Avanos Medical, Inc. Announces Second Quarter 2024 Results
"We are pleased with our second quarter results and the cumulative progress we have made at the mid-year point," said
Second Quarter 2024 Financial Highlights
- Total net sales from continuing operations were
$171.7 million , a 1.4% increase from the comparable prior year period. - Net income from continuing operations for the quarter was
$4.3 million , compared to net loss from continuing operations of$4.3 million a year ago. - Adjusted net income from continuing operations totaled
$15.8 million , compared to$11.2 million a year ago. - Diluted earnings per share from continuing operations was
$0.09 , compared to diluted loss per share of$0.09 a year ago. - Adjusted diluted earnings per share from continuing operations was
$0.34 , compared to$0.24 a year ago. - Adjusted EBITDA was
$26.8 million , compared to$22.9 million a year ago.
Second Quarter 2024 Operating Results From Continuing Operations
For the three months ended
Gross margin during the second quarter of 2024 was 55.7%, compared to 57.7% in the prior year period. Adjusted gross margin was 59.6% compared to 59.9% last year. Gross profit margin decreased primarily due to costs related to the priorities of our three-year transformation initiative (the "Transformation Process") and plant separation costs associated with the divestiture of our respiratory health ("RH") business (the "Divestiture"). In addition, lower pricing for our HA products was partially offset by favorable volume and product mix.
Selling and general expenses as a percentage of net sales was 47.1% for the second quarter of 2024, compared to 54.9% for the second quarter of 2023. On an adjusted basis, selling and general expenses as a percentage of net sales was 43.0% for the second quarter of 2024, compared to 45.1% for the second quarter of 2023. Selling and general expenses decreased primarily due to savings realized from the execution on our Transformation Process and disciplined spending.
Operating profit in the second quarter of 2024 was
Adjusted EBITDA from continuing operations was
First Six Months of 2024 Operating Results
For the six months ended
Gross margin was 56.4%, compared to 57.6% last year. Adjusted gross margin was 59.7% compared to 59.8% last year and was impacted by the same items noted above for the second quarter.
Selling and general expenses as a percentage of net sales were 48.7% for the six months ended
Operating profit was
Adjusted EBITDA for the six months ended June 30, 2024 was
Cash Flow and Balance Sheet
Cash from operations less capital expenditures, or free cash flow, for the second quarter was an inflow of
Total debt outstanding, net of unamortized discounts, was
Discontinued Operations
Net sales from discontinued operations were
2024 Outlook
For the year, the Company anticipates revenue from continuing operations of between
Non-GAAP Financial Measures
This press release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the
- Adjusted net income;
- Adjusted diluted earnings per share;
- Adjusted gross and operating profit;
- Adjusted effective tax rate;
- Adjusted EBITDA; and
- Free cash flow.
These non-GAAP financial measures exclude the following items, as applicable, for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures:
- Certain acquisition and integration charges related to acquisitions.
- Expenses associated with restructuring and transformation activities, including the Divestiture in the fourth quarter of 2023.
- Expenses associated with European Union Medical Device Regulation ("EU MDR") compliance.
- The amortization of intangible assets associated with prior business acquisitions.
- The tax effects of certain adjusting items.
- The benefit associated with the tax effects of the CARES Act.
- The positive or negative effect of changes in currency exchange rates during the year.
The Company provides these non-GAAP financial measures as supplemental information to its GAAP financial measures. Management and the Company's board of directors use net sales on a constant currency basis, adjusted net income, adjusted diluted earnings per share, adjusted operating profit, adjusted EBITDA, and free cash flow to: (a) evaluate the Company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the Company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of the Company's ongoing business operations.
Additionally, the compensation committee of the Company's board of directors will use certain of the non-GAAP financial measures when setting and assessing achievement of incentive compensation goals. These goals are based, in part, on the Company's net sales on a constant currency basis and adjusted EBITDA, which will be determined by excluding certain items that are used in calculating these non-GAAP financial measures.
Our competitors may define these non-GAAP financial measures differently, and as a result, our measure of these non-GAAP financial measures may not be directly comparable to those of other companies. Items excluded from these non-GAAP financial measures are significant components in understanding and assessing financial performance. These non-GAAP financial measures are supplemental measures of operating performance that do not represent, and should not be considered in isolation or as an alternative to, or substitute for, the financial statement data presented in the Company's consolidated financial statements as indicators of financial performance. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures as supplemental information.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the attached financial tables.
