measures is
intended to supplement, and not
to replace, our presentation of
net income and other GAAP
measures. Like all non-GAAP
measures, non-GAAP earnings are
subject to inherent limitations
because they do not include all
the expenses that must be
included under GAAP.
View original content with multimedia:http://www.prnewswire.com/news-releases/resmed-inc-announces-results-for-the-second-quarter-of-fiscal-year-2018-300586074.html SOURCE ResMed Inc. |
||
Company Codes: NYSE:RMD, Australia:RMD |
