Press Release Details
Colfax Reports Preliminary Third Quarter Results
RICHMOND, Va., Nov 03, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Colfax Corporation (NYSE: CFX), a global leader in fluid-handling solutions for critical applications, today announced preliminary financial results for the third quarter ended October 2, 2009. The preliminary results do not reflect any potential adjustments from the favorable asbestos ruling on October 14, 2009 for the Company's Warren Pumps subsidiary. The Company expects additional information related to this matter to become available prior to filing its third quarter Form 10-Q with the SEC on or before November 16, 2009. Any adjustments that result from the Company's evaluation of this information will be reflected in the Company's financial statements included in its third quarter Form 10-Q.
On a year-over-year basis, highlights for the quarter and the first nine months of 2009 include:
Third quarter of 2009 (all comparisons versus the third quarter of 2008)
-- Net income of $1.8 million (4 cents per share - basic and diluted)
including restructuring and other related charges of $9.6 million;
adjusted net income (as defined below) of $10.0 million (23 cents per
share), a decrease of 17.6% including negative currency effects of 1
cent per share
-- Net sales of $128.5 million, a decrease of 16.2%; organic sales decline
(as defined below) of 12.0%
-- Operating income of $3.7 million; adjusted operating income (as defined
below) of $16.5 million, a decrease of 18.7% including negative currency
effects of $0.8 million
-- EBITDA (as defined below) of $7.4 million; adjusted EBITDA (as defined
below) of $20.2 million, a decrease of 15.9% including negative currency
effects of $1.0 million
-- Third quarter orders of $124.3 million, a decrease of 28.5%; organic
order decline (as defined below) of 25.5%
-- Backlog of $298.0 million at period end
Year-to-date 2009 (all comparisons versus the first nine months of 2008)
-- Net income of $13.0 million (30 cents per share - basic and diluted)
including restructuring and other related charges of $10.8 million;
adjusted net income (as defined below) of $28.9 million (67 cents per
share), a decrease of 20.2% including negative currency effects of 10
cents per share
-- Net sales of $394.1 million, a decrease of 11.6%; organic sales decline
(as defined below) of 2.5%
-- Operating income of $23.8 million; adjusted operating income (as defined
below) of $47.9 million, a decrease of 23.0% including negative currency
effects of $6.4 million
-- EBITDA (as defined below) of $34.4 million; adjusted EBITDA (as defined
below) of $58.5 million, a decrease of 20.4% including negative currency
effects of $7.2 million
-- Orders for the nine month period of $349.2 million, a decrease of 35.7%;
organic order decline (as defined below) of 29.9%
Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline) are not financial measures calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP"). See below for a description of the measures' usefulness and a reconciliation of these measures to their most directly comparable preliminary GAAP financial measures.
"We are pleased with our performance in this challenging environment," said John Young, president and CEO of Colfax Corporation. "While overall sales were down, our Navy and power generation businesses showed good growth over last year's third quarter. On a sequential basis, our organic orders were up 15% driven by increases in the commercial marine, Navy, power generation and general industrial markets. Backlog is also up slightly since the end of the second quarter. We're continuing to streamline our operations and reduce our cost structure. We've made significant progress on our cost reduction initiatives and have reduced headcount by about 15%. We expect to realize savings of approximately $16 million in 2009 or about $22 million on an annualized basis. The benefits of our efforts are evident in our margins. Our gross profit margin was up 40 basis points and we maintained our adjusted EBITDA margin despite 16% lower sales than last year."
He added, "We're encouraged by the recent improvement in our order book but we are continuing to have push-outs of project deliveries. Given the uncertain economic environment, we remain cautious on our outlook. Our strong balance sheet provides us the flexibility to weather current conditions while pursuing acquisitions and organic growth initiatives. Our strategy remains unchanged - we're focused on providing unmatched expert solutions to our global customer base while aligning capacity to meet demand. We're well positioned to enhance profitability and our competitive position as conditions improve."
"Based on variable project timing and estimated mix, we've lowered our projected sales and adjusted eps ranges for 2009. We now expect sales to be down organically 8% to 10% and expect adjusted eps to be $.88 to $.94."
Non-GAAP Financial Measures
Colfax has provided in this press release financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA exclude asbestos liability and defense costs (income) and asbestos coverage litigation expenses, certain legacy legal charges, certain due diligence costs, restructuring and other related charges as well as one time initial public offering-related costs to the extent they impact the periods presented. Adjusted net income also reflects interest expense as if the initial public offering (IPO) had occurred at the beginning of 2007 and presents income taxes at an effective tax rate of 32% in 2009 and 34% in 2008. Adjusted net income per share in 2008 assumes the 44,006,026 shares outstanding at the closing of the IPO to be outstanding since January 1, 2007. Projected adjusted net income per share excludes actual and estimated restructuring and other related charges, asbestos coverage litigation expenses and asbestos liability and defense costs. Organic sales growth (decline) and organic order growth (decline) exclude the impact of acquisitions and foreign exchange rate fluctuations. These non-GAAP financial measures assist Colfax in comparing its operating performance on a consistent basis because, among other things, they remove the impact of changes in our capital structure and asset base, non-recurring items such as IPO-related costs, legacy asbestos issues (except in the case of EBITDA) and items outside the control of its operating management team.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to preliminary GAAP results has been provided in the financial tables included in this press release.
