Tornier third quarter sales increase 16% to $57.6 million

Tornier N.V. (NASDAQ: TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported sales of $57.6 million for the third quarter of 2011 compared to sales of $49.7 million for the third quarter of 2010, an increase of 16% as reported and 11% in constant currency. Year to date sales were reported at $192.1 million compared to sales of $166.1 million in the comparable nine month period of 2010, an increase of 16% as reported and 12% in constant currency. Third quarter 2011 sales of Tornier's extremity product categories increased 15% as reported and 12% in constant currency over the prior year's third quarter, and represented 82% of reported global sales.

Douglas W. Kohrs, President and Chief Executive Officer of Tornier, commented, "Led by upper extremity product lines, and despite economic and healthcare utilization headwinds, Tornier recorded another quarter of solid double digit sales growth both as reported and in constant currency. Growth in our international markets was particularly strong, while our US market performance was below our expectations in our lower extremity and sports medicine and biologics product lines. However, we remain confident that our ongoing instrument set investments and new product launches are positioning us for continued double digit extremities growth."

The Company's third quarter 2011 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $4.9 million or 8.5% of sales, compared to $2.7 million or 5.4% of sales in the same quarter last year. For the first nine months of 2011, adjusted EBITDA reached $20.3 million or 10.5% of sales, compared to $13.4 million or 8.1% of sales in the same period last year, an increase of 51%.

Mr. Kohrs continued, "Although our adjusted EBITDA was affected by our geographic and product mix in the quarter, our tight control of operating expenses allowed us to deliver another quarter of significant expansion in our adjusted EBITDA margin. Our plans for product insourcing and other manufacturing efficiencies remain on track to support improving factory utilization and expanding margins."

Sales and Product Review

Tornier's third quarter 2011 constant currency sales growth of 11% continued to be led by its extremity product line categories which together posted constant currency growth of 12% over third quarter 2010. Within the extremity products group, third quarter constant currency growth of the upper extremity joints and trauma category was 14.2%, led by the new Aequalis™ Ascend™ shoulder arthroplasty system, the continued adoption of the Aequalis™ reverse shoulder arthroplasty system and the CortiLoc™ glenoid. Further positive contributions came from the Company's 2011 launch of the new Simpliciti™ stemless shoulder system in select European markets and the Latitude® total elbow prosthesis. Tornier's lower extremity joints and trauma and sports medicine and biologics product categories posted constant currency sales growth rates of 4.3% and 1.6%, respectively. At the end of the third quarter, Tornier initiated an expansion of instrument sets to support recently launched lower extremity products such as the Stabilis™ ankle fusion system. Also in the third quarter, Tornier initiated clinical use of several new sports medicine and biologics products including the Insite® FT PEEK anchors, its shoulder instability system and the Accel-PRP™ system. Tornier's large joints and other product category, which includes hips and knees sold in select international markets, continued its constant currency growth at above market rates in the third quarter at 6.7% over the same quarter last year.

On a geographic basis as compared to the third quarter of 2010, Tornier's international sales increased 26.6% as reported and 14.3% in constant currency, representing 43% of global sales. Sales in the United States increased by 8.8% and represented 57% of global sales.

Outlook

The Company is updating its previous guidance and now projects 2011 sales in the range of $257.5 to $260 million, representing global growth of 13% to 14% as reported, and 10% to 11% in constant currency over 2010 sales. Full year total extremities product sales are expected to grow 14% to 15% as reported or 12% to 13% in constant currency. The Company projects 2011 adjusted EBITDA, as described in the GAAP to non-GAAP reconciliation provided later in this release, of $26.8 to $27.8 million or 10% to 11% of total sales.

For the fourth quarter of 2011, the Company projects sales in the range of $65.5 to $68.0 million, representing growth of 7% to 11% based on recent currency exchange rates, and 6% to 10% in constant currency over the fourth quarter 2010. Fourth quarter extremities sales are expected to grow 9% to 13% both as reported and in constant currency. The Company projects adjusted EBITDA for the fourth quarter of 2011 of $6.5 to $7.5 million, representing 10% to 11% of total sales.

Source: Tornier N.V.