Conference Call Webcast
About
Forward-Looking Statements
This press release contains information that includes or is based on "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan" or "continue" and similar expressions. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; shortage in drugs used in our Surgical Pain and Recovery products or other disruptions in our supply chain; the ongoing regional conflicts between
Additional information concerning these and other factors that may impact future results is contained in our filings with the
AVANOS MEDICAL, INC. |
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CONDENSED CONSOLIDATED INCOME STATEMENTS |
|||||||
(unaudited) |
|||||||
(in millions, except per share amounts) |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
$ 171.7 |
|
$ 169.4 |
|
$ 337.8 |
|
$ 328.7 |
Cost of products sold |
76.1 |
|
71.6 |
|
147.4 |
|
139.5 |
Gross Profit |
95.6 |
|
97.8 |
|
190.4 |
|
189.2 |
Research and development expenses |
6.3 |
|
6.8 |
|
13.3 |
|
14.3 |
Selling and general expenses |
80.9 |
|
93.0 |
|
164.5 |
|
181.8 |
Other expense, net |
2.1 |
|
0.1 |
|
2.3 |
|
1.3 |
Operating Income (Loss) |
6.3 |
|
(2.1) |
|
10.3 |
|
(8.2) |
Interest income |
3.0 |
|
0.5 |
|
3.6 |
|
1.0 |
Interest expense |
(3.1) |
|
(3.5) |
|
(6.2) |
|
(7.0) |
Income (Loss) Before Income Taxes |
6.2 |
|
(5.1) |
|
7.7 |
|
(14.2) |
Income tax (provision) benefit |
(1.9) |
|
0.8 |
|
(2.9) |
|
2.1 |
Income (Loss) from Continuing Operations |
4.3 |
|
(4.3) |
|
4.8 |
|
(12.1) |
Loss from discontinued operations, net of tax |
(2.5) |
|
(63.8) |
|
(3.9) |
|
(56.5) |
Net Income (Loss) |
$ 1.8 |
|
$ (68.1) |
|
$ 0.9 |
|
$ (68.6) |
|
|
|
|
|
|
|
|
Interest expense, net |
$ 0.1 |
|
$ 3.0 |
|
$ 2.6 |
|
$ 6.0 |
Income tax provision (benefit) |
1.0 |
|
(1.6) |
|
1.5 |
|
(1.5) |
Depreciation and amortization |
11.3 |
|
11.5 |
|
22.7 |
|
23.6 |
EBITDA |
$ 14.2 |
|
$ (55.2) |
|
$ 27.7 |
|
$ (40.5) |
|
|
|
|
|
|
|
|
Earnings (Loss) Per Share |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Continuing operations |
$ 0.09 |
|
$ (0.09) |
|
$ 0.10 |
|
$ (0.26) |
Discontinued operations |
(0.05) |
|
(1.37) |
|
(0.08) |
|
(1.21) |
Basic Earnings (Loss) Per Share |
$ 0.04 |
|
$ (1.46) |
|
$ 0.02 |
|
$ (1.47) |
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Continuing operations |
$ 0.09 |
|
$ (0.09) |
|
$ 0.10 |
|
$ (0.26) |
Discontinued operations |
$ (0.05) |
|
(1.37) |
|
(0.08) |
|
(1.21) |
Diluted Earnings (Loss) Per Share |
$ 0.04 |
|
$ (1.46) |
|
$ 0.02 |
|
$ (1.47) |
|
|
|
|
|
|
|
|
Common Shares Outstanding |
|
|
|
|
|
|
|
Basic |
45.9 |
|
46.8 |
|
46.1 |
|
46.7 |
Diluted |
46.3 |
|
46.8 |
|
46.6 |
|
46.7 |
AVANOS MEDICAL, INC. |
|||||||
Discontinued Operations Summary |
|||||||
(unaudited) |
|||||||
(in millions, except per share amounts) |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
$ 13.6 |
|
$ 30.4 |
|
$ 30.5 |
|
$ 62.8 |
Cost of products sold |
15.6 |
|
18.6 |
|
31.5 |
|
37.9 |
Gross Profit |
(2.0) |
|
11.8 |
|
(1.0) |
|
24.9 |
Research and development expenses |
— |
|
0.2 |