Conference Call and Webcast
Colfax will host a conference call to provide details about its results and business strategy on Tuesday, November 3 at 8:00 a.m. ET. The call will be open to the public through 877-718-5106 or 719-325-4871 and webcast via Colfax's website at http://www.colfaxcorp.com under the "Investor Relations" section. Access to a supplemental slide presentation can also be found at the Colfax website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call.
About Colfax Corporation
Colfax Corporation is a global leader in critical fluid-handling products and technologies. Through its global operating subsidiaries, Colfax manufactures positive displacement industrial pumps and valves used in oil & gas, power generation, commercial marine, global naval and general industrial markets. Colfax's operating subsidiaries supply products under the well-known brands Allweiler, Fairmount Automation, Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren and Zenith. Colfax is traded on the NYSE under the ticker "CFX." Additional information about Colfax is available at www.colfaxcorp.com.
CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS:
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Colfax's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on Colfax's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Colfax's results to differ materially from current expectations include, but are not limited to factors detailed in Colfax's reports filed with the U.S. Securities and Exchange Commission as well as its Annual Report on Form 10-K under the caption "Risk Factors". In addition, these statements are based on a number of assumptions that are subject to change. This press release speaks only as of this date. Colfax disclaims any duty to update the information herein.
The term "Colfax" in reference to the activities described in this press release may mean one or more of Colfax's global operating subsidiaries and/or their internal business divisions and does not necessarily indicate activities engaged in by Colfax Corporation.
Colfax Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Preliminary(1) and unaudited)
Three Months Ended Nine Months Ended
October 2, September 26, October 2, September 26,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $128,545 $153,461 $394,053 $445,543
Cost of sales 82,339 98,983 255,277 286,110
------ ------ ------- -------
Gross profit 46,206 54,478 138,776 159,433
Initial public
offering related
costs - - - 57,017
Selling, general
and
administrative
expenses 28,136 33,233 86,248 97,516
Research and
development
expenses 1,523 1,478 4,610 4,430
Restructuring and
other related
charges 9,608 - 10,755 -
Asbestos
liability and
defense costs
(income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage
litigation
expenses 1,845 5,148 8,838 12,257
----- ----- ----- ------
Operating income
(loss) 3,717 20,931 23,821 (5,038)
Interest expense 1,834 1,951 5,466 9,684
----- ----- ----- -----
Income (loss)
before income
taxes 1,883 18,980 18,355 (14,722)
Provision
(benefit) for
income taxes 64 5,329 5,309 (3,772)
-- ----- ----- ------
Net income (loss) $1,819 $13,651 $13,046 $(10,950)
====== ======= ======= ========
Net income (loss)
per share-basic
and diluted $0.04 $0.31 $0.30 $(0.43)
===== ===== ===== ======
(1) The preliminary financial results as of and for the three and nine
months ended October 2, 2009 reflect management's best estimate of
the Company's net asbestos liability based upon information
currently available. The preliminary results do not reflect any
potential adjustments from the favorable asbestos ruling on October
14, 2009 for the Company's Warren Pumps subsidiary. The Company
expects additional information related to this matter to become
available prior to filing its third quarter Form 10-Q with the SEC on
or before November 16, 2009. Any adjustments that result from the
Company's evaluation of this information will be reflected in the
Company's financial statements included in its third quarter
Form 10-Q.
