Invacare Corporation (NYSE:IVC) Q4 2014 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 08:30 am ET


Invacare Corporation (NYSE:IVC) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning ladies and gentlemen and welcome to the Invacare 2014 Fourth Quarter Conference Call. (Forward-looking Cautionary Statements) Also of note, except for free cash flow, the financial information for all periods excludes the impact of discontinued operations. Discontinued operations include Invacare Supply Group, the company's former domestic medical supplies business that was divested on January 18, 2013.

Champion Manufacturing Incorporated, the company's former domestic medical recliner business for dialysis clinics that was divested on August 6, 2013. And Altimate Medical Incorporated, the company's former manufacturer of stationary standing assistive devices for use in patient rehabilitation, that was divested on August 29, 2014.

Champion was a part of the Institutional Products Group segment and Altimate was a part of the North America Home Medical Equipment segment. On today's call, the management team will focus on the highlights of the quarter as opposed to covering all the detail, which you can read in the release that was issued earlier.

In particular, I would refer investors to the company's earnings release to review the definition of free cash flow and some of the adjusted earnings items which will be mentioned during the call. You can find the release and access to the company's SEC filings at

Before I turn the call over to Invacare's Interim President and Chief Financial Officer, Mr. Robert K. Gudbranson, I would like to remind you all that phone lines have been placed on mute for the first part of the call. After management overview, we will open the call to questions. This conference is being recorded, Thursday, February 5, 2015.

I would like to turn the call over to Mr. Rob Gudbranson. Mr. Gudbranson you may now begin.

Robert Gudbranson

Thank you and good morning. With me today on the call is Lara Mahoney, Director of Investor Relations and Corporate Communications. In the fourth quarter, the Invacare Team successfully managed working capital to achieve free cash flow of 11.4 million, which led to free cash flow of 8.4 million for the full year. The company further reduced debt total debt outstanding to 22.3 million as of December 31st, 2014.

As was the case throughout 2014, the European business segment finished the year with another strong quarter. Additionally, the IPG business segment excluding intangible impairment charges and the Asia Pacific segment, both improved earnings before income taxes compared to the fourth quarter of 2013.

Now I'd like to further review the company's consolidated fourth quarter results. In the fourth quarter organic net sales decreased 0.5% as compared to the fourth quarter of 2013, as organic net sales increases in the European, IPG, and Asia Pacific segments were more than offset by an organic net sales decline in the North America HME segment.

Gross margin as a percent of net sales for the fourth quarter of 2014, was higher by 0.2 percentage points compared to the prior year's fourth quarter. However, the fourth quarter of 2013 gross margin included incremental warranty expense of 3.4 million or 1 percentage point, as well