Net sales are up 8.3% at Invacare
ELYRIA, Ohio – Invacare put smiles on the faces of its investors last week.
Invacare has reported net earnings of $10.7 million for the second quarter ended June 30, 2011, compared to a net loss of $600,000 for the same period last year. Earnings were positively impacted by a tax settlement in Germany that allowed the manufacturer to pocket about $5.1 million. Adjusted net earnings were $14.7 million vs. $12.7 million
Net sales were $466.4 million for the second quarter this year compared to $430.8 million for the same period last year, an 8.3% increase.
For the six months ended June 30, 2011, net earnings were $18.1 million compared to $2.5 million for the same period last year. Adjusted net earnings were $25.2 million vs. $20.4 million. Net sales were $894.9 million vs. $833.1 million, a 7.4% increase.
For North American HME, earnings before income taxes were $13.3 million for the second quarter this year compared to $10.5 million for the same period last year. Net sales were $198.7 million vs. $190.1 million, a 4.5% increase. For the first half of this year, earnings before income taxes were $26.6 million compared to $22 million for the same period last year. Net sales were $384.3 million vs. $365.1 million, a 5.3% increase.
Invacare stated that it has seen “no significant impact” from Round 1 of national competitive bidding, which kicked off Jan. 1 in nine metropolitan statistical areas.
“While there may be slowness in purchases in these areas, it is hard to measure, since the company does not have zip code level visibility to either customer’s sales and rental data or Medicare fulfillment data,” it states. “The company continues to expect NCB to be neutral to earnings in 2011, but it will remain judicious in its extension of credit to customers in these MSAs.”
Looking forward, Invacare has two globalization projects that it hopes will result in long-term improvements. First, the manufacturer has decided to cease operations at two existing facilities—one in Europe and one in the United States; and second, it has decided that all new products must have a global platform.
“The company discontinued several projects that did not advance its globalization strategy and redeployed those resources to initiative new projects,” it states. “This resulted in a decline of new product launches in 2011, but the company expects to see the benefits in 2012 and beyond with numerous new product launches that will have global market appeal.”
Invacare increased its guidance for organic sales growth to between 3.5% and 4.5% from 3% to 4%. The manufacturer expects, however, that the effect of higher organic sales on earnings will be diluted by two things: Its gross margin declined in the first half of the year due to a sales mix favoring lower margin customers and lower margin products lines, as well as pricing pressure on certain products; and its results in the second half of 2011 are expected to be impacted by a significantly higher effective tax rate.
To read Invacare’s earnings report, go here.