Invacare Corporation (NYSE: IVC), a global manufacturer and distributor of home and long-term care medical equipment, announced a restructuring plan Wednesday that calls for workforce cuts of up to 190 associates and expected savings in the ballpark of up to $15 million.
The restructuring plan of the Elyria, Ohio-based Invacare includes a reduction to the company’s workforce of approximately 150 associates and 40 temporary associates from the North America/Home Medical Equipment (HME), Institutional Products Group and Asia/Pacific segments.
“Invacare is committed to improving free cash flow and resorting profitability in the North America/HME and Asia/Pacific businesses,” stated interim President and CEO Robert Gudbranson. “While the decision to downsize our workforce is extremely difficult, it is a necessary step toward achieving these objectives in light of our financial results for the first six monhts of 2014 and the slow sales start to the third quarter.”
The company reported an adjusted loss per share of $0.36 in the second quarter of 2014, down from the adjusted loss per share of $0.42 reported in the same period in 2013.
Organic net sales in the second quarter were also down, decreasing 6.1% compared to the same period last year. Additionally, free cash flow was negative $8.6 million in the second quarter compared to positive free cash flow of $2.9 million in the comparable period a year ago.
The company’s European operations fared better during the quarter, posting a net sales increase of 8.6% to $154 million versus $141.8 million for the second quarter of 2013. Earnings before income taxes during the quarter for Invacare’s European business segment were also up, rising to $12.3 million, compared to $8.4 million for the same period in the prior year.
“Clearly, Invacare’s businesses outside of Europe are under pressure, and we are not pleased with the second quarter’s consolidated financial results,” stated former President and CEO Gerald Blouch, who announced his retirement July 31, 2014. “We are determined to turn around the business by focusing on improving free cash flow and restoring profitability in the North America/HME and Asia/Pacific businesses.”
The company intends the restructuring plan announced this week will enable it to do so in the long-run. When fully instituted in 2015, Invacare expects the restructuring initiative will generate $14 million to $15 million in annualized pre-tax savings.
The company, which markets its products in approximately 80 countries around the world, had approximately 5,400 associates as of June 30, 2014.
Written by Jason Oliva