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

04/23/2015
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 /PRNewswire/ -- 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 CommissionResMed 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

 

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






 

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




 

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

 

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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SOURCE ResMed Inc.

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