FourthQuarter 2018 Highlights (compared to Fourth Quarter
2017):
-
Total revenue, including royalty and other revenue, was $223.1 million;
-
Product revenue increased 12.8% to $221.4 million, or 13.5% on a
constant currency basis;
-
Shipments of noninvasive technology boards and monitors increased
11.5% to 60,300;
-
GAAP net income per diluted share of $0.83; and
-
Non-GAAP net income per diluted share increased 53.7% to $0.83.
Full Year 2018 Highlights (compared to Full Year 2017):
-
Total revenue, including royalty and other revenue, was $858.3 million;
-
Product revenue increased 12.4% to $829.9 million, or 11.9% on a
constant currency basis;
-
Shipments of noninvasive technology boards and monitors increased
14.1% to 231,700;
-
GAAP net income per diluted share of $3.45; and
-
Non-GAAP net income per diluted share increased 31.7% to $3.03.
IRVINE, Calif.--(BUSINESS WIRE)--Feb. 26, 2019--
Masimo (Nasdaq: MASI) today announced its financial results for the
fourth quarter and full year ended December 29, 2018.
Fourth Quarter 2018 Results (compared to Fourth Quarter 2017):
Total revenue, including royalty and other revenue was $223.1 million.
Product revenues increased 12.8% to $221.4 million, or 13.5% on a
constant currency basis. The company shipped approximately 60,300
noninvasive technology boards and monitors.
GAAP operating margin was 24.2%. Non-GAAP operating margin increased 260
basis points to 24.3%, compared to 21.7%. Excluding the impact of
royalty and other revenue, non-GAAP product operating margin increased
640 basis points to 23.8%, compared to 17.4% in the prior year period.
GAAP net income per diluted share was $0.83. Non-GAAP net income per
diluted share increased 53.7% to $0.83, compared to $0.54 in the prior
year period. Excluding the impact of royalty and other revenue, non-GAAP
product net income per diluted share increased 97.6% to $0.81, compared
to $0.41 in the prior year period.
Full Year 2018 Results (compared to Full Year 2017):
Total revenue, including royalty and other revenue was $858.3 million.
Product revenue increased 12.4% to $829.9 million, or 11.9% on a
constant currency basis. The Company shipped approximately 231,700
noninvasive technology boards and monitors.
GAAP operating margin was 24.2%. Non-GAAP operating margin increased 100
basis points to 24.5%, compared to 23.5% in the prior year period.
Excluding the impact of royalty and other revenue, non-GAAP product
operating margin increased 340 basis points to 22.0%, compared to 18.6%
in the prior year period.
GAAP net income per diluted share was $3.45. Non-GAAP net income per
diluted share increased 31.7% to $3.03, compared to $2.30 in the prior
year period. Excluding the impact of royalty and other revenue, non-GAAP
product net income per diluted share increased 53.2% to $2.65, compared
to $1.73 in the prior year period.
Total cash and cash equivalents increased $237.2 million during the year
to $552.5 million as of December 29, 2018.
Joe Kiani, Chairman and Chief Executive Officer of Masimo, said, “2018
was a dynamic year for Masimo as we are seeing strong momentum in our
business. Our global organization executed on our strategy to deliver
above-market growth and drive operational efficiencies throughout the
business. We are extremely happy to report fourth quarter and full year
results that exceeded expectations. Due to the strong finish in 2018, we
are now increasing our 2019 product revenue guidance to $912 million and
our 2019 non-GAAP earnings per diluted share guidance to $3.08.”
2019 Financial Guidance
The Company provided the following estimates for its full year 2019
guidance:
| (in millions, except percentages and earnings per share) |
|
2019
Updated Guidance(1)
|
|
|
GAAP
|
|
Non-GAAP
|
|
Total revenue, including royalty and other revenue
|
|
$
|
912
|
|
|
$
|
912
|
|
|
Product revenue
|
|
$
|
912
|
|
|
$
|
912
|
|
|
Percentage growth - as reported
|
|
|
9.9
|
%
|
|
|
N/A
|
|
|
Percentage growth - constant currency
|
|
|
N/A
|
|
|
|
10.7
|
%
|
|
Royalty and other revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Product gross margin
|
|
|
N/A
|
|
|
|
66.8
|
%
|
|
Product operating margin(2) |
|
|
N/A
|
|
|
|
24.0
|
%
|
|
Product diluted earnings per share(3) |
|
|
N/A
|
|
|
$
|
3.08
|
|
|
EBITDA
|
|
|
26.4
|
%
|
|
|
30.4
|
%
|
|
Estimated tax rate
|
|
|
19.8
|
%
|
|
|
23.2
|
%
|
|
______________
|
| (1) |
|
Updated guidance provided February 26, 2019.
|
| (2) |
|
Product operating margin excludes the impact of royalty and other
revenue and associated costs.
|
| (3) |
|
Total diluted earnings per share excludes the impact of royalty and
other revenue and associated costs.
|
-
Total revenue, including other revenue, of $912 million;
-
Product revenue of $912 million, which reflects growth of 9.9% and
constant currency growth of 10.7%;
-
Non-GAAP product operating margin of 24.0%, increasing 200 basis
points over prior year period;
-
Non-GAAP product earnings per diluted share of $3.08, increasing 16.2%
over the prior year period; and
-
Included in our full year revenue guidance is approximately $7.0
million of year-over-year currency headwinds.
Impact of Adoption of New Revenue Accounting Standard:
During the first quarter of 2018, the Company adopted Financial
Accounting Standards Board (FASB) Accounting Standards Update (ASU) No.
2014-09, Revenue (Topic 606): Revenue from Contracts with
Customers (ASU 2014-09). The Company’s adoption of ASU 2014-09
generally resulted in (a) the acceleration of when the Company
recognizes certain revenue, and (b) the deferral of certain incremental
costs associated with obtaining a customer contract. In accordance with
the full retrospective method of adoption for ASU 2014-09, the Company
has adjusted certain amounts previously reported in its condensed
consolidated financial statements to comply with the new standard, as
indicated by the notation, “As Adjusted”. For additional information
with respect to the impact of the adoption of this new accounting
standard and reconciliations to the prior reported amounts, please
reference Note 2 to our consolidated financial statements that will be
included in Part IV, Item 15(a)(1) and 15(a)(2), respectively, of our
Annual Report on Form 10-K for the fiscal period ended December 29, 2018
that will be filed with the Securities and Exchange Commission on or
about February 26, 2019.
