Third-quarter profits for Orthofix (NSDQ:OFIX) plunged some 65% compared with the same period last year on increased income tax expenses, but the orthopedics company raised its 2017 sales outlook and increased the high end of its earnings forecast.
Lewisville, Texas-based Orthofix posted profits of $3.5 million, or 19¢ per share, on sales of $105.2 million for the three months ended Sept. 30, for a bottom-line plunge of -65.1% on sales growth of 6.9% compared with Q3 2016. Adjusted to exclude one-time items, earnings per share were 42¢, 4¢ ahead of the consensus forecast on Wall Street.
“We continue to execute on our strategy of increasing the organic growth and profitability of each of our four strategic business units while rationalizing corporate costs in all areas. This has resulted in an accelerating sales growth rate each quarter thus far this year, and positioned us for solid mid-single digit organic revenue growth and the opportunity for meaningful margin expansion in the years to come,” president & CEO Brad Mason said in prepared remarks.
CFO Doug Rice told analysts during a conference call that income tax expenses for the quarter were 65% of income before taxes, compared with -14% for the prior year’s quarter.
“This year-over-year increase in our rate was driven by accruals for uncertain tax positions in the current quarter as well as a one-time tax benefit in the third quarter of 2016 related to a change in estimate for share based compensation that did not recur this year,” Rice explained, according to a Seeking Alpha transcript.
Mason said the impact of Hurricane Maria in Puerto Rico is likely to mean a -$500,000 sales hit during fourth quarter “until such time as medical procedures begin to ramp back to normal volumes.”
“Based on this we are planning for little to no sales in Puerto Rico for the next four to six quarters,” he said.
Orthofix said it now expects to post adjusted EPS of $1.54 to $1.63 for the full year, compared with $1.54 to $1.60 previously. Revenues are pegged at $428 million to $431 million, up from $422 million to $425 million previously.
OFIX shares closed up 0.9% at $49.85 apiece yesterday.