Kalamazoo, Michigan, April 23, 2019 (GLOBE NEWSWIRE) — Stryker (NYSE:SYK) reported operating results for the first quarter of 2019:
First Quarter Highlights
- Reported net sales increased 8.5% to $3.5 billion
- Organic net sales increased 7.3%
- Reported operating income margin of 15.0%
- Adjusted operating income margin(1) expanded 10 bps to 25.1%
- Reported EPS decreased 6.0% to $1.09
- Adjusted EPS(1) increased 11.9% to $1.88, exceeding the high end of guidance range
| First Quarter Net Sales Growth Overview | ||||||||||
| Reported | Foreign Currency Exchange | Constant Currency | Acquisitions | Organic | ||||||
| Orthopaedics | 2.8 | % | (2.3 | )% | 5.1 | % | — | % | 5.0 | % |
| MedSurg | 8.2 | (1.8 | ) | 10.0 | 1.1 | 8.9 | ||||
| Neurotechnology and Spine | 20.7 | (2.5 | ) | 23.2 | 15.4 | 7.8 | ||||
| Total | 8.5 | % | (2.1 | )% | 10.6 | % | 3.3 | % | 7.3 | % |
“With over 7% organic sales growth in the first quarter, our multi-year momentum continued across our businesses and regions,” said Kevin A. Lobo, Chairman and Chief Executive Officer. “We remain committed to providing compelling value to our customers through innovative products and services, both internally developed and acquired, which translate to strong financial results for our shareholders.”
Sales Analysis
Consolidated net sales of $3.5 billion increased 8.5% in the quarter and 10.6% in constant currency. Organic net sales increased 7.3% in the quarter including 8.7% from increased unit volume partially offset by 1.4% from lower prices.
Orthopaedics net sales of $1.3 billion increased 2.8% in the quarter and 5.1% in constant currency. Organic net sales increased 5.0% in the quarter including 7.1% from increased unit volume partially offset by 2.1% from lower prices.
MedSurg net sales of $1.5 billion increased 8.2% in the quarter and 10.0% in constant currency. Organic net sales increased 8.9% in the quarter including 9.9% from increased unit volume partially offset by 1.0% from lower prices.
Neurotechnology and Spine net sales of $0.7 billion increased 20.7% in the quarter and 23.2% in constant currency. Organic net sales increased 7.8% in the quarter including 8.9% from increased unit volume partially offset by 1.1% from lower prices.
Earnings Analysis
Reported net earnings of $412 million decreased 7.0% in the quarter. Reported net earnings per diluted share of $1.09 decreased 6.0% in the quarter. Reported gross profit margin and reported operating income margin were 64.9% and 15.0% in the quarter. Adjusted gross profit margin(1) and adjusted operating income margin(1) were 65.8% and 25.1%, an improvement of 10 basis points in the quarter. Adjusted net earnings(1) of $714 million increased 11.9% in the quarter. Adjusted net earnings per diluted share(1) of $1.88 increased 11.9% in the quarter.
2019 Outlook
Based on our first quarter performance we now expect 2019 organic net sales growth to be in the range of 6.8% to 7.5% and expect adjusted net earnings per diluted share(2) to be in the range of $8.05 to $8.20. For the second quarter we expect adjusted net earnings per diluted share(2) to be in the range of $1.90 to $1.95. If foreign currency exchange rates hold near current levels, we expect net sales in the second quarter will be negatively impacted by approximately 1.5% and full year will be negatively impacted by approximately 1.0%, and net earnings per diluted share will be negatively impacted by $0.01 to $0.03 in the second quarter and negatively impacted by $0.05 to $0.10 in the full year.
(1) A reconciliation of the non-GAAP financial measures: adjusted gross profit margin, adjusted operating income and adjusted operating income margin, adjusted net earnings and adjusted net earnings per diluted share, to the most directly comparable GAAP measures: gross profit margin, operating income and operating income margin, net earnings and net earnings per diluted share, and other important information accompanies this press release.
(2) We are unable to present a quantitative reconciliation of our expected net earnings per diluted share to expected adjusted net earnings per diluted share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of restructuring-related and other charges, acquisition-related expenses and fair value adjustments to inventory and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and is dependent on various factors, including timing, and could be material to our Consolidated Statements of Earnings.
Conference Call on Tuesday, April 23, 2019
As previously announced, Stryker will host a conference call on Tuesday, April 23, 2019 at 4:30 p.m., Eastern Time, to discuss the Company’s operating results for the quarter ended March 31, 2019 and provide an operational update.
To participate in the conference call dial (877) 702-4565 (domestic) or (647) 689-5532 (international) and be prepared to provide conference ID number 4854803 to the operator.
A simultaneous webcast of the call will be accessible via the Company’s website at www.stryker.com. The call will be archived on the Investor Relations page of this site.
A recording of the call will also be available from 8:00 p.m., Eastern Time, on Tuesday, April 23, 2019, until 11:59 p.m., Eastern Time, on Tuesday, April 30, 2019. To hear this recording, you may dial (800) 585-8367 (domestic) or (416) 621-4642 (international) and enter conference ID number 4854803.