Impact of Adoption of New Lease Accounting Standard:
In February 2016, the Financial Accounting Standards Board issued a new
standard for leases, Accounting Standards Codification (ASC) Topic 842, Leases
(ASC 842). This standard will become effective for the Company on
December 30, 2018. The Company is continuing to evaluate the expected
impact of ASC 842 on its consolidated financial statements, but
anticipates that, among other things, the required recognition by a
lessee of a lease liability and related right-of-use asset for operating
leases will increase both the assets and liabilities recognized and
reported on its balance sheet as of the adoption date. In addition, ASC
842 will also change the classification of certain leases for which the
Company is the lessor, resulting in the acceleration of revenue under
certain contracts, as well as the immediate expensing of certain costs
that are currently deferred and expensed over the life of the lease. The
Company is continuing to evaluate the available practical expedients and
its adoption method for this new standard.
Supplementary Non-GAAP Financial Information
For additional non-GAAP financial details, please visit the Investor
Relations section of the Company’s website at www.masimo.com
to access Supplementary Financial Information.
Non-GAAP Financial Measures
The non-GAAP financial measures contained herein are a supplement to the
corresponding financial measures prepared in accordance with U.S. GAAP.
The non-GAAP financial measures presented exclude the items described
below. Management believes that adjustments for these items assist
investors in making comparisons of period-to-period operating results.
Furthermore, management also believes that these items are not
indicative of the Company’s on-going core operating performance. These
non-GAAP financial measures have certain limitations in that they do not
reflect all of the costs associated with the operations of the Company’s
business as determined in accordance with GAAP.
Therefore, investors should consider non-GAAP financial measures in
addition to, and not as a substitute for, or as superior to, measures of
financial performance prepared in accordance with GAAP. The non-GAAP
financial measures presented by the Company may be different from the
non-GAAP financial measures used by other companies.
The Company has presented the following non-GAAP measures to assist
investors in understanding the Company’s core net operating results on
an on-going basis: (i) constant currency product revenue growth %, (ii)
non-GAAP net income, (iii) non-GAAP diluted earnings per share, (iv)
non-GAAP gross profit/margin, (v) non-GAAP operating income/margin, (vi)
non-GAAP product net income, (vii) non-GAAP product diluted earnings per
share, (viii) non-GAAP product gross profit/margin, (ix) non-GAAP
product operating income/margin and (x) adjusted EBITDA. These non-GAAP
financial measures may also assist investors in making comparisons of
the Company’s core operating results with those of other companies.
Management believes non-GAAP product revenue growth %, non-GAAP gross
profit, non-GAAP operating income, non-GAAP net income, non-GAAP net
income per diluted share and adjusted EBITDA are important measures in
the evaluation of the Company’s performance and uses these measures to
better understand and evaluate our business.
The non-GAAP financial measures reflect adjustments for the following
items, as well as the related income tax effects thereof:
Constant currency adjustments.
Some of our sales agreements with foreign customers provide for payment
in currencies other than the U.S. Dollar. These foreign currency
revenues, when converted into U.S. Dollars, can vary significantly from
period to period depending on the average and quarter-end exchange rates
during a respective period. We believe that comparing these foreign
currency denominated revenues by holding the exchange rates constant
with the prior year period is useful to management and investors in
evaluating our product revenue growth rates on a period-to-period basis.
We anticipate that fluctuations in foreign exchange rates and the
related constant currency adjustments for calculation of our product
revenue growth rate will continue to occur in future periods.
Acquisition-related costs, including
depreciation and amortization.
Depreciation and amortization related to the revaluation of assets and
liabilities (primarily intangible assets, property, plant and equipment
adjustments, inventory revaluation, lease liabilities, etc.) to fair
value through purchase accounting related to value created by the seller
prior to the acquisition rather than ongoing costs of operating our core
business. As a result, we believe that exclusion of these costs in
presenting non-GAAP financial measures provides management and investors
a more effective means of evaluating historical performance and
projected costs and the potential for realizing cost efficiencies within
our core business. Depreciation and amortization related to the
revaluation of acquisition related assets and liabilities will generally
recur in future periods.
Litigation damages, awards and settlements.
In connection with litigation proceedings arising in the course of our
business, we have recorded expenses as a defendant in such proceedings
in the form of damages, as well as gains as a plaintiff in such
proceedings in the form of litigation awards and settlement proceeds. We
believe that exclusion of these gains and losses is useful to management
and investors in evaluating the performance of our ongoing operations on
a period-to-period basis. In this regard, we note that these expenses
and gains are generally unrelated to our core business and/or infrequent
in nature.
Realized and unrealized gains or losses from
foreign currency transactions.
We are exposed to foreign currency gains or losses on outstanding
foreign currency denominated receivables and payables related to certain
customer sales agreements, product costs and other operating expenses.
As the Company does not actively hedge these currency exposures, changes
in the underlying currency rates relative to the U.S. Dollar may result
in realized and unrealized foreign currency gains and losses between the
time these receivables and payables arise and the time that they are
settled in cash. Since such realized and unrealized foreign currency
gains and losses are the result of macro-economic factors and can vary
significantly from one period to the next, we believe that exclusion of
such realized and unrealized gains and losses are useful to management
and investors in evaluating the performance of our ongoing operations on
a period-to-period basis. Realized and unrealized foreign currency gains
and losses are likely to recur in future periods.
Excess tax benefits from stock-based
compensation.
Current authoritative accounting guidance requires that excess tax
benefits or costs recognized on stock-based compensation expense be
reflected in our provision for income taxes rather than paid-in capital.
Since we cannot control or predict when stock option awards will be
exercised or the price at which such awards will be exercised, the
impact of such guidance can create significant volatility in our
effective tax rate from one period to the next. We believe that
exclusion of these excess tax benefits or costs is useful to management
and investors in evaluating the performance of our ongoing operations on
a period-to-period basis. These excess tax benefits or costs will
generally recur in future periods as long as we continue to issue equity
awards to our employees.
Tax impacts that may not be representative of
the ongoing results of our core operations.
From time to time, we record tax benefits relating to the derecognition
of uncertain tax positions due to the expiration of the statutes of
limitations. We believe that exclusion of the tax benefit resulting from
the expiration of certain statutes of limitations related to
non-recurring transactions is useful to management and investors in
evaluating the performance of our ongoing operations on a
period-to-period basis. In this regard, we note that this tax item is
unrelated to our core business and non-recurring in nature.