|
— |
|
0.6 |
Selling, general and other expenses |
— |
|
3.8 |
|
— |
|
7.7 |
Pretax loss on classification as discontinued operations |
— |
|
72.3 |
|
— |
|
72.3 |
Other expense, net |
1.4 |
|
0.1 |
|
4.3 |
|
0.2 |
Loss from discontinued operations before income taxes |
(3.4) |
|
(64.6) |
|
(5.3) |
|
(55.9) |
Income tax benefit (provision) from discontinued operations |
0.9 |
|
0.8 |
|
1.4 |
|
(0.6) |
(Loss) from discontinued operations, net of tax |
$ (2.5) |
|
$ (63.8) |
|
$ (3.9) |
|
$ (56.5) |
|
|
|
|
|
|
|
|
(Loss) Per Share |
|
|
|
|
|
|
|
Basic |
$ (0.05) |
|
$ (1.37) |
|
$ (0.08) |
|
$ (1.21) |
Diluted |
$ (0.05) |
|
$ (1.37) |
|
$ (0.08) |
|
$ (1.21) |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions) |
|||||||||||
|
|||||||||||
|
Gross Profit |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 95.6 |
|
$ (2.0) |
|
$ 93.6 |
|
$ 97.8 |
|
$ 11.8 |
|
$ 109.6 |
Acquisition and integration-related charges |
0.1 |
|
— |
|
0.1 |
|
— |
|
— |
|
— |
Restructuring and transformation charges |
0.3 |
|
— |
|
0.3 |
|
0.1 |
|
— |
|
0.1 |
Post-RH Divestiture transition charges |
0.4 |
|
— |
|
0.4 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
2.2 |
|
— |
|
2.2 |
|
— |
|
— |
|
— |
Intangibles amortization |
3.6 |
|
— |
|
3.6 |
|
3.6 |
|
— |
|
3.6 |
As adjusted non-GAAP |
$ 102.2 |
|
$ (2.0) |
|
$ 100.2 |
|
$ 101.5 |
|
$ 11.8 |
|
$ 113.3 |
Gross profit margin, as reported |
55.7 % |
|
(14.7) % |
|
50.5 % |
|
57.7 % |
|
38.8 % |
|
54.9 % |
Gross profit margin, as adjusted |
59.6 % |
|
(14.7) % |
|
54.1 % |
|
59.9 % |
|
38.8 % |
|
56.7 % |
|
Gross Profit |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 190.4 |
|
$ (1.0) |
|
$ 189.4 |
|
$ 189.2 |
|
$ 24.9 |
|
$ 214.1 |
Acquisition and integration-related charges |
0.1 |
|
— |
|
0.1 |
|
— |
|
— |
|
— |
Restructuring and transformation charges |
1.0 |
|
— |
|
1.0 |
|
0.1 |
|
— |
|
0.1 |
Post-RH Divestiture transition charges |
0.8 |
|
— |
|
0.8 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
2.2 |
|
— |
|
2.2 |
|
— |
|
— |
|
— |
Intangibles amortization |
7.0 |
|
— |
|
7.0 |
|
7.2 |
|
— |
|
7.2 |
As adjusted non-GAAP |
$ 201.5 |
|
$ (1.0) |
|
$ 200.5 |
|
$ 196.5 |
|
$ 24.9 |
|
$ 221.4 |
Gross profit margin, as reported |
56.4 % |
|
(3.3) % |
|
51.4 % |
|
57.6 % |
|
39.6 % |
|
54.7 % |
Gross profit margin, as adjusted |
59.7 % |
|
(3.3) % |
|
54.4 % |
|
59.8 % |
|
39.6 % |
|
56.6 % |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions) |
|||||||||||
|
|||||||||||
|
Operating Profit (Loss) |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 6.3 |
|
$ (3.4) |
|
$ 2.9 |
|
$ (2.1) |
|
$ 7.7 |
|
$ 5.6 |
Acquisition and integration-related charges |
2.2 |
|
— |
|
2.2 |
|
0.3 |
|
— |
|
0.3 |
Restructuring and transformation charges |
1.6 |
|
— |
|
1.6 |
|
9.8 |
|
— |
|
9.8 |
Post-RH Divestiture transition charges |
0.5 |
|
— |
|
0.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
3.4 |
|
— |
|
3.4 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
1.5 |
|
— |
|
1.5 |
|
0.9 |
|
— |
|
0.9 |
Intangibles amortization |
6.3 |
|
— |
|
