Wright Medical Group, Inc. Reports Results for Second Quarter

ARLINGTON, Tenn., Aug 02, 2010 (BUSINESS WIRE) — Wright Medical Group, Inc. (WMGI 14.96, -0.18, -1.19%) , 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 second quarter ended June 30, 2010.

Net sales totaled $127.7 million during the second quarter ended June 30, 2010, representing a 7% increase over net sales of $118.9 million during the second quarter of 2009. Foreign currency did not have a significant impact on sales results for the second quarter of 2010 as compared to the second quarter of 2009.

Net income for the second quarter of 2010 totaled $4.8 million or $0.13 per diluted share, compared to net income of $2.4 million or $0.06 per diluted share in the second quarter of 2009.

Net income for the second quarter of 2010 included the after-tax effects of approximately $4.1 million of non-cash stock-based compensation expense, $606,000 of expenses related to the ongoing U.S. governmental inquiry, and $461,000 of restructuring charges. Net income for the second quarter of 2009 included the after-tax effects of approximately $4.1 million of non-cash stock-based compensation expense, $2.0 million of expenses related to the ongoing U.S. governmental inquiries, and $794,000 of restructuring charges related to the previously announced closure of the Company’s Toulon, France operations.

Second quarter net income, as adjusted, increased 17% to $8.3 million in 2010 from $7.1 million in 2009, while diluted earnings per share, as adjusted, increased to $0.21 in the second quarter of 2010 from $0.18 in the second quarter of 2009. 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 very pleased with the performance of the business this quarter, led by strong revenue growth in our global extremities and international hip and knee businesses. Additionally, we continued to execute well operationally, evidenced by 100 basis points of operating margin expansion and $7.2 million of free cash flow for the quarter.”

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 inquiry.

The Company is reiterating its previously-communicated as-adjusted earnings per share outlook, representing a target range for the full year 2010 of $0.88 to $0.94 per diluted share, reflecting growth of 4% to 11%, as well as its 2010 net sales outlook of $515 million to $530 million, representing growth of 6% to 9%.

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 expects total pre-tax charges related to the closing of the Toulon facilities to be in a range of approximately $28 million to $30 million, of which $27.4 million have been incurred to date. We have concluded our restructuring efforts in Creteil, France, incurring a cumulative total of $2.8 million of expenses.

The Company’s anticipated targets 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.

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Tags: Gary D. Henley, wright medical

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