Natus Medical Reports Record Fourth Quarter and Full Year 2013 Earnings

  • Reports record non-GAAP Q4 2013 EPS of $0.37
  • Reports record non-GAAP Fiscal 2013 EPS of $1.03
  • Achieves record 19.1% non-GAAP Operating Profit Margin in Fourth Quarter
  • Increases full year 2014 non-GAAP EPS guidance

Business Wire

SAN CARLOS, Calif.--(BUSINESS WIRE)--

Natus Medical Incorporated (BABY) today announced financial results for the fourth quarter and full year ended December 31, 2013.

For the fourth quarter ended December 31, 2013, the Company reported revenue of $90.6 million, compared to $90.8 million in the fourth quarter of the 2012. Included in the Company’s 2012 fourth quarter revenues were $2.2 million of one-time shipments of proprietary product to CareFusion. Natus agreed to manufacture this product for CareFusion through a supply agreement that was part of the purchase of Nicolet. Net income for the quarter was a record $9.1 million, or $0.29 per diluted share compared with net income of $5.0 million, or $0.17 per diluted share, in the fourth quarter of 2012.

For the twelve months ended December 31, 2013, the Company reported revenue of $344.1 million, compared to $292.3 million reported in 2012. Net income was a record $22.9 million, or $0.74 per diluted share, compared with a net income of $3.9 million, or $0.13 per diluted share, for the twelve months ended December 31, 2012.

The Company reported record non-GAAP earnings per share of $0.37 per diluted share for the fourth quarter 2013, up 23% from the $0.30 per diluted share reported for the fourth quarter of 2012, and $1.03 per diluted share for the twelve months ended December 31, 2013, up 61% from the $0.64 per diluted share reported for the same period in the previous year.

The Company’s cash and cash equivalents increased $12 million to $56.1 million during the quarter while total debt was reduced by $10 million.

“I am very pleased to report our fourth quarter results. We exceeded our revenue and earnings guidance and achieved record profitability. Our non-GAAP operating profit margin of 19.1% was extremely satisfying. As a result, we have established a new long term annual non-GAAP operating profit margin goal of 20%,” said Jim Hawkins, President and Chief Executive Officer of the Company. “Our international revenues were higher than expected during the quarter with solid growth in the Pacific Rim and improving sales in Europe, while our domestic business remained stable.” continued Mr. Hawkins.

“The record 2013 results were highlighted by non-GAAP earnings growth of 61% to $1.03. Other major achievements include significantly improving operating margins, the successful integration of the Nicolet and Grass acquisitions and the reorganization of the Company into two business units – Neurology and Newborn Care,” Hawkins added. “Looking forward to 2014, we believe we are well positioned to continue to achieve solid earnings growth and increased cash generation.”

Financial Guidance

As previously announced, for the first quarter of 2014, the Company expects to report revenue of $82 million to $86 million and non-GAAP earnings per share of $0.21 to $0.24, an increase of 40% to 60% over the first quarter of 2013 non-GAAP earnings per share of $0.15.

The Company updated its non-GAAP earnings guidance for the full year 2014 and now expects to report non-GAAP earnings per share of $1.14 to $1.18, an increase from previous guidance of $1.12 to $1.16. Full year 2014 revenue guidance remained unchanged at $345 million to $350 million.

Use of Non-GAAP Financial Measures

The Company's non-GAAP results exclude amortization expense associated with certain acquisition-related intangibles, restructuring charges, and direct costs of acquisitions. The Company’s non-GAAP earnings guidance includes the impact of expensing employee share based compensation. All non-GAAP earnings per share amounts are on a diluted basis. A reconciliation between non-GAAP and GAAP financial measures is included on page 6 of this press release.

The Company believes that the presentation of results excluding these charges provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results. Therefore, the Company believes these non-GAAP financial measures facilitate comparison of operating results across reporting periods.

The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated.

Conference Call

Natus has scheduled an investment-community conference call to discuss this announcement beginning at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) today, January 29, 2014. Individuals interested in listening to the conference call may do so by dialing 1-866-318-8616 for domestic callers, or 1-617-399-5135 for international callers, and entering reservation code 68307031. A telephone replay will be available for 48 hours following the conclusion of the call by dialing 1-888-286-8010 for domestic callers, or 1-617-801-6888 for international callers, and entering reservation code 18802636.

The conference call also will be available real-time via the Internet at http://investor.natus.com, and a recording of the call will be available on the Company’s Web site for 90 days following the completion of the call.

About Natus Medical Incorporated

Natus is a leading provider of healthcare products used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and balance and mobility disorders.

Additional information about Natus Medical can be found at www.natus.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, particularly statements regarding the expectations, beliefs, plans, intentions and strategies of Natus. These forward-looking statements include statements regarding the long term goal of 20% non-GAAP operating margins to, revenue and non-GAAP profitability in the fourth quarter and full year 2014, the impact of amortization expense associated with acquisition-related intangible assets and any expected restructuring charges. These statements relate to current estimates and assumptions of our management as of the date of this press release, and future events or Natus' future financial performance or results, and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are only predictions and the actual events or results may differ materially. Natus cannot provide any assurance that its future results or the results implied by the forward-looking statements will meet expectations. Our future results could differ materially due to a number of factors, including the effects of competition, the demand for our products and services, the impact of adverse global economic conditions on our target markets, our ability to expand our sales in international markets, our ability to maintain current sales levels in a mature domestic market, our ability to control costs, risks associated with bringing new products to market and integrating acquired businesses, and our ability to fulfill product orders on a timely basis. Natus disclaims any obligation to update information contained in any forward looking statement.

