Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 17, 2008

 

 

Colfax Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-34045   54-1887631

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(I.R.S. Employer

Identification No.)

8730 Stony Point Parkway, Suite 150

Richmond, VA 23235

(Address of Principal Executive Offices) (Zip Code)

(804) 560-4070

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On June 17, 2008, Colfax Corporation issued a press release reporting financial results for the quarter ended March 28, 2008. A copy of Colfax Corporation’s press release is attached to this report as Exhibit 99.1 and is incorporated in this report by reference. Colfax Corporation has scheduled a conference call for 8:00 a.m. EDT on June 17, 2008 to discuss its financial results, and slides for that call are attached to this report as Exhibit 99.2 and are incorporated in this report by reference.


Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1   Colfax Corporation press release dated June 17, 2008, reporting financial results for the quarter ended March 28, 2008.
99.2   Colfax Corporation slides for June 17, 2008 conference call for financial results for the quarter ended March 28, 2008.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Colfax Corporation
Date: June 17, 2008   By:  

/s/ JOHN A. YOUNG

  Name:   John A. Young
  Title:   President and Chief Executive Officer


EXHIBIT INDEX

 

99.1    Colfax Corporation press release dated June 17, 2008, reporting financial results for the quarter ended March 28, 2008.
99.2    Colfax Corporation slides for June 17, 2008 conference call for financial results for the quarter ended March 28, 2008.
Exhibit 99.1

Exhibit 99.1

 

  
Page 1 of 5   

COLFAX REPORTS FIRST QUARTER 2008 FINANCIAL RESULTS

RICHMOND, VA., June 17, 2008 - Colfax Corporation (NYSE: CFX), a global leader in engineered fluid handling products and systems today announced financial results for the first quarter ended March 28, 2008. Colfax completed its initial public offering on May, 8, 2008. On a year-over-year basis, highlights for the quarter include:

 

   

Adjusted net income (as defined below) of $8.9 million, an increase of 48.3%; Net income of $6.8 million, a increase of 13.3%

 

   

Net sales of $130.7 million, an increase of 13.9%

 

   

Adjusted operating income (as defined below) of $18.3 million, an increase of 24.5%; Operating income of $14.9 million, an increase of 1.4%

 

   

Adjusted EBITDA (as defined below) of $22.0 million, an increase of 20.9%; EBITDA (as defined below) of $18.6 million, an increase of 2.2%

 

   

Record first quarter orders of $180.3 million, an increase of 37.8%

 

   

Record backlog of $353.6 million, an increase of 72.8%

Adjusted net income, adjusted operating income, EBITDA and adjusted EBITDA are not financial measures calculated in accordance with generally accepted accounting principles (“GAAP”). The “adjusted” measures exclude asbestos liability and defense cost (income) and asbestos coverage litigation expense and thus, provide a measure of the Company’s operating performance. See below for a description of the measures’ usefulness and a reconciliation of these measures to their most directly comparable GAAP financial measures.

“We are pleased with our first quarter results,” said John Young, President and CEO of Colfax Corporation. “Our strong earnings are reflective of the fast growing, global end-markets we participate in and our ability to design and manufacture products that handle the most demanding fluids in critical applications. Colfax’s leading brands of specialty fluid handling products and our dedicated employees deliver unsurpassed value to a global and diverse customer base.”

Young continued, “We saw strong order growth throughout the quarter. Over the prior year, commercial marine orders were up 76% on a currency adjusted basis and global navy orders were up 105%. We are especially pleased with the order activity in the global navy market. Our modest organic sales growth rate of 2.1% exceeded our expectations as we anticipated the timing of navy and other project business. With a backlog of orders at an all time high of $353.6 million at quarter end, we believe we are positioned well for strong performance the balance of the year.”


  
Page 2 of 5   

 

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 operating income, EBITDA and adjusted EBITDA. 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 capital structure, asset base, legacy asbestos issues (except in the case of EBITDA) and items outside the control of its operating management team. Because these measures facilitate comparisons of Colfax’s historical operating performance considering only revenue and profit generating activities, Colfax uses these measures in its internal management reporting, budgeting and forecasting processes, to compare its operating results across its business as well as to those of Colfax’s competitors and other companies in its industry, as an internal profitability measure, as a component in evaluating Colfax’s ability and the desirability of making capital expenditures and significant acquisitions, and as an element in determining executive compensation.

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.

Conference Call and Webcast

Colfax will host a conference call to provide details about its results and business strategy on Tuesday, June 17, 2008 at 8:00 a.m. EDT. The call will be open to the public through 719-325-4893 or 877-440-5786 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 available until the next quarterly call. In addition, a replay of this call will be available until approximately July 1st. The replay number in the U.S. is 888-203-1112 and internationally it is 719-457-0820, and the access code is 4889794.

