ICU Medical, Inc. Announces Fourth Quarter and Fiscal Year 2014 Results

February 9, 2015

SAN CLEMENTE, Calif., Feb. 9, 2015 (GLOBE NEWSWIRE) -- ICU Medical, Inc., (Nasdaq:ICUI) ("ICU Medical"), a leader in innovative medical devices used in vascular therapy, oncology and critical care applications, today announced financial results for the fourth quarter and fiscal year ended December 31, 2014.

Fourth Quarter 2014 Results

Fourth quarter 2014 revenue was $79.9 million, compared to $77.9 million in the same period last year. GAAP net income for the fourth quarter of 2014 was $7.4 million, or $0.46 per diluted share, as compared to GAAP net income of $13.3 million, or $0.86 per diluted share, for the fourth quarter of 2013. Adjusted diluted earnings per share for the fourth quarter of 2014 was $0.68 as compared to $0.94 for the fourth quarter of 2013. Also, adjusted EBITDA was $21.9 million for the fourth quarter of 2014 as compared to $20.1 million for the fourth quarter of 2013.

Full Fiscal Year 2014 Results

Fiscal year 2014 revenue was $309.3 million, compared to $313.7 million in the same period last year. GAAP net income for fiscal year 2014 was $26.3 million, or $1.68 per diluted share, as compared to GAAP net income of $40.4 million, or $2.65 per diluted share, for fiscal year 2013. Adjusted diluted earnings per share for fiscal year 2014 was $2.38 as compared to $3.06 for fiscal year 2013. Also, adjusted EBITDA was $73.9 million for fiscal year 2014 as compared to $79.0 million for fiscal year 2013.

Vivek Jain, ICU Medical's Chief Executive Officer, said, "Fourth quarter and full year results were slightly above our expectations. Consistent with our trends during the previous two quarters, fourth quarter revenue was driven by strength in direct infusion therapy, oncology and international sales and this was offset by an expected decline in our OEM business."

Revenues by market segment for the three and twelve months ended December 31, 2014 and 2013 were as follows:

(dollars in millions)
  Fiscal year ended December 31, Three months ended December 31,
Market Segment 2014 2013 Change 2014 2013 Change
Infusion Therapy $216.0 $221.0  $ (5.0) $56.5 $54.2 $2.3
Critical Care 55.1 54.3 0.8 13.8 13.3 0.5
Oncology 36.9 37.1 (0.2) 9.3 9.9 (0.6)
Other 1.3 1.3 0.0 0.3 0.5 (0.2)
  $309.3 $313.7  $ (4.4) $79.9 $77.9 $2.0

The Company ended the fourth quarter with a strong balance sheet. As of December 31, 2014, cash, cash equivalents and investment securities totaled $346.8 million and working capital was $408.5 million. Additionally, the Company generated operating cash flow of $60.5 million for the fiscal year of 2014.

Fiscal Year 2015 Guidance

For the year, the Company expects revenue to be in the range of $312 million to $317 million, GAAP diluted earnings per share to be in the range of $2.15 to $2.25, adjusted diluted earnings per share to be in the range of $2.70 to $2.80, and adjusted EBITDA to be in the range of $84 million to $86 million.

Conference Call

The Company will be conducting a conference call concerning these announcements at 4:30 p.m. EST (1:30 p.m. PST), today, Monday, February 9, 2015. The call can be accessed at 800-936-9761, international 408-774-4587, conference ID 74256379. The conference call will be simultaneously available by webcast, which can be accessed by going to the Company's website at www.icumed.com, clicking on the Investors tab, clicking on the Webcast icon and following the prompts. The webcast will also be available by replay.

Use of Non-GAAP Financial Information

This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Our management believes that the non-GAAP data provides useful supplemental information to management and investors regarding our performance and facilitates a more meaningful comparison of results of operations between current and prior periods. The non-GAAP financial measures included in this press release are adjusted EBITDA and adjusted diluted earnings per share ("Adjusted Diluted EPS"). Adjusted EBITDA excludes intangible asset amortization expense, depreciation expense, stock compensation expense, strategic transaction expense, restructuring expense and income tax expense. Adjusted Diluted EPS excludes, net of tax, intangible asset amortization expense, stock compensation expense, strategic transaction expense and restructuring expense.

The non-GAAP financial measures should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

Reconciliations of our GAAP to non-GAAP financial are included in the financial tables in this press release.

About ICU Medical, Inc.