Fourth Quarter and Full Year 2018 Actuals versus
Fourth Quarter 2017 and Full Year Actuals:
|
RECONCILIATION OF GAAP TO CONSTANT
CURRENCY PRODUCT REVENUE:
|
|
|
Three Months Ended |
|
(in thousands, except percentages)
|
|
December 29,
2018
|
|
December 30,
2017
As Adjusted
|
|
GAAP product revenue
|
|
$
|
221,413
|
|
|
$
|
196,353
|
|
Non-GAAP constant currency adjustments:
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
|
1,360
|
|
|
N/A
|
|
Total non-GAAP product revenue adjustments
|
|
|
1,360
|
|
|
N/A
|
|
Constant currency product revenue
|
|
$
|
222,773
|
|
|
$
|
196,353
|
|
Product revenue growth %:
|
|
|
|
|
|
GAAP
|
|
|
12.8
|
%
|
|
|
|
Constant currency
|
|
|
13.5
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP TO CONSTANT
CURRENCY PRODUCT REVENUE:
|
|
|
Twelve Months Ended |
|
(in thousands, except percentages)
|
|
December 29,
2018
|
|
December 30,
2017
As Adjusted
|
|
GAAP product revenue
|
|
$
|
829,874
|
|
|
$
|
738,242
|
|
Non-GAAP constant currency adjustments:
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
|
(4,015
|
)
|
|
N/A
|
|
Total non-GAAP product revenue adjustments
|
|
|
(4,015
|
)
|
|
N/A
|
|
Constant currency product revenue
|
|
$
|
825,859
|
|
|
$
|
738,242
|
|
Product revenue growth %:
|
|
|
|
|
|
GAAP
|
|
|
12.4
|
%
|
|
|
|
Constant currency
|
|
|
11.9
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME AND NET INCOME PER DILUTED SHARE:
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 29, 2018
|
|
December 30, 2017
As Adjusted
|
| (in thousands, except earnings per share) |
|
|
$ |
|
|
Per Diluted
Share
|
|
|
$ |
|
|
Per Diluted
Share
|
|
GAAP net income
|
|
$
|
46,934
|
|
|
$
|
0.83
|
|
|
$
|
(7,735
|
)
|
|
$
|
(0.15
|
)
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
360
|
|
|
|
0.01
|
|
|
|
390
|
|
|
|
0.01
|
|
|
Litigation damages, awards and settlements
|
|
|
(75
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Realized and unrealized foreign currency gains and losses
|
|
|
1,263
|
|
|
|
0.02
|
|
|
|
31
|
|
|
|
—
|
|
|
Tax impact of pre-tax non-GAAP adjustments above
|
|
|
(662
|
)
|
|
|
(0.01
|
)
|
|
|
(82
|
)
|
|
|
—
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(294
|
)
|
|
|
(0.01
|
)
|
|
|
(4,148
|
)
|
|
|
(0.07
|
)
|
|
2017 U.S. Tax Reform
|
|
|
(878
|
)
|
|
|
(0.01
|
)
|
|
|
41,392
|
|
|
|
0.74
|
|
|
Total non-GAAP adjustments
|
|
|
(286
|
)
|
|
|
—
|
|
|
|
37,583
|
|
|
|
0.68
|
|
|
GAAP anti-dilutive effect given the net loss (basic and diluted
EPS are the same in the period)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
Non-GAAP net income
|
|
$
|
46,648
|
|
|
$
|
0.83
|
|
|
$
|
29,848
|
|
|
$
|
0.54
|
|
|
Weighted average shares outstanding - basic
|
|
|
|
|
53,043
|
|
|
|
|
|
51,656
|
|
|
Weighted average shares outstanding – diluted
|
|
|
|
|
56,449
|
|
|
|
|
|
55,595
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP NET
INCOME AND NET INCOME PER DILUTED SHARE:
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
December 29, 2018 |
|
December 30, 2017
As Adjusted
|
| (in thousands, except earnings per share) |
|
|
$ |
|
|
Per Diluted
Share
|
|
|
$ |
|
|
Per Diluted
Share
|
|
GAAP net income
|
|
$
|
193,543
|
|
|
$
|
3.45
|
|
|
$
|
124,789
|
|
|
$
|
2.23
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
1,442
|
|
|
|
0.02
|
|
|
|
1,597
|
|
|
|
0.03
|
|
|
Litigation damages, awards and settlements
|
|
|
425
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
|
Realized and unrealized foreign currency gains and losses
|
|
|
2,027
|
|
|
|
0.03
|
|
|
|
270
|
|
|
|
0.01
|
|
|
Tax impact of pre-tax non-GAAP adjustments above
|
|
|
(796
|
)
|
|
|
(0.01
|
)
|
|
|
(456
|
)
|
|
|
(0.01
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
|
(22,036
|
)
|
|
|
(0.39
|
)
|
|
|
(39,241
|
)
|
|
|
(0.70
|
)
|
|
Tax impact of expiration of certain statutes of limitations related
to unique and non-recurring tax positions
|
|
|
(4,169
|
)
|
|
|
(0.07
|
)
|
|
|
—
|
|
|
|
—
|
|
|
2017 U.S. Tax Reform
|
|
|
(878
|
)
|
|
|
(0.01
|
)
|
|
|
41,392
|
|
|
|
0.74
|
|
|
Total non-GAAP adjustments
|
|
|
(23,985
|
)
|
|
|
(0.42
|
)
|
|
|
3,562
|
|
|
|
0.07
|
|
|
Non-GAAP net income
|
|
$
|
169,558
|
|
|
$
|
3.03
|
|
|
$
|
128,351
|
|
|
$
|
2.30
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
|
56,039
|
|
|
|
|
|
55,874
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME AND NET
INCOME PER DILUTED SHARE TO
|
|
NON-GAAP PRODUCT NET INCOME AND PRODUCT
NET INCOME PER DILUTED SHARE:
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 29, 2018 |
|
December 30, 2017
As Adjusted
|
| (in thousands, except per share amounts) |
|
|
$ |
|
|
Per Diluted
Share
|
|
|
$ |
|
|
Per Diluted
Share
|
|
Product net income(1) |
|
$
|
45,547
|
|
|
$
|
0.81
|
|
|
$
|
(13,379
|
)
|
|
$
|
(0.25
|
)
|
|
Royalty and NRE net income(2) |
|
|
1,387
|
|
|
|
0.02
|
|
|
|
5,644
|
|
|
|
0.10
|
|
|
GAAP net income
|
|
$
|
46,934
|
|
|
$
|
0.83
|
|
|
$
|
(7,735
|
)
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to product net income:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
360
|
|
|
|
0.01
|
|
|
|
390
|
|
|
|
0.01
|
|
|
Litigation damages, awards and settlements
|
|
|
(75
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Realized and unrealized foreign currency gains and losses
|
|
|
1,263
|
|
|
|
0.02
|
|
|
|
31
|
|
|
|
—
|
|
|
Tax impact of pre-tax non-GAAP adjustments above
|
|
|
(662
|
)
|
|
|
(0.01
|
)
|
|
|
(82
|
)
|
|
|
—
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(294
|
)
|
|
|
(0.01
|
)
|
|
|
(4,148
|
)
|
|
|
(0.07
|
)
|
|
Tax impact of expiration of certain statutes of limitations related
to unique and non-recurring tax positions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