About Colfax Corporation

Colfax Corporation is a global leader in critical fluid-handling solutions, including the manufacture of positive displacement industrial pumps and valves used in global oil & gas, power generation, marine, naval and a variety of other industrial applications.


  
Page 3 of 5   

 

Key product brands include 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’s products, businesses and practices is available at www.colfaxcorp.com

CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS:

This press release contains forward-looking statements, including forward-looking statements within the meaning of the 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 Registration Statement on Form S-1 under the caption “Risk Factors” and other reports filed with the U.S. Securities and Exchange Commission. 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.

Contacts:

For Investors:

Scott Faison, Senior Vice President & CFO, Colfax Corporation

804-327-5668


  
Page 4 of 5   

 

Colfax Corporation

Condensed Consolidated Statement of Operations

(amounts in thousands)

(unaudited)

 

     Three Months Ended  
     March 28, 2008    March 30, 2007  

Net sales

   $ 130,651    $ 114,815  

Cost of sales

     82,473      75,996  
               

Gross profit

     48,178      38,819  

Selling, general and administrative expenses

     28,507      23,104  

Research and development expenses

     1,381      1,021  

Asbestos liability and defense costs (income)

     278      (2,305 )

Asbestos coverage litigation expenses

     3,139      2,253  
               

Operating income

     14,873      14,746  

Interest expense

     4,497      4,758  
               

Income before income taxes

     10,376      9,988  

Provision for income taxes

     3,578      3,950  
               

Net income

   $ 6,798    $ 6,038  
               


  
Page 5 of 5   

 

Colfax Corporation

Tables

(amounts in thousands)

(unaudited)

 

     Three Months Ended  
     March 28, 2008     March 30, 2007  

EBITDA:

    

Net income

   $ 6,798     $ 6,038  

Interest expense

     4,497       4,758  

Provision for income taxes

     3,578       3,950  

Depreciation and amortization

     3,695       3,498  
                

EBITDA

   $ 18,568     $ 18,244  
                

EBITDA margin

     14.2 %     15.9 %
                

Adjusted EBITDA:

    

Net income

   $ 6,798     $ 6,038  

Interest expense

     4,497       4,758  

Provision for income taxes

     3,578       3,950  

Depreciation and amortization

     3,695       3,498  

Asbestos liability and defense costs (income)

     278       (2,305 )

Asbestos coverage litigation expenses

     3,139       2,253  
                

Adjusted EBITDA

   $ 21,985     $ 18,192  
                

Adjusted EBITDA margin

     16.8 %     15.8 %
                

Adjusted Net Income:

    

Net income

   $ 6,798     $ 6,038  

Asbestos liability and defense costs (income)

     278       (2,305 )

Asbestos coverage litigation expenses

     3,139       2,253  

Tax effect of asbestos-related adjustments

     (1,298 )     20  
                

Adjusted net income

     8,917       6,006  
                

Adjusted net income margin

     6.8 %     5.2 %
                

Adjusted Operating Income:

    

Operating income

   $ 14,873     $ 14,746  

Asbestos liability and defense costs (income)

     278       (2,305 )

Asbestos coverage litigation expenses

     3,139       2,253  
                

Adjusted operating income

   $ 18,290     $ 14,694  
                

Adjusted operating income margin

     14.0 %     12.8 %
                

# # #

Exhibit 99.2
Q1 2008 Earnings Call
June 17, 2008
Exhibit 99.2


1
Forward Looking Statements
The following information contains forward-looking statements, including forward-
looking statements within the meaning of the 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 Registration Statement on Form S-1 under the caption "Risk Factors" and
other reports filed with the U.S. Securities and Exchange Commission. In addition,
these statements are based on a number of assumptions that are subject to change.
This presentation speaks only as of this date. Colfax disclaims any duty to update
the information herein.


2
Q1 2008 Highlights
Adjusted net income of $8.9 million, an increase of 48.3%
Net sales of $130.7 million, an increase of 13.9%
Adjusted operating income of $18.3 million, an increase of 24.5%
Adjusted EBITDA of $22.0 million, an increase of 20.9%
Record first quarter orders of $180.3 million, an increase of 37.8%
Record backlog of $353.6 million, an increase of 72.8%
Well Positioned For Strong Performance in 2008


3
Note: Dollars in millions.
Historical Orders & Backlog
$118.3
$179.3
$292.8
$204.6
$353.6
$0.0
$80.0
$160.0
$240.0
$320.0
$400.0
2005
2006
2007
-
Q1 2007
Q1 2008
$370.4
$442.3
$581.5
$130.8
$180.3
$0.0
$120.0
$240.0
$360.0
$480.0
$600.0
2005
2006
2007
-
Q1 2007
Q1 2008
17.7%
17.6%
Acquisitions
1.2%
6.1%
FX Translation
0.5%
7.8%
Total Growth
--
--
--
--
19.4%
31.5%
24.2%
1.6%
12.1%
37.8%
Existing
Businesses
--
--
--
--
Accelerating Order and Backlog Growth
Orders
Orders
Backlog
Backlog


