Invacare Corporation (“Invacare”)(NYSE:IVC) will participate on
Tuesday, July 14, 2020 in the 20th Annual CJS Securities New Ideas
Summer Conference where the company's management will provide a
business update and share certain expected preliminary financial
results for the second quarter ended June 30, 2020.
Second Quarter 2020 Preliminary Financial Results
For 2Q20, the company expects to report unaudited and
preliminary net sales of approximately $196 million, a decrease of
approximately 17% compared to the 2Q19. When adjusted for the
impact of foreign currency translation and the divestiture of
Dynamic Controls, preliminary constant currency net sales(a)
decreased 13% compared to 2Q19. Adjusted EBITDA(b) is expected to
be favorable to 2Q19 driven by higher gross margin as a percentage
of net sales and lower SG&A expenses.
Commenting on the second quarter, Matt Monaghan, chairman,
president and chief executive officer stated: “Given the
unprecedented nature of the current environment, we are pleased
with our strategic execution. With sales being impacted by a near
complete shutdown of the global economy during the second quarter,
we reoriented our business to optimize sales for those products
that are experiencing higher demand, while minimizing costs for
those products where opportunities are more limited. To help
mitigate the sudden decrease in total net sales as a result of the
pandemic, we initiated strong cost containment actions to conserve
cash, such as the reduction of employment costs and deferment of
tax payments, which are expected to drive sequential improvement in
profitability and free cash flow(c) in the second quarter.
As a result of the sudden shift in product mix and our long-lead
supply chain, we also expect a temporary increase in inventory.
However, we anticipate this inventory will convert to cash in the
remainder of 2020 and into 2021. Our associates continue to work
through various challenges to procure materials and components
necessary to support the pandemic response and other parts of our
business.
I’m pleased that in this complex environment, we continue to
make steady progress on our transformation initiatives, in addition
to the introduction of new products and actions that increase our
financial flexibility,” said Monaghan.
Business Update
At the start of 3Q20, quotes for mobility and seating products
have improved compared to 2Q20 on a global basis. However, the
magnitude of the recovery is different by region as result of
different shutdown actions in each country. While it is difficult
to estimate the shape of the recovery, consolidated net sales are
expected to increase sequentially with the resumption of access to
clinics, but remain at a lower level than the same periods in 2019.
The company continues to launch new products such as the Group 3
eligible standing wheelchair system, the AVIVA™ front- and rear-
wheel drive power chairs, and the recently FDA-cleared SMOOV one™
power add-on. Demand primarily for respiratory products is expected
to continue with continued elevated COVID-19 cases.
Commenting on the business environment, Monaghan said, “We
anticipate improvements in operating results as quarantining
programs are relaxed and access to clinical settings is increased,
along with continued execution of cost savings initiatives. I am
confident in our ability to navigate the ever-changing environment
and believe that our transformational actions will improve the
long-term sustainability of the business.”
The company will provide a more thorough and detailed review of
the second quarter results and outlook for the remainder of 2020
during its 2Q20 earnings release conference call scheduled on
August 6, 2020.
A copy of the updated IR presentation will be posted on the
Company’s website at newsroom.invacare.com.
About Invacare Corporation
Invacare Corporation is a leading manufacturer and distributor
in its markets for medical equipment used in non-acute care
settings. At its core, the company designs, manufactures and
distributes medical devices that help people to move, breathe, rest
and perform essential hygiene. The company provides clinically
complex medical device solutions for congenital (e.g., cerebral
palsy, muscular dystrophy, spina bifida), acquired (e.g., stroke,
spinal cord injury, traumatic brain injury, post-acute recovery,
pressure ulcers) and degenerative (e.g., ALS, multiple sclerosis,
chronic obstructive pulmonary disease (COPD), elderly, bariatric)
ailments. The company's products are important parts of care for
people with a wide range of challenges, from those who are active
and involved in work or school each day and may need additional
mobility or respiratory support, to those who are cared for in
residential care settings, at home and in rehabilitation centers.
The company sells its products principally to home medical
equipment providers with retail and e-commerce channels,
residential care operators, distributors and government health
services in North America, Europe and Asia/Pacific. For more
information about the company and its products, visit Invacare's
website at www.invacare.com.
