DJO Posts Modest Sales Gains for Q1

San Diego, Calif.-based DJO Global Inc. has posted modest sales growth for the first quarter (ended March 28). DJO makes orthopedic implants, braces and products for pain-management.

Net sales for the first quarter were $280.1 million, reflecting negative growth of 0.9 percent, compared with net sales of $282.7 million for the first quarter of 2014. According to the company, net sales were unfavorably impacted by $12 million related to changes in foreign currency exchange rates compared to the rates in effect in the first quarter of 2014.

Excluding the impact of changes in foreign currency exchange rates from rates in effect in the prior year period, net sales increased 5 percent on a sales-per-day basis compared to net sales for the first quarter of 2014. The first quarter of 2015 included 62 shipping days in the United States and 61 shipping days in most international markets, while the comparable 2014 period included 63 days.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2015 were $59 million, or 21.1 percent of net sales, reflecting 1.1 percent decline when compared with Adjusted EBITDA of $59.7 million for the first quarter of 2014. On a constant currency basis, adjusted EBITDA grew 4 percent in the first quarter of 2015.

For the first quarter of 2015, the company reported a net loss of $35.5 million, compared to a net loss of $36.5 million for the first quarter of 2014.

“We are pleased to report strong top and bottom line performance, in line with expectations,” said Mike Mogul, DJO’s president and CEO. “We also launched our Exprt Revision Knee, the world’s first orthopedic implant designed primarily for experienced surgeons providing a streamlined surgical experience at a much lower cost. Just as exciting was our launch of the world’s first titanium knee brace, the A22, providing patients and athletes with a much lighter and lower profile experience in an ACL (anterior cruciate ligament) brace.

Mogul highlighted the performance of the company’s Bracing and Vascular, Surgical Implant and International divisions, for delivering “strong organic sales-per-day growth” of 5.7 percent, 14.4 percent and 6.4 percent, respectively.

“We continue to be very optimistic about the building momentum of providing MotionCare products in order to keep arthritis sufferers moving. We also launched a very exciting slate of new products for 2015,” he added. “We expect these new products and other ongoing commercial initiatives to drive continued top line growth and we are reconfirming our guidance of total company full year constant currency revenue and adjusted EBITDA growth rates of mid single digits for the full 2015 year. Based on current foreign currency rates, we expect sales and adjusted EBITDA for the full year of 2015 to be negatively impacted by approximately 400-500 bps (basis points). However, at current foreign currency rates, we expect positive growth in full-year sales and adjusted EBITDA driven by core business growth.”

Editor’s note: According to Investopedia, a basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01 percent (1/100th of a percent) or 0.0001 in decimal form. In most cases, it refers to changes in interest rates and bond yields.

Net sales for DJO’s Bracing and Vascular segment were $113.9 million in the first quarter of 2015, reflecting growth of 5.7 percent, compared to the first quarter of 2014, driven by strong contribution from the sales of new products and improving sales execution, according to the company.

Net sales for the Recovery Sciences segment were $67.1 million in the first quarter of 2015, reflecting a drop of 1.1 percent on a sales-per-day basis, compared to the first quarter of 2014, primarily due to the slower than anticipated sales in the EMPI and Regeneration business units.

First-quarter net sales within the International segment were $72.2 million. Excluding the impact of changes in foreign currency exchange rates from rates in effect in the prior year period, net sales for the first quarter of 2015 increased 6.4 percent.

Net sales for the Surgical Implant segment were $26.9 million for the first quarter of 2015, reflecting growth of 14.4 percent, driven by strong sales of the company’s shoulder, knee and hip product lines.

Moving Jobs to Mexico
In related news, according to a recent article in the Minneapolis/St. Paul Business Journal, DJO is moving operations in Arden Hills, Minn., to Mexico and eliminating up to 54 jobs in the Twin Cities. The Arden Hills site is for the firm’s Exos business, which makes a waterproof alternative to the common cast. DJO bought the business in 2012.

DJO expects in May, according to a layoff notice sent to the Minnesota Department of Employment and Economic Development
Most of the positions to be eliminated are product assemblers and machine operators, according to the local newspaper. Some managers may be offered transfers.