Invacare Corporation reports results for the quarter that ended March 31, 2022.
Reflecting on the quarter, Matt Monaghan, chairman, president, and chief executive officer, said “In 1Q22, we delivered 2.4% reported net sales and 6.4% constant currency net sales growth driven by sales of mobility & seating products which achieved double-digit growth. We are pleased that strong demand continued across our entire portfolio of products.
“As we work to increase our capability to fulfill strong demand, we continue to experience an adverse impact on cost and availability of inputs. In response, we are streamlining our portfolio to emphasize more clinically valuable products and implementing pricing actions to offset increased costs. Coupled with the introduction of new high value products, we expect these actions to be increasingly impactful throughout the remainder of the year.
“As we have successfully done in recent years, we continue to execute transformative actions that will enhance our competitive position. Since the beginning of 2022, we have taken actions to streamline how we operate, which will yield substantial cost savings. In addition, new software is improving the customer experience by making it easier to transact with Invacare. We look forward to providing updates on other transformative changes which will generate profitable growth and enhanced shareholder value in 2022 and beyond.”
Invacare Key Metrics (1Q22* versus 1Q21)
- Reported net sales was $201.0 million, an increase of 2.4%. Constant currency net sales increased 6.4%.
- Gross profit as a percent of net sales was 23.7%, a decrease of 410 basis points attributable to higher costs, primarily in freight and material, as well as operational inefficiencies from intermittent production stoppages, which more than offset the benefit of price increases.
- SG&A expense increased by $1.7 million, or 3.0%, and constant currency SG&A increased by $3.5 million, or 5.9% primarily related to ERP expenses taken in the quarter that were not capitalized due to a temporary pause in new deployments.
- Operating loss was $16.6 million due to lower gross profit and higher SG&A expense, as well as increased restructuring costs.
- Adjusted EBITDA loss of $8.6 million was primarily attributable to lower gross margin and higher SG&A expense.
- Free cash flow usage was $29.8 million, an increase of $12.0 million. 1Q22 free cash flow usage funded the operating loss, customer bonus payments, and increased inventory and lower accounts payable.
* 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, “Demand trends for our industry-leading products remained strong, demonstrated by our top-line revenue performance despite continuing supply chain disruptions. As expected, and in line with our historic seasonality, the company consumed cash in 1Q22 to build inventory, fund annual customer rebates, and pay higher input costs driven by supply chain disruptions. We anticipate free cash flow to improve for the full year compared to 2021 and sequentially each quarter in 2022 driven by higher profitability as a result of favorable product mix, benefits of restructuring actions, and working capital converting to cash. The company will continue to manage working capital and the balance sheet to support normal operating needs and to fund restructuring actions.”
[Source(s): Invacare Corporation, Business Wire]
Invacare Corp Announces End-of-Year Financial Results