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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): February 20, 2009


Colfax Corporation

(Exact name of registrant as specified in its charter)

 
Delaware
001-34045
54-1887631
(State or other jurisdiction
(Commission
(I.R.S. Employer
of incorporation)
File Number)
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 February 20, 2009, Colfax Corporation issued a press release reporting financial results for the quarter and the year ended December 31, 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. EST on February 20, 2009 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 
 
Item 9.01.  Financial Statements and Exhibits.

(d)
Exhibits
  
     
 
99.1
Colfax Corporation press release dated February 20, 2009, reporting financial results for the quarter and the year ended December 31, 2008.
     
 
99.2
Colfax Corporation slides for February 20, 2009 conference call for financial results for the quarter and the year ended December 31, 2008.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
3
 
 
 
 
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: February 20, 2009
By:
/s/ JOHN A. YOUNG
  
 
Name:
John A. Young
 
Title:
President and Chief Executive Officer
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4
 
 

 
EXHIBIT INDEX

99.1
Colfax Corporation press release dated February 20, 2009, reporting financial results for the quarter and the year ended December 31, 2008.
   
99.2
Colfax Corporation slides for February 20, 2009 conference call for financial results for the quarter and the year ended December 31, 2008.



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Unassociated Document
Exhibit 99.1
 
COLFAX REPORTS FOURTH QUARTER, FULL-YEAR 2008 RESULTS
 
Record Sales and Orders Drive Strong Performance in 2008
 
RICHMOND, VA – February 20, 2009 - Colfax Corporation (NYSE: CFX), a global leader in engineered fluid handling products and systems, today announced financial results for the fourth quarter and full year ended December 31, 2008. On a year-over-year basis, highlights for the quarter and the year include:
 
Fourth quarter of 2008 (all comparisons versus the fourth quarter of 2007)
 
 
•
Net income of $10.4 million (24 cents per share – basic and diluted); Adjusted net income (as defined below) of $17.5 million (40 cents per share), an increase of 19.1%
 
 
•
Net sales of $159.3 million, an increase of 10.9%; Organic sales growth (as defined below) of 19.1%
 
 
•
Operating income of $21.7 million; Adjusted operating income (as defined below) of $28.6 million, an increase of 14.9%
 
 
•
EBITDA (as defined below) of $25.2 million; Adjusted EBITDA (as defined below) of $32.1 million, an increase of 10.8%
 
 
•
Fourth quarter orders of $126.3 million, a decrease of 19.3%; Organic order decline (as defined below) of 15.8%
 
 
•
Backlog of $337.3 million at period end
 
Full year 2008 (all comparisons versus 2007)
 
 
•
Net loss of $0.6 million (11 cents per share – basic and diluted); Adjusted net income (as defined below) of $53.7 million ($1.22 per share), an increase of 32.8%
 
 
•
Net sales of $604.9 million, an increase of 19.5%; Organic sales growth (as defined below) of 13.9%
 
 
•
Operating income of $16.7 million; Adjusted operating income (as defined below) of $90.8 million, an increase of 24.5%
 
 
•
EBITDA (as defined below) of $31.5 million; Adjusted EBITDA (as defined below) of $105.6 million, an increase of 19.8%
 
 
•
Record orders for the year of $669.2 million, an increase of 15.1%; Organic order growth (as defined below) of 7.0%
 
Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, organic sales growth and organic order growth 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 GAAP financial measures.

“We had an excellent fourth quarter,” said John Young, president and CEO of Colfax Corporation.  “Our strong results were driven by organic sales growth of 19% and a 210 basis point improvement in gross profit margin. We also delivered record results for the year, including organic sales growth of 14%, in line with our low double-digit growth expectation.  Sales growth was lead by increased demand in the power generation, commercial marine and general industrial end markets.  We are well positioned heading into 2009, with a higher backlog than we had at the beginning of 2008.”

He continued, “Despite our recent performance and our relatively strong backlog, we expect that the second half of the year could be very challenging if current economic conditions persist.  We remain cautious on our outlook but continue to expect organic sales growth in the range of 1% to 3% and adjusted earnings per share of $1.10 to $1.17 for 2009. Our focus continues to be on growing the business through expanding our served markets, executing on our breakthrough initiatives and pursuing acquisitions while controlling costs.  Our strong financial position allows us to be flexible as well as opportunistic. We believe that the long-term fundamentals of our end markets including the need for infrastructure and energy worldwide bode well for our fluid-handling products and solutions.”
 
1
 
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 and organic order growth. Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA exclude asbestos liability and defense cost (income) and asbestos coverage litigation expense, certain legacy legal charges, certain due diligence costs, as well as one time initial public offering-related costs. 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 34%. Adjusted net income per share assumes the 44,006,026 shares outstanding at the closing of the IPO to be outstanding since January 1, 2007. Organic sales growth and organic order growth 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 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 Friday, February 20 at 8:00 a.m. EST. The call will be open to the public through 719-325-4744 or 877-723-9518 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. In addition, a replay of this call will be available until approximately March 6, 2009. The replay number in the U.S. is 888-203-1112 and internationally it is 719-457-0820, and the access code is 4053059.
 
