DJOFL first quarter 2014 net sales increase 1.3% to $282.7 million

DJO Global, Inc. ("DJO" or the "Company"), a leading global provider of medical device solutions for musculoskeletal health, vascular health and pain management, today announced financial results for its public reporting subsidiary, DJO Finance LLC ("DJOFL"), for the first quarter ended March 29, 2014.

First Quarter Results

DJOFL achieved net sales for the first quarter of 2014 of $282.7 million, reflecting growth of 1.3 percent, compared with net sales of $279.1 million for the first quarter of 2013. Net sales for the first quarter of 2014 were favorably impacted by $0.9 million related to changes in foreign currency exchange rates compared to the rates in effect in the first quarter of 2013. Excluding the impact of changes in foreign currency exchange rates from rates in effect in the prior year period ("constant currency"), net sales for the first quarter of 2014 increased 2.5 percent on a sales per day basis compared to net sales for the first quarter of 2013. The first quarter of 2014 included 62 shipping days in the United States and 61 shipping days in most international markets, while the comparable 2013 period included 63 days.

For the first quarter of 2014, DJOFL reported a net loss attributable to DJOFL of $36.5 million, compared to a net loss of $32.4 million for the first quarter of 2013. As detailed in the attached financial tables, the results for the current and prior year first quarter periods were impacted by significant non-cash items, non-recurring items and other adjustments.

The Company defines Adjusted EBITDA as net (loss) income attributable to DJOFL plus interest expense, net, income tax provision (benefit), and depreciation and amortization, further adjusted for certain non-cash items, non-recurring items and other adjustment items as permitted in calculating covenant compliance under the Company's amended senior secured credit facility and the indentures governing its 8.75% second priority senior secured notes, its 9.875% and 7.75% senior notes and its 9.75% senior subordinated notes. Reconciliation between net loss and Adjusted EBITDA is included in the attached financial tables.

Adjusted EBITDA for the first quarter of 2014 was $59.6 million, or 21.1 percent of net sales, remaining flat when compared with Adjusted EBITDA of $59.8 million, or 21.4 percent of net sales, for the first quarter of 2013.

"We were pleased to see all of our business segments, except for Recovery Sciences, continue to deliver good sales growth in the first quarter with approximately 2.5% growth on a constant currency basis compared to the first quarter of 2013, despite effects of severe weather in the U.S. Our strong global commercial execution continues to drive momentum across most of our businesses," said Mike Mogul, DJO's President and Chief Executive Officer. "I want to especially congratulate our Surgical Implant and International teams, for delivering strong constant currency growth in the first quarter of 2013 of 13.2% and 8.9%, respectively, as compared to the prior year period. Our Recovery Sciences business continues to be impacted by Medicare's 2012 non-coverage decision related to Transcutaneous Electrical Nerve Stimulation ("TENS") for chronic low back pain ("CLBP") and slow market conditions for capital equipment purchasing, which is impacting our Chattanooga business. Excluding Recovery Sciences, aggregate net sales from our other business segments for the first quarter of 2014 increased by 5.1% compared to the prior year period."

Sales by Business Segment

Net sales for DJO's Bracing and Vascular segment were $109.5 million in the first quarter of 2014, reflecting growth of 3.0 percent on a sales per day basis, compared to the first quarter of 2013, driven by strong contribution from the sales of new products and improving sales execution.

Net sales for DJO's Recovery Sciences segment were $68.9 million in the first quarter of 2014, reflecting a contraction of 7.5 percent on a sales per day basis, compared to the first quarter of 2013, primarily due to the effects of the Medicare CLBP decision on the EMPI business unit and continued slow market conditions for capital equipment sold by the Chattanooga business unit.

First quarter net sales within the International segment were $80.4 million, reflecting an increase in constant currency net sales on a sales per day basis of 8.9 percent from the first quarter of 2013, excluding the impact of $0.9 million of favorable changes in foreign currency exchange rates from rates in effect in the first quarter of 2013.

Net sales for the Surgical Implant segment were $23.9 million for the first quarter of 2014, reflecting a sales per day increase of 13.2 percent over net sales in the first quarter of 2013, driven by strong sales of each of the Company's shoulder, knee and hip product lines.

As of March 29, 2014, the Company had cash balances of $47.0 million and available liquidity of $61.5 million under its $100 million revolving line of credit.

SOURCE DJO Global