Form: 8-K

Current report filing

April 23, 2015

Exhibit 99.1

 

LOGO

ResMed Inc. Announces Results for the Third Quarter of Fiscal Year 2015

Revenue increased 6% to $422 million; up 13% on a constant currency basis

GAAP diluted earnings per share of $0.64, or non-GAAP earnings per share of $0.65

Operating cash flow of $90.9 million

Company repurchased 300,000 shares in the third quarter

San Diego, April 23, 2015 – ResMed Inc. (NYSE: RMD) today announced results for its quarter ended March 31, 2015. Revenue for the quarter was $422.5 million, a 6 percent increase compared to the quarter ended March 31, 2014 (a 13 percent increase on a constant currency basis). Net income was $91.0 million, an increase of 1 percent compared to the quarter ended March 31, 2014. Diluted earnings per share for the quarter were $0.64, an increase of 2 percent compared to the quarter ended March 31, 2014. Non-GAAP diluted earnings per share for the quarter were $0.65, a 2 percent increase compared to the quarter ended March 31, 2014.

“We are pleased to report excellent progress with our new product launches, as we continued to see double-digit revenue growth,” said Mick Farrell, ResMed’s chief executive officer. “Strong demand for our new flow generator launches in the U.S. and continued growth in our Asia Pacific and Europe regions drove our results in the quarter.

“We saw strong customer adoption of our range of new flow generators: the Astral, AirSense™ 10 and the recently launched AirCurve™ 10 series of cloud-connected bilevel devices. This quarter, we continued to build our informatics capabilities with the acquisition of Jaysec, a provider of cloud-based software solutions for the home medical equipment industry, as well as the integration of our AirView patient management system with leading informatics partners.” Farrell concluded, “We are executing on our long-term strategy: growing our core sleep disordered breathing market and investing in future opportunities in chronic obstructive pulmonary disease as well as cardio-respiratory conditions. Our innovative products and solutions improve patient outcomes, lower healthcare costs, and reduce the impact of chronic disease.”

Analysis of third quarter results

In the third quarter of fiscal year 2015, revenue in the Americas was $250.9 million, a 16 percent increase over the prior year’s quarter. Revenue in combined Europe and Asia Pacific was $171.6 million, a 6 percent decrease compared to the quarter ended March 31, 2014 (a 9 percent increase on a constant currency basis).

Gross margin in the third quarter was 59.5 percent, lower than the prior year, mainly due to declines in average selling prices, an unfavorable product and geographic mix, and an unfavorable impact from foreign exchange rate movements.


Selling, general and administrative expenses were $116.3 million for the quarter, a 1 percent increase (a 10 percent increase on a constant currency basis) over the quarter ended March 31, 2014. SG&A expenses improved to 27.5 percent of revenue in the quarter, compared to 28.9 percent in the quarter ended March 31, 2014.

Research and development expenses were $27.0 million for the quarter, or 6.4 percent of revenue. R&D expenses decreased by 8 percent (a 4 percent increase on a constant currency basis) compared to the quarter ended March 31, 2014.

Operating profit for the quarter was $105.9 million and cash flow from operations was $90.9 million.

Amortization of acquired intangible assets was $2.2 million ($1.6 million, net of tax) during the quarter. Stock-based compensation costs incurred during the quarter of $11.7 million ($8.2 million, net of tax) consisted of expenses associated with employee equity grants, and the company’s employee stock purchase plan.

Share repurchase program

During the quarter, the company repurchased 300,000 shares at a cost of $20.3 million, as part of its ongoing capital management program.

Dividend program

The ResMed board of directors today declared a quarterly dividend of $0.28 per share. The dividend will have a record date of May 21, 2015, payable on June 18, 2015. The dividend will be paid in U.S. currency to holders of ResMed’s common stock trading on the New York Stock Exchange. Holders of Chess Depositary Instruments trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be May 19, 2015 for common stock holders and for CDI holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from May 19, 2015 through May 21, 2015, inclusive.