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. 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 reports filed with the U.S. Securities and Exchange Commission as well as its Registration Statement on Form S-1 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.

2
 
COLFAX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(amounts in thousands, except per share data)

   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
    
December 31,
    
December 31,
  
    
2008
    
2007
    
2008
    
2007
  
                         
Net sales
   $ 159,311     $ 143,703     $ 604,854     $ 506,305  
Cost of sales
     101,557       94,488       387,667       330,714  
                                 
Gross profit
     57,754       49,215       217,187       175,591  
Initial public offering-related costs
     -       -       57,017       -  
Selling, general and administrative expenses
     27,718       23,223       125,234       98,500  
Research and development expenses
     1,426       1,087       5,856       4,162  
Asbestos liability and defense (income) costs
     1,978       (31,946 )     (4,771 )     (63,978 )
Asbestos coverage litigation expenses
     4,905       5,314       17,162       13,632  
                                 
Operating income
     21,727       51,537       16,689       123,275  
Interest expense
     2,138       4,830       11,822       19,246  
                                 
Income before income taxes
     19,589       46,707       4,867       104,029  
Provision for income taxes
     9,210       17,715       5,438       39,147  
                                 
Net income (loss)
   $ 10,379     $ 28,992     $ (571 )   $ 64,882  
                                 
Net income (loss) available to common
                                
   shareholders per share—basic and diluted
   $ 0.24     $ 0.77     $ (0.11 )   $ 1.79  

 
3
 
 
COLFAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
Preliminary and Unaudited
(amounts in thousands)

   
December 31,
  
   
2008
    
2007
  
ASSETS
            
CURRENT ASSETS:
            
Cash and cash equivalents
   $ 28,762     $ 48,093  
Trade receivables, less allowance for doubtful accounts
     101,064       84,430  
Inventories, net
     80,327       68,287  
Asbestos insurance asset
     26,473       19,059  
Asbestos insurance receivable
     36,371       44,664  
Other current assets
     21,860       22,534  
                 
Total current assets
     294,857       287,067  
Deferred income taxes, net
     53,428       36,447  
Property, plant and equipment, net
     92,090       88,391  
Goodwill and intangible assets, net
     179,046       185,353  
Long-term asbestos insurance asset
     277,542       286,169  
Deferred loan costs, pension and other assets
     16,113       13,113  
Total assets
   $ 913,076     $ 896,540  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
CURRENT LIABILITIES:
                
Current portion of long-term debt and capital leases
   $ 5,420     $ 2,640  
Accounts payable
     52,138       48,910  
Accrued asbestos liability
     28,574       28,901  
Other accrued liabilities
     68,154       67,923  
                 
Total current liabilities
     154,286       148,374  
Long-term debt, less current portion
     91,701       203,853  
Long-term dividend payable to shareholders
     -       35,054  
Long-term asbestos liability
     328,684       347,332  
Pension and accrued post-retirement benefits
     130,188       71,365  
Other liabilities
     41,286       37,511  
Total liabilities
     746,145       843,489  
Shareholders’ equity
     166,931       53,051  
Total liabilities and shareholders' equity
   $ 913,076     $ 896,540  

 
4
 
 
COLFAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Preliminary and Unaudited
(amounts in thousands)

   
Year ended December 31,
  
   
2008
    
2007
  
Cash flows from operating activities:
            
Net (loss) income
   $ (571 )   $ 64,882  
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
                
Depreciation and amortization
     14,788       15,239  
Noncash stock-based compensation
     11,330       -  
Write off of deferred loan costs
     4,614       -  
Other adjustments for non-cash items
     994       1,609  
Deferred income taxes
     (13,357 )     22,186  
Changes in working capital
     (27,680 )     3,344  
Changes in other operating assets and liabilities
     (21,631 )     (32,777 )
Net cash (used in) provided by operating activities
     (31,513 )     74,483  
                 
Cash flows from investing activities:
                
Purchases of fixed assets
     (20,113 )     (13,671 )
Acquisitions, net of cash received
     (439 )     (32,987 )
Proceeds from sale of fixed assets
     23       133  
Net cash used in investing activities
     (20,529 )     (46,525 )
                 
Cash flows from financing activities:
                
Borrowings under term credit facility
     100,000       55,000  
Payments under term credit facility
     (210,278 )     (11,791 )
Proceeds from borrowings on revolving credit facilities
     28,185       58,000  
Repayments of borrowings on revolving credit facilities
     (28,158 )     (86,500 )
Proceeds from the issuance of common stock, net of offering costs
     193,020       -  
Repurchases of common stock
     (5,731 )     -  
Dividends paid to preferred shareholders
     (38,546 )     -  
Other
     (3,656 )     (2,972 )
Net cash provided by financing activities
     34,836       11,737  
                 
Effect of exchange rates on cash
     (2,125 )     790  
                 
(Decrease) increase in cash and cash equivalents
     (19,331 )     40,485  
Cash and cash equivalents, beginning of year
     48,093       7,608  
Cash and cash equivalents, end of year
   $ 28,762     $ 48,093  
 
