EX-99.1
Published on October 22, 2015
Exhibit 99.1
ResMed Inc. Announces Results for the First Quarter of Fiscal Year 2016
Revenue increased 8% to $412 million; up 15% on a constant currency basis
GAAP diluted earnings per share of $0.57, or non-GAAP earnings per share of $0.58
Operating cash flow of $122.1 million
Company repurchased 1.2 million shares in the first quarter
San Diego, October 22, 2015 ResMed Inc. (NYSE: RMD) today announced results for its quarter ended September 30, 2015. Revenue for the quarter was $411.6 million, an 8 percent increase compared with the quarter ended September 30, 2014 (a 15 percent increase on a constant currency basis).
Our global team was able to drive strong double-digit constant currency growth in the first quarter of fiscal year 2016. This result was led by 39 percent flow generator and 9 percent mask growth in the Americas, said Mick Farrell, ResMeds chief executive officer. We are investing for ongoing expansion and leadership in our high-growth regions. In October, we completed the acquisition of Curative Medical, making our combined ResMed and Curative business the market leader in sleep-disordered breathing and respiratory care in China.
Farrell continued, It has been a year since we launched our Air Solutions Platform. We have made incredible progress, with over one million patients with cloud-connected devices on bedside tables, providing actionable data every day for patients, customers, providers and payors. Our leading informatics capabilities enable our global team to enhance and deliver the most innovative products and solutions that improve patient outcomes, create efficiencies for our customers, help providers better manage chronic disease and lower healthcare costs. We have established ourselves as leaders in the field of connected care and digital health.
Analysis of first quarter results
In the first quarter of fiscal year 2016, revenue in the Americas was $254.2 million, a 23 percent increase over the prior years quarter. Revenue in combined EMEA and APAC was $157.5 million, a 9 percent decrease compared with the quarter ended September 30, 2014 (a 5 percent increase on a constant currency basis).
Gross margin was 58.0 percent in the first quarter of fiscal year 2016, lower than the prior years quarter mainly due to an unfavorable product mix, declines in average selling prices and an unfavorable geographic mix.
Income from operations for the quarter was $98.0 million, a 4 percent increase compared with the quarter ended September 30, 2014. Non-GAAP income from operations for the quarter was $100.3 million, a 4 percent increase compared with the quarter ended September 30, 2014.
Selling, general and administrative expenses were $111.1 million for the first quarter of fiscal year 2016, a 1 percent increase (an 11 percent increase on a constant currency basis) over the quarter ended September 30, 2014. SG&A expenses improved to 27.0 percent of revenue in the quarter, compared with 29.1 percent in the quarter ended September 30, 2014.
Research and development expenses were $27.2 million for the first quarter of fiscal year 2016, or 6.6 percent of revenue. R&D expenses decreased by 9 percent (a 12 percent increase on a constant currency basis) compared with the quarter ended September 30, 2014.
Amortization of acquired intangible assets was $2.3 million during the quarter. Stock-based compensation costs incurred during the quarter of $12.4 million consisted of expenses associated with employee equity grants, and the companys employee stock purchase plan.
Net income for the quarter was $80.4 million, a 3 percent decrease compared with the quarter ended September 30, 2014. Non-GAAP net income for the quarter ended September 30, 2015 was $82.1 million, a 3 percent decrease compared with the quarter ended September 30, 2014 (non-GAAP measures exclude the impact of amortization of acquired intangibles).
Diluted earnings per share for the quarter were $0.57. Non-GAAP diluted earnings per share for the quarter were $0.58.
Cash flow from operations for the quarter was $122.1 million.
Share repurchase program
During the quarter, the company repurchased 1.2 million shares at a cost of $62.0 million, as part of its ongoing capital management program.
Dividend program
The ResMed board of directors today declared a quarterly dividend of $0.30 per share. The dividend will have a record date of November 19, 2015, payable on December 17, 2015. The dividend will be paid in U.S. currency to holders of ResMeds 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 November 17, 2015 for common stock holders and for CDI holders. ResMed has received a waiver from the ASXs settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from November 18, 2015 through November 19, 2015, inclusive.
Webcast details
ResMed will discuss its financial and business results and 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 ResMeds Investor Relations website at investors.resmed.com. Please go to this section of the website and click on the icon for the Q1 2016 earnings webcast to register and listen to the live webcast. The online archive of the broadcast will be available on ResMeds website after the live call. In addition, a telephone replay of the conference call will be available approximately two hours after the call by dialing 855-859-2056 (U.S.) and +1 404-537-3406 (international) and entering a passcode of 43449699. The telephone replay will be available until November 5, 2015.
