Updates strategic priorities with the
discontinuation of the production of respiratory products
Anticipates sequential improvement in
revenues and profitability in 4Q22
Invacare Corporation (NYSE: IVC) ("Invacare" or the "company")
today reported results for the quarter ended September 30,
2022.
Executive Summary
Reflecting on the quarter and the company's progress against its
transformation program, Geoffrey Purtill, interim president and
chief executive officer, said "We remain committed to taking
necessary and decisive action to increase shareholder value. After
carefully evaluating our strategic options, we have determined that
the lifestyle and mobility & seating categories are core to
improving Invacare's growth and profitability. As a result, we are
discontinuing the production of respiratory products. This will
allow us to further streamline our operations and, we expect, to
improve profitability by focusing resources on lifestyle and
mobility & seating products, which continue to experience
strong demand. We will also continue to take a hard look at every
aspect of our business, leaving no stone unturned as we position
Invacare for the future.
Turning to our 3Q22 results, while demand for lifestyle and
mobility & seating products remained resilient, results were
impacted by supply chain challenges and component shortages due to
supplier delivery holds which limited our ability to manufacture
products and fulfill existing orders within the quarter. Looking
ahead to 4Q22, we anticipate that the incremental financing
received in October will enable us to further improve output and
convert open orders into sales more efficiently. As we progress
through 4Q22, we have already seen positive trends and expect to
deliver sequential growth in net sales and Adjusted EBITDA next
quarter.
In conclusion, we continue to accelerate the execution of our
multi-faceted transformation plan which I am cautiously optimistic
will generate a return to profitability and enhance long-term
shareholder value. We look forward to providing updates on
additional strategic actions as they are determined."
Transformation Plan Update
As part of its ongoing transformation and updated strategic
priorities, the company has determined that the lifestyle and
mobility & seating categories are core to restoring its growth
and profitability. The decision to discontinue production of
respiratory products is expected to simplify operations and improve
profitability by enabling the company to focus resources on its
core business. As a result of this decision, the company recorded a
restructuring charge of $8.7 million in 3Q22 to value inventory on
hand at its net realizable value, impacting gross margins by 510
basis points. This charge was recorded primarily in the North
America and Europe reporting segments.
The company expects to discontinue the production of respiratory
products in 4Q22 and to fulfill existing customer orders with
inventory on hand. The company will continue to operate its
respiratory parts and service business and honor its
respiratory-related warranty and regulatory obligations.
As a result of transformation actions taken in the first half of
2022, the company realized a benefit of $4.1 million in reduced
operating costs in 3Q22. However, this was offset by lower net
sales and gross profit, as well as the unfavorable impact from
foreign exchange.
The company has identified additional opportunities to drive
growth and profitability in 2023 and beyond. These options include
product line rationalization, footprint optimization, supply chain
simplification, organization rightsizing, and liquidity
enhancements.
Key Metrics (3Q22* versus 3Q21)
- Reported net sales were $170.4 million, a decrease of 24.0% and
constant currency net sales(a) decreased 16.9%.
- Gross margin was 18.4%, a decrease of 850 basis points,
including 510 basis points of decline related to the write-down of
respiratory inventory as a result of the decision to discontinue
production of respiratory products.
- SG&A expense decreased 1.4% to $55.4 million, and constant
currency SG&A(b) increased 4.5%.
- Operating loss was $33.4 million compared to a loss of $24.8
million.
- Adjusted EBITDA(c) loss was $11.8 million, compared to positive
$8.0 million.
- Free cash flow(d) usage was $20.5 million compared to usage of
$6.1 million.
* Date format is quarter and year in each instance
Commenting on the company's financial results, Kathy Leneghan,
senior vice president and chief financial officer stated, "As
anticipated, the company utilized the proceeds from financing
transactions completed in 3Q22 to help unlock the supply chain and
accelerate our transformation initiatives. We expect to see a
sequential improvement in Adjusted EBITDA as we begin to more
efficiently convert open orders into sales. We are optimistic that
our transformation plan will drive continued improvement in
profitability and free cash flow, and as always, we continue to
assess opportunities to further enhance liquidity."