2017 U.S. Tax Reform(3) |
|
|
(675
|
)
|
|
|
(0.01
|
)
|
|
|
39,815
|
|
|
|
0.71
|
|
|
Total non-GAAP adjustments to product net income
|
|
|
(83
|
)
|
|
|
—
|
|
|
|
36,006
|
|
|
|
0.65
|
|
|
GAAP anti-dilutive effect given the net loss (basic and diluted
EPS are the same in the period)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
Non-GAAP product net income
|
|
$
|
45,464
|
|
|
$
|
0.81
|
|
|
$
|
22,627
|
|
|
$
|
0.41
|
|
|
Weighted average shares outstanding - basic
|
|
|
|
|
53,043
|
|
|
|
|
|
51,656
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
|
56,449
|
|
|
|
|
|
55,595
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME AND NET
INCOME PER DILUTED SHARE TO
|
|
NON-GAAP PRODUCT NET INCOME AND PRODUCT
NET INCOME PER DILUTED SHARE:
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
December 29, 2018 |
|
December 30, 2017
As Adjusted
|
| (in thousands, except per share amounts) |
|
|
$ |
|
|
Per Diluted
Share
|
|
|
$ |
|
|
Per Diluted
Share
|
|
Product net income(1) |
|
$
|
172,166
|
|
|
$
|
3.07
|
|
|
$
|
94,538
|
|
|
$
|
1.69
|
|
|
Royalty and NRE net income(2) |
|
|
21,377
|
|
|
|
0.38
|
|
|
|
30,251
|
|
|
|
0.54
|
|
|
GAAP net income
|
|
$
|
193,543
|
|
|
$
|
3.45
|
|
|
$
|
124,789
|
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to product net income:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
1,442
|
|
|
|
0.02
|
|
|
|
1,597
|
|
|
|
0.03
|
|
|
Litigation damages, awards and settlements
|
|
|
425
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
|
Realized and unrealized foreign currency gains and losses
|
|
|
2,027
|
|
|
|
0.03
|
|
|
|
270
|
|
|
|
0.01
|
|
|
Tax impact of pre-tax non-GAAP adjustments above
|
|
|
(796
|
)
|
|
|
(0.01
|
)
|
|
|
(456
|
)
|
|
|
(0.01
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
|
(22,036
|
)
|
|
|
(0.39
|
)
|
|
|
(39,241
|
)
|
|
|
(0.70
|
)
|
|
Tax impact of expiration of certain statutes of limitations related
to unique and non-recurring tax positions
|
|
|
(4,169
|
)
|
|
|
(0.07
|
)
|
|
|
—
|
|
|
|
—
|
|
|
2017 U.S. Tax Reform(3) |
|
|
(675
|
)
|
|
|
(0.01
|
)
|
|
|
39,815
|
|
|
|
0.71
|
|
|
Total non-GAAP adjustments to product net income
|
|
|
(23,782
|
)
|
|
|
(0.42
|
)
|
|
|
1,985
|
|
|
|
0.04
|
|
|
Anti-dilutive effect given the net loss (basic and diluted EPS are
the same) in the period
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Non-GAAP product net income
|
|
$
|
148,384
|
|
|
$
|
2.65
|
|
|
$
|
96,523
|
|
|
$
|
1.73
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
|
56,039
|
|
|
|
|
|
55,874
|
|
|
________________
|
| (1) |
|
Product net income = total net income less amounts related to
royalty and other revenue net of associated costs and income taxes.
|
| (2) |
|
Royalty and NRE net income = royalty and other revenue less
associated costs and income taxes.
|
| (3) |
|
Excludes 2017 U.S. Tax Reform charges related to royalty and other
revenue net of associated costs.
|
|
|
|
RECONCILIATION OF GAAP OPERATING
INCOME/MARGIN % TO
|
|
NON-GAAP PRODUCT OPERATING INCOME/MARGIN
% AND TOTAL OPERATING INCOME/MARGIN %:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 29, 2018 |
|
December 30, 2017
As Adjusted
|
| (in thousands, except percentages) |
|
|
$ |
|
|
% of Revenue |
|
$ |
|
% of Revenue |
|
Product operating income/margin(1) |
|
$
|
52,370
|
|
|
23.7
|
%
|
|
$
|
33,804
|
|
17.2
|
%
|
|
Royalty and NRE gross profit/margin
|
|
|
1,536
|
|
|
89.4
|
|
|
|
10,922
|
|
94.3
|
|
|
GAAP total operating income/margin
|
|
|
53,906
|
|
|
24.2
|
|
|
|
44,726
|
|
21.5
|
|
|
Non-GAAP adjustments to product operating income/margin:
|
|
|
|
|
|
|
|
|
|
Acquisition related depreciation and amortization
|
|
|
360
|
|
|
0.1
|
|
|
|
390
|
|
0.2
|
|
|
Litigation damages, awards and settlements
|
|
|
(75
|
)
|
|
—
|
|
|
|
—
|
|
—
|
|
|
Total non-GAAP adjustments to product operating income/margin
|
|
|
285
|
|
|
0.1
|
|
|
|
390
|
|
0.2
|
|
|
Non-GAAP product operating income/margin(1) |
|
|
52,655
|
|
|
23.8
|
|
|
|
34,194
|
|
17.4
|
|
|
Royalty and other operating income/margin
|
|
|
1,536
|
|
|
89.4
|
|
|
|
10,922
|
|
94.3
|
|
|
Non-GAAP total operating income/margin
|
|
$
|
54,191
|
|
|
24.3
|
%
|
|
$
|
45,116
|
|
21.7
|
%
|
|
|
|
RECONCILIATION OF GAAP OPERATING
INCOME/MARGIN % TO
|
|
NON-GAAP PRODUCT OPERATING INCOME/MARGIN
% AND TOTAL OPERATING INCOME/MARGIN %:
|
|
|
|
|
|
Twelve Months Ended |
|
|
December 29, 2018 |
|
December 30, 2017
As Adjusted
|
| (in thousands, except percentages) |
|
|
$ |
|
|
% of Revenue |
|
$ |
|
% of Revenue |
|
Product operating income/margin(1) |
|
$
|
180,339
|
|
|
21.7
|
%
|
|
$
|
135,402
|
|
18.4
|
%
|
|
Royalty and NRE gross profit/margin
|
|
|
27,705
|
|
|
97.5
|
|
|
|
48,385
|
|
93.0
|
|
|
GAAP total operating income/margin
|
|
|
208,044
|
|
|
24.2
|
|
|
|
183,787
|
|
23.3
|
|
|
Non-GAAP adjustments to product operating income/margin:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
1,442
|
|
|
0.3
|
|
|
|
1,597
|
|
0.2
|
|
|
Litigation damages, awards and settlements
|
|
|
425
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
Total non-GAAP adjustments to product operating income/margin
|
|
|
1,867
|
|
|
0.3
|
|
|
|
1,597
|
|
0.2
|
|
|
Non-GAAP product operating income/margin(1) |
|
|
182,206
|
|
|
22.0
|
|
|
|
136,999
|
|
18.6
|
|
|
Royalty and other operating income/margin
|
|
|
27,705
|
|
|
97.5
|
|
|
|
48,385
|
|
93.0
|
|
|
Non-GAAP total operating income/margin
|
|
$
|
209,911
|
|
|
24.5
|
%
|
|
$
|
185,384
|
|
23.5
|
%
|
|
______________
|
| (1) |
|
Product operating income/margin = total operating income/margin less
amounts related to royalty and other revenue net of associated costs.