ICU Medical, Inc. (Nasdaq:ICUI) develops, manufactures and sells innovative medical devices used in vascular therapy, oncology and critical care applications. ICU Medical's products improve patient outcomes by helping prevent bloodstream infections and protecting healthcare workers from exposure to infectious diseases or hazardous drugs. The company's complete product line includes custom IV systems, closed delivery systems for hazardous drugs, needlefree IV connectors, catheters and cardiac monitoring systems. ICU Medical is headquartered in San Clemente, California. More information about ICU Medical, Inc. can be found at www.icumed.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as ''will,'' ''expect,'' ''believe,'' ''could,'' ''would,'' ''estimate,'' ''continue,'' ''build,'' ''expand'' or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the future, including, but not limited to, statements regarding guidance for the first quarter and fiscal year 2015. These forward-looking statements are based on Management's current expectations, estimates, forecasts and projections about the Company and assumptions Management believes are reasonable, all of which are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated in the forward-looking statements. These risks and uncertainties include, but are not limited to, decreased demand for the Company's products, decreased free cash flow, the inability to recapture conversion delays or part/resource shortages on anticipated timing, or at all, changes in product mix, increased competition from competitors, lack of continued growth or improving efficiencies and unexpected changes in the Company's arrangements with its largest customers. Future results are subject to risks and uncertainties, including the risk factors, and other risks and uncertainties, described in the Company's filings with the Securities and Exchange Commission, which include those in the Annual Report on Form 10-K for the year ended December 31, 2013. Forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
(unaudited)
     
 December 31,
 20142013
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents  $ 275,812  $ 226,022
Investment securities 70,952 70,869
Cash, cash equivalents and investment securities 346,764 296,891
Accounts receivable, net of allowance for doubtful accounts of $1,127 and $1,208 at December 31, 2014 and 2013, respectively 39,051 45,318
Inventories 36,933 34,451
Prepaid income taxes 3,963 5,966
Prepaid expenses and other current assets 5,818 7,319
Deferred income taxes 4,683 4,351
Total current assets 437,212 394,296
     
PROPERTY AND EQUIPMENT, net 86,091 87,861
GOODWILL 1,478 1,478
INTANGIBLE ASSETS, net 7,063 8,490
DEFERRED INCOME TAXES 9,258 7,518
   $ 541,102  $ 499,643
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable  $ 11,378  $ 11,335
Accrued liabilities 17,350 15,551
Total current liabilities 28,728 26,886
     
DEFERRED INCOME TAXES 1,376 3,630
INCOME TAX LIABILITY 2,746 4,402
COMMITMENTS AND CONTINGENCIES — —
STOCKHOLDERS' EQUITY:    
Convertible preferred stock, $1.00 par value Authorized—500 shares; Issued and outstanding— none — —
Common stock, $0.10 par value — Authorized—80,000 shares; Issued 15,595 shares at December 31, 2014 and 15,103 at December 31, 2013, outstanding 15,595 shares at December 31, 2014 and 15,102 shares at December 31, 2013 1,559 1,510
Additional paid-in capital 107,336 78,495
Treasury stock, at cost — 0 shares at December 31, 2014 and 1 shares at December 31, 2013 — (49)
Retained earnings 408,911 382,576
Accumulated other comprehensive income (loss) (9,554) 2,193
Total stockholders' equity 508,252 464,725
   $ 541,102  $ 499,643
     
     
ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(unaudited)
       
 Year ended December 31,
 201420132012
REVENUES:      
Net sales  $ 308,770  $ 313,056  $ 316,322
Other 490 660 547
TOTAL REVENUE 309,260 313,716 316,869
COST OF GOODS SOLD 157,859 158,984 160,359
Gross profit 151,401 154,732 156,510
OPERATING EXPENSES:      
Selling, general and administrative 88,939 89,006 84,604
Research and development 18,332 12,407 10,630
Restructuring and strategic transaction 5,093 1,370 —
Total operating expenses 112,364 102,783 95,234
Income from operations 39,037 51,949 61,276
OTHER INCOME 755 765 563
Income before income taxes 39,792 52,714 61,839
PROVISION FOR INCOME TAXES (13,457) (12,296) (20,558)
NET INCOME  $ 26,335  $ 40,418  $ 41,281
NET INCOME PER SHARE      
Basic  $ 1.72  $ 2.75  $ 2.90
Diluted  $ 1.68  $ 2.65  $ 2.80
WEIGHTED AVERAGE NUMBER OF SHARES      
Basic 15,282 14,688 14,223
Diluted 15,647 15,274 14,725
       
       
ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(unaudited)
   
 Three months ended December 31,
 20142013
REVENUES:    
Net sales  $ 79,773  $ 77,637
Other 123 304
TOTAL REVENUE 79,896 77,941
COST OF GOODS SOLD 40,211 38,996
Gross profit 39,685 38,945
OPERATING EXPENSES:    
Selling, general and administrative 20,299 21,900
Research and development 5,080 3,458
Restructuring and strategic transaction 2,253 29
Total operating expenses 27,632 25,387
Income from operations 12,053 13,558
OTHER INCOME 183 195
Income before income taxes 12,236 13,753
PROVISION FOR INCOME TAXES (4,864) (421)
NET INCOME  $ 7,372  $ 13,332
NET INCOME PER SHARE    
Basic  $ 0.48  $ 0.89
Diluted  $ 0.46  $ 0.86
WEIGHTED AVERAGE NUMBER OF SHARES    
Basic 15,469 14,491
Diluted 15,934 15,416
     