3Q22 Segment Results versus 3Q21
(in millions USD)
Net Sales
Operating Loss
3Q22
3Q21
Reported
% Change
Constant Currency
% Change
3Q22
3Q21
% Change
Europe
$
97.5
$
127.0
(23.3
)%
(11.5
)%
$
(2.6
)
$
9.6
(127.1
)%
North America
65.3
88.1
(25.8
)
(25.6
)
(15.0
)
(1.5
)
(885.4
)
All Other
7.6
9.1
(16.6
)
(7.8
)
(6.4
)
(3.9
)
(65.7
)
At a segment level, reported net sales in Europe declined due to
unfavorable foreign exchange and lower volumes across all main
product categories primarily due to supply chain challenges,
including components shortages due to supplier delivery holds. In
North America, revenues declined in all product categories but most
significantly in respiratory products. Net sales in the Asia
Pacific region, reported in All Other, declined as growth in
mobility & seating was more than offset by lower sales of
respiratory and lifestyle products.
Gross margin was negatively impacted by the write-down of
respiratory inventory of $8.7 million, or 510 basis points.
Excluding this charge, gross margin declined by 340 basis points
due to unfavorable operational variances attributable to lower
volumes and intermittent production stoppages, higher input costs,
and unfavorable foreign exchange partially offset by the benefit of
pricing actions. Gross profit dollars were impacted by the same
factors, in addition to lower net sales and unfavorable foreign
currency translation of $3.7 million.
SG&A expenses on a constant currency basis increased as a
result of higher IT costs. 3Q22 included $2.7 million of IT costs
classified as operating expense as a result of the pause in ERP
roll-out, similar to the first half of 2022, as the company
continues to focus on restructuring actions. Previously, these IT
costs were classified as capital expenditures and were included in
All Other.
In 3Q22, the company incurred $8.4 million of restructuring
expense related to severance and other costs as compared to $0.4
million in 3Q21.
As a result of the financing transactions completed in 3Q22, the
company recognized a net gain on debt extinguishment of $6.4
million related to the partial retirement of 2024 and 2026
convertible notes, and net gain on convertible debt derivatives of
$1.0 million related to the issuance of secured 2026 convertible
notes.
Fourth Quarter 2022 Update
The company has begun to realize the benefit of improved access
to key materials and components as a result of the increased
financial flexibility from the financing transactions completed in
3Q22. On a consolidated basis, the company expects to see
sequential constant currency net sales growth in 4Q22. Adjusted
EBITDA is also anticipated to improve sequentially driven by
revenue growth, higher gross profit attributable to the increased
effectiveness of pricing actions, improved operational
efficiencies, and restructuring benefits partially offset by
continued higher input costs, and unfavorable foreign exchange.
Through the first two months of 4Q22, Europe is on pace to deliver
sequential constant currency net sales improvement and positive
Adjusted EBITDA for the quarter. The company anticipates it will
incur additional restructuring charges for North America in 4Q22 as
it focuses on improving the profitability of this segment for the
long-term.
The company continues to experience strong demand and orders for
its lifestyle and mobility & seating products. Open orders
related to lifestyle and mobility & seating products were $80.5
million at the end of 3Q22 as compared to $60.5 million at the end
of 2021. Open orders remain elevated due to global component
shortages, primarily electronic components and other key input
materials, supply chain challenges, and supplier delivery
holds.
The company continues to focus on executing its transformation
plan to drive revenue growth and deliver significant improvement in
financial performance to enhance long-term shareholder value.
Conference Call and Webcast
As previously announced, the company will provide a conference
call and webcast for investors and other interested parties to
review its third quarter 2022 financial results on Tuesday,
November 8, 2022 at 8:30 AM ET. Those wishing to participate via
webcast can access the event at
https://events.q4inc.com/attendee/918973030. Those wishing to
participate via telephone can dial 844-200-6205, or for
international callers 929-526-1599, and enter Conference ID 542322.