6.3 |
|
5.8 |
|
0.3 |
|
6.1 |
As adjusted non-GAAP |
$ 21.8 |
|
$ (3.4) |
|
$ 18.4 |
|
$ 18.4 |
|
$ 80.3 |
|
$ 98.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit (Loss) |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 10.3 |
|
$ (5.3) |
|
$ 5.0 |
|
$ (8.2) |
|
$ 16.4 |
|
$ 8.2 |
Acquisition and integration-related charges |
2.5 |
|
— |
|
2.5 |
|
1.8 |
|
— |
|
1.8 |
Restructuring and transformation charges |
4.5 |
|
— |
|
4.5 |
|
18.7 |
|
— |
|
18.7 |
Post-RH Divestiture transition charges |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
4.1 |
|
— |
|
4.1 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
2.8 |
|
— |
|
2.8 |
|
2.0 |
|
— |
|
2.0 |
Intangibles amortization |
12.4 |
|
— |
|
12.4 |
|
11.6 |
|
0.8 |
|
12.4 |
As adjusted non-GAAP |
$ 38.1 |
|
$ (5.3) |
|
$ 32.8 |
|
$ 29.6 |
|
$ 89.5 |
|
$ 119.1 |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions) |
|||||||||||
|
|||||||||||
|
Income (Loss) Before Taxes |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 6.2 |
|
$ (3.4) |
|
$ 2.8 |
|
$ (5.1) |
|
$ (64.6) |
|
$ (69.7) |
Acquisition and integration-related charges |
2.2 |
|
— |
|
2.2 |
|
0.3 |
|
— |
|
0.3 |
Restructuring and transformation charges |
1.6 |
|
— |
|
1.6 |
|
9.8 |
|
— |
|
9.8 |
Post-RH Divestiture transition charges |
0.5 |
|
— |
|
0.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
3.4 |
|
— |
|
3.4 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
1.5 |
|
— |
|
1.5 |
|
0.9 |
|
— |
|
0.9 |
Intangibles amortization |
6.3 |
|
— |
|
6.3 |
|
5.8 |
|
0.3 |
|
6.1 |
As adjusted non-GAAP |
$ 21.7 |
|
$ (3.4) |
|
$ 18.3 |
|
$ 15.4 |
|
$ 8.0 |
|
$ 23.4 |
|
Income (Loss) Before Taxes |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 7.7 |
|
$ (5.3) |
|
$ 2.4 |
|
$ (14.2) |
|
$ (55.9) |
|
$ (70.1) |
Acquisition and integration-related charges |
2.5 |
|
— |
|
2.5 |
|
1.8 |
|
— |
|
1.8 |
Restructuring and transformation charges |
4.5 |
|
— |
|
4.5 |
|
18.7 |
|
— |
|
18.7 |
Post-RH Divestiture transition charges |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
4.1 |
|
— |
|
4.1 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
2.8 |
|
— |
|
2.8 |
|
2.0 |
|
— |
|
2.0 |
Intangibles amortization |
12.4 |
|
— |
|
12.4 |
|
11.6 |
|
0.8 |
|
12.4 |
As adjusted non-GAAP |
$ 35.5 |
|
$ (5.3) |
|
$ 30.2 |
|
$ 23.6 |
|
$ 17.2 |
|
$ 40.8 |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions) |
|||||||||||
|
|||||||||||
|
Tax (Provision) Benefit |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ (1.9) |
|
$ 0.9 |
|
$ (1.0) |
|
$ 0.8 |
|
$ 0.8 |
|
$ 1.6 |
Tax effects of adjusting items |
(4.0) |
|
— |
|
(4.0) |
|
(5.0) |
|
(2.9) |
|
(7.9) |
As adjusted non-GAAP |
$ (5.9) |
|
$ 0.9 |
|
$ (5.0) |
|
$ (4.2) |
|
$ (2.1) |
|
$ (6.3) |
Effective tax rate, as reported |
30.6 % |
|
26.5 % |
|
35.7 % |
|
15.7 % |
|
1.2 % |
|
2.3 % |
Effective tax rate, as adjusted |
27.2 % |
|
26.5 % |
|
27.3 % |
|
27.0 % |
|
26.3 % |
|
26.8 % |
|
Tax (Provision) Benefit |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ (2.9) |
|
$ 1.4 |
|
$ (1.5) |
|
$ 2.1 |
|
$ (0.6) |
