Continued strong momentum with fourth-quarter sales growth of 11%, organic growth of 8%
Reported fourth-quarter net income from continuing operations of $0.05 per share with adjusted earnings per diluted share of $0.79
Entering 2024 with strong operating momentum and an exciting slate of new product launches
Wilmington, DE, Feb. 22, 2024 (GLOBE NEWSWIRE) — —Enovis™ Corporation (NYSE:ENOV), an innovation-driven medical technology growth company, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2023. The Company will host an investor conference call and live webcast to discuss these results today at 8:30 am ET.
Fourth Quarter and Fiscal Year 2023 Financial Results
Enovis’ fourth-quarter net sales of $455 million grew 11% from the same quarter in 2022, including 8% organic growth. Fourth quarter results reflect continued execution in P&R, above-market growth in Recon, and the impact of recent acquisitions. Compared to the same quarter in 2022, net sales in Recon grew 18%, with 11% organic sales growth, and P&R grew 8%, with 6% organic sales growth.
Enovis also reported a fourth-quarter net income from continuing operations of $3 million and adjusted EBITDA of $82 million, or 18% of sales, a decline of 30 basis points versus the comparable prior year quarter, which includes the temporary dilution of recent acquisitions.
The Company reported a fourth-quarter 2023 net income from continuing operations of $0.05 per share and adjusted earnings per diluted share of $0.79.
Enovis’ full year 2023 net sales of $1.7 billion grew 9% year over year, including 8% organic growth. Net sales in Recon grew 18% with 14% organic growth and P&R grew 5% with 5% organic sales growth. Enovis also reported a full year net loss from continuing operations of $54 million and adjusted EBITDA of $269 million, or 16% of sales, an increase of 70 basis points versus 2022. For the full year 2023 Enovis reported a net loss from continuing operations of $1.00 per share and adjusted diluted earnings per diluted share of $2.40.
“We are very pleased with our results in 2023 with both revenues and operating margins exceeding expectations while continuing to make investments in key growth initiatives and M&A,” said Matt Trerotola, Chief Executive Officer of Enovis. “We look forward to carrying this momentum into 2024, which is setting up to be a transformative year as we integrate Lima and kick off a multi-year cadence of new product introductions across Recon and P&R.”
2023 Business Highlights
Delivered double-digit Recon sales across all major categories and geographies
Adjusted EBITDA margin improved 70 basis points year over year driven by product and geographic mix, new product introductions and execution on key EGX initiatives offset by increased investments in research and development and building capabilities in enabling technology and foot & ankle
Transformed our Recon segment with the acquisition of LimaCorporate S.p.A. (“Lima”) for an enterprise value of approximately €800 million
2024 Financial Outlook
Enovis also announced financial expectations for 2024. Revenue is expected to approximate $2.05-2.15 billion. This includes $290-300 million of revenue related to the Lima acquisition which closed on January 3, 2024. Adjusted EBITDA is forecasted to be $365-$380 million which is inclusive of $70-75 million from Lima. Full-year adjusted earnings per diluted share are expected to be in the range of $2.50-$2.65.
Conference call and Webcast
Investors can access the webcast via a link on the Enovis website, www.enovis.com. For those planning to participate on the call, please dial (833) 685-0901 (U.S. callers) or +1 (412) 317-5715 (International callers) and ask to join the Enovis call. A link to a replay of the call will also be available on the Enovis website later in the day.
ABOUT ENOVIS
Enovis Corporation (NYSE:ENOV) is an innovation-driven medical technology growth company dedicated to developing clinically differentiated solutions that generate measurably better patient outcomes and transform workflows. Powered by a culture of continuous improvement, global talent and innovation, the Company’s extensive range of products, services and integrated technologies fuels active lifestyles in orthopedics and beyond. The Company’s shares of common stock are listed in the United States on the New York Stock Exchange under the symbol ENOV. For more information about Enovis, please visit www.enovis.com.
Forward-Looking Statements
This press release includes forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Enovis’ plans, goals, objectives, outlook, expectations and intentions, including the potential benefits of the recently completed acquisition of Lima, and other statements that are not historical or current fact. Forward-looking statements are based on Enovis’ current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Enovis’ results to differ materially from current expectations include, but are not limited to, risks related to Enovis’ recently completed acquisition of Lima; the impact of public health emergencies and global pandemics (including COVID-19); the war in Ukraine and escalating geopolitical tensions including in connection with Russia’s invasion of Ukraine; macroeconomic conditions, including the impact of increasing inflationary pressures; supply chain disruptions; increasing energy costs and availability concerns, particularly in the European market; the impacts of the completed spin-off of ESAB Corporation into an independent publicly traded company (the “Separation”); the potential to incur significant liability if the Separation is determined to be a taxable transaction; the ability to realize the anticipated benefits of the Separation, the financial and operating performance of the Company following the Separation; other impacts on Enovis’ business and ability to execute business continuity plans; and the other factors detailed in Enovis’ reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q under the caption “Risk Factors,” as well as the other risks discussed in Enovis’ filings with the SEC. In addition, these statements are based on assumptions that are subject to change. This press release speaks only as of the date hereof. Enovis disclaims any duty to update the information herein.
