• Total Sales: $321.3 million, a year-over-year increase of 2.9% as reported and 3.8% in constant currency.
• Adjusted Net Income: $29.6 million, an increase of 19.6% year-over-year.
• Adjusted Diluted EPS: $0.95, an increase of 20.1% year-over-year.
• Orthopedics Sales Growth: 3.9% in constant currency; U.S. sales decreased 2.1%, international sales increased 7.9%.
• General Surgery Sales Growth: 3.8% in constant currency; U.S. sales grew 6.9%, international sales decreased 3.3%.
• Adjusted Gross Margin: 56.4%, 80 basis points higher than the prior year quarter.
• Research and Development Expense: 4.0% of sales, 40 basis points lower than the prior year quarter.
• Adjusted SG&A Expenses: 38.7% of sales, consistent with the prior year.
• Interest Expense: $6.8 million in the first quarter.
• Adjusted Effective Tax Rate: 23.1%.
• Cash Flow from Operations: $41.5 million compared to $29.1 million in the first quarter of 2024.
• Capital Expenditures: $3.8 million compared to $2.0 million a year ago.
• Long-term Debt: $891.4 million at the end of the quarter.
• Leverage Ratio: 3.2x as of March 31.
• Full Year Revenue Guidance: $1.35 billion to $1.378 billion.
• Full Year Adjusted EPS Guidance: $4.45 to $4.60, excluding tariffs.

• Warning! GuruFocus has detected 4 Warning Signs with HCC.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Conmed Corp (NYSE:CNMD) reported a year-over-year sales increase of 2.9% as reported and 3.8% in constant currency, slightly exceeding guidance.
• Adjusted net income increased by 19.6% year-over-year, with adjusted diluted net earnings per share rising by 20.1%.
• The company received FDA clearance for a new delivery device for BioBrace in rotator cuff repair, which is expected to enhance surgical procedures.
• Strong demand was noted for BioBrace, with double-digit sales growth in foot and ankle products and significant clinical adoption.
• Conmed Corp (NYSE:CNMD) is making progress in supply chain initiatives, with a decline in the number of SKUs on backorder and expectations for further improvements by year-end.

Negative Points

• Supply chain challenges persist, particularly affecting the orthopedics segment in the U.S., where sales decreased by 2.1%.
• International general surgery sales declined by 3.3%, attributed to weaknesses in energy and critical care product lines.
• The company faces potential tariff impacts, with an estimated $5.5 million exposure in 2025, primarily from China.
• Adjusted gross margin improvements are expected to be delayed, with significant benefits not materializing until 2026.
• Despite a positive quarter, the company maintained its full-year revenue growth guidance at 4% to 6%, indicating caution amid macroeconomic uncertainties.

Q & A Highlights

Q: Can you explain why the full-year guidance was raised by less than the Q1 beat, especially considering FX improvements? A: Todd Garner, CFO, explained that there is no softness in the market to worry about. The company guided for 4% to 6% constant currency growth, and Q1 results were in line with this. The guidance was adjusted only for currency improvements, not operational changes.

Q: What has surprised you, both good and bad, since becoming CEO? A: Patrick Beyer, CEO, stated that nothing negative has surprised him due to his prior 10-year tenure at the company. Positively, he has been impressed by the passion of the CONMED team and the strong customer embrace of their technology.

Q: Can you clarify the tariff impact and mitigation strategies? A: Todd Garner, CFO, noted that the major tariff concern from Mexico is resolved, leaving China as the primary issue. Mitigation strategies include adjusting logistics to avoid U.S. tariffs, considering price adjustments, and exploring vendor changes, though these are slower due to regulatory constraints.

Q: Could you expand on supply chain improvements and their impact, particularly regarding BioBrace? A: Patrick Beyer, CEO, highlighted three focus areas: procurement, production planning, and production itself. Progress has been made, especially in implant products, with key portfolios coming off backorder. BioBrace had a strong quarter with significant clinical advancements and FDA clearance for a new device.

Q: What is the long-term growth potential once supply chain issues are resolved? A: Patrick Beyer, CEO, indicated that the company operates in fast-growing markets and aims for 4% to 9% growth. The goal is to achieve higher growth by addressing supply chain issues and leveraging their four key growth drivers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.