 
5
 

COLFAX CORPORATION
Reconciliation of GAAP to non-GAAP Financial Measures
Unaudited
(dollars in thousands, except per share data)

   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
    
December 31,
    
December 31,
  
   
2008
    
2007
    
2008
    
2007
  
                         
EBITDA
                        
Net income (loss)
   $ 10,379     $ 28,992     $ (571 )   $ 64,882  
                                 
Interest expense
     2,138       4,830       11,822       19,246  
Provision for income taxes
     9,210       17,715       5,438       39,147  
Depreciation and amortization
     3,443       4,034       14,788       15,239  
                                 
EBITDA
   $ 25,170     $ 55,571     $ 31,477     $ 138,514  
EBITDA margin
     15.8 %     38.7 %     5.2 %     27.4 %
                                 
Adjusted EBITDA
                                
Net income (loss)
   $ 10,379     $ 28,992     $ (571 )   $ 64,882  
                                 
Interest expense
     2,138       4,830       11,822       19,246  
Provision for income taxes
     9,210       17,715       5,438       39,147  
Depreciation and amortization
     3,443       4,034       14,788       15,239  
IPO-related costs
     -       -       57,017       -  
Legacy legal adjustment
     -       -       4,131       -  
Due diligence costs
     -       -       582       -  
Asbestos liability and defense (income) costs
     1,978       (31,946 )     (4,771 )     (63,978 )
Asbestos coverage litigation expense
     4,905       5,314       17,162       13,632  
                                 
Adjusted EBITDA
   $ 32,053     $ 28,939     $ 105,598     $ 88,168  
Adjusted EBITDA margin
     20.1 %     20.1 %     17.5 %     17.4 %
                                 
Adjusted Net Income and Adjusted Earnings per Share
                                
Net income (loss)
   $ 10,379     $ 28,992     $ (571 )   $ 64,882  
IPO-related costs
     -       -       57,017       -  
Legacy legal adjustment
     -       -       4,131       -  
Due diligence costs
     -       -       582       -  
Asbestos liability and defense (income) costs
     1,978       (31,946 )     (4,771 )     (63,978 )
Asbestos coverage litigation expense
     4,905       5,314       17,162       13,632  
Interest adjustment to effect IPO at beginning of period
     -       2,143       2,302       7,536  
Tax adjustment to 34% effective rate
     210       10,161       (22,201 )     18,333  
                                 
Adjusted net income
   $ 17,472     $ 14,664     $ 53,651     $ 40,405  
Adjusted net income margin
     11.0 %     10.2 %     8.9 %     8.0 %
                                 
Shares outstanding at closing of IPO
     44,006,026       44,006,026       44,006,026       44,006,026  
Adjusted net income per share
   $ 0.40     $ 0.33     $ 1.22     $ 0.92  
                                 
Net income (loss) per share-basic and diluted in accordance with GAAP
   $ 0.24     $ 0.77     $ (0.11 )   $ 1.79  
                                 
Adjusted Operating Income
                                
Operating income
   $ 21,727     $ 51,537     $ 16,689     $ 123,275  
IPO-related costs
     -       -       57,017       -  
Legacy legal adjustment
     -       -       4,131       -  
Due diligence costs
     -       -       582       -  
Asbestos liability and defense (income) costs
     1,978       (31,946 )     (4,771 )     (63,978 )
Asbestos coverage litigation expense
     4,905       5,314       17,162       13,632  
                                 
Adjusted operating income
   $ 28,610     $ 24,905     $ 90,810     $ 72,929  
Adjusted operating income margin
     18.0 %     17.3 %     15.0 %     14.4 %
 
 
6
 

COLFAX CORPORATION
Sales and Order Growth
Unaudited
(amounts in millions)

   
Sales
    
Orders
  
   
$
      
%
    
$
      
%
   
                             
Three Months Ended December 31, 2007
   $ 143.7             $ 156.5          
                                 
Components of Growth:
                                
Organic growth from existing businesses
     27.4       19.1 %     (24.7 )     (15.8 )%
Acquisitions
     0.8       0.6 %     3.1       2.0 %
Foreign currency translation
     (12.6 )     (8.8 )%     (8.6 )     (5.5 )%
Total Growth
     15.6       10.9 %     (30.2 )     (19.3 )%
                                 
Three Months Ended December 31, 2008
   $ 159.3             $ 126.3          

   
Sales
    
Orders
  
   
$
      
%
    
$
      
%
  
                             
Year Ended December 31, 2007
   $ 506.3             $ 581.5          
 
                               
Components of Growth:
                                
Organic growth from existing businesses
     70.2       13.9 %     40.9       7.0 %
Acquisitions
     5.5       1.1 %     11.7       2.0 %
Foreign currency translation
     22.9       4.5 %     35.1       6.1 %
Total Growth
     98.6       19.5 %     87.7       15.1 %
                                 
Year Ended December 31, 2008
   $ 604.9