More information about potential risk factors that could affect the business and financial results of Natus is included in Natus' annual report on Form 10-K for the year ended December 31, 2012, and its quarterly reports on Form 10-Q, and in other reports filed from time to time by Natus with the U.S. Securities and Exchange Commission.

NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
     
Quarter Ended Year to Date

Dec. 31,

2013

Dec.31,

2012

Dec. 31,

2013

Dec.31,

2012

 
Revenue $ 90,636 $ 90,821 $ 344,112 $ 292,280
Cost of revenue   37,563     39,575     142,081     128,812  
Gross profit   53,073     51,246     202,031     163,468  
58.6 % 56.4 % 58.7 % 55.9 %
Operating expenses:
Marketing and selling 22,770 22,592 87,151 77,285
Research and development 7,699 8,122 32,073 29,966
General and administrative   8,480     11,757     48,528     50,963  
Total operating expenses   38,949     42,471     167,752     158,214  
Income from operations 14,124 8,775 34,279 5,254
Other income/(expense), net   (1,279 )   (1,094 )   (2,716 )   (835 )
Income before tax 12,845 7,681 31,563 4,419
Provision for income tax expense   3,716     2,664     8,685     536  
Net income $ 9,129   $ 5,017   $ 22,878   $ 3,883  
Earnings per share:
Basic $ 0.30 $ 0.17 $ 0.76 $ 0.13
Diluted $ 0.29 $ 0.17 $ 0.74 $ 0.13
 
Weighted-average shares:
Basic 30,495 29,282 29,993 29,031
Diluted 31,458 29,974 30,821 29,837
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP ADJUSTMENTS (UNAUDITED)
(in thousands, except per share amounts)
     
Quarter Ended Year to Date

Dec. 31,

2013

Dec.31,

2012

Dec. 31,

2013

Dec.31,

2012

GAAP based results:
 
Income before provision for income tax $ 12,845 $ 7,681 $ 31,563 $ 4,419
 
Non-GAAP adjustments:
 
Amortization of acquired intangibles:
Cost of revenue 611 740 2,972 2,503
Marketing and selling 621 542 2,642 2,005
Research and development 661 338 1,628 1,351
 
Intangible Asset Impairment Charges (M&S) 1,500 560 1,500 560
Restructuring charges (G&A) (198) 716 1,822 9,627
Direct costs of acquisitions (G&A) - 80 1,774 2,858
Accelerate ERP system depreciation (G&A) - - - 902
Backlog FMV Adjustments (Marketing & Sales) - - - 720
Inventory FMV adjustment (COGS)   -   342   -   968
Non-GAAP income before
provision for income tax 16,040 10,999 43,901 25,913
 
Income tax expense, as adjusted   4,369   2,142   12,204   6,910
 
Non-GAAP net income $ 11,671 $ 8,857 $ 31,697 $ 19,003
Non-GAAP earnings per share:
Basic $ 0.38 $ 0.30 $ 1.06 $ 0.65
Diluted $ 0.37 $ 0.30 $ 1.03 $ 0.64
 
Weighted-average shares
used to compute
Basic non-GAAP earnings per share 30,495 29,282 29,993 29,031
Diluted non-GAAP earnings per share 31,458 29,974 30,821 29,837
 
GAAP Gross profit 53,073 51,246 202,031 163,468
Amortization of intangibles 611 740 2,972 2,503
Backlog FMV adjustment   -   342   -   968
Non-GAAP Gross Profit 53,684 52,328 205,003 166,939
Non-GAAP Gross Margin 59.2% 57.2% 59.6% 56.8%
 
GAAP Operating profit 14,124 8,775 34,279 5,254
Amortization of intangibles 3,393 2,180 8,742 6,419
Restructuring and other charges   (198)   1,138   3,596   15,075
Non-GAAP Operating profit 17,319 12,093 46,617 26,748
Non-GAAP Operating margin 19.1% 13.3% 13.5% 9.2%
NATUS MEDICAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
   
December 31, December 31,
2013 2012
ASSETS Q4-13 Q4-12
 
Current assets:
Cash and cash equivalents $ 56,106 $ 23,057
Accounts receivable, net 82,110 89,960
Inventories 37,685 40,756
Other Current Assets   20,822   15,098
Total current assets 196,723 168,871
 
Property and equipment, net 23,295 26,512
Goodwill and Intangible assets 196,058 188,642
Other assets   10,324   7,828
Total assets $ 426,400 $ 391,853
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 29,777 $ 32,537
Current debt 10,517 19,826
Accrued liabilities 26,692 32,938
Deferred revenue   12,946   13,305
Total current liabilities 79,932 98,606
 
Long-term liabilities:
Long-term debt, net 27,500 13,034
Other long-term liabilities   12,549   11,461
Total liabilities   119,981   123,101
Total stockholders’ equity   306,419   268,752
Total liabilities and stockholders’ equity $ 426,400 $ 391,853

Contact:
Natus Medical Incorporated
Jonathan A. Kennedy, 650-802-0400
Sr. Vice President and Chief Financial Officer
InvestorRelations@Natus.com

Rates

View Comments