ARLINGTON, Tenn.–(BUSINESS WIRE)–Wright Medical Group, Inc. (NASDAQ: WMGI – News), a global orthopaedic medical device company and a leading provider of surgical solutions for the foot and ankle market, today reported financial results for its fourth quarter ended December 31, 2009.
Net sales totaled $129.9 million during the fourth quarter ended December 31, 2009, representing an 8% increase over net sales of $120.1 million during the fourth quarter of 2008, exceeding the previously communicated outlook range of $122 to $127 million. Excluding the impact of foreign currency, net sales increased 5% during the fourth quarter.
For the fourth quarter of 2009, the Company recorded net income of $2.2 million, or $0.06 per diluted share, compared to net loss for the fourth quarter of 2008 of $2.7 million, or ($0.07) per diluted share. Net income for the fourth quarter of 2009 included the after-tax effects of approximately $5.6 million of charges to write down a significant international receivable, $3.0 million of non-cash stock-based compensation expense, $2.6 million of non-cash charges to write-off cumulative translation adjustment (CTA) balances associated with the substantially complete liquidation of certain foreign subsidiaries, $2.6 million of restructuring charges, and $186,000 of expenses related to the ongoing U.S. governmental inquiries. Net loss for the fourth quarter of 2008 included the after-tax effects of approximately $3.0 million of non-cash stock-based compensation expense, $2.9 million of expenses related to the ongoing U.S. governmental inquiries, and $1.1 million of restructuring charges, as well as a $11.2 million tax provision associated with the write-off of French net operating losses (NOLs).
Our fourth quarter net income, as adjusted, totaled $10.8 million in 2009 compared to $12.6 million in 2008, while diluted earnings per share, as adjusted, totaled $0.27 and $0.31 for the fourth quarter of 2009 and 2008, respectively. A reconciliation of U.S. GAAP to “as adjusted” results is included in the attached financial tables.
Gary D. Henley, President and Chief Executive Officer commented, “We are pleased with the improvements we made to the underlying capabilities of our business in 2009 including increasing the size of our focused sales force, expanding our product portfolios and improving our cash flow capabilities. These improvements leave us well positioned for growth in 2010 and beyond.”
Mr. Henley continued, “We are also pleased with our fourth quarter performance, as better than anticipated sales and a lower than expected effective tax rate enabled us to make strategic investments in our business while still exceeding our previously communicated earnings guidance. Additionally, continued excellent working capital management produced $10.8 million of free cash flow for the quarter, and a record $34.6 million for the full year 2009.”
Outlook
The Company’s earnings target, as communicated in the guidance range stated below, excludes the effect of possible future acquisitions, other material future business developments, non-cash stock-based compensation expense, restructuring charges, and costs associated with the Company’s ongoing U.S. governmental inquiries.
The Company anticipates full year 2010 net sales to be in the range of $515 million to $530 million, which represents annualized as-reported and constant-currency growth expectations of approximately 6% to 9%. The Company anticipates full year 2010 as-adjusted earnings per share to be in the range of $0.88 to $0.94 per diluted share, reflecting growth of 4% to 11%.
As noted above, the Company’s earnings target excludes the impact of non-cash stock-based compensation charges as well as the impact of restructuring charges. While the amount of the non-cash stock-based compensation charges will vary depending upon a number of factors, many of which are not within the Company’s control, the Company currently estimates that the after-tax impact of those expenses will range from $0.20 to $0.24 per diluted share for the full year 2010. With regard to restructuring charges, the Company has adjusted the top-end of its estimate of total pre-tax charges related to the closing of the Toulon facilities to a range of approximately $28 million to $30 million, of which $27 million have been incurred to date. Additionally, we continue to anticipate incurring pre-tax restructuring charges related to our Creteil, France operations to total $3 million to $4 million, of which $2.1 million of these charges have been incurred to date, the remainder of which we expect to record in the first half of 2010.
The Company’s anticipated ranges for net sales, adjusted earnings per share, stock-based compensation charges and restructuring charges are forward-looking statements. They are subject to various risks and uncertainties that could cause the Company’s actual results to differ materially from the anticipated targets. The anticipated targets are not predictions of the Company’s actual performance. See the cautionary information about forward-looking statements in the “Safe-Harbor Statement” section of this press release.