|
Full Year 2018 Actuals versus Full Year 2019
Guidance:
|
RECONCILIATION OF GAAP PRODUCT REVENUE
GROWTH % TO
|
|
CONSTANT CURRENCY PRODUCT REVENUE GROWTH
%:
|
|
|
Full Year 2019
Guidance
|
|
Full Year 2018
Actuals
|
|
GAAP product revenue
|
|
$
|
912,000
|
|
|
$
|
829,874
|
|
|
Non-GAAP constant currency adjustments:
|
|
|
|
|
|
Constant currency F/X adjustments
|
|
|
7,000
|
|
|
|
—
|
|
|
Total non-GAAP constant currency adjustments
|
|
|
7,000
|
|
|
|
—
|
|
|
|
$
|
919,000
|
|
|
$
|
829,874
|
|
|
Product revenue growth %:
|
|
|
|
|
|
GAAP
|
|
|
9.9
|
%
|
|
|
|
Non-GAAP (constant currency)
|
|
|
10.7
|
%
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME AND NET
INCOME PER DILUTED SHARE TO
|
|
NON-GAAP PRODUCT NET INCOME AND PRODUCT
NET INCOME PER DILUTED SHARE:
|
|
|
|
|
|
|
|
Full Year 2019
Guidance(1)
|
|
Full Year 2018
Actuals
|
| (in thousands, except earnings per share) |
|
|
$ |
|
|
Per Diluted
Share
|
|
|
$ |
|
|
Per Diluted
Share
|
|
Product net income(2) |
|
$
|
184,126
|
|
|
$
|
3.19
|
|
|
$
|
172,166
|
|
|
$
|
3.07
|
|
|
Royalty and NRE net income(3) |
|
|
—
|
|
|
|
—
|
|
|
|
21,377
|
|
|
|
0.38
|
|
|
GAAP net income
|
|
$
|
184,126
|
|
|
$
|
3.19
|
|
|
$
|
193,543
|
|
|
$
|
3.45
|
|
|
Non-GAAP product net income adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
1,426
|
|
|
|
0.03
|
|
|
|
1,442
|
|
|
|
0.02
|
|
|
Litigation damages, awards and settlements
|
|
|
—
|
|
|
|
—
|
|
|
|
425
|
|
|
|
0.01
|
|
|
Realized and unrealized foreign currency gains and losses
|
|
|
—
|
|
|
|
—
|
|
|
|
2,027
|
|
|
|
0.03
|
|
|
Tax impact of pre-tax non-GAAP adjustments above
|
|
|
(236
|
)
|
|
|
—
|
|
|
|
(796
|
)
|
|
|
(0.01
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
|
(8,000
|
)
|
|
|
(0.14
|
)
|
|
|
(22,036
|
)
|
|
|
(0.39
|
)
|
|
Expiration of certain statutes of limitations related to unique and
non-recurring tax positions
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,169
|
)
|
|
|
(0.07
|
)
|
|
Tax impact of U.S. tax reform(4) |
|
|
—
|
|
|
|
—
|
|
|
|
(675
|
)
|
|
|
(0.01
|
)
|
|
Total non-GAAP adjustments
|
|
|
(6,810
|
)
|
|
|
(0.11
|
)
|
|
|
(23,782
|
)
|
|
|
(0.42
|
)
|
|
Non-GAAP product net income
|
|
$
|
177,316
|
|
|
$
|
3.08
|
|
|
$
|
148,384
|
|
|
$
|
2.65
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
|
57,700
|
|
|
|
|
|
56,039
|
|
|
________________
|
| (1) |
|
Estimated effective tax rate of 19.8% applied to GAAP earnings and
23.2% applied to non-GAAP earnings.
|
| (2) |
|
Product net income = total net income less amounts related to
royalty and other revenue net of associated costs and income taxes.
|
| (3) |
|
Royalty and NRE net income = royalty and other revenue less
associated costs and income taxes.
|
| (4) |
|
Excludes 2017 U.S. Tax Reform charges related to royalty and other
revenue net of associated costs.
|
|
|
|
RECONCILIATION OF GAAP GROSS
PROFIT/MARGIN AND GAAP OPERATING INCOME/MARGIN TO
|
|
NON-GAAP PRODUCT GROSS PROFIT/MARGIN AND
NON-GAAP OPERATING PRODUCT INCOME/MARGIN %:
|
|
|
|
|
|
|
|
Full Year 2019
Guidance
|
|
Full Year 2018
Actuals
|
| (in thousands, except percentages) |
|
$ |
|
% of Revenue
|
|
$ |
|
% of Revenue |
|
Product gross profit/margin(1) |
|
$
|
608,758
|
|
66.7
|
%
|
|
$
|
547,187
|
|
65.9
|
%
|
|
Royalty and NRE gross profit/margin(2) |
|
|
—
|
|
—
|
|
|
|
27,705
|
|
97.5
|
|
|
GAAP product gross profit/margin
|
|
$
|
608,758
|
|
66.7
|
%
|
|
$
|
574,892
|
|
67.0
|
%
|
|
Non-GAAP product gross profit/margin adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
458
|
|
0.1
|
|
|
|
458
|
|
0.1
|
|
|
Total non-GAAP adjustments
|
|
|
458
|
|
0.1
|
|
|
|
458
|
|
0.1
|
|
|
Non-GAAP product gross profit/margin
|
|
$
|
609,216
|
|
66.8
|
%
|
|
$
|
575,350
|
|
67.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Product operating income/margin(3) |
|
$
|
217,454
|
|
23.8
|
%
|
|
$
|
180,339
|
|
21.7
|
%
|
|
Royalty and other NRE gross profit/margin(2) |
|
|
—
|
|
—
|
|
|
|
27,705
|
|
97.5
|
|
|
GAAP operating income/margin
|
|
$
|
217,454
|
|
23.8
|
%
|
|
$
|
208,044
|
|
24.2
|
%
|
|
Non-GAAP product operating income/margin adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition-related depreciation and amortization
|
|
|
1,426
|
|
0.2
|
|
|
|
1,867
|
|
0.3
|
|
|
Total non-GAAP adjustments
|
|
|
1,426
|
|
0.2
|
|
|
|
1,867
|
|
0.3
|
|
|
Non-GAAP product operating income/margin
|
|
$
|
218,880
|
|
24.0
|
%
|
|
$
|
182,206
|
|
22.0
|
%
|
|
________________
|
| (1) |
|
Product gross profit/margin = total gross profit/margin less amounts
related to royalty and other revenue net of associated COGS.