This press release contains forward-looking statements within
the meaning of the “Safe Harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are those that describe future outcomes or expectations
that are usually identified by words such as “will,” “should,”
“could,” “plan,” “intend,” “expect,” “continue,” “forecast,”
“believe,” and “anticipate” and include, for example, statements
related to the expected effects on the company’s business of the
COVID-19 pandemic; sales and free cash flow trends; the impact of
contingency plans and cost containment actions; the company’s
liquidity and working capital expectations; the company’s future
financial results; and similar statements. Actual results may
differ materially as a result of various risks and uncertainties,
including the duration and scope of the COVID-19 pandemic and
impact on the demand for the company’s products; the ability of the
company to obtain needed raw materials and components from its
suppliers; actions that governments, businesses and individuals
take in response to the pandemic, including mandatory business
closures and restrictions on onsite commercial interactions; the
impact of the pandemic and actions taken in response to the
pandemic on global and regional economies and economic activity;
the pace of recovery when the COVID-19 pandemic subsides; general
economic uncertainty in key global markets and a worsening of
global economic conditions or low levels of economic growth; the
effects of steps the company takes to reduce operating costs; the
inability of the company to sustain profitable sales growth,
achieve anticipated improvements in segment operating performance,
convert high inventory levels to cash or reduce its costs to
maintain competitive prices for its products; lack of market
acceptance of the company's new product innovations; circumstances
or developments that may make the company unable to implement or
realize the anticipated benefits, or that may increase the costs,
of its current and planned business initiatives, in particular the
key elements of its enhanced transformation and growth plan such as
its new product introductions, additional investments in sales
force and demonstration equipment, plant consolidation in Germany,
supply chain actions and global information technology outsourcing
and ERP implementation activities; possible adverse effects on the
company's liquidity, including the company's ability to address
future debt maturities, that may result from delays in the
implementation of, any failure to realize benefits from, its
current and planned business initiatives; adverse changes in
government and third-party payor reimbursement levels and practices
in the U.S.; adverse impacts of new tariffs or increases in
commodity prices or freight costs; regulatory proceedings or the
company's failure to comply with regulatory requirements or receive
regulatory clearance or approval for the company's products or
operations; adverse effects of regulatory or governmental
inspections of the company's facilities at any time and
governmental investigations or enforcement actions; exchange rate
fluctuations; and those other risks and uncertainties expressed in
the cautionary statements and risk factors in the company's annual
report on Form 10-K, quarterly reports on Form 10-Q and other
filings with the Securities and Exchange Commission. The company
may not be able to predict and may have little or no control over
many factors or events that may influence its future results and,
except as required by law, shall have no obligation to update any
forward-looking statements.
Definitions of Non-GAAP Financial Measures
(a) "Constant currency net sales" is a non-GAAP financial
measure, which is defined as net sales excluding the impact of
foreign currency translation and divestitures. For foreign currency
translation impact, the current year's functional constant currency
net sales are translated using the prior year's foreign exchange
rates. For the divestiture impact, the company adjusted net sales
for the Dynamic Controls business which was divested as of March 7,
2020. These amounts are then compared to the prior year's sales to
calculate the constant currency net sales change. For 2Q20, the
company estimates the negative impact of foreign currency of 2% and
the divestiture of 2%. The company believes that this financial
measure provides meaningful information for evaluating the core
operating performance of the company.
(b) "Adjusted EBITDA" is a non-GAAP financial measure, which is
defined as earnings before interest, taxes, depreciation and
amortization and calculated as net loss plus: income taxes,
interest expense-net, loss on debt extinguishment including debt
finance charges and fees, gain or loss on convertible debt
derivatives, asset write-downs related to intangible assets, gain
on sale of business and depreciation and amortization, as further
adjusted to exclude charges related to restructuring activities and
stock-based compensation expense. It should be noted that the
company's definition of Adjusted EBITDA may not be comparable to
similar measures disclosed by other companies because not all
companies and financial analysts calculate Adjusted EBITDA in the
same manner. The company believes that this financial measure
provides meaningful information which is used by financial analysts
and others in the company's industry to evaluate the performance of
the company.
(c) "Free Cash Flow" is a non-GAAP financial measure, which is
defined as net cash provided (used) by operating activities less
purchases of property and equipment plus proceeds from sales of
property and equipment. The company believes that this financial
measure provides meaningful information for evaluating the overall
financial performance of the company and its ability to repay debt
or make future investments.
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version on businesswire.com: https://www.businesswire.com/news/home/20200713005670/en/
Lois Lee loislee@invacare.com 440-329-6435
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