A copy of the webcast slide deck will be posted to
https://global.invacare.com/investor-relations prior to the webcast
and an achieve will be posted 24 hours after the call. A recording
of the conference call can be accessed by dialing 929-458-6194 and
entering the Conference ID Code 071740, through November 22,
2022.
About Invacare Corporation
Invacare Corporation (NYSE: IVC) ("Invacare" or the "company")
is a leading manufacturer and distributor in its markets for
medical equipment used in non-acute care settings. At its core, the
company designs, manufactures and distributes medical devices that
help people to move, rest, and perform essential hygiene. The
company provides clinically complex medical device solutions for
congenital (e.g., cerebral palsy, muscular dystrophy, spina
bifida), acquired (e.g., stroke, spinal cord injury, traumatic
brain injury, post-acute recovery, pressure ulcers) and
degenerative (e.g., ALS, multiple sclerosis, elderly, bariatric)
ailments. The company's products are important parts of care for
people with a wide range of challenges, from those who are active
and involved in work or school each day and may need additional
mobility, to those who are cared for in residential care settings,
at home and in rehabilitation centers. The company sells its
products principally to home medical equipment providers with
retail and e-commerce channels, residential care operators,
distributors, and government health services in North America,
Europe, and Asia Pacific. For more information about the company
and its products, visit Invacare's website at www.invacare.com.
This press release contains forward-looking statements within
the meaning of the “Safe Harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are those that describe future outcomes or expectations
that are usually identified by words such as “will,” “may,”
“should,” “could,” “plan,” “intend,” “expect,” “continue,”
“forecast,” “believe,” and “anticipate” as well as similar
comments, denote forward-looking statement that are subject to
inherent uncertainties that are difficult to predict. These
include, for example, statements related to the company’s ability
to address on-going supply chain challenges and component
shortages; sales and free cash flow trends; the impact of
contingency plans and cost containment actions; the company’s
intention to discontinue the production of respiratory products and
focus on lifestyle and mobility & seating products, the
company's liquidity and working capital expectations; the company’s
future financial results, including expectations as to consolidated
and segment revenue, net sales and Adjusted EBITDA in 4Q22; the
company's future business plans and similar statements. Actual
results and events may differ significantly from those expressed or
anticipated as a result of various risks and uncertainties,
including the availability and cost to the company of needed
products, components or raw materials from the company's suppliers,
including delivery delays and production interruptions from
pandemic-related supply chain challenges and supplier delivery
holds resulting from past due payables; the duration and scope of
the COVID-19 pandemic, the pace of resumption of access to
healthcare, including clinics and elective care, and loosening of
public health restrictions, or any reimposed restrictions on access
to healthcare or tightening of public health restrictions, which
could impact the demand for the company’s products; global
shortages in, or increasing costs for, transportation and logistics
services and capacity; actions that governments, businesses and
individuals take in response to the pandemic, including mandatory
business closures and restrictions on onsite commercial
interactions; the impact of the pandemic or political or
geopolitical crises, such as the Russian war with Ukraine, and
actions taken in response, on global and regional economies and
economic activity; the pace of recovery when the COVID-19 pandemic
subsides; general economic uncertainty in key global markets and a
worsening of global economic conditions or low levels of economic
growth, including negative conditions attributable to inflationary
economic conditions and rising interest rates; the effects of steps
the company has taken or will take to reduce operating costs; the
ability of the company to sustain profitable sales growth, achieve
anticipated improvements in segment operating performance, convert
high inventory levels to cash or reduce its costs; the ability of
the company to successfully improve output and convert open orders
into sales; the ability of the company to successfully focus on
lifestyle and mobility & seating products; lack of market