Colfax Corporation
Condensed Consolidated Balance Sheets
Dollars in thousands
(Preliminary(1) and unaudited)
October 2, December 31,
2009 2008
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $50,833 $28,762
Trade receivables, less allowance for
doubtful accounts 89,601 101,064
Inventories, net 77,369 80,327
Asbestos insurance asset 26,031 26,473
Asbestos insurance receivable 34,972 36,371
Other current assets 21,589 21,860
------ ------
Total current assets 300,395 294,857
Deferred income taxes, net 51,576 53,428
Property, plant and equipment, net 93,060 92,090
Goodwill and intangible assets, net 180,613 179,046
Long-term asbestos insurance asset 267,396 277,542
Deferred loan costs, pension and other assets 16,594 16,113
------ ------
Total assets $909,634 $913,076
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and
capital leases $7,698 $5,420
Accounts payable 37,992 52,138
Accrued asbestos liability 28,103 28,574
Other accrued liabilities 71,600 68,154
------ ------
Total current liabilities 145,393 154,286
Long-term debt, less current portion 85,236 91,701
Long-term asbestos liability 316,218 328,684
Pension and accrued post-retirement benefits 129,663 130,188
Other liabilities 40,055 41,286
------ ------
Total liabilities 716,565 746,145
Shareholders' equity 193,069 166,931
------- -------
Total liabilities and shareholders' equity $909,634 $913,076
======== ========
(1) The preliminary financial results as of and for the three and nine
months ended October 2, 2009 reflect management's best estimate of
the Company's net asbestos liability based upon information currently
available. The preliminary results do not reflect any potential
adjustments from the favorable asbestos ruling on October 14, 2009
for the Company's Warren Pumps subsidiary. The Company expects
additional information related to this matter to become available
prior to filing its third quarter Form 10-Q with the SEC on or before
November 16, 2009. Any adjustments that result from the Company's
evaluation of this information will be reflected in the Company's
financial statements included in its third quarter Form 10-Q.
Colfax Corporation
Condensed Consolidated Statement of Cash Flows
Dollars in thousands
(Preliminary(1) and unaudited)
Nine Months Ended
October 2, September 26,
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $13,046 $(10,950)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation, amortization and fixed asset
impairment charges 11,240 11,345
Noncash stock-based compensation 1,970 10,814
Other adjustments for non-cash items 474 5,430
Deferred income taxes 362 (18,063)
Changes in working capital 6,087 (26,315)
Changes in other operating assets and
liabilities 823 (2,952)
--- ------
Net cash provided by (used in) operating
activities 34,002 (30,691)
Cash flows from investing activities:
Purchases of fixed assets (7,779) (13,329)
Acquisitions, net of cash received (1,260) -
Proceeds from sale of fixed assets 238 23
--- --
Net cash used in investing activities (8,801) (13,306)
Cash flows from financing activities:
Borrowings under term credit facility - 100,000
Payments under term credit facility (3,750) (207,778)
Proceeds from borrowings on revolving credit
facilities - 28,185
Repayments of borrowings on revolving credit
facilities - (28,158)
Proceeds from the issuance of common stock,
net of offering costs - 193,020
Dividends paid to preferred shareholders - (38,546)
Other (447) (3,446)
---- ------
Net cash (used in) provided by financing
activities (4,197) 43,277
Effect of exchange rates on cash 1,067 556
----- ---
Increase (decrease) in cash and cash
equivalents 22,071 (164)
Cash and cash equivalents, beginning of year 28,762 48,093
------ ------
Cash and cash equivalents, end of year $50,833 $47,929
======= =======
(1) The preliminary financial results as of and for the three and nine
months ended October 2, 2009 reflect management's best estimate of
the Company's net asbestos liability based upon information currently
available. The preliminary results do not reflect any potential
adjustments from the favorable asbestos ruling on October 14, 2009
for the Company's Warren Pumps subsidiary. The Company expects
additional information related to this matter to become available
prior to filing its third quarter Form 10-Q with the SEC on or
before November 16, 2009. Any adjustments that result from the
Company's evaluation of this information will be reflected in the
Company's financial statements included in its third quarter
Form 10-Q.
Colfax Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
Dollars in thousands, except per share data
(Preliminary(1) and unaudited)
Three Months Ended Nine Months Ended
October 2, September 26, October 2, September 26,
2009 2008 2009 2008
---- ---- ---- ----
EBITDA
Net income (loss) $1,819 $13,651 $13,046 $(10,950)
Interest expense 1,834 1,951 5,466 9,684
Provision (benefit)
for income taxes 64 5,329 5,309 (3,772)
Depreciation and
amortization 3,681 3,695 10,592 11,345
----- ----- ------ ------
EBITDA $7,398 $24,626 $34,413 $6,307
====== ======= ======= ======
EBITDA margin 5.8% 16.0% 8.7% 1.4%
Adjusted EBITDA
Net income (loss) $1,819 $13,651 $13,046 $(10,950)