|
$ 1.5 |
Tax effects of adjusting items |
(6.7) |
|
— |
|
(6.7) |
|
(8.5) |
|
(4.0) |
|
(12.5) |
As adjusted non-GAAP |
$ (9.6) |
|
$ 1.4 |
|
$ (8.2) |
|
$ (6.4) |
|
$ (4.6) |
|
$ (11.0) |
Effective tax rate, as reported |
37.7 % |
|
26.4 % |
|
(62.5) % |
|
14.8 % |
|
(1.1) % |
|
(2.1) % |
Effective tax rate, as adjusted |
27.0 % |
|
26.4 % |
|
27.2 % |
|
27.0 % |
|
27.0 % |
|
27.0 % |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions except per share amounts) |
|||||||||||
|
|||||||||||
|
Net Income (Loss) |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 4.3 |
|
$ (2.5) |
|
$ 1.8 |
|
$ (4.3) |
|
$ (63.8) |
|
$ (68.1) |
Acquisition and integration-related charges |
2.2 |
|
— |
|
2.2 |
|
0.3 |
|
— |
|
0.3 |
Restructuring and transformation charges |
1.6 |
|
— |
|
1.6 |
|
9.8 |
|
— |
|
9.8 |
Post-RH Divestiture transition charges |
0.5 |
|
— |
|
0.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
3.4 |
|
— |
|
3.4 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
1.5 |
|
— |
|
1.5 |
|
0.9 |
|
— |
|
0.9 |
Intangibles amortization |
6.3 |
|
— |
|
6.3 |
|
5.8 |
|
0.3 |
|
6.1 |
Tax effects of adjusting items |
(4.0) |
|
— |
|
(4.0) |
|
(5.0) |
|
(2.9) |
|
(7.9) |
As adjusted non-GAAP |
$ 15.8 |
|
$ (2.5) |
|
$ 13.3 |
|
$ 11.2 |
|
$ 5.9 |
|
$ 17.1 |
Diluted earnings (loss) per share, as reported |
$ 0.09 |
|
$ (0.05) |
|
$ 0.04 |
|
$ (0.09) |
|
$ (1.37) |
|
$ (1.46) |
Diluted earnings (loss) per share, as adjusted |
$ 0.34 |
|
$ (0.05) |
|
$ 0.29 |
|
$ 0.24 |
|
$ 0.13 |
|
$ 0.37 |
|
Net Income (Loss) |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 4.8 |
|
$ (3.9) |
|
$ 0.9 |
|
$ (12.1) |
|
$ (56.5) |
|
$ (68.6) |
Acquisition and integration-related charges |
2.5 |
|
— |
|
2.5 |
|
1.8 |
|
— |
|
1.8 |
Restructuring and transformation charges |
4.5 |
|
— |
|
4.5 |
|
18.7 |
|
— |
|
18.7 |
Post-RH Divestiture transition charges |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
4.1 |
|
— |
|
4.1 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
2.8 |
|
— |
|
2.8 |
|
2.0 |
|
— |
|
2.0 |
Intangibles amortization |
12.4 |
|
— |
|
12.4 |
|
11.6 |
|
0.8 |
|
12.4 |
Tax effects of adjusting items |
(6.7) |
|
— |
|
(6.7) |
|
(8.5) |
|
(4.0) |
|
(12.5) |
As adjusted non-GAAP |
$ 25.9 |
|
$ (3.9) |
|
$ 22.0 |
|
$ 17.2 |
|
$ 12.6 |
|
$ 29.8 |
Diluted earnings (loss) per share, as reported |
$ 0.10 |
|
$ (0.08) |
|
$ 0.03 |
|
$ (0.26) |
|
$ (1.21) |
|
$ (1.47) |
Diluted earnings (loss) per share, as adjusted |
$ 0.56 |
|
$ (0.08) |
|
$ 0.48 |
|
$ 0.37 |
|
$ 0.27 |
|
$ 0.64 |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions except per share amounts) |
|||||||||||
|
|||||||||||
|
Selling, General and Administrative Expenses |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 80.9 |
|
$ — |
|
$ 80.9 |
|
$ 93.0 |
|
$ 3.8 |
|
$ 96.8 |
Acquisition and integration-related charges |
(0.3) |
|
— |
|
(0.3) |
|
(0.3) |
|
— |
|
(0.3) |
Restructuring and transformation charges |
(1.3) |
|
— |
|
(1.3) |
|
(9.5) |
|
— |
|
(9.5) |
Post-RH Divestiture transition charges |
(0.1) |
|
— |
|