acceptance of the company's new product innovations; potential
adverse effects of revised product pricing and/or product
surcharges on revenues or the demand for the company's products;
any failure to satisfy the continued listing standards of the NYSE
and delisting of the company’s common shares from the NYSE;
circumstances or developments that may make the company unable to
implement or realize the anticipated benefits, or that may increase
the costs, of its current and planned business initiatives, in
particular the key elements of its growth plans, such as its new
product introductions, commercialization plans, additional
investments in demonstration equipment, product distribution
strategy in Europe, supply chain actions and global information
technology outsourcing and ERP implementation activities; possible
adverse effects on the company's liquidity, including (i) the
company's ability to address future debt maturities or other
obligations, including additional debt that may be incurred in the
future or (ii) the company's ability to access the remaining
portion of the financing under the July and October 2022 financing
transactions (as discussed in the notes to the condensed
consolidated financial statements) in the event of a failure to
satisfy one or more of the applicable closing conditions; increases
in interest rates or the costs of borrowing; potential limitations
on the company’s business activities from obligations in the
company’s debt agreements; adverse changes in government and
third-party payor reimbursement levels and practices; decreased
availability or increased costs of materials which could increase
the company's cost of producing or acquiring the company's
products, including the adverse impacts of tariffs and increases in
commodity costs or freight costs; consolidation of health care
providers; increasing pricing pressures in the markets for the
company's products; risks of failures in, or disruptions to, legacy
IT systems; risks of cybersecurity attack, data breach or data loss
and/or delays in or inability to recover or restore data and IT
systems; adverse effects of the company's consent decree of
injunction with the U.S. Food and Drug Administration (FDA),
including but not limited to, compliance costs, inability to
rebuild negatively impacted customer relationships, unabsorbed
capacity utilization, including fixed costs and overhead; any
circumstances or developments that might adversely impact the
third-party expert auditor's required audits of the company's
quality systems at the facilities impacted by the consent decree,
including any possible failure to comply with the consent decree or
FDA regulations or the inability to adequately address the matters
identified to us by the FDA; regulatory proceedings or the
company's failure to comply with regulatory requirements or receive
regulatory clearance or approval for the company's products or
operations in the United States or abroad; adverse effects of
regulatory or governmental inspections of the company's facilities
at any time and governmental enforcement actions; product liability
or warranty claims; product recalls, including more extensive
warranty or recall experience than expected; possible adverse
effects of being leveraged, including interest rate or event of
default risks; exchange rate fluctuations, particularly in light of
the relative importance of the company's foreign operations to its
overall financial performance; legal actions, including adverse
judgments or settlements of litigation or claims in excess of
available insurance limits; tax rate fluctuations; additional tax
expense or additional tax exposures, which could affect the
company's future profitability and cash flow; uncollectible
accounts receivable; risks inherent in managing and operating
businesses in many different foreign jurisdictions; heightened
vulnerability to a hostile takeover attempt or other shareholder
activism; provisions of Ohio law or in the company's debt
agreements, charter documents or other agreements that may prevent
or delay a change in control, and those other risks and
uncertainties expressed in the cautionary statements and risk
factors in the company's annual report on Form 10-K, quarterly
reports on Form 10-Q and other filings with the Securities and
Exchange Commission. The company may not be able to predict and may
have little or no control over many factors or events that may
influence its future results and, except to the extent required by
law, the company does not undertake and specifically declines any
obligation to review or update any forward-looking statements or
publicly announce the results of any revisions to any such
statements to reflect future events or developments or
otherwise.