4
$57.1
$64.8
$88.2
$18.2
$22.0
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
2005
2006
2007
Q1 2007
Q1 2008
Financial Performance Overview
Note: Dollars in millions.
(1) Please refer to the Appendix for the Non-GAAP reconciliation.
% Margin
16.5%
16.5%
17.4%
$345.5
$393.6
$506.3
$114.8
$130.7
$0.0
$120.0
$240.0
$360.0
$480.0
$600.0
2005
2006
2007
Q1 2007
Q1 2008
11.8%
13.5%
Acquisitions
1.4%
8.0%
FX Translation
0.8%
7.1%
Total Growth
13.9%
28.6%
--
--
--
Existing
Businesses
--
--
--
15.9%
16.8%
2.1%
2.2%
9.6%
13.9%
Consistent Track Record of Profitable Sales Growth
Revenue
Adjusted
EBITDA
(1)


5
Q1 2008 Sales and Orders by End Market
Q1 2008 Orders: $180.3 million
Q1 2008 Orders: $180.3 million
Q1 2008 Sales: $130.7 million
Q1 2008 Sales: $130.7 million
Commercial
Marine
36%
Oil & Gas
7%
Power
Generation
12%
Navy
6%
General
Industrial
39%
Commercial
Marine
25%
Oil & Gas
10%
Power
Generation
11%
Navy
5%
General
Industrial
49%
Well Positioned in Five Attractive and Diverse End Markets


6
Commercial Marine Market Perspective
Q1 2008 Year-Over Year Results
Orders up 99.1% year-over-year (76.0% organic growth)
Sales up 11.6% year-over-year (-1.0% organic growth)
Market Trends
Growth in international trade and demand for bulk commodities
driving increased ship construction
Global market with China taking leadership position
Aging fleet, environmental regulations requiring ship owners to
upgrade or replace ships
Local presence required to effectively serve customers and
capture aftermarket business
Executing Strategies To Drive Profitable Sales Growth
Colfax Q1 08
Orders Split
36%
Comm.
Marine
Colfax Q1 08
Sales Split
25%
Comm.
Marine


7
Oil & Gas Market Perspective
Strong Product Portfolio Capable of Solving Needs of Evolving Oil & Gas Market
Colfax Q1 08
Orders Split
7%
O&G
Colfax Q1 08
Sales Split
10%
O&G
Q1 2008 Year-Over Year Results
Orders down 24.7% year-over-year (-26.5% organic growth)
Sales down 7.3% year-over-year (-10.1% organic growth)
Market Trends
Elevated oil prices and depleting supplies spurring heavy oil
exploration, transport and processing
Customers
focusing
more
on
“total
cost
of
ownership”
to
reduce
downtime and increase efficiency
Application expertise critical to winning large project orders


8
Power Generation Market Perspective
Leading Supplier of Lubrication Solutions to Power Generation OEMs
Colfax Q1 08
Orders Split
12%
Power
Gen.
Colfax Q1 08
Sales Split
11%
Power
Gen.
Q1 2008 Year-Over Year Results
Orders up 18.7% year-over-year (10.2% organic growth)
Sales up 37.6% year-over-year (27.4% organic growth)
Market Trends
Robust economic growth in Asia and Middle East driving
investment in energy infrastructure projects
Aging power infrastructure in mature markets creating upgrade
projects to increase efficiency and lower operating costs
Multiple forms of power generation (gas, coal, hydro, nuclear) being
employed to satisfy growing global demand


9
Global Navy Market Perspective
Developing Innovative Fluid Handling Products and Systems to Drive Future Growth
Colfax Q1 08
Orders Split
6%
Navy
Colfax Q1 08
Sales Split
5%
Navy
Q1 2008 Year-Over Year Results
Orders up 107.3% year-over-year (104.8% organic growth)
Sales down 26.7% year-over-year (-27.7% organic growth)
Market Trends
Sovereign navies around the world expanding fleets to address
heightened national security level concerns
U.S. Navy continues to invest in the next generation of naval
vessels
Increased demand for integrated fluid handling systems and
solutions to reduce operating costs


10
General Industrial Perspective
Leading Supplier of Highly Engineered Fluid Handling Products and Systems with Global Reach
Colfax Q1 08
Orders Split
39%
General
Industrial
Colfax Q1 08
Sales Split
49%
General
Industrial
Q1 2008 Year-Over Year Results
Orders up 21.2% year-over-year (10.3% organic growth)
Sales up 23.2% year-over-year (12.2% organic growth)
Market Trends
Global economic development driving increased capital investment
Developing regions embracing engineered products and solutions
that reduce costs and increase efficiency
Global footprint and channel optimization required to cover broad
end market applications


