Conmed Corporation (CNMD) reported first-quarter fiscal 2011 adjusted (excluding one-time items such as restructuring charges) earnings per share of 37 cents, outpacing the Zacks Consensus Estimate of 30 cents and the year-ago adjusted earnings of 28 cents. Profit (as reported) for the quarter surged 23% year over year to roughly $9 million (or 31 cents a share) on account of higher revenues.

Restructuring costs include expenses related to the consolidation of administrative functions and costs of transferring additional product lines to the company’s new manufacturing plant in Chihuahua, Mexico. Costs associated with these activities were $1.4 million in the quarter and the company expects restructuring expenses of $3 million-$4 million for the full year.


Revenues rose 4% year over year to roughly $183.5 million. Sales beat the Zacks Consensus Estimate of $182 million and dovetail with the company’s guidance range of $180 million-$185 million. International sales came in at $91.4 million (up 7.5%), representing roughly 50% of total sales. Foreign exchange translation had a nominal impact on revenues.

Conmed witnesses growth across its key business segments such as Arthroscopy, Powered Surgical Instruments and Electrosurgery. Revenues from Arthroscopy rose 4.4% year over year to $75.4 million while Powered Surgical Instruments sales climbed 8.9% to $38.1 million. Electrosurgery revenues increased 2.2% to $23.6 million.

Revenues from Endoscopic Technologies edged up 0.8% to $11.9 million while Endosurgery sales climbed 4.7% to $17.9 million. Total Single-use and reposable revenues moved up 2.4% to $141.6 million in the quarter while consolidated revenues from Capital equipment soared 10% to $41.9 million.


Gross margin improved to 52.2% from 52% a year ago owing to higher sales. Operating margin increased to 9.4% from 7.7% a year ago, supported by higher gross margin.

Balance Sheet and Cash flow

Conmed exited the quarter with cash and cash equivalents of $17.9 million, up 80% year over year. Long-term debt decreased 12% year over year to $183.4 million.  The company generated operating cash flow of $20.7 million during the quarter which it primarily used to de-leverage its balance sheet.


Conmed has reaffirmed its fiscal 2011 revenues and earnings forecasts. The company continues to expect revenues of $745 million-$755 million and adjusted earnings per share of $1.40 to $1.50. For second-quarter 2011, revenues are projected between $180 million and $185 million with adjusted earnings forecasted in the range of 30 cents to 35 cents a share. The current Zacks Consensus Estimates for revenues and earnings for fiscal 2011 are $744 million and $1.50, respectively. 

Conmed is a medical products maker specializing in surgical instruments and devices. A large percentage of the company’s products are designed for minimally invasive surgery, a trend that is extremely popular these days.

However, Conmed operates in a highly-competitive orthopedic surgery market against much larger, more technically-competent companies, such as Johnson & Johnson (JNJ), Smith & Nephew (SNN) and Stryker Corporation (SYK).

CONMED CORP (CNMD): Free Stock Analysis Report
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STRYKER CORP (SYK): Free Stock Analysis Report
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