|
| (2) |
|
Royalty and NRE gross profit/margin = royalty and other revenue less
associated COGS.
|
| (3) |
|
Product operating income/margin = total net income less amounts
related to royalty and other revenue net of associated costs.
|
|
|
|
RECONCILIATION OF EBITDA TO ADJUSTED
EBITDA
|
|
|
|
|
|
|
|
Full Year 2019
Guidance
|
|
Full Year 2018
Actuals
|
| (in thousands, except earnings per share) |
|
|
$ |
|
|
% of Revenue |
|
|
$ |
|
|
% of Revenue |
|
GAAP net income
|
|
$
|
184,126
|
|
|
20.2
|
%
|
|
$
|
193,543
|
|
|
22.5
|
%
|
|
Other (income)/expense(1) |
|
|
(12,000
|
)
|
|
(1.3
|
)
|
|
|
(5,732
|
)
|
|
(0.7
|
)
|
|
Provision for income taxes
|
|
|
45,329
|
|
|
5.0
|
|
|
|
20,233
|
|
|
2.4
|
|
|
Depreciation and amortization
|
|
|
22,857
|
|
|
2.5
|
|
|
|
21,127
|
|
|
2.5
|
|
|
EBITDA
|
|
|
240,312
|
|
|
26.4
|
|
|
|
229,171
|
|
|
26.7
|
|
|
Add: Litigation damages, awards and settlements
|
|
|
—
|
|
|
—
|
|
|
|
425
|
|
|
—
|
|
|
Add: Non-cash stock-based compensation expense
|
|
|
37,326
|
|
|
4.0
|
|
|
|
27,416
|
|
|
3.2
|
|
|
Adjusted EBITDA
|
|
$
|
277,638
|
|
|
30.4
|
%
|
|
$
|
257,012
|
|
|
29.9
|
%
|
|
______________
|
| (1) |
|
Other (income)/expense consists primarily of interest
(income)/expense and net foreign currency (gains)/losses.
|
|
|
|
RECONCILIATION OF FREE CASH FLOW TO
ADJUSTED FREE CASH FLOW:
|
|
|
Three Months Ended |
| (in thousands, except percentages) |
|
December 29,
2018
|
|
December 30,
2017 As
Adjusted
|
|
GAAP total revenue
|
|
$
|
223,132
|
|
|
$
|
207,939
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
63,222
|
|
|
|
48,681
|
|
|
Purchases of property and equipment, net
|
|
|
(4,827
|
)
|
|
|
(5,854
|
)
|
|
Free cash flow
|
|
|
58,395
|
|
|
|
42,827
|
|
|
Tax payments related to litigation awards and damages
|
|
|
—
|
|
|
|
3,050
|
|
|
Adjusted free cash flow
|
|
$
|
58,395
|
|
|
$
|
45,877
|
|
|
|
|
|
|
|
% of total revenue
|
|
|
26.2
|
%
|
|
|
22.1
|
%
|
|
|
|
|
Twelve Months Ended |
| (in thousands, except percentages) |
|
December 29,
2018
|
|
December 30,
2017 As
Adjusted
|
|
GAAP total revenue
|
|
$
|
858,289
|
|
|
$
|
790,248
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
239,527
|
|
|
|
56,062
|
|
|
Purchases of property and equipment, net
|
|
|
(17,126
|
)
|
|
|
(43,684
|
)
|
|
Free cash flow
|
|
|
222,401
|
|
|
|
12,378
|
|
|
Tax payments related to litigation awards and damages
|
|
|
—
|
|
|
|
74,201
|
|
|
Adjusted free cash flow
|
|
$
|
222,401
|
|
|
$
|
86,579
|
|
|
|
|
|
|
|
% of total revenue
|
|
|
25.9
|
%
|
|
|
11.0
|
%
|
Conference Call
Masimo will hold a conference call today at 1:30 p.m. PT (4:30 p.m. ET)
to discuss the results. A live webcast of the call will be available
online from the investor relations page of the Company’s website at www.masimo.com.
The dial-in numbers are (888) 520-7182 for domestic callers and +1 (706)
758-3929 for international callers. The reservation code for both
dial-in numbers is 6889465. After the live webcast, the call will be
available on Masimo’s website through March 27, 2019. In addition, a
telephonic replay of the call will be available through March 6, 2019.
The replay dial-in numbers are (855) 859-2056 for domestic callers and
+1 (404) 537-3406 for international callers. Please use reservation code
6889465.
About Masimo
Masimo (Nasdaq: MASI) is a global leader in innovative noninvasive
monitoring technologies. Our mission is to improve patient outcomes and
reduce the cost of care. In 1995, the Company debuted Masimo SET®
Measure-through Motion and Low Perfusion® pulse oximetry,
which has been shown in multiple studies to significantly reduce false
alarms and accurately monitor for true alarms. Masimo SET® is
estimated to be used on more than 100 million patients in leading
hospitals and other healthcare settings around the world. In 2005,
Masimo introduced rainbow® Pulse CO-Oximetry technology,
allowing noninvasive and continuous monitoring of blood constituents
that previously could only be measured invasively, including total
hemoglobin (SpHb®), oxygen content (SpOC™),
carboxyhemoglobin (SpCO®), methemoglobin (SpMet®),
Pleth Variability Index (PVi®) and more recently, Oxygen
Reserve Index (ORi™), in addition to SpO2, pulse rate and
perfusion index (PI). In 2014, Masimo introduced Root™, an
intuitive patient monitoring and connectivity platform with the Masimo
Open Connect® (MOC-9®) interface. Masimo is also
taking an active leadership role in mobile health applications (mHealth)
with products such as the Radius-7® wearable patient monitor
and the MightySat® fingertip pulse oximeter. Additional
information about Masimo and its products may be found at www.masimo.com.
