ICU Medical(US:ICUI)2019-11-12 21:38Revenue Performance - Total revenue for the three months ended September 30, 2019, was $307.5 million, a decrease from $327.2 million in the same period of 2018 [127]. - Infusion Consumables revenue for the three months ended September 30, 2019, was $119.8 million, an increase of 1.7% compared to $117.8 million in 2018 [132]. - Infusion Consumables revenue for the nine months ended September 30, 2019, decreased to $358.0 million from $361.5 million in 2018, a decline of 1.0% [132]. - IV Solutions revenue for the three months ended September 30, 2019, was $98.2 million, a decrease of $16.2 million or 14.2% compared to the same period in 2018 [134]. - Infusion Systems revenue for the nine months ended September 30, 2019, was $244.5 million, down $18.8 million or 7.1% from the prior year [135]. - Critical Care revenue for the three months ended September 30, 2019, was $10.6 million, a decrease of $2.9 million or 21.5% compared to the same period in 2018 [136]. - Domestic revenue accounted for 72% of total revenue for the three months ended September 30, 2019, while international revenue was 28% [127]. - Infusion Systems represented 26% of total revenue for the three months ended September 30, 2019, consistent with 25% in 2018 [127]. Financial Metrics - Gross margin for the three months ended September 30, 2019, was 39%, down from 41% in the same period of 2018 [131]. - Gross margins for the three months ended September 30, 2019, were 38.6%, down from 41.1% in the same period in 2018 [137]. - Selling, general and administrative expenses for the three months ended September 30, 2019, were 21%, a decrease from 24% in 2018 [131]. - SG&A expenses for the three months ended September 30, 2019, were $65.9 million, a decrease of $10.7 million or 14.0% compared to the same period in 2018 [139]. - Research and development expenses remained consistent at 4% for both the three and nine months ended September 30, 2019, and 2018 [131]. - R&D expenses for the nine months ended September 30, 2019, were $36.0 million, a decrease of $3.3 million or 8.4% compared to the same period in 2018 [142]. - The company reported a net income of 9% for the three months ended September 30, 2019, compared to 3% in the same period of 2018 [131]. Cash Flow and Investments - Cash, cash equivalents, and investments decreased by $47.3 million from $384.1 million at December 31, 2018 to $336.8 million at September 30, 2019 [152]. - Net cash provided by operations for the nine months ended September 30, 2019 was $53.1 million, with net income and adjustments contributing $156.9 million [153]. - The net cash used in operations due to changes in operating assets and liabilities was $103.9 million, including a $30.9 million increase in inventories and a $32.5 million increase in accounts receivable [153]. - The net cash used in financing activities for the nine months ended September 30, 2019 was $14.2 million, a decrease of $22.3 million compared to the previous year [162]. - The company has a five-year Senior Secured Revolving Credit Facility of $150.0 million, with an accordion feature allowing for increased borrowing capacity [167]. - As of September 30, 2019, the company was in compliance with all financial covenants [170]. Strategic Initiatives - The company aims to enhance growth through increased sales and marketing efforts, although success is not guaranteed [129]. - The company plans to increase marketing efforts and expand production facilities, which may enhance manufacturing efficiencies and cost savings [1]. - The company is focused on the development and marketing of new products, which is critical for future growth [179]. - There is a dependence on a small number of customers, which poses risks to revenue stability [1]. - The company anticipates potential fluctuations in quarterly results due to business seasonality and customer ordering patterns [1]. - The company is exploring future investment alternatives to enhance liquidity and capital resources over the next twelve months [1]. Risks and Challenges - The company is subject to various risks including foreign exchange fluctuations and increases in labor costs [179]. - The outcome of litigation and regulatory approvals may significantly impact the company's operations and financial results [179]. - The effective tax rate for the nine months ended September 30, 2019, was 14%, compared to (4.0)% in the same period in 2018 [149]. - Other income for the nine months ended September 30, 2019, was $4.7 million, compared to a loss of $3.5 million in the same period in 2018 [148]. - The effective tax rate for the nine months ended September 30, 2018 was impacted by a discrete tax benefit of $12.8 million related to stock option exercises and a contract settlement tax benefit of $5.7 million [151]. Currency Exposure - The net Euro asset position was approximately €48.3 million, with a potential impact of $5.3 million on consolidated amounts from a 10% change in Euro to USD conversion [184]. - The net Canadian dollar asset position was approximately $37.5 million, with a potential impact of $2.6 million from a 10% change in Canadian dollar to USD conversion [184]. - The company does not currently hedge its Canadian dollar or Euro foreign currency exposures, but it does hedge a portion of its manufacturing spend in Mexican Peso [185].