About ResMed
The global team at ResMed (NYSE:RMD) is united in the commitment to change millions of 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. ResMeds 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 statementsincluding statements regarding ResMeds projections of future revenue or earnings, expenses, new product development, new product launches and new markets for its productsare 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 ResMeds 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 September 30,
|
||||||||
| 2015 | 2014 | |||||||
| Net revenue |
$411,647 | $380,399 | ||||||
| Cost of sales
|
|
173,028
|
|
|
143,086
|
|
||
|
Gross profit
|
|
238,619
|
|
|
237,313
|
|
||
| Operating expenses |
||||||||
| Selling, general and administrative |
111,095 | 110,520 | ||||||
| Research and development |
27,192 | 30,024 | ||||||
| Amortization of acquired intangible assets |
2,307 | 2,094 | ||||||
|
Total operating expenses
|
|
140,594
|
|
|
142,638
|
|
||
|
Income from operations(1)
|
|
98,025
|
|
|
94,675
|
|
||
| Other income (expenses), net: |
||||||||
| Interest income, net |
3,422 | 5,584 | ||||||
| Other, net
|
|
(2,003
|
)
|
|
1,671
|
|
||
|
Total other income, net
|
|
1,419
|
|
|
7,255
|
|
||
| Income before income taxes |
99,444 | 101,930 | ||||||
| Income taxes
|
|
19,041
|
|
|
18,670
|
|
||
|
Net income(1)
|
|
$80,403
|
|
|
$83,260
|
|
||
| Basic earnings per share |
$0.57 | $0.59 | ||||||
| Diluted earnings per share |
$0.57 | $0.58 | ||||||
| Non-GAAP diluted earnings per share, excluding the impact of amortization of acquired intangible assets(1) | $0.58 | $0.59 | ||||||
| Basic shares outstanding |
140,309 | 140,127 | ||||||
| Diluted shares outstanding |
141,946 | 142,683 | ||||||
| (1) | See the reconciliation of non-GAAP financial measures in the table at the end of the press release. |
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RESMED INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited - In thousands)
| September 30, 2015 |
June 30, 2015 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$822,053 | $717,249 | ||||||
| Accounts receivable, net |
327,168 | 362,568 | ||||||
| Inventories |
258,609 | 246,859 | ||||||
| Prepayments, deferred income taxes and other current assets |
124,970 | 117,506 | ||||||
|
Total current assets
|
|
1,532,800
|
|
|
1,444,182
|
|
||
| Property, plant and equipment, net |
368,984 | 387,758 | ||||||
| Goodwill and other intangible assets, net |
305,418 | 311,403 | ||||||
| Deferred income taxes and other non-current assets |
47,477 | 40,917 | ||||||
|
Total non-current assets
|
|
721,879
|
|
|
740,078
|
|
||
|
Total assets
|
|
$2,254,679
|
|
|
$2,184,260
|
|
||
| LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$77,482 | $81,112 | ||||||
| Accrued expenses |
117,651 | 132,976 | ||||||
| Deferred revenue |
34,848 | 36,097 | ||||||
| Income taxes payable |
26,550 | 16,278 | ||||||
| Deferred income taxes |
776 | 796 | ||||||
|
Total current liabilities
|
|
257,307
|
|
|
267,259
|
|
||
| Non-current liabilities: |
||||||||
| Deferred income taxes |
7,968 | 8,062 | ||||||
| Deferred revenue |
23,446 | 19,284 | ||||||
| Income taxes payable |
1,754 | 1,754 | ||||||
| Other long term liabilities |
2,804 | - | ||||||
| Non-current portion of long-term debt |
500,587 | 300,594 | ||||||
|
Total non-current liabilities
|
|
536,559
|
|
|
329,694
|
|
||
|
Total liabilities
|
|
793,866
|
|
|
596,953
|
|
||
| STOCKHOLDERS EQUITY: |
||||||||
| Common stock |
558 | 562 | ||||||
| Additional paid-in capital |
1,248,077 | 1,228,795 | ||||||
| Retained earnings |
2,014,344 | 1,976,020 | ||||||
| Treasury stock |
(1,506,542 | ) | (1,444,554 | ) | ||||
| Accumulated other comprehensive income
|
|
(295,624
|
)
|
|
(173,516
|
)
|
||
|
Total stockholders equity
|
|
$1,460,813
|
|
|
$1,587,307
|
|
||
|
Total liabilities and stockholders equity
|
|
$2,254,679
|
|
|
$2,184,260
|
|
||
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RESMED INC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited - In thousands)
