Wright Medical Group Inc. (NSDQ:WMGI) posted a Wall-Street-beating quarter amid declining sales and an earnings forecast below analysts’ estimates for 2012.
The Arlington, Tenn.-based orthopedics company reported profits of $1.2 million, or 3 cents per diluted share, on sales of $126.9 million during the 3 months ended Dec. 31, 2011.
That’s a top-line loss of 8% and a bottom line loss of 86.5% compared to Q4 2010, when Wright posted profits of $8.9 million, or 33 cents diluted EPS, on sales of $138.8 million.
One-time charges weighed heavily on the orthopedic device maker during the quarter, including $2.8 million in restructuring costs, $3.4 million for a deferred prosecution agreement, $2.4 million in non-cash stock-based compensation expenses and a $1 million set-aside for an estimated IRS audit liability, according to regulatory filings.
Wright’s Q4 adjusted EPS of 17 cents still beat expectations on The Street by 6 cents, but president & CEO Robert Palmisano wasn’t content with the figures.
"Although our 4th-quarter results were stronger than anticipated, we are not satisfied with our 2011 financial performance relative to the market opportunities, and we have much work ahead of us to improve our execution, efficiency and return to a high-growth company," Palmisano said in prepared remarks. "My top priorities will be to grow our foot-and-ankle business above market rates, run a much more focused and efficient ortho-recon business, and increase cash generation. I believe these initiatives will in turn drive growth and shareholder value."
Wright beat The Street with its full-year report as well, despite posting losses of $5.1 million, or 13 cents per share, on sales of $512.9 million in 2011. That compares to profits of $17.8 million, or 47 cents EPS, on sales of $519 million in 2010.
Adjusted for 1-time charges, the company reported 84 cents EPS for 2011, 18 cents higher than analysts’ estimates of 66 cents.
The orthopedic giant forecast lowered sales for the next year, setting 2012 revenue guidance in the range of $472 million to $489 million and earnings in between 26 cents and 36 cents.
"As our guidance implies, these transformational changes for our business will require significant investment in 2012, which will negatively impact our full-year 2012 results," Palmisano said. "However, we believe these investments will generate significant future returns, including accelerating foot and ankle sales growth rates and improving inventory management and cash generation."
Some of those strategies include shifting the company’s foot and ankle business from a distribution model to direct sales and significantly reducing inventories to improve cash flow.
WMGI shares got a modest bump on the market today, trading 1.6% higher at $16.94 per share as of about 12:45 p.m. today.