(0.1) |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
(1.2) |
|
— |
|
(1.2) |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
(3.7) |
|
— |
|
(3.7) |
EU MDR Compliance |
(1.5) |
|
— |
|
(1.5) |
|
(0.9) |
|
— |
|
(0.9) |
Intangibles amortization |
(2.7) |
|
— |
|
(2.7) |
|
(2.2) |
|
(0.3) |
|
(2.5) |
As adjusted non-GAAP |
$ 73.8 |
|
$ — |
|
$ 73.8 |
|
$ 76.4 |
|
$ 3.5 |
|
$ 79.9 |
SG&A as a percentage of revenue, as reported |
47.1 % |
|
— % |
|
43.7 % |
|
54.9 % |
|
12.5 % |
|
48.4 % |
SG&A as a percentage of revenue, as adjusted |
43.0 % |
|
— % |
|
39.8 % |
|
45.1 % |
|
11.5 % |
|
40.0 % |
|
Selling, General and Administrative Expenses |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
As reported |
$ 164.5 |
|
$ — |
|
$ 164.5 |
|
$ 181.8 |
|
$ 7.7 |
|
$ 189.5 |
Acquisition and integration-related charges |
(0.6) |
|
— |
|
(0.6) |
|
(0.4) |
|
— |
|
(0.4) |
Restructuring and transformation charges |
(3.4) |
|
— |
|
(3.4) |
|
(18.4) |
|
— |
|
(18.4) |
Post-RH Divestiture transition charges |
(0.5) |
|
— |
|
(0.5) |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
(1.9) |
|
— |
|
(1.9) |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
(3.7) |
|
— |
|
(3.7) |
EU MDR Compliance |
(2.8) |
|
— |
|
(2.8) |
|
(2.0) |
|
— |
|
(2.0) |
Intangibles amortization |
(5.4) |
|
— |
|
(5.4) |
|
(4.4) |
|
(0.8) |
|
(5.2) |
As adjusted non-GAAP |
$ 149.9 |
|
$ — |
|
$ 149.9 |
|
$ 152.9 |
|
$ 6.9 |
|
$ 159.8 |
SG&A as a percentage of revenue, as reported |
48.7 % |
|
— % |
|
44.7 % |
|
55.3 % |
|
12.3 % |
|
48.4 % |
SG&A as a percentage of revenue, as adjusted |
44.4 % |
|
— % |
|
40.7 % |
|
46.5 % |
|
11.0 % |
|
40.8 % |
AVANOS MEDICAL, INC. |
|||||||||||
NON-GAAP RECONCILIATIONS |
|||||||||||
(unaudited) |
|||||||||||
(in millions) |
|||||||||||
|
|||||||||||
|
EBITDA |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
Net income (loss) |
$ 4.3 |
|
$ (2.5) |
|
$ 1.8 |
|
$ (4.3) |
|
$ (63.8) |
|
$ (68.1) |
Interest expense, net |
0.1 |
|
— |
|
0.1 |
|
3.0 |
|
— |
|
3.0 |
Income tax provision (benefit) |
1.9 |
|
(0.9) |
|
1.0 |
|
(0.8) |
|
(0.8) |
|
(1.6) |
Depreciation |
5.0 |
|
— |
|
5.0 |
|
4.5 |
|
0.9 |
|
5.4 |
Amortization |
6.3 |
|
— |
|
6.3 |
|
5.8 |
|
0.3 |
|
6.1 |
EBITDA |
17.6 |
|
(3.4) |
|
14.2 |
|
8.2 |
|
(63.4) |
|
(55.2) |
Acquisition and integration-related charges |
2.2 |
|
— |
|
2.2 |
|
0.3 |
|
— |
|
0.3 |
Restructuring and transformation charges |
1.6 |
|
— |
|
1.6 |
|
9.8 |
|
— |
|
9.8 |
Post-RH Divestiture transition charges |
0.5 |
|
— |
|
0.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
3.4 |
|
— |
|
3.4 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
1.5 |
|
— |
|
1.5 |
|
0.9 |
|
— |
|
0.9 |
Adjusted EBITDA |
$ 26.8 |
|
$ (3.4) |
|
$ 23.4 |
|
$ 22.9 |
|
$ 8.9 |
|
$ 31.8 |
|
EBITDA |
||||||||||
|
Six Months Ended |
|
Six Months Ended |
||||||||
|
Continuing
|
|
Discontinued
|
|
Total |
|
Continuing
|
|
Discontinued
|
|
Total |
Net income (loss) |
$ 4.8 |
|
$ (3.9) |
|
$ 0.9 |
|
$ (12.1) |
|
$ (56.5) |
|
$ (68.6) |
Interest expense, net |
2.6 |
|
— |
|
2.6 |
|
6.0 |
|