Non-GAAP Financial Measures
Enovis has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”). These non-GAAP financial measures may include one or more of the following: adjusted net income from continuing operations, adjusted net income per diluted share from continuing operations, adjusted EBITDA, adjusted EBITDA margin and organic sales growth.
Adjusted net income from continuing operations attributable to Enovis (“Adjusted net income”) and Adjusted net income per diluted share excludes restructuring and other charges, European Union Medical Device Regulation (“MDR”) and other costs, amortization of acquired intangibles, inventory step up costs, strategic transaction costs, debt extinguishment costs, insurance settlement gain, gains and losses on the Company’s investments, stock compensation costs, and other income/expense. Adjusted net income adjusts interest expense for periods prior to 2023 to reflect pro forma interest of the Company’s capital structure after giving effect to the completing of the refinancing transactions in connection with the Separation, and it includes the tax effect of adjusted pre-tax income at applicable tax rates and other tax adjustments. Enovis also presents adjusted net income margin from continuing operations, which is subject to the same adjustments as adjusted net income from continuing operations.
Adjusted EBITDA represents Adjusted net income with the adjustments noted above, includes minority interest, and excludes taxes, interest, depreciation, and other amortization. Enovis presents adjusted EBITDA margin, which is subject to the same adjustments as adjusted EBITDA.
Adjusted gross profit represents gross profit excluding the fair value charges of acquired inventory and the impact of restructuring and other charges. Adjusted gross profit margin is subject to the same adjustments as adjusted gross profit.
Organic sales growth calculates sales growth period over period, after excluding the impact of acquisitions and foreign exchange rate fluctuations.
These non-GAAP financial measures assist Enovis management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete restructuring plans that are fundamentally different from the ongoing productivity improvements of the Company. Enovis management also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release. Enovis does not provide reconciliations of adjusted EBITDA or adjusted earnings per share on a forward-looking basis to the closest GAAP financial measures, as such information is not available without unreasonable efforts on a forward-looking basis due to uncertainties regarding, and the potential variability of, reconciling items excluded from these measures. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period.
Kyle Rose
Vice President, Investor Relations
Enovis Corporation
+1-917-734-7450
investorrelations@enovis.com
Enovis Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended
Year Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net sales
$ 455,020
$ 408,713
$ 1,707,197
$ 1,563,101
Cost of sales
190,631
176,960
716,418
693,718
Gross profit
264,389
231,753
990,779
869,383
Gross profit margin
58.1 %
56.7 %
58.0 %
55.6 %
Selling, general and administrative expense
211,011
208,589
830,305
772,913
Research and development expense
18,319
14,725
75,331
60,827
Amortization of acquired intangibles
35,261
31,698
133,517
126,301
Insurance settlement gain
—
(4,646)
—
(36,705)
Restructuring and other charges
5,553
9,572
17,335
17,225
Operating loss
(5,755)
(28,185)
(65,709)
(71,178)
Operating loss margin
(1.3) %
(6.9) %
(3.8) %
(4.6) %
Interest expense, net
4,253
6,108
19,749
24,052
Debt extinguishment charges
7,333
292
7,333
20,396
Gain on investment in ESAB Corporation
—
(30,257)
—
(102,669)
Gain on cost basis investment
—
—
—
(8,800)
Other income, net
(24,998)
(1,788)
(25,663)
(2,088)
Income (loss) from continuing operations before income taxes
7,657
(2,540)
(67,128)
(2,069)
Income tax expense (benefit)
4,589
52,296
(13,289)
36,120
Net income (loss) from continuing operations
3,068
(54,836)
(53,839)
(38,189)
Income from discontinued operations, net of taxes
12
16,267
21,108
26,430
Net income (loss)
3,080
(38,569)
(32,731)
(11,759)
Less: net income attributable to noncontrolling interest from continuing operations – net of taxes
116
34
530
567
Less: net income attributable to noncontrolling interest from discontinued operations – net of taxes
—
—
—
966
Net income (loss) attributable to Enovis Corporation
$ 2,964
$ (38,603)
$ (33,261)
$ (13,292)
Net income (loss) per share – basic and diluted
Continuing operations
$ 0.05
$ (1.01)
$ (1.00)
$ (0.72)
Discontinued operations
$ —
$ 0.30
$ 0.39
$ 0.47
Consolidated operations
$ 0.05
$ (0.71)
$ (0.61)
$ (0.25)
Enovis Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
Change in Sales
Dollars in millions
(Unaudited)
Net Sales
Prevention and Recovery
Reconstructive
Total Enovis
$
Change %
$
Change %
$
Change %
For the three months ended December 31, 2022
$ 262.5
$ 146.2
$ 408.7
Components of Change:
Existing businesses(1)