Jul 13 2010
Biomet, Inc. announced today financial results for its fourth quarter and fiscal year ended May 31, 2010. The Company announced preliminary net sales results for the fiscal fourth quarter and twelve month period in its press release issued June 28, 2010, which is posted on Biomet's website at www.biomet.com in the Investors Section. There have been no changes to the net sales results following the release of the preliminary net sales results.
- Net sales increased 10% (8% constant currency) worldwide during the fourth quarter to $703 million
- Fiscal year 2010 net sales increased 8% (7% constant currency) worldwide to $2.7 billion
- Reported operating income for fiscal year 2010 totaled $357 million compared to a fiscal year 2009 operating loss of $348 million
- Adjusted operating income increased 7% during fiscal year 2010 to $839 million
- Adjusted EBITDA increased 8% during fiscal year 2010 to $1 billion, or 37.1% of net sales
- Cash from operations increased 32% to $322 million for fiscal year 2010
- Free cash flow improved to $135 million for fiscal year 2010 from $59 million for fiscal year 2009
Fourth Quarter Financial Results
Net sales increased 10% to $702.5 million during the fourth quarter of fiscal year 2010 from $639.3 million during the fourth quarter of fiscal year 2009. On a constant currency basis, net sales increased 8% during the fourth quarter.
On a reported basis, operating income was $83.3 million during the fourth quarter of fiscal year 2010 compared to an operating loss of $107.2 million during the fourth quarter of fiscal year 2009. Excluding special items, which included a significant litigation charge and impairment charge in the fourth quarter of fiscal year 2009, adjusted operating income for the fourth quarter was $215.3 million, or 30.6% of net sales, compared to adjusted operating income of $204.6 million for the fourth quarter of fiscal year 2009.
The Company reported a net loss of $14.5 million during the fourth quarter of fiscal year 2010 compared to a net loss of $170.9 million during the fourth quarter of fiscal year 2009.
Special items (pre-tax) of $132.0 million were recorded during the fourth quarter of fiscal year 2010 and included $93.5 million of non-cash amortization and depreciation expense related to the merger. The $38.5 million of non-merger related special items recorded during the fourth quarter primarily related to $15.9 million of costs associated with our operational improvement initiatives and stock compensation expense of $8.1 million.
Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") during the fourth quarter was $253.6 million, or 36.1% of net sales, compared to adjusted EBITDA of $242.5 million for the fourth quarter of fiscal year 2009.
Interest expense was $126.8 million during the fourth quarter of fiscal year 2010 compared to $137.7 million during the fourth quarter of fiscal year 2009, primarily as a result of lower interest rates on floating rate debt.
Free cash flow (operating cash flow minus capital expenditures) for the fourth quarter of fiscal year 2010 totaled $29.0 million compared to negative free cash flow of $10.2 million for the fourth quarter of fiscal year 2009. Unlevered free cash flow (cash flow before debt service) was $219.7 million for the fourth quarter of fiscal year 2010 compared to $197.3 million for the fourth quarter of fiscal year 2009.
The Company's reported net debt balance at May 31, 2010, was $5.707 billion, including cash on hand of $189 million. From the merger date of September 25, 2007, to the quarter ended May 31, 2010, reported net debt decreased by $446 million due to debt repayments of $199 million, an increase in cash of $116 million, and a $131 million decrease due to favorable foreign currency translation on the Company's Euro denominated debt.
At May 31, 2010, the Company's senior secured leverage ratio was 3.29 times the last twelve months ("LTM") adjusted EBITDA (as defined in the Company's Credit Agreement dated September 25, 2007), compared to 4.7 times at the merger date. At the end of fiscal year 2010, the net debt leverage ratio was 5.64 times LTM adjusted EBITDA compared to 7.7 times at the merger date.
Biomet's President and Chief Executive Officer Jeffrey R. Binder remarked, "We made great progress during fiscal 2010. Our consolidated sales growth accelerated in the fourth quarter, contributing to very healthy sales results for our full fiscal year. Double-digit sales growth for orthopaedic reconstructive products continued to drive our top line performance during the quarter and year, and allowed us to capture additional share gains in this important market during fiscal 2010. Our sport medicine division also reported double-digit sales growth for the fourth quarter and full year, while our International division was able to penetrate key markets outside the United States with exceptionally strong double-digit sales growth. In addition to our strong sales results, we ended the year with adjusted EBITDA of $1 billion or 37.1% of net sales, which is a significant milestone for us. I'm proud of the level of success we've achieved in both sales and EBITDA during fiscal 2010."
Mr. Binder continued, "As we exit each fiscal year, I take time to reflect on how gratifying it is to lead a business that helps to improve the lives of the patients who need our products. More than 1,000,000 times a year, we help one surgeon provide personalized care to one patient. As we enter fiscal 2011, I see great opportunities for Biomet to continue to fulfill this mission."
Full Year Financial Results
For the twelve months ended May 31, 2010, net sales increased 8% to $2.698 billion from $2.504 billion during fiscal year 2009. Excluding the effect of foreign currency, net sales increased 7% during fiscal year 2010.
Reported operating income totaled $356.6 million during fiscal year 2010 compared to an operating loss of $348.3 million during fiscal year 2009. Excluding special items, which included a significant litigation charge and impairment charge in fiscal year 2009, adjusted operating income for fiscal year 2010 increased 7% to $838.6 million, or 31.1% of net sales, compared to adjusted operating income of $781.5 million for fiscal year 2009.
On a reported basis, a net loss of $47.6 million was recorded during fiscal 2010 compared to a net loss of $749.2 million during fiscal year 2009. Excluding special items, adjusted net income totaled $241.5 million during fiscal year 2010 compared to adjusted net income of $158.1 million during fiscal year 2009.
Special items (pre-tax) totaled $482.0 million during fiscal year 2010 and included $386.2 million of non-cash amortization and depreciation expense related to the merger. The $95.8 million of non-merger related special items primarily related to $43.3 million of costs associated with our operational improvement initiatives and stock compensation expense of $22.4 million.
Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") for fiscal year 2010 increased 8% to $1 billion, or 37.1% of net sales, compared to adjusted EBITDA of $926.4 million during fiscal year 2009.
Interest expense was $516.4 million during fiscal year 2010 compared to $550.3 million during fiscal year 2009, primarily due to lower interest rates on floating rate debt.
Free cash flow (operating cash flow minus capital expenditures) for fiscal year ended May 31, 2010 totaled $135.1 million compared to free cash flow of $58.8 million for fiscal year 2009. Unlevered free cash flow (cash flow before debt service) was $636.7 million for the twelve month period ended May 31, 2010, compared to $592.1 million for fiscal year 2009.