INVACARE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS) - (UNAUDITED)
(In thousands, except per share
data)
Three Months Ended
Nine Months Ended
September 30
September 30
2022
2021
2022
2021
Net sales
$
170,408
$
224,200
$
560,413
$
646,266
Cost of products sold
139,029
163,890
433,323
470,500
Gross Profit
31,379
60,310
127,090
175,766
Selling, general and administrative
expenses
55,365
56,135
174,552
178,721
Charges related to restructuring
activities
8,440
377
16,383
2,476
Impairment of an intangible asset
1,012
—
1,012
—
Impairment of goodwill
—
28,564
—
28,564
Operating Loss
(33,438
)
(24,766
)
(64,857
)
(33,995
)
Net gain on convertible debt
derivatives
(950
)
—
(950
)
—
Net gain on debt extinguishment
(6,398
)
(10,131
)
(6,398
)
(9,422
)
Interest expense - net
7,344
6,284
19,825
18,098
Loss Before Income Taxes
(33,434
)
(20,919
)
(77,334
)
(42,671
)
Income tax provision
920
1,840
3,160
4,830
Net Loss
(34,354
)
(22,759
)
(80,494
)
(47,501
)
Net Loss per Share—Basic
$
(0.92
)
$
(0.65
)
$
(2.23
)
$
(1.36
)
Weighted Average Shares
Outstanding—Basic
37,537
35,013
36,073
34,826
Net Loss per Share—Assuming Dilution
*
$
(0.92
)
$
(0.65
)
$
(2.23
)
$
(1.36
)
Weighted Average Shares
Outstanding—Assuming Dilution
37,680
35,488
36,241
35,371
__________
* Net loss per share assuming dilution
calculated using weighted average shares outstanding - basic for
periods in which there is a loss.
INVACARE CORPORATION AND
SUBSIDIARIES
RECONCILIATION OF NET INCOME
(LOSS) TO ADJUSTED EBITDA(c)
Three Months Ended
Nine Months Ended
(In thousands)
September 30
September 30
2022
2021
2022
2021
Net Loss
$
(34,354
)
$
(22,759
)
$
(80,494
)
$
(47,501
)
Income tax provision
920
1,840
3,160
4,830
Interest expense - net
7,344
6,284
19,825
18,098
Net gain on debt extinguishment
(6,398
)
(10,131
)
(6,398
)
(9,422
)
Net gain on convertible debt
derivatives
(950
)
—
(950
)
—
Operating Loss
(33,438
)
(24,766
)
(64,857
)
(33,995
)
Impairment of an intangible asset
1,012
—
1,012
—
Impairment of goodwill
—
28,564
—
28,564
Depreciation and amortization
3,948
4,247
11,796
12,511
EBITDA
(28,478
)
8,045
(52,049
)
7,080
Charges related to restructuring
activities
8,440
377
16,383
2,476
Restructuring related to exit of product
lines*
8,651
—
8,651
—
Stock compensation expense (benefit)
(439
)
(441
)
1,839
5,369
Adjusted EBITDA(c)
$
(11,826
)
$
7,981
$
(25,176
)
$
14,925
__________
"Adjusted EBITDA(c)" is a non-GAAP
financial measure, which is defined at the end of this press
release.
* Reflected in cost of products sold in
the condensed consolidated statements of income (loss).
INVACARE CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENTS (UNAUDITED)
The company operates in two primary business segments: North
America and Europe with each selling the company's primary product
categories, which includes: lifestyle, mobility and seating and
respiratory therapy products. Sales in Asia Pacific, which do not
meet the quantitative criteria for determining reportable segments,
are reported in All Other and include products similar to those
sold in North America and Europe. Intersegment revenue for
reportable segments was $8,501,000 and $35,601,000 for the three
and nine months ended September 30, 2022 compared to $21,265,000
and $63,661,000 for the three and nine months ended September 30,
2021. The accounting principles applied at the operating segment
level are generally the same as those applied at the consolidated
financial statement level. Intersegment sales are eliminated in
consolidation.