     
ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
       
 Year ended December 31,
 201420132012
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income  $ 26,335  $ 40,418  $ 41,281
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 19,447 19,506 19,001
Provision for doubtful accounts 34 185 (237)
Provision for warranty and returns (360) 671 220
Stock compensation 9,592 5,434 5,563
Loss (gain) on disposal of property and equipment 8 (36) 212
Bond premium amortization 2,188 2,715 2,585
Changes in operating assets and liabilities:      
Accounts receivable 4,912 3,556 (5,395)
Inventories (3,836) 2,319 4,573
Prepaid expenses and other assets 1,970 (383) (415)
Accounts payable (621) (31) (1,536)
Accrued liabilities 2,344 (2,215) 1,199
Income taxes, including excess tax benefits and deferred income taxes (1,373) (6,413) (780)
Net cash provided by operating activities 60,640 65,726 66,271
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment (16,604) (18,415) (19,160)
Proceeds from sale of assets 5 49 10
Intangible asset additions (989) (1,080) (1,145)
Purchases of investment securities (93,588) (86,022) (98,876)
Proceeds from sale of investment securities 89,426 92,348 77,798
Net cash used by investing activities (21,750) (13,120) (41,373)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds from exercise of stock options 16,998 18,004 14,844
Proceeds from employee stock purchase plan 2,485 2,457 2,220
Tax benefits from exercise of stock options 5,700 6,966 4,567
Purchase of treasury stock (5,836) (3,033) —
Net cash provided by financing activities 19,347 24,394 21,631
Effect of exchange rate changes on cash (8,447) 2,122 781
NET INCREASE IN CASH AND CASH EQUIVALENTS 49,790 79,122 47,310
CASH AND CASH EQUIVALENTS, beginning of period 226,022 146,900 99,590
CASH AND CASH EQUIVALENTS, end of period  $ 275,812  $ 226,022  $ 146,900
       
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION      
Cash paid during the year for income taxes  $ 8,668  $ 12,172  $ 16,741
NON-CASH INVESTING ACTIVITIES      
Accrued liabilities for property and equipment  $ 789  $ 212  $ 427
       
       
ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands, except per share data)
(unaudited)
         
  Adjusted EBITDA
  Q4 Year Ended
  2014 2013 2014 2013
GAAP net income $7,372 $13,332 $26,335 $40,418
         
Non-GAAP adjustments:        
Stock compensation expense (a) 2,602 1,301 9,592 5,434
Depreciation and amortization expense (b) 4,805 5,055 19,447 19,506
Restructuring and strategic transaction expense (c) 2,253 29 5,093 1,370
Provision for income taxes (d) 4,864 421 13,457 12,296
Total non-GAAP adjustments 14,524 6,806 47,589 38,606
         
Adjusted EBITDA $21,896 $20,138 $73,924 $79,024
         
         
  Adjusted diluted earnings per share
  Q4 Year Ended
  2014 2013 2014 2013
GAAP diluted earnings per share $0.46 $0.86 $1.68 $2.65
         
Non-GAAP adjustments:        
Stock compensation expense (a) $0.16 $0.08 $0.61 $0.36
Amortization expense (e) $0.04 $0.04 $0.15 $0.17
Restructuring and strategic transaction expense (c) $0.14 $ -- $0.33 $0.09
Estimated income tax impact from adjustments (f)  $ (0.12)  $ (0.04)  $ (0.39)  $ (0.21)
Adjusted diluted earnings per share $0.68 $0.94 $2.38 $3.06
         
(a) Stock-based compensation expense in accordance with ASC 718.
(b) Depreciation of fixed assets and amortization of intangible assets.
(c) Restructuring and strategic transaction expense
(d) Income tax expense recognized during the period.
(e) Amortization expense
(f) Estimated income tax effect on adjustments for stock compensation expense, amortization expense and restructuring and strategic transaction expense.
         
         
ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year 2015 Outlook
(Amounts in millions, except per share data)
(unaudited)
     
     
GAAP net income $35 $36
     
Non-GAAP adjustments:    
Stock compensation expense (a) 12 12
Depreciation and amortization expense (b) 19 19
Provision for income taxes (c) 18 19
Total non-GAAP adjustments 49 50
     
Adjusted EBITDA $84 $86
     
     
     
     
GAAP diluted earnings per share $2.15 $2.25
     
Non-GAAP adjustments:    
Stock compensation expense (a) $0.73 $0.73
Amortization expense (d) $0.11 $0.11
Estimated income tax impact from adjustments (e)  $ (0.29)  $ (0.29)
Adjusted diluted earnings per share $2.70 $2.80
     
(a) Stock-based compensation expense in accordance with ASC 718.
(b) Depreciation of fixed assets and amortization of intangible assets.
(c) Income tax expense recognized during the period.
(d) Amortization expense
(e) Estimated income tax effect on adjustments for stock compensation expense and amortization expense.
     
CONTACT: ICU Medical, Inc.

         Scott Lamb, Chief Financial Officer

         (949) 366-2183

         

         ICR, Inc.

         John Mills, Partner

         (646) 277-1254