Press Release Details

•         Achieved results at the upper end of expectations

•         Delivered 3.9% year-on-year sales growth in Medical Technology segment including 4.5% organic improvement

•         Improved Fabrication Technology operating income and adjusted EBITA margins by 290 basis points

•         Recently completed divestiture of Air & Gas Handling business, used proceeds to repay $1.6 billion of debt

Annapolis Junction, MD, Oct. 31, 2019 (GLOBE NEWSWIRE) -- Colfax Corporation (NYSE: CFX), a leading diversified technology company, today announced its financial results for the third quarter of 2019.

The Company reported net income from continuing operations of $4 million or $0.02 per share in the quarter, compared to $0.14 per share in the prior year quarter. Excluding strategic transaction costs, acquisition-related amortization costs, pension settlement losses, and restructuring costs, the Company reported adjusted net income of $0.50 per share versus $0.22 in the third quarter of 2018.

On a continuing operations basis, Colfax reported third quarter net sales of $847 million up 61.5% from the previous year’s quarter including the acquisition of DJO. The Medical Technology segment expanded 4.5% organically versus the prior year period. Growth in the Medical Technology segment was driven by continued momentum in Reconstructive and a return to growth in Prevention & Rehabilitation. The Fabrication Technology segment grew 2.9% but declined organically by 0.6%.

Third quarter adjusted EBITA was $126 million with adjusted EBITA margin of 14.9% including strong operating execution in the Fabrication Technology segment. Fabrication Technology adjusted EBITA margins increased 290 basis points to 15.2% through a combination of cost reductions, productivity improvements, and pricing benefits. The Medical Technology segment achieved adjusted EBITA margins of 18.5%, up 200 basis points sequentially from the second quarter.

“Our third quarter results reflect the strong performance of our new Colfax portfolio,” said Matt Trerotola, Colfax President and CEO. “The successful divestiture of our Air & Gas Handling business marks the completion of our pivot to the new Colfax, and we have reshaped the Company to be more profitable and less cyclical. Our new portfolio also generates higher and more consistent cash flow, and we remain confident in our ability to generate substantial free cash flow next year.

“We exceeded our operational performance expectations despite softer Fabrication Technology end markets, and we expect a strong finish to the year. We also made additional progress in Medical Technology, returning Prevention and Rehabilitation to solid growth.”

The Company announced that it is reaffirming its 2019 adjusted EPS outlook from continuing operations of $1.90 to $2.00.  Colfax will provide additional information in its call with investors scheduled for later today.

Conference Call and Webcast

Colfax will host a conference call to provide details about its results today at 8:00 a.m. EDT. The call will be open to the public by calling +1-877-303-7908 (U.S. callers) or +1-678-373-0875 (international callers) and referencing the conference ID number 7646778 or through webcast via Colfax’s website at www.colfaxcorp.com under the “Investors” 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 leading diversified technology company that provides orthopedic and fabrication technology products and services to customers around the world, principally under the DJO and ESAB brands. Colfax believes that its brands are among the most highly recognized in each of the markets that it serves. The Company uses its Colfax Business System (“CBS”), a comprehensive set of tools, processes and values, to create superior value for customers, shareholders and associates. Colfax’s common stock is traded on the NYSE under the ticker “CFX.”

Non-GAAP Financial Measures and Other Adjustments

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 EBITA (earnings before interest, taxes and amortization), adjusted EBITA margin, organic sales growth, and organic order growth. Colfax also provides adjusted EBITA and adjusted EBITA margin on a segment basis.

• Adjusted net income represents net income (loss) from continuing operations excluding restructuring and other related charges, pension settlement loss, debt extinguishment charges, acquisition-related amortization and other non-cash charges, strategic transaction costs, and loss on short-term investments related to the 2017 divestiture of the Fluid Handling business.
• Adjusted EBITA represents net income (loss) from continuing operations excluding restructuring and other related charges, acquisition-related amortization and other non-cash charges, and strategic transaction costs, as well as provision (benefit) for income taxes, loss on short-term investments, interest expense, net and pension settlement loss.  Colfax presents adjusted EBITA margin, which is subject to the same adjustments as adjusted EBITA. Further, Colfax presents adjusted EBITA (and adjusted EBITA margin) on a segment basis, where we exclude the impact of strategic transaction costs and acquisition-related amortization and other non-cash charges from segment operating income.
• Core or organic sales growth and organic order growth (decline) exclude the impact of acquisitions and foreign exchange rate fluctuations.

These non-GAAP financial measures assist Colfax management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete restructuring plans that are fundamentally different from the ongoing productivity improvements of the Company. Colfax management also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends.

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 GAAP results has been provided in the financial tables included in this press release.

In this document, Colfax presents forward-looking adjusted EPS guidance. Colfax does not provide such outlook on a GAAP basis because changes in the items that Colfax excludes from GAAP to calculate the adjusted EPS measures can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of Colfax’s routine operating activities. Additionally, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on outlook done on a GAAP basis.

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 fact. 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, the factors detailed in Colfax’s reports filed with the U.S. Securities and Exchange Commission including its 2018 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the period ended June 28, 2019 under the caption “Risk Factors.” In addition, these statements are based on assumptions that are subject to change. This press release speaks only as of the date hereof. 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.

Contact:

Terry Ross
Colfax Corporation
+1-301-323-9090
investorrelations@colfaxcorp.com

Colfax Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Unaudited)

Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Amounts in millions, except per share data
(Unaudited)

^{__________
(1)} Net income from continuing operations attributable to Colfax Corporation for the respective periods is calculated using Net income from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes of $0.9 million and $3.1 million for the three and nine months ended September 27, 2019 and $0.4 million and $1.7 million for the three and nine months ended September 28, 2018, respectively.
⁽²⁾ Includes $3.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended September 27, 2019.
⁽³⁾ Includes amortization of acquired intangibles and fair value charges on acquired inventory.
⁽⁴⁾ Includes costs incurred for the acquisition of DJO.

⁽⁵⁾ The effective tax rates used to calculate adjusted net income and adjusted net income per share were 26.2% and 24.2% for the three and nine months ended September 27, 2019 and 32.5% and 18.3% for the three and nine months ended September 28, 2018, respectively.

Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in millions
(Unaudited)

^{__________
(1)} Includes the gain on disposal and the change in fair value of the CIRCOR shares received as partial consideration for the Fluid Handling business sale.
⁽²⁾ The nine months ended September 27, 2019 includes $0.8 million of debt extinguishment charges related to the first quarter of 2019.
⁽³⁾ Restructuring and other related charges includes $3.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 27, 2019.
⁽⁴⁾ Includes costs incurred for the acquisition of DJO.
⁽⁵⁾ Includes amortization of acquired intangibles and fair value charges on acquired inventory.

Colfax Corporation
Change in Sales
Dollars in millions
(Unaudited)

^__________

⁽¹⁾ Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of growth due to factors such as price, product mix and volume.
⁽²⁾ Represents the incremental sales as a result of our acquisitions discussed previously.
⁽³⁾ Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales, valued at current year foreign exchange rates.

Colfax Corporation
Condensed Consolidated Balance Sheets
Dollars in thousands, except share amounts
(Unaudited)

Colfax Corporation
Condensed Consolidated Statements of Cash Flows
Dollars in thousands
(Unaudited)

Source: Colfax Corporation