Webcast details

ResMed will discuss its financial and business results and its business outlook on its webcast at 1:30 p.m. U.S. Pacific Standard Time today. The live webcast of the call can be accessed on ResMed’s website at www.resmed.com. Please allow extra time before the call to visit the website and download the streaming media player (Windows Media Player), required to listen to the internet broadcast. The online archive of the broadcast will be available after the live call on ResMed’s website. In addition, a telephone replay of the conference call will be available approximately two hours after the call by dialing 630-652-3042 (U.S.) and +1 630-652-3042 (international) and entering a passcode of 39335543. The telephone replay will be available until May 7, 2015.

About ResMed

The global team at ResMed (NYSE:RMD) is united in their commitment to changing lives with every breath. With more than 4,000 employees and a presence in over 100 countries, the company has been pioneering new and innovative devices and treatments for sleep-disordered breathing, chronic obstructive pulmonary disease, and other chronic diseases for more than 25 years. ResMed’s world-leading products and innovative solutions improve the quality of life for millions of patients worldwide, reduce the impact of chronic disease, and save healthcare costs. For more information about ResMed and its businesses, visit www.resmed.com or follow @resmed on Twitter.


Safe harbor statement

Statements contained in this release that are not historical facts are “forward-looking” statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements -- including statements regarding ResMed’s projections of future revenue or earnings, expenses, new product development, new product launches and new markets for its products -- are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Additional risks and uncertainties are discussed in ResMed’s periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.

Investors:

Agnes Lee

Senior Director, Investor Relations

(858) 836-5971

investorrelations@resmed.com

News Media:

Alison Graves

Director, Global Corporate Communications

(858) 836-6789

news@resmed.com

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share data)

 

                                                           
  

Three Months Ended

March 31,

 

Nine Months Ended

March 31,

 
  

2015

 

 

2014

 

 

2015

 

 

2014

 

 
       

Net revenue

  $422,497          $397,758          $1,225,848          $1,139,762        

Cost of sales

 

 

 

171,066    

 

  

 

 

 

145,970    

 

  

 

 

 

473,882    

 

  

 

 

 

411,234     

 

  

 

       

Gross profit

 

 

 

251,431    

 

  

 

 

 

251,788    

 

  

 

 

 

751,966    

 

  

 

 

 

728,528     

 

  

 

       

Operating expenses:

   

Selling, general and administrative

  116,336          115,101          349,377          328,172        

Research and development

  27,024          29,530          86,342          86,430        

Amortization of acquired intangible assets

 

 

 

2,203    

 

  

 

 

 

2,459    

 

  

 

 

 

6,558    

 

  

 

 

 

7,325     

 

  

 

       

Total operating expenses

 

 

 

145,563    

 

  

 

 

 

147,090    

 

  

 

 

 

442,277    

 

  

 

 

 

421,927     

 

  

 

       

Income from operations

 

 

 

105,868    

 

  

 

 

 

104,698    

 

  

 

 

 

309,689    

 

  

 

 

 

306,601     

 

  

 

       

Other income (expenses), net:

   

Interest income (expense), net

  4,761          6,015          15,765          19,182        

Other, net

 

 

 

3,729    

 

  

 

 

 

2,199    

 

  

 

 

 

6,346    

 

  

 

 

 

(1,340)    

 

  

 

       

Total other income (expenses), net

 

 

 

8,490    

 

  

 

 

 

8,214    

 

  

 

 

 

22,111    

 

  

 

 

 

17,842     

 

  

 

       

Income before income taxes

  114,358          112,912          331,800          324,443        

Income taxes

 

 

 

23,375    

 

  

 

 

 

22,943    

 

  

 

 

 

66,376    

 

  

 

 

 

66,908     

 

  

 

       

Net income

 

 

 

$90,983    

 

  

 

 

 

$89,969    

 

  

 

 

 

$265,424    

 

  

 

 

 

$257,535     

 

  

 

       

Basic earnings per share

  $0.65          $0.64          $1.89          $1.82        

Diluted earnings per share

  $0.64          $0.63          $1.86          $1.78        
       

Basic shares outstanding

  140,792          140,959          140,341          141,774        

Diluted shares outstanding

 

 

 

142,813    

 

  

 

 

 

143,375    

 

  

 

 

 

142,614    

 

  

 

 

 

144,758     

 

  

 

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RESMED INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited - In thousands)

 

                             
   March 31,   June 30,  
  

2015

 

 

2014

 

 

