Wright Medical Group N.V. (WMGI)

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Wright Medical Group, Inc. (WMGI)

Q4 2008 Earnings Call

February 19, 2009 4:30 am ET


Gary D. Henley - President & Chief Executive Officer

John K. Bakewell - Executive Vice President & Chief Financial Officer


Taylor Harris – J.P. Morgan

Raj Denhoy - Thomas Weisel Partners

Matt Miksic - Piper Jaffray

Mike Matson - Wachovia Capital Markets

Kurt Kruger - Kruger Capital

Jeff Johnson - Robert W. Baird & Co.

Bill Plovanic - Canaccord Adams



Good morning ladies and gentlemen and welcome to the Fourth Quarter 2008 Wright Medical Group Incorporated Earnings Results Conference Call. My name is Wayne and I will be your coordinator for today. (Operator Instructions) This conference call may contain forward-looking statements as defined in the Federal Securities Laws. In fact, every statement made during the call except for those of historical fact will be forward-looking statements. Forward-looking statements reflect the current knowledge, assumptions, beliefs, estimates and expectations of our management. They also express our management’s current views of future performance, results, and trends. We caution you that actual results might defer materially from those described in these statements. Forward-looking statements are subject to a number of risks and uncertainties, including those discussed in our filings with the Securities and Exchange Commission. These SEC filings include our 10-K for 2007 and our subsequent 10-Qs for 2008. These risks and uncertainties could cause our actual results to materially differ from those described in the forward-looking statements. Although we believe that each forward-looking statement is accurate, there can be no assurance that it ultimately will prove to be so. You should not view a forward-looking statement as a representation by us that is described that the results will be achieved. We caution you not to place undue reliance on any forward-looking statement. All forward-looking statements are made as of today’s date, and we assume no obligation to update any such statement after this date.

With that ladies and gentlemen, I would now like to turn the call over to Mr. Gary Henley, President and Chief Executive Officer. You may proceed sir.

Gary Henley

Thank you, Wayne and good afternoon everyone. Welcome to our year end earnings call. I am pleased to share with you the details of our fourth quarter 2008 financial results, which reflect a strong finish to an outstanding year highlighted by excellent sales growth and significant operating expense leverage.

With me on the call today is John K. Bakewell, Executive Vice President & Chief Financial Officer. Together John and I will be discussing the fourth quarter results, the progress that we’ve made and have been making in our business and our latest outlook on the business going forward.

Before we begin I would like to note that we will be using a number of non-GAAP financial measures to describe our performance. Regarding that I will refer you to the reconciliations that appear in the tables of today’s press release as well as on our website. Further, that our Form

8-K filed today provides a detailed narrative that describes our use of such measures. Please note that unless otherwise stated, all of today’s discussions regarding results of operations refer to our as adjusted results.

As stated in today’s press release our sales results for the third quarter came in near the mid point of our original outlook range, which is modestly better than the lower end expectation which we communicated to you at our December guidance call. At the same time we posted excellent profitability for the quarter, with our adjusted EPS at $0.31 coming in above our communicated outlook of $0.28 to $0.30. While we are quite pleased with that outcome, particularly in light of the current global economic environment, we are also growing a bit more cautious about how that environment might impact gross in 2009 and will share out thoughts about that later in the call.

As we have done in past calls, I will start today with a summary of our top and bottom line results and then move into a detailed review of our revenue performance. John will then address the other key line items that make up our financial performance and share with you our guidance outlook both for Q1 as well as our latest views on the full year 2009. Together we will wrap up our prepared section of today’s calls with some business updates and then we will begin taking your questions.

To get started, net sales for the fourth quarter of 2008 were $120.1 million representing a 16% over net sales of $013.2 million in the fourth quarter of 2007, finishing near the middle of our previously communicated guidance range of $119 to $122 million. Excluding the unfavorable impact of foreign currency on our international revenues, which totaled approximately $2 million, global net sales increased 28% during the fourth quarter. We are pleased to see the strength of our Q4 sales performance was so broad based and balanced with solid performance in all of our major product lines as well as in both our US and International markets.

Additionally, we achieved adjusted net income of $12.6 million or $0.31 per diluted share for the fourth quarter of 2008, finishing above the upper end of our adjusted EPS guidance range of $0.28 to $0.30. Our strong sales performance, combined with excellent operating leverage resulted in adjusted operating income totaling $17.1 million, representing a year-over-year growth of 23%. This was a nice finish to an outstanding year in which we produced adjusted operating income growth of 36%.

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