The information by segment is as follows:
Three Months Ended
Nine Months Ended
(In thousands)
September 30
September 30
2022
2021
Change
2022
2021
Change
Revenues from external customers
Europe
$
97,487
$
127,026
$
(29,539
)
$
328,334
$
361,097
$
(32,763
)
North America
65,314
88,054
(22,740
)
209,351
260,275
(50,924
)
All Other (sales in Asia Pacific)
7,607
9,120
(1,513
)
22,728
24,894
(2,166
)
Consolidated
$
170,408
$
224,200
$
(53,792
)
$
560,413
$
646,266
$
(85,853
)
Operating income (loss)
Europe
$
(2,588
)
$
9,554
$
(12,142
)
$
4,126
$
18,378
$
(14,252
)
North America
(15,007
)
(1,523
)
(13,484
)
(29,607
)
(2,308
)
(27,299
)
All Other
(6,391
)
(3,856
)
(2,535
)
(21,981
)
(19,025
)
(2,956
)
Charges related to restructuring
activities
(8,440
)
(377
)
(8,063
)
(16,383
)
(2,476
)
(13,907
)
Impairment of an intangible asset
(1,012
)
—
(1,012
)
(1,012
)
—
(1,012
)
Impairment of goodwill
—
(28,564
)
28,564
—
(28,564
)
28,564
Consolidated operating loss
(33,438
)
(24,766
)
(8,672
)
(64,857
)
(33,995
)
(30,862
)
Net gain on convertible debt
derivatives
950
—
950
950
—
950
Net gain on debt extinguishment
6,398
10,131
(3,733
)
6,398
9,422
(3,024
)
Net interest expense
(7,344
)
(6,284
)
(1,060
)
(19,825
)
(18,098
)
(1,727
)
Loss before income taxes
$
(33,434
)
$
(20,919
)
$
(12,515
)
$
(77,334
)
$
(42,671
)
$
(34,663
)
__________
“All Other” consists of operating income
(loss) associated with the company's businesses in the Asia Pacific
region and unallocated corporate selling, general and
administrative ("SG&A") expenses and intersegment eliminations,
which do not meet the quantitative criteria for determining
reportable segments.
INVACARE CORPORATION AND SUBSIDIARIES
BUSINESS SEGMENT NET SALES (UNAUDITED)
The following tables provide net sales changes by segment as
reported and as adjusted to exclude the impact of foreign exchange
translation (constant currency net sales(a)) for the periods
referenced below. The current year constant currency net sales are
translated using the prior year's foreign exchange rates. These
amounts are then compared to the prior year's sales to calculate
the constant currency net sales change.
Three months ended September 30, 2022 compared to September 30,
2021:
Reported
Foreign Exchange Translation
Impact
Constant Currency
Europe
(23.3
)%
(11.8
) %
(11.5
)%
North America
(25.8
)
(0.2
)
(25.6
)
All Other (sales in Asia Pacific)
(16.6
)
(8.8
)
(7.8
)
Consolidated
(24.0
)%
(7.1
)%
(16.9
)%
Nine months ended September 30, 2022 compared to September 30,
2021:
Reported
Foreign Exchange Translation
Impact
Constant Currency
Europe
(9.1
)%
(9.5
)%
0.4
%
North America
(19.6
)
(0.2
)
(19.4
)
All Other (sales in Asia Pacific)
(8.7
)
(7.7
)
(1.0
)
Consolidated
(13.3
)%
(5.7
)%
(7.6
)%
__________ "Constant currency net sales(a)" is a non-GAAP
financial measure, which is defined at the end of this press
release.