ASSETS

   

Current assets:

   

Cash and cash equivalents

  $866,325           $905,730        

Accounts receivable, net

  345,485           359,593        

Inventories

  225,191           165,418        

Prepayments, deferred income taxes and other current assets

 

 

 

115,769     

 

  

 

 

 

125,468     

 

  

 

     

Total current assets

 

 

 

1,552,770     

 

  

 

 

 

1,556,209     

 

  

 

Property, plant and equipment, net

  384,160           434,277        

Goodwill and other intangible assets, net

  302,339           334,510        

Deferred income taxes and other non-current assets

 

 

 

38,760     

 

  

 

 

 

35,966     

 

  

 

     

Total non-current assets

 

 

 

725,259     

 

  

 

 

 

804,753     

 

  

 

     

Total assets

 

 

 

$2,278,029     

 

  

 

 

 

$2,360,962     

 

  

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current liabilities:

   

Accounts payable

  $70,900           $85,405        

Accrued expenses

  131,770           130,656        

Deferred revenue

  37,295           42,370        

Income taxes payable

  15,800           10,392        

Deferred income taxes

  639           717        

Current portion of long-term debt

 

 

 

0     

 

  

 

 

 

18     

 

  

 

     

Total current liabilities

 

 

 

256,404     

 

  

 

 

 

269,558     

 

  

 

Non-current liabilities:

   

Deferred income taxes

  8,831           10,716        

Deferred revenue

  14,184           16,352        

Income taxes payable

  1,754           5,318        

Non-current portion of long-term debt

 

 

 

460,581     

 

  

 

 

 

300,770     

 

  

 

     

Total non-current liabilities

 

 

 

485,350     

 

  

 

 

 

333,156     

 

  

 

     

Total liabilities

 

 

 

741,754     

 

  

 

 

 

602,714     

 

  

 

Stockholders’ Equity:

   

Common stock

  563           561        

Additional paid-in capital

  1,195,880           1,117,644        

Retained earnings

  1,927,958           1,780,396        

Treasury stock

  (1,388,623)          (1,291,910)       

Accumulated other comprehensive income

 

 

 

(199,503)    

 

  

 

 

 

151,557     

 

  

 

     

Total stockholders’ equity

 

 

 

$1,536,275     

 

  

 

 

 

$1,758,248     

 

  

 

     

Total liabilities and stockholders’ equity

 

 

 

$2,278,029     

 

  

 

 

 

$2,360,962     

 

  

 

- More –


RESMED INC AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)

 

                             
  

Nine Months
Ended

March 31,

 

Nine Months
Ended

March 31,

 
  

2015

 

 

2014

 

 

Cash flows from operating activities:

 

Net income

  $265,424           $257,535        

Adjustment to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization

  55,310           53,631        

Gain on disposal of business

  (709)          -        

Stock-based compensation costs

  34,802           32,679        

Foreign currency revaluation

  (1,252)          (3,305)       

Excess tax benefit from stock-based compensation arrangements

  (20,738)          (11,388)       

Changes in operating assets and liabilities, net of effect of acquisitions:

 

Accounts receivable, net

  (14,814)          (12,873)       

Inventories, net

  (80,793)          (15,735)       

Prepaid expenses, net deferred income taxes and other current assets

  (3,487)          (4,020)       

Accounts payable, accrued expenses and other liabilities

 

 

 

49,736    

 

  

 

 

 

(20,839)    

 

  

 

     

Net cash provided by operating activities

 

 

283,479     

 

  

 

 

 

275,685     

 

  

 

Cash flows from investing activities:

 

Purchases of property, plant and equipment

  (50,266)          (54,210)       

Patent registration costs

  (7,109)          (5,691)       

Business acquisitions, net of cash acquired

  (26,956)          (3,172)       

Investments in cost-method investments

  (10,500)          (5,275)       

Proceeds from sale of business

  468           -        

Purchases of foreign currency options

  -           (1,337)       

Payments on maturity of foreign currency contracts

 

 

(25,232)    

 

  

 

 

 

(2,466)    

 

  

 

     

Net cash used in investing activities

 

 

 

(119,595)    

 

  

 

 

 

(72,151)    

 

  

 

Cash flows from financing activities:

 

