Invacare Corporation Announces Preliminary Financial Results for 2Q20 and Provides Business Update
Invacare Corporation (“Invacare”)(NYSE:IVC) will participate on Tuesday, July 14, 2020 in the 20th Annual CJS Securities New Ideas Summer Conference where the company's management will provide a business update and share certain expected preliminary financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Preliminary Financial Results
For 2Q20, the company expects to report unaudited and preliminary net sales of approximately $196 million, a decrease of approximately 17% compared to the 2Q19. When adjusted for the impact of foreign currency translation and the divestiture of Dynamic Controls, preliminary constant currency net sales(a) decreased 13% compared to 2Q19. Adjusted EBITDA(b) is expected to be favorable to 2Q19 driven by higher gross margin as a percentage of net sales and lower SG&A expenses.
Commenting on the second quarter, Matt Monaghan, chairman, president and chief executive officer stated: “Given the unprecedented nature of the current environment, we are pleased with our strategic execution. With sales being impacted by a near complete shutdown of the global economy during the second quarter, we reoriented our business to optimize sales for those products that are experiencing higher demand, while minimizing costs for those products where opportunities are more limited. To help mitigate the sudden decrease in total net sales as a result of the pandemic, we initiated strong cost containment actions to conserve cash, such as the reduction of employment costs and deferment of tax payments, which are expected to drive sequential improvement in profitability and free cash flow(c) in the second quarter.
As a result of the sudden shift in product mix and our long-lead supply chain, we also expect a temporary increase in inventory. However, we anticipate this inventory will convert to cash in the remainder of 2020 and into 2021. Our associates continue to work through various challenges to procure materials and components necessary to support the pandemic response and other parts of our business.
I’m pleased that in this complex environment, we continue to make steady progress on our transformation initiatives, in addition to the introduction of new products and actions that increase our financial flexibility,” said Monaghan.
At the start of 3Q20, quotes for mobility and seating products have improved compared to 2Q20 on a global basis. However, the magnitude of the recovery is different by region as result of different shutdown actions in each country. While it is difficult to estimate the shape of the recovery, consolidated net sales are expected to increase sequentially with the resumption of access to clinics, but remain at a lower level than the same periods in 2019. The company continues to launch new products such as the Group 3 eligible standing wheelchair system, the AVIVA front- and rear- wheel drive power chairs, and the recently FDA-cleared SMOOV one power add-on. Demand primarily for respiratory products is expected to continue with continued elevated COVID-19 cases.