Forward-Looking Statements
All statements other than statements of historical facts included in
this press release that address activities, events or developments that
we expect, believe or anticipate will or may occur in the future are
forward-looking statements including, in particular, the statements
about our expectations for full fiscal year GAAP and non-GAAP 2019
total, product, royalty and other revenues, gross profit/margin,
earnings per diluted share, product earnings per diluted share,
operating margin, product operating income/margin, net income, product
net income, EBITDA, adjusted EBITDA , free cash flow, and estimated tax
rate, and our long-term outlook; demand for our products; anticipated
revenue and earnings growth; our financial condition, results of
operations and business generally; expectations regarding our ability to
design and deliver innovative new noninvasive technologies and reduce
the cost of care; and demand for our technologies. These forward-looking
statements are based on management’s current expectations and beliefs
and are subject to uncertainties and factors, all of which are difficult
to predict and many of which are beyond our control and could cause
actual results to differ materially and adversely from those described
in the forward-looking statements. These risks include, but are not
limited to, those related to: our dependence on Masimo SET®
and Masimo rainbow SET™ products and technologies for
substantially all of our revenue; any failure in protecting our
intellectual property exposure to competitors’ assertions of
intellectual property claims; the highly competitive nature of the
markets in which we sell our products and technologies; any failure to
continue developing innovative products and technologies; the lack of
acceptance of any of our current or future products and technologies;
obtaining regulatory approval of our current and future products and
technologies; the risk that the implementation of our international
realignment will not continue to produce anticipated operational and
financial benefits, including a continued lower effective tax rate; the
loss of our customers; the failure to retain and recruit senior
management; product liability claims exposure; a failure to obtain
expected returns from the amount of intangible assets we have recorded;
the maintenance of our brand; the amount and type of equity awards that
we may grant to employees and service providers in the future; our
ongoing litigation and related matters; and other factors discussed in
the “Risk Factors” section of our most recent periodic reports filed
with the Securities and Exchange Commission (“SEC”), including our most
recent Form 10-K and Form 10-Q, all of which you may obtain for free on
the SEC’s website at www.sec.gov.
Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we do not know whether our
expectations will prove correct. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date hereof, even if subsequently made available by us on our website or
otherwise. We do not undertake any obligation to update, amend or
clarify these forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.
Masimo, SET, Signal Extraction Technology, Improving Patient Outcome
and Reducing Cost of Care... by Taking Noninvasive Monitoring to New
Sites and Applications, rainbow, SpHb, SpOC, SpCO, SpMet, PVI and ORI
are trademarks or registered trademarks of Masimo Corporation.
| MASIMO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
|
|
|
|
|
December 29,
2018
|
|
December 30,
2017
As Adjusted
|
| ASSETS |
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
552,490
|
|
|
$
|
315,302
|
|
|
Accounts receivable, net of allowance for doubtful accounts
|
|
|
109,629
|
|
|
|
118,532
|
|
|
Inventories
|
|
|
93,751
|
|
|
|
92,259
|
|
|
Other current assets
|
|
|
29,227
|
|
|
|
33,602
|
|
|
Total current assets
|
|
|
785,097
|
|
|
|
559,695
|
|
|
Deferred costs and other contract assets
|
|
|
127,086
|
|
|
|
109,256
|
|
|
Property and equipment, net
|
|
|
165,972
|
|
|
|
164,096
|
|
|
Intangible assets, net
|
|
|
27,924
|
|
|
|
27,123
|
|
|
Goodwill
|
|
|
23,297
|
|
|
|
20,617
|
|
|
Deferred tax assets
|
|
|
21,210
|
|
|
|
19,981
|
|
|
Other assets
|
|
|
4,232
|
|
|
|
4,668
|
|
|
Total assets
|
|
$
|
1,154,818
|
|
|
$
|
905,436
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
40,388
|
|
|
$
|
33,780
|
|
|
Accrued compensation
|
|
|
49,486
|
|
|
|
39,515
|
|
|
Deferred revenue and other contract liabilities, current
|
|
|
33,106
|
|
|
|
32,105
|
|
|
Other current liabilities
|
|
|
24,627
|
|
|
|
24,254
|
|
|
Total current liabilities
|
|
|
147,607
|
|
|
|
129,654
|
|
|
Other liabilities
|
|
|
38,146
|
|
|
|
51,757
|
|
|
Total liabilities
|
|
|
185,753
|
|
|
|
181,411
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Common stock
|
|
|
53
|
|
|
|
52
|
|
|
Treasury stock
|
|
|
(489,026
|
)
|
|
|
(472,536
|
)
|
|
Additional paid-in capital
|
|
|
533,164
|
|
|
|
461,494
|
|
|
Accumulated other comprehensive loss
|
|
|
(6,199
|
)
|
|
|
(2,941
|
)
|
|
Retained earnings
|
|
|
931,073
|
|
|
|
737,956
|
|
|
Total stockholders’ equity
|
|
|
969,065
|
|
|
|
724,025
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,154,818
|
|
|
$
|
905,436
|
|
|
|
| MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 29,
2018
|
|
December 30,
2017
As Adjusted
|
|
December 29,
2018
|
|
December 30,
2017
As Adjusted
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
221,413
|
|
|
$
|
196,353
|
|
|
$
|
829,874
|
|
|
$
|
738,242
|
|
|
Royalty and other revenue
|
|
|
1,719
|
|
|
|
11,586
|
|
|
|
28,415
|
|
|
|
52,006
|
|