Proceeds from issuance of common stock, net

  23,176           15,624        

Excess tax benefit from stock-based compensation arrangements

  20,738           11,388        

Purchases of treasury stock

  (103,295)          (169,398)       

Payment of business combination contingent consideration

  (458)          (1,117)       

Proceeds from borrowings, net of borrowing costs

  160,000           507,838        

Repayment of borrowings

  (1,527)          (415,029)       

Dividends paid

 

 

(117,862)    

 

  

 

 

 

(106,387)    

 

  

 

     

Net cash (used in) / provided by financing activities

 

 

(19,228)    

 

  

 

 

 

(157,081)    

 

  

 

     

Effect of exchange rate changes on cash

 

 

(184,061)    

 

  

 

 

 

16,062     

 

  

 

     

Net increase / (decrease) in cash and cash equivalents

  (39,405)          62,515        

Cash and cash equivalents at beginning of period

 

 

905,730     

 

  

 

 

 

876,048     

 

  

 

     

Cash and cash equivalents at end of period

 

 

866,325     

 

  

 

 

 

938,563     

 

  

 

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Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In US$ thousands, except share and per share data)

The measure, “non-GAAP operating income” is reconciled with GAAP income from operations below:

 

  

Three Months Ended

Mar 31,

 

Nine Months Ended

Mar 31,

 
   

 

2015

 

  

 

 

 

2014

 

  

 

 

 

2015

 

  

 

 

 

2014

 

  

 

   

GAAP income from operations

  105,868          104,698          309,689          306,601       
   

Amortization of acquired intangible assets (A)

 

 

 

2,203    

 

  

 

 

 

2,459    

 

  

 

 

 

6,558    

 

  

 

 

 

7,325    

 

  

 

   
Non-GAAP operating income (excluding the impact of amortization of acquired intangible assets)  

 

108,071    

 

  

 

 

 

107,157    

 

  

 

 

 

316,247    

 

  

 

 

 

313,926    

 

  

 

The measure, “non-GAAP net income” and “non-GAAP diluted earnings per share” are reconciled with GAAP net income and GAAP diluted earnings per share in the table below:

 

  

Three Months Ended

Mar 31,

 

Nine Months Ended

Mar 31,

 
   

 

2015

 

  

 

 

 

2014

 

  

 

 

 

2015

 

  

 

 

 

2014

 

  

 

   

GAAP net income

  90,983          89,969          265,424          257,535       
   

Amortization of acquired intangible assets, net of tax (A)

 

 

 

1,643    

 

  

 

 

 

1,868    

 

  

 

 

 

4,951    

 

  

 

 

 

5,563    

 

  

 

Non-GAAP net income (excluding the impact of amortization of acquired intangible assets)

 

 

 

92,626    

 

  

 

 

 

91,837    

 

  

 

 

 

270,375    

 

  

 

 

 

263,098    

 

  

 

   

Diluted shares outstanding

 

 

 

142,813    

 

  

 

 

 

143,375    

 

  

 

 

 

142,614    

 

  

 

 

 

144,758    

 

  

 

   

GAAP diluted earnings per share

 

 

 

$0.64    

 

  

 

 

 

$0.63    

 

  

 

 

 

$1.86    

 

  

 

 

 

$1.78    

 

  

 

   

Non-GAAP diluted earnings per share (excluding the impact of amortization of acquired intangible assets)

 

 

 

$0.65    

 

  

 

 

 

$0.64    

 

  

 

 

 

$1.90    

 

  

 

 

 

$1.82    

 

  

 

 

(A) Management excludes amortization of acquired intangible assets from its evaluation of ongoing operations and believes investors benefit from excluding these charges to facilitate a more meaningful evaluation of current operating performance.

ResMed believes that presenting diluted earnings per share, excluding the impact of the amortization of acquired intangible assets is an additional measure of performance that investors can use to compare operating results between reporting periods.

Management uses non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. Management believes this information provides investors better insight in evaluating the Company’s performance from core operations and provides consistency in financial reporting. Our use of non-GAAP measures is intended to supplement, and not to replace, our presentation of net income and other GAAP measures. Like all non-GAAP measures, non-GAAP earnings are subject to inherent limitations because they do not include all the expenses that must be included under GAAP.

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