— |
|
6.0 |
Income tax provision (benefit) |
2.9 |
|
(1.4) |
|
1.5 |
|
(2.1) |
|
0.6 |
|
(1.5) |
Depreciation |
10.3 |
|
— |
|
10.3 |
|
9.4 |
|
1.8 |
|
11.2 |
Amortization |
12.4 |
|
— |
|
12.4 |
|
11.6 |
|
0.8 |
|
12.4 |
EBITDA |
33.0 |
|
(5.3) |
|
27.7 |
|
12.8 |
|
(53.3) |
|
(40.5) |
Acquisition and integration-related charges |
2.5 |
|
— |
|
2.5 |
|
1.8 |
|
— |
|
1.8 |
Restructuring and transformation charges |
4.5 |
|
— |
|
4.5 |
|
18.7 |
|
— |
|
18.7 |
Post-RH Divestiture transition charges |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Post-RH Divestiture restructuring |
4.1 |
|
— |
|
4.1 |
|
— |
|
— |
|
— |
Divestiture related |
— |
|
— |
|
— |
|
3.7 |
|
— |
|
3.7 |
Estimated loss on Divestiture |
— |
|
— |
|
— |
|
— |
|
72.3 |
|
72.3 |
EU MDR Compliance |
2.8 |
|
— |
|
2.8 |
|
2.0 |
|
— |
|
2.0 |
Adjusted EBITDA |
$ 48.4 |
|
$ (5.3) |
|
$ 43.1 |
|
$ 39.0 |
|
$ 19.0 |
|
$ 58.0 |
AVANOS MEDICAL, INC. |
|||||||
NON-GAAP RECONCILIATIONS |
|||||||
(unaudited) |
|||||||
(in millions except per share amounts) |
|||||||
|
|||||||
|
Free Cash Flow |
||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Cash provided by (used in) operating activities |
$ 27.8 |
|
$ (2.6) |
|
$ 19.8 |
|
$ (9.4) |
Capital expenditures |
(5.9) |
|
(4.0) |
|
(10.0) |
|
(8.0) |
Free Cash Flow |
$ 21.9 |
|
$ (6.6) |
|
$ 9.8 |
|
$ (17.4) |
2024 OUTLOOK |
|||
|
|||
|
|
||
Diluted earnings per share (GAAP) |
$ 0.63 |
to |
$ 0.87 |
Intangibles amortization |
0.37 |
to |
0.34 |
Restructuring and transformation charges |
0.08 |
to |
0.06 |
Post RH-Divestiture transition charges |
0.12 |
to |
0.10 |
Other |
0.10 |
to |
0.08 |
Adjusted diluted earnings per share (non-GAAP) |
$ 1.30 |
to |
$ 1.45 |
AVANOS MEDICAL, INC. |
|||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(unaudited) |
|||
(in millions) |
|||
|
|||
|
|
|
|
ASSETS |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ 92.2 |
|
$ 87.7 |
Accounts receivable, net |
123.0 |
|
142.8 |
Inventories |
163.9 |
|
163.2 |
Prepaid and other current assets |
22.3 |
|
28.8 |
Assets held for sale |
72.7 |
|
64.5 |
Total Current Assets |
474.1 |
|
487.0 |
Property, Plant and Equipment, net |
110.7 |
|
117.2 |
Operating Lease Right-of-Use Assets |
29.4 |
|
26.8 |
|
794.4 |
|
796.1 |
Other Intangible Assets, net |
226.2 |
|
239.5 |
Deferred Tax Assets |
6.3 |
|
6.5 |
Other Assets |
16.7 |
|
19.3 |
TOTAL ASSETS |
$ 1,657.8 |
|
$ 1,692.4 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current Liabilities |
|
|
|
Current portion of long-term debt |
$ 10.2 |
|
$ 8.6 |
Current portion of operating lease liabilities |
14.4 |
|
12.8 |
Trade accounts payable |
51.4 |
|
56.3 |
Accrued expenses |
79.5 |
|
93.2 |
Liabilities held for sale |
52.7 |
|
63.7 |
Total Current Liabilities |
208.2 |
|
234.6 |
Long-Term Debt |
164.9 |
|
159.4 |
Operating Lease Liabilities |
28.8 |
|
28.3 |
Deferred Tax Liabilities |
23.4 |
|
23.8 |
Other Long-Term Liabilities |
10.5 |
|
10.0 |
TOTAL LIABILITIES |
435.8 |
|
456.1 |
Stockholders' Equity |
1,222.0 |
|
1,236.3 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,657.8 |