11
Note: Dollars in millions.
Income Statement Summary
First Quarter
Delta
2007
2008
$
%
Orders
$130.8
$180.3
$49.5
37.8%
Sales
$114.8
$130.7
$15.9
13.9%
Gross Profit
$38.8
$48.2
$9.4
24.2%
% of Sales
33.8%
36.9%
SG&A Expense
$23.1
$28.5
$5.4
23.4%
R&D Expense
$1.0
$1.4
$0.4
40.0%
Operating Expenses
$24.1
$29.9
$5.8
24.1%
% of Sales
21.0%
22.9%
Adjusted Operating Income
$14.7
$18.3
$3.6
24.5%
% of Sales
12.8%
14.0%
Adjusted EBITDA
$18.2
$22.0
$3.8
20.9%
% of Sales
15.9%
16.8%
Adjusted Net Income
$6.0
$8.9
$2.9
48.3%
% of Sales
5.2%
6.8%


12
Note: Dollars in millions.
Statement of Cash Flows Summary
Net Income
Non-Cash Expenses
Other
Total Operating Activities
Capital Expenditures
Acquisitions
Other
Total Investing Activities
Net Borrowings
Other
Total Financing Activities
Effect of Exchange Rates
Increase (Decrease in Cash)
Cash Beginning of Period
Cash End of Period
Three Months Ended
3/30/2007
3/28/2008
$6.0
$6.8
$4.5
$1.7
($5.2)
($13.4)
($4.0)
($6.2)
$1.3
($11.1)
($1.5)
($3.0)
($28.5)
$0.0
$0.0
$0.0
($30.0)
($2.9)
$36.5
$0.0
($0.4)
($1.3)
$36.1
($1.3)
$1.1
$0.5
$8.5
($14.8)
$7.6
$48.1
$16.1
$33.3
Change in
Working
Capital
and
Accrued
Liabilities


13
21.56 million shares sold (11.85 million primary / 9.71 million secondary)
44.01 million shares outstanding post offering
Primarily to repay a portion of existing debt, effective redemption of preferred stock
through
conversion
and
sale
of
common,
pay
dividends
and
general
corporate
purposes
IPO Summary
Shares Sold
Use of Proceeds
$18.00 per share
IPO Price
Began trading May 8, 2008
Completed offering May 13, 2008
Date
$193.4 million
Net Proceeds


14
Pro Forma Capitalization
Note: Dollars in millions.
Well Capitalized for Growth Going Forward
As Adjusted
Actual
For IPO
Cash
$33.3
$69.1
Total Debt
$207.8
$129.3
Shareholder's Equity
$64.2
$225.5
Total Capitalization
$272.0
$354.8
Total Debt / Total Capitalization
76.4%
36.5%
As of March 28, 2008
As of March 28, 2008


15
Well Positioned for the Future
Global Leader in Specialty
Global Leader in Specialty
Fluid Handling Products
Fluid Handling Products
Proven Application
Proven Application
Expertise in Solving
Expertise in Solving
Critical Customer Needs
Critical Customer Needs
Serving Fast
Serving Fast
Growing Infrastructure
Growing Infrastructure
Driven End Markets
Driven End Markets
Experienced Management
Experienced Management
Team in Place to Grow 
Team in Place to Grow 
Organically and Through
Organically and Through
Strategic Acquisitions
Strategic Acquisitions
CBS-Driven Culture Focused
on Profitable Sales Growth
Leading Brand Names
Generating Aftermarket
Sales and Services


Questions


Appendix


18
Note: Dollars in millions.
Non-GAAP Reconciliation
Fiscal Year End
Three Months Ended
2005
2006
2007
3/30/2007
3/28/2008
Adjusted EBITDA:
Net Income
$12.2
$0.1
$64.9
$6.0
$6.8
Provision for Income Taxes
6.9
3.9
39.1
4.0
3.6
Interest Expense
9.0
14.2
19.2
4.8
4.5
Depreciation and Amortization
11.4
11.5
15.2
3.5
3.7
Asbestos Liability and Defense Costs (Income)
14.3
21.8
(65.2)
(2.3)
0.3
Asbestos Coverage Litigation Expense
3.8
12.0
14.9
2.2
3.1
Adjusted EBITDA
$57.1
$64.8
$88.2
$18.2
$22.0
Adjusted EBITDA Margin
16.5%
16.5%
17.4%
15.9%
16.8%
Discontinued Operations Expense (Income)
(0.6)
1.4
0.0
0.0
0.0