CONMED (CNMD) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales increased by 4.5% to $332.1 million for the three months ended June 30, 2024, compared to$317.7 million for the same period in 2023, primarily driven by strong growth in the general surgery product line [89]. - General surgery sales rose by 8.9% to $192.6 million for the three months ended June 30, 2024, compared to$176.9 million in the same period of 2023 [90]. - Orthopedic surgery sales decreased by 0.9% to $139.5 million for the three months ended June 30, 2024, compared to$140.8 million in the same period of 2023 [90]. - Net income increased to 9.0% for the three months ended June 30, 2024, compared to 4.3% for the same period in 2023 [88]. - Gross profit margin improved by 160 basis points to 55.3% for the three months ended June 30, 2024, compared to 53.7% for the same period in 2023 [90]. Expenses and Costs - Cost of sales increased to $148.4 million for the three months ended June 30, 2024, compared to$147.0 million for the same period in 2023 [90]. - Selling and administrative expense decreased to $122.5 million in Q2 2024 from$129.7 million in Q2 2023, representing a 5.6% decrease [92]. - Research and development expenses were 4.2% of net sales for the three months ended June 30, 2024, compared to 4.3% for the same period in 2023 [88]. - Research and development expense increased to $14.1 million in Q2 2024 from$13.6 million in Q2 2023, a 3.7% increase [94]. - Interest expense decreased to $9.6 million in Q2 2024 from$10.0 million in Q2 2023, a 4% decrease [95]. - Income tax expense recorded an effective tax rate of 20.1% for Q2 2024 compared to 21.2% for Q2 2023, reflecting a reduction of 1.1 percentage points [97]. Cash Flow and Financing - Net cash provided by operating activities was $72.4 million in the first half of 2024, significantly up from$22.8 million in the same period of 2023 [101]. - Net cash used in investing activities decreased by $4.2 million in the first half of 2024, with capital expenditures at$5.6 million compared to $8.8 million in the prior year [103]. - Net cash used in financing activities increased to$61.1 million in the first half of 2024 from $14.4 million in the same period of 2023 [104]. - The company had$114.6 million in borrowings outstanding on the term loan facility and $62.0 million on the revolving credit facility as of June 30, 2024 [106]. - The company has repurchased a total of 6.1 million shares of common stock for$162.6 million under a $200.0 million share repurchase program [108]. Market and Operational Challenges - The company expects ongoing supply chain challenges and inflationary pressures to impact results through 2024 [86]. - The company is experiencing higher manufacturing and operating costs due to inflationary pressures and ongoing supply chain challenges [106]. - International sales accounted for approximately 44% of consolidated net sales during both the six months ended June 30, 2024, and 2023 [85]. - The company derived approximately 84% of its revenues from single-use products, indicating a strong recurring revenue stream [85].