|
$ 1,692.4 |
AVANOS MEDICAL, INC. |
|||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS |
|||||||
(unaudited) |
|||||||
(in millions) |
|||||||
|
|||||||
|
Three Months Ended |
|
Six Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Operating Activities |
|
|
|
|
|
|
|
Net income (loss) |
$ 1.8 |
|
$ (68.1) |
|
$ 0.9 |
|
$ (68.6) |
Depreciation and amortization |
11.3 |
|
11.5 |
|
22.7 |
|
23.6 |
|
— |
|
59.1 |
|
— |
|
59.1 |
Loss on asset dispositions |
— |
|
— |
|
0.3 |
|
— |
Changes in operating assets and liabilities, net of acquisition |
8.3 |
|
(13.4) |
|
(13.7) |
|
(32.7) |
Deferred income taxes and other |
6.4 |
|
8.3 |
|
9.6 |
|
9.2 |
Cash Provided by (Used in) Operating Activities |
27.8 |
|
(2.6) |
|
19.8 |
|
(9.4) |
Investing Activities |
|
|
|
|
|
|
|
Capital expenditures |
(5.9) |
|
(4.0) |
|
(10.0) |
|
(8.0) |
Proceeds from RH Divestiture post-closing settlement |
— |
|
— |
|
2.1 |
|
— |
Acquisition of assets and investments in businesses |
— |
|
(2.5) |
|
— |
|
(2.5) |
Cash Used in Investing Activities |
(5.9) |
|
(6.5) |
|
(7.9) |
|
(10.5) |
Financing Activities |
|
|
|
|
|
|
|
Secured debt repayments |
(1.5) |
|
(1.5) |
|
(3.1) |
|
(3.1) |
Revolving credit facility proceeds |
— |
|
— |
|
20.0 |
|
— |
Revolving credit facility repayments |
— |
|
— |
|
(10.0) |
|
(20.0) |
Purchase of treasury stock |
(3.5) |
|
(2.6) |
|
(12.6) |
|
(3.7) |
Proceeds from the exercise of stock options |
— |
|
— |
|
0.5 |
|
0.6 |
Payment of contingent consideration liabilities |
— |
|
— |
|
(0.5) |
|
— |
Cash Used in Financing Activities |
(5.0) |
|
(4.1) |
|
(5.7) |
|
(26.2) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(0.5) |
|
(0.7) |
|
(1.7) |
|
0.2 |
Increase (Decrease) in Cash and Cash Equivalents |
16.4 |
|
(13.9) |
|
4.5 |
|
(45.9) |
Cash and Cash Equivalents - Beginning of Period |
75.8 |
|
95.7 |
|
87.7 |
|
127.7 |
Cash and Cash Equivalents - End of Period |
$ 92.2 |
|
$ 81.8 |
|
$ 92.2 |
|
$ 81.8 |
AVANOS MEDICAL, INC. |
||||||||||||
SELECTED BUSINESS AND PRODUCTS DATA |
||||||||||||
(unaudited) |
||||||||||||
(in millions) |
||||||||||||
|
||||||||||||
|
Three Months Ended |
|
|
|
|
Six Months Ended |
|
|
||||
|
2024 |
|
2023 |
|
Change |
|
|
2024 |
|
2023 |
|
Change |
|
$ 97.7 |
|
$ 93.0 |
|
5.1 % |
|
|
$ 192.4 |
|
$ 181.8 |
|
5.8 % |
Pain Management and Recovery: |
|
|
|
|
|
|
|
|
|
|
|
|
Surgical pain and recovery |
$ 32.3 |
|
$ 34.8 |
|
(7.2) % |
|
|
$ 63.5 |
|
$ 69.5 |
|
(8.6) % |
Interventional pain |
41.7 |
|
41.6 |
|
0.2 % |
|
|
81.9 |
|
77.4 |
|
5.8 % |
Total Pain Management and Recovery |
74.0 |
|
76.4 |
|
(3.1) % |
|
|
145.4 |
|
146.9 |
|
(1.0) % |
Total |
$ 171.7 |
|
$ 169.4 |
|
1.4 % |
|
|
$ 337.8 |
|
$ 328.7 |
|
2.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Volume |
|
|
Pricing/Mix |
|
Currency |
|
|
Net sales - percentage change |
QTD |
|
1.4 % |
|
3.5 % |
|
|
(1.8) % |
|
(0.3) % |
|
|
Net sales - percentage change |
YTD |
|
2.8 % |
|
4.3 % |
|
|
(1.4) % |
|
(0.1) % |
|
|
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SOURCE