Tornier Reports Financial Results for 2010 and Provides 2011 Outlook

AMSTERDAM, The Netherlands–(BUSINESS WIRE)–Tornier N.V. (NASDAQ: TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported full year sales of $227.4 million in 2010 compared to sales of $201.5 million in 2009, an increase of 13% as reported and 14% in constant currency over the prior year. The extremities product categories, which represent approximately 77% of company sales, were $176.0 million in 2010 compared to extremity sales of $152.5 million in 2009, an increase of 15% as reported and 16% in constant currency over the prior year. Tornier’s sales in the fourth quarter of 2010 were $61.3 million compared to sales of $57.3 million in the fourth quarter of 2009, an increase of 7% as reported and 10% in constant currency. Fourth quarter 2010 sales of Tornier’s extremity product lines increased by 9% as reported and 11% in constant currency over fourth quarter 2009.

Douglas W. Kohrs, President and Chief Executive Officer of Tornier, commented, “We are pleased to have delivered another year of solid double digit sales growth in 2010 as Tornier’s new product momentum, global expansion, and strong position in the extremities market overcame a challenging economic environment for the healthcare industry and the orthopaedic market. We recently highlighted six already launched new products at the American Academy of Orthopaedic Surgeons meeting and we plan a total of 19 product launches for the full year. We are excited about the contribution that these new products will make to sustain balanced growth across our product lines and geographic markets.”

Tornier’s 2010 adjusted EBITDA, as defined in both our most recent Form S-1 and in the GAAP to non-GAAP reconciliation provided later in this release, was reported at $18.6 million or 8.2% of sales, an increase of 76% compared to $10.6 million, or 5.3% of sales, in 2009. The Company reported adjusted EBITDA of $5.2 million, or 8.5% of sales, for the fourth quarter of 2010 compared to $5.0 million for the fourth quarter of 2009.

Mr. Kohrs continued, “We are encouraged by the significant increase in adjusted EBITDA in 2010 which we believe evidences the margin expansion opportunity in our business model. As we look forward to 2011, our first year as a publicly traded company, we remain committed to continued improvement in profitability driven by above market top line growth.”

Sales and Product Review

Sales of Tornier’s extremity product lines recorded constant currency growth of 16% in 2010. This organic growth has resulted from Tornier’s investments in product development, business development and geographic expansion in recent years. Within total extremities, upper extremities represent the Company’s largest reported product category and include its pioneering shoulder arthroplasty products. The upper extremity product category recorded constant currency growth of 11% in 2010 with Tornier’s core AEQUALIS^® and newerAFFINITI^™ and AEQUALIS ASCEND^™ products all contributing to product line growth. Tornier’s lower extremity product category recorded constant currency growth of 16% in 2010, aided by continued market share gains by the Company’s market-leading SALTO^® ankle arthroplasty system. Sports medicine and biologics represent Tornier’s fastest growing reported product category, recording constant currency growth of approximately 100% in 2010. This category is benefitting from the expanding market acceptance of the Company’s innovative rotator cuff repair products that include Piton^® anchors, Conexa^™ regenerative tissue matrix and the ArthroTunneler^™ anchorless rotator cuff repair system.

On a geographic basis, Tornier’s 2010 sales in the United States increased by 14% and represented 56% of global sales, while international sales increased by 12% as reported and 15% in constant currency, and represented 44% of global sales.

Outlook

The Company expects 2011 reported sales in the range of $255 to $262 million, representing growth of 12% to 15% based on recent exchange rates, and 10% to 14% in constant currency. The Company projects 2011 adjusted EBITDA, as described in both our most recently filed Form S-1 and in the GAAP to non-GAAP reconciliation provided later in this release, of 11% to 12% of sales, or $28 to $31 million. This would represent an increase in adjusted EBITDA of 51% to 67% over the adjusted EBITDA reported in 2010.

For the first quarter of 2011, the Company expects reported sales in the range of $65.5 to $66.5 million, representing growth of 6% to 8% based on recent currency exchange rates, and 7% to 9% in constant currency. Projected first quarter 2011 sales reflect the negative effect of four fewer selling days compared to the first quarter of 2010. The Company projects adjusted EBITDA for the first quarter of 2011 of 8% to 9% of sales, or $5.5 to $6.0 million.

Post Year End Events

On February 8, 2011, the Company completed its initial public offering by issuing 8,750,000 ordinary shares at $19.00 per share, raising approximately $155 million net of underwriters’ discounts and commissions. As a result of its initial public offering, Tornier has strengthened its balance sheet and overall liquidity. Tornier’s notes payable, including accrued interest, were paid in full, in the amount of approximately $116 million. At the time of the repayment of the notes, approximately $29 million of unamortized note discount remained and will be recorded as a pre-tax loss on the extinguishment of debt in the Company’s first quarter 2011 financial results.

As estimated for February 2011 month end, the Company currently holds approximately $58 million in cash and cash equivalents, has $50 million in debt and has an additional $16 million of available credit. At the end of February, the Company has approximately 38.3 million shares issued and outstanding.

Earnings Call Information

Tornier will host a conference call today at 5:00 p.m. eastern time to discuss its fourth quarter and fiscal year 2010 results. Those interested may join the call from within the U.S. by dialing 877-673-5355; outside the U.S., dial +1-760-666-3805. A replay of the call will be available through the Company’s website at www.tornier.com for replay two hours after completion of the call.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this press release include the intent, belief or current expectations of the Company and members of its management team with respect to the Company’s future business operations as well as the assumptions upon which such statements are based. Forward-looking statements include specifically, but are not limited to, the Company’s market opportunities, future products, sales and financial results and such statements are subject to risks and uncertainties such as the timing and success of new product introductions, physician acceptance, endorsement, and use of the Company’s products, regulatory matters, competitor activities, changes in and adoption of reimbursement rates, potential product recalls, effects of global economic conditions and changes in foreign currency exchange rates. Additional factors that could cause actual results to differ materially from those contemplated within this press release can also be found in the Company’s Risk Factor disclosures in its Registration Statement on Form S-1, as amended, which was declared effective on February 2, 2011, and in the Company’s other filings with the SEC. The Company disclaims any responsibility to update any forward-looking statements.

About Tornier

Tornier is a global medical device company focused on serving extremities specialists who treat orthopaedic conditions of the shoulder, elbow, wrist, hand, ankle and foot. The Company’s broad offering of over 80 product lines includes joint replacement, trauma, sports medicine, and biologic products to treat the extremities, as well as joint replacement products for the hip and knee in certain international markets. Since its founding approximately 70 years ago, Tornier’s “Specialists Serving Specialists” philosophy has fostered a tradition of innovation, intense focus on surgeon education, and commitment to advancement of orthopaedic technology stemming from its close collaboration with orthopaedic surgeons and thought leaders throughout the world. For more information regarding Tornier, visit www.tornier.com.

Use of Non-GAAP Financial Measures

To supplement Tornier’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), Tornier uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this press release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this release. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for Tornier’s financial results prepared in accordance with GAAP.