INVACARE CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(In thousands)
September 30,
2022
December 31,
2021
Assets
Current Assets
Cash and cash equivalents
$
45,439
$
83,745
Trade receivables, net
80,105
117,115
Installment receivables, net
255
218
Inventories, net
120,687
144,274
Other current assets
48,338
40,036
Total Current Assets
294,824
385,388
Other Assets
5,330
5,362
Intangibles, net
23,390
26,356
Property and Equipment, net
53,244
60,921
Finance Lease Assets, net
56,083
63,029
Operating Lease Assets, net
9,980
12,600
Goodwill
314,755
355,875
Total Assets
$
757,606
$
909,531
Liabilities and Shareholders’
Equity
Current Liabilities
Accounts payable
$
95,973
$
130,036
Accrued expenses
116,330
102,971
Current taxes payable
2,136
3,914
Current portion of long-term debt
2,150
3,107
Current portion of finance lease
obligations
3,031
3,009
Current portion of operating lease
obligations
3,062
4,217
Total Current Liabilities
222,682
247,254
Long-Term Debt
333,129
305,022
Long-Term Obligations - Finance
Leases
57,511
63,736
Long-Term Obligations - Operating
Leases
6,865
8,234
Other Long-Term Obligations
56,374
66,796
Shareholders’ Equity
81,045
218,489
Total Liabilities and Shareholders’
Equity
$
757,606
$
909,531
INVACARE CORPORATION AND
SUBSIDIARIES
RECONCILIATION FROM NET CASH
PROVIDED (USED) BY
OPERATING ACTIVITIES TO FREE
CASH FLOW(d)
Three Months Ended
Nine Months Ended
(In thousands)
September 30
September 30
2022
2021
2022
2021
Net cash used by operating activities
$
(19,932
)
$
(775
)
$
(46,874
)
$
(36,825
)
Plus:
Sales of property and equipment
—
—
5
23
Less:
Purchases of property and equipment
(538
)
(5,350
)
(3,302
)
(14,397
)
Free Cash Flow(d) (usage)
$
(20,470
)
$
(6,125
)
$
(50,171
)
$
(51,199
)
__________
"Free Cash Flow(d) is a non-GAAP financial
measure, which is defined at the end of this press release.
Definitions of Non-GAAP Financial Measures
(a) "Constant currency net sales" is a non-GAAP financial
measure, which is defined as net sales excluding the impact of
foreign currency translation. The current year's functional
constant currency net sales are translated using the prior year's
foreign exchange rates. These amounts are then compared to the
prior year's sales to calculate the constant currency net sales
change. The "Business Segments Net Sales" table accompanying this
press release compares net sales as reported and net sales
excluding the effects of foreign exchange translation by segment
and for the consolidated company for the three and nine months
ended September 30, 2022 and September 30, 2021, respectively. The
company believes that this financial measure provides meaningful
information for evaluating the core operating performance of the
company. This financial measure is reconciled to the related GAAP
financial measures in the "Business Segment Net Sales" table
included in this press release.
(b) "Constant Currency SG&A" is a non-GAAP financial
measure, which is defined as selling, general and administrative
("SG&A") expense excluding the impact of foreign currency
translation. The current period's functional constant currency
SG&A expenses are translated using the prior year's foreign
exchange rates. These amounts are then compared to the prior year's
SG&A expenses to calculate the constant currency SG&A
expenses change.
(c) "Adjusted EBITDA" is a non-GAAP financial measure, which is
defined as earnings before interest, taxes, depreciation and
amortization and calculated as net loss plus: income taxes,
interest expense-net, net gain or loss on convertible debt
derivatives, net gain or loss on debt extinguishment including debt
finance charges and fees, asset write-downs related to intangible
assets, impairment of goodwill, net gain or loss on sale of
business, and depreciation and amortization, as further adjusted to
exclude charges related to exit of product lines, charges related
to restructuring activities, and stock compensation expense. It
should be noted that the company's definition of Adjusted EBITDA
may not be comparable to similar measures disclosed by other
companies because not all companies and financial analysts
calculate Adjusted EBITDA in the same manner. The company believes
that this financial measure provides meaningful information which
is used by financial analysts and others in the company's industry
to evaluate the performance of the company. This financial measure
is reconciled to the related GAAP financial measure in the
“Reconciliation of Net Income (Loss) to Adjusted EBITDA” table
included in this press release.
(d) "Free cash flow" is a non-GAAP financial measure, which is
defined as net cash provided (used) by operating activities less
purchases of property and equipment plus proceeds from sales of
property and equipment. The company believes that this financial
measure provides meaningful information for evaluating the overall
financial performance of the company and its ability to repay debt
or make future investments. This financial measure is reconciled to
the related GAAP financial measure in the “Reconciliation from Net
Cash Provided (Used) by Operating Activities to Free Cash Flow”
table included in this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107005711/en/
INVESTOR CONTACT: Lois Lee loislee@invacare.com
440-329-6435
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