| Three Months September 30, |
||||||||
| 2015 | 2014 | |||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$80,403 | $83,260 | ||||||
| Adjustment to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
18,403 | 18,582 | ||||||
| Gain on disposal of business |
- | (709 | ) | |||||
| Stock-based compensation costs |
12,383 | 11,367 | ||||||
| Excess tax benefit from stock-based compensation arrangements |
(2,536 | ) | (2,575 | ) | ||||
| Changes in operating assets and liabilities, net of effect of acquisitions: |
||||||||
| Accounts receivable, net |
30,498 | 20,804 | ||||||
| Inventories, net |
(17,194 | ) | (37,897 | ) | ||||
| Prepaid expenses, net deferred income taxes and other current assets |
(3,526 | ) | (15,168 | ) | ||||
| Accounts payable, accrued expenses and other liabilities |
3,641 | 8,872 | ||||||
|
Net cash provided by operating activities
|
|
122,072
|
|
|
86,536
|
|
||
| Cash flows from investing activities: |
||||||||
| Purchases of property, plant and equipment |
(16,403 | ) | (20,681 | ) | ||||
| Patent registration costs |
(2,423 | ) | (2,366 | ) | ||||
| Business acquisitions, net of cash acquired |
- | (7,318 | ) | |||||
| Investments in cost-method investments |
(4,582 | ) | (500 | ) | ||||
| Proceeds from sale of business |
- | 468 | ||||||
| Payments on maturity of foreign currency contracts |
(39,341 | ) | (11,206 | ) | ||||
|
Net cash used in investing activities
|
|
(62,749
|
)
|
|
(41,603
|
)
|
||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock, net |
4,352 | 4,930 | ||||||
| Excess tax benefit from stock-based compensation arrangements |
2,536 | 2,575 | ||||||
| Purchases of treasury stock |
(57,857 | ) | (46,803 | ) | ||||
| Payment of business combination contingent consideration |
- | (458 | ) | |||||
| Proceeds from borrowings, net of borrowing costs |
200,000 | 75,000 | ||||||
| Repayment of borrowings |
(8 | ) | (10 | ) | ||||
| Dividends paid |
(42,079 | ) | (39,199 | ) | ||||
|
Net cash (used in) / provided by financing activities
|
|
106,944
|
|
|
(3,965
|
)
|
||
|
Effect of exchange rate changes on cash
|
|
(61,463
|
)
|
|
(65,004
|
)
|
||
|
Net increase / (decrease) in cash and cash equivalents
|
104,804 | (24,036 | ) | |||||
| Cash and cash equivalents at beginning of period
|
|
717,249
|
|
|
905,730
|
|
||
|
Cash and cash equivalents at end of period
|
|
822,053
|
|
|
881,694
|
|
||
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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 September 30, |
|
||||||
| 2015 | 2014 | |||||||
| GAAP income from operations | 98,025 | 94,675 | ||||||
|
Amortization of acquired intangible assets (A)
|
|
2,307
|
|
|
2,094
|
|
||
| Non-GAAP operating income (excluding the impact of amortization of acquired intangible assets)
|
|
100,332
|
|
|
96,769
|
|
||
|
The measures 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 September 30, |
|
||||||
| 2015 | 2014 | |||||||
|
GAAP net income |
80,403 | 83,260 | ||||||
|
Amortization of acquired intangible assets, net of tax (A)
|
|
1,717
|
|
|
1,601
|
|
||
|
Non-GAAP net income (A)
|
|
82,120
|
|
|
84,861
|
|
||
|
Diluted shares outstanding
|
|
141,946
|
|
|
142,683
|
|
||
|
GAAP diluted earnings per share
|
|
$0.57
|
|
|
$0.58
|
|
||
|
Non-GAAP diluted earnings per share (A)
|
|
$0.58
|
|
|
$0.59
|
|
||
| (A) | ResMed excludes amortization of acquired intangible assets from their 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 diluted earnings per share, which exclude the impact of the amortization of acquired intangible assets, is an additional measure of performance investors can use to compare operating results between reporting periods.
ResMed 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. ResMed believes this information provides investors better insight in evaluating ResMeds performance from core operations and provides consistent 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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