|
Total revenue
|
|
|
223,132
|
|
|
|
207,939
|
|
|
|
858,289
|
|
|
|
790,248
|
|
|
Cost of goods sold
|
|
|
74,801
|
|
|
|
69,287
|
|
|
|
283,397
|
|
|
|
268,216
|
|
|
Gross profit
|
|
|
148,331
|
|
|
|
138,652
|
|
|
|
574,892
|
|
|
|
522,032
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
74,693
|
|
|
|
77,832
|
|
|
|
289,456
|
|
|
|
276,292
|
|
|
Research and development
|
|
|
19,807
|
|
|
|
16,094
|
|
|
|
76,967
|
|
|
|
61,953
|
|
|
Litigation settlement, award and/or defense costs
|
|
|
(75
|
)
|
|
|
—
|
|
|
|
425
|
|
|
|
—
|
|
|
Total operating expenses
|
|
|
94,425
|
|
|
|
93,926
|
|
|
|
366,848
|
|
|
|
338,245
|
|
|
Operating income
|
|
|
53,906
|
|
|
|
44,726
|
|
|
|
208,044
|
|
|
|
183,787
|
|
|
Non-operating expense
|
|
|
(1,652
|
)
|
|
|
(694
|
)
|
|
|
(5,732
|
)
|
|
|
(2,013
|
)
|
|
Income before provision for income taxes
|
|
|
55,558
|
|
|
|
45,420
|
|
|
|
213,776
|
|
|
|
185,800
|
|
|
Provision for income taxes
|
|
|
8,624
|
|
|
|
53,155
|
|
|
|
20,233
|
|
|
|
61,011
|
|
|
Net income (loss)
|
|
$
|
46,934
|
|
|
$
|
(7,735
|
)
|
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
Other comprehensive gain (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains (losses)
|
|
|
(382
|
)
|
|
|
(184
|
)
|
|
|
(3,258
|
)
|
|
|
4,201
|
|
|
Unrealized loss on marketable securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(115
|
)
|
|
Total comprehensive income (loss)
|
|
$
|
46,552
|
|
|
$
|
(7,919
|
)
|
|
$
|
190,285
|
|
|
$
|
128,875
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.88
|
|
|
$
|
(0.15
|
)
|
|
$
|
3.70
|
|
|
$
|
2.42
|
|
|
Diluted
|
|
$
|
0.83
|
|
|
$
|
(0.15
|
)
|
|
$
|
3.45
|
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in per share calculations:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
53,043
|
|
|
|
51,656
|
|
|
|
52,296
|
|
|
|
51,516
|
|
|
Diluted
|
|
|
56,449
|
|
|
|
55,595
|
|
|
|
56,039
|
|
|
|
55,874
|
|
|
|
|
The following table presents details of the stock-based
compensation expense that is included in each functional line item
in the condensed consolidated statements of operations (in
thousands):
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 29,
2018
|
|
December 30,
2017
|
|
December 29,
2018
|
|
December 30,
2017
|
|
Cost of goods sold
|
|
$
|
94
|
|
|
$
|
94
|
|
|
$
|
334
|
|
|
$
|
351
|
|
|
Selling, general and administrative
|
|
|
6,081
|
|
|
|
4,588
|
|
|
|
21,391
|
|
|
|
13,272
|
|
|
Research and development
|
|
|
1,547
|
|
|
|
1,313
|
|
|
|
5,692
|
|
|
|
3,564
|
|
|
Total
|
|
$
|
7,722
|
|
|
$
|
5,995
|
|
|
$
|
27,417
|
|
|
$
|
17,187
|
|
|
|
| MASIMO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|
|
|
|
Twelve Months Ended |
|
|
December 29,
2018
|
|
December 30,
2017
|
| Cash flows from operating activities: |
|
|
|
|
|
Net income
|
|
$
|
193,543
|
|
|
$
|
124,789
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
21,127
|
|
|
|
20,061
|
|
|
Stock-based compensation
|
|
|
27,417
|
|
|
|
17,187
|
|
|
Loss on disposal of equipment, intangibles and other assets
|
|
|
949
|
|
|
|
522
|
|
|
Provision for doubtful accounts
|
|
|
(439
|
)
|
|
|
251
|
|
|
Provision for amount due from former foreign agent
|
|
|
(2,016
|
)
|
|
|
10,477
|
|
|
(Benefit) provision from deferred income taxes
|
|
|
(8,274
|
)
|
|
|
17,276
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Decrease (increase) in trade accounts receivable
|
|
|
10,826
|
|
|
|
(19,772
|
)
|
|
Increase in inventories
|
|
|
(1,885
|
)
|
|
|
(24,014
|
)
|
|
Decrease (increase) in other current assets
|
|
|
3,843
|
|
|
|
(2,908
|
)
|
|
Increase in deferred cost of goods sold
|
|
|
(17,935
|
)
|
|
|
(14,102
|
)
|
|
Increase in prepaid income taxes
|
|
|
—
|
|
|
|
(2,498
|
)
|
|
Decrease (increase) in other assets
|
|
|
407
|
|
|
|
(10,771
|
)
|
|
Increase (decrease) in accounts payable
|
|
|
5,211
|
|
|
|
(4,057
|
)
|
|
Increase (decrease) in accrued compensation
|
|
|
10,195
|
|
|
|
(4,292
|
)
|
|
Increase (decrease) in deferred revenue and other contract
liabilities
|
|
|
1,420
|
|
|
|
(13,295
|
)
|
|
Decrease in income taxes payable
|
|
|
(1,208
|
)
|
|
|
(72,087
|
)
|
|
Increase in other current liabilities
|
|
|
3,923
|
|
|
|
5,282
|
|
|
(Decrease) increase in other liabilities
|
|
|
(7,577
|
)
|
|
|
28,013
|
|
|
Net cash provided by operating activities
|
|
|
239,527
|
|
|
|
56,062
|
|
| Cash flows from investing activities: |
|
|
|
|
|
Purchases of property and equipment
|
|
|
(17,126
|
)
|
|
|
(43,684
|
)
|
|
Increase in intangible assets
|
|
|
(5,557
|
)
|
|
|
(3,079
|
)
|
|
Business combination, net of cash acquired
|
|
|
(3,922
|
)
|
|
|
—
|
|
|
Acquisitions of equity investments
|
|
|
—
|
|
|
|
(1,145
|
)
|
|
Other
|
|
|
453
|
|
|
|
—
|
|
|
Net cash used in investing activities
|
|
|
(26,152
|
)
|
|
|
(47,908
|
)
|
| Cash flows from financing activities: |
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
44,748
|
|
|
|
62,205
|
|
|
Repurchases of common stock
|
|
|
(18,478
|
)
|
|
|
(66,272
|
)
|
|
Other
|
|
|
(490
|
)
|
|
|
(71
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
25,780
|
|
|
|
(4,138
|
)
|
|
Effect of foreign currency exchange rates on cash
|
|
|
(1,997
|
)
|
|
|
3,269
|
|
|
Net increase in cash, cash equivalents and restricted cash
|
|
|
237,158
|
|
|
|
7,285
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
315,483
|
|
|
|
308,198
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
552,641
|
|
|
$
|
315,483
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190226006161/en/
Source: Masimo
Investor Contact: Eli Kammerman
(949) 297-7077
ekammerman@masimo.com
Media Contact: Irene Paigah
(858) 859-7001
irenep@masimo.com