DJO Global (DJO), San Diego, California, announced financial results for its operating subsidiary, DJO Finance LLC (DJOFL), for the second quarter of fiscal 2011, ended July 2.
DJOFL achieved net sales for the second quarter of 2011 of $277.8 million, reflecting growth of 14.5 percent, from $242.5 million for the second quarter of 2010. Net sales for the second quarter of 2011 increased 11.6 percent compared to the same quarter last year.
DJO’s second quarter 2011 includes net sales from businesses recently acquired, including Elastic Therapy (ETI), Asheboro, North Carolina, on January 4, Circle City Medical (Circle City), Carmel, Indiana, on March 10, and Dr. Comfort (DRC), Mequon, Wisconsin, on April 7.
The acquired businesses, in the aggregate, achieved pro forma sales of $29.4 million in the second quarter of 2011, including pre-acquisition sales of DRC, reflecting pro forma growth of nearly 10 percent over pro forma sales of $26.8 million for the second quarter of 2010.
For the second quarter of 2011, DJOFL reported a net loss attributable to DJOFL of $19.3 million, compared to net income of $0.2 million for the second quarter of 2010. The results for the current and prior year second quarter periods were impacted by significant non-cash items, non-recurring items, and other adjustments.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter of 2011 was $69.9 million, or 25.1 percent of net sales, a 3.7 percent increase compared to the second quarter of 2010. DJO defines adjusted EBITDA as net income (loss) attributable to DJOFL plus loss (income) from discontinued operations, interest expense, net, income tax expense (benefit), and depreciation and amortization, further adjusted for certain non-cash items, non-recurring items and other adjustment items as permitted in calculating covenant compliance under the company’s senior secured credit facility and the indentures governing its 10.875 percent and 7.75 percent senior notes and its 9.75 percent senior subordinated notes.
Adjusted EBITDA as a percentage of net sales (Adjusted EBITDA margin) in the current second quarter period were unfavorably impacted by reduced gross profit margins, compared to the second quarter of 2010, due to the acquisitions noted above and certain unfavorable changes in product mix and pricing, and also to certain operating expense investments made to strengthen the company’s commercial infrastructure.