Interest expense 1,834 1,951 5,466 9,684
Provision(benefit)
for income taxes 64 5,329 5,309 (3,772)
Depreciation and
amortization 3,681 3,695 10,592 11,345
Restructuring and
other related
charges 9,608 - 10,755 -
IPO-related costs - - - 57,017
Legacy legal
adjustment - - - 4,131
Due diligence costs - 582 - 582
Asbestos liability
and defense costs
(income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage
litigation expense 1,845 5,148 8,838 12,257
----- ----- ----- ------
Adjusted EBITDA $20,228 $24,044 $58,510 $73,545
======= ======= ======= =======
Adjusted EBITDA
margin 15.7% 15.7% 14.8% 16.5%
Adjusted Net
Income and
Adjusted Earnings
per Share
Net income (loss) $1,819 $13,651 $13,046 $(10,950)
Restructuring and
other related
charges 9,608 - 10,755 -
IPO-related costs - - - 57,017
Legacy legal
adjustment - - - 4,131
Due diligence costs - 582 - 582
Asbestos liability
and defense costs
(income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage
litigation expense 1,845 5,148 8,838 12,257
Interest adjustment
to effect IPO at
beginning of
period - - - 2,302
Tax adjustment to
effective rate of
32% and 34%,
respectively (4,644) (926) (8,276) (22,410)
------ ---- ------ -------
Adjusted net income $10,005 $12,143 $28,867 $36,180
======= ======= ======= =======
Adjusted net income
margin 7.8% 7.9% 7.3% 8.1%
Weighted average
shares
outstanding -
diluted 43,324,995 - 43,274,177 -
Shares outstanding
at closing of IPO - 44,006,026 - 44,006,026
Adjusted net income
per share $0.23 $0.28 $0.67 $0.82
===== ===== ===== =====
Net income per
share-basic
and diluted in
accordance
with GAAP $0.04 $0.31 $0.30 $(0.43)
===== ===== ===== ======
Adjusted Operating
Income
Operating income
(loss) $3,717 $20,931 $23,821 $(5,038)
Restructuring and
other related
charges 9,608 - 10,755 -
IPO-related costs - - - 57,017
Legacy legal
adjustment - - - 4,131
Due diligence costs - 582 - 582
Asbestos liability
and defense costs
(income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage
litigation expense 1,845 5,148 8,838 12,257
----- ----- ----- ------
Adjusted operating
income $16,547 $20,349 $47,918 $62,200
======= ======= ======= =======
Adjusted
operating
income margin 12.9% 13.3% 12.2% 14.0%
(1) The preliminary financial results as of and for the three and nine
months ending October 2, 2009 reflect management's best estimate of
the Company's net asbestos liability based upon information currently
available. The preliminary results do not reflect any potential
adjustments from the favorable asbestos ruling on October 14, 2009
for the Company's Warren Pumps subsidiary. The Company expects
additional information related to this matter to become available
prior to filing its third quarter Form 10-Q with the SEC on or before
November 16, 2009. Any adjustments that result from the Company's
evaluation of this information will be reflected in the Company's
financial statements included in its third quarter Form 10-Q.
Colfax Corporation
Sales and Orders Growth
Dollars in millions
(unaudited)
Sales Orders
$ % $ %
------ ----- ------ -----
Three Months Ended
September 26, 2008 $153.5 $173.8
Components of Change:
Existing Businesses (18.4) (12.0)% (44.3) (25.5)%
Acquisitions 0.5 0.3% 0.4 0.2%
Foreign Currency
Translation (7.1) (4.6)% (5.6) (3.2)%
----- -----
Total (25.0) (16.2)% (49.5) (28.5)%
------ ------
Three Months Ended
October 2, 2009 $128.5 $124.3
====== ======
Sales Orders Backlog at
$ % $ % Period End
------ ----- ------ ----- ----------
Nine Months Ended
September 26, 2008 $445.5 $542.9 $383.1
Components of Change:
Existing Businesses (11.4) (2.5)% (162.6) (29.9)% (83.9) (21.9)%
Acquisitions 0.5 0.1% 0.4 0.1% 0.5 0.1%
Foreign Currency
Translation (40.5) (9.1)% (31.5) (5.8)% (1.7) (0.4)%
----- ------ -----
Total (51.4) (11.6)% (193.7) (35.7)% (85.1) (22.2)%
------ ------ ------
Nine Months Ended
October 2, 2009 $394.1 $349.2 $298.0
====== ====== ======
Colfax Corporation
Reconciliation of Projected 2009 Net Income Per Share(1)
to Adjusted Net Income Per Share
Amounts in Dollars
(unaudited)
EPS Range
---------
Projected net income per share - fully diluted $0.35 $0.41
Restructuring and other related charges incurred year-
to-date 0.17 0.17
Estimated fourth quarter restructuring and other
related charges(2) 0.06 0.06
Asbestos coverage litigation 0.19 0.19
Asbestos liability and defense costs 0.11 0.11
---- ----
Projected adjusted net income per share - fully diluted $0.88 $0.94
===== =====
(1) Does not reflect any potential adjustments from the favorable
asbestos ruling on October 14, 2009 for the Company's Warren Pumps
subsidiary. The Company expects additional information related to
this matter to become available prior to filing its third quarter
Form 10-Q with the SEC on or before November 16, 2009. Any
adjustments that result from the Company's evaluation of this
information will be reflected in the Company's financial statements
included in its third quarter Form 10-Q.
(2) Represents estimated costs related to restructuring actions
implemented through November 3, 2009.
SOURCE Colfax Corporation
http://www.colfaxcorp.com
Copyright (C) 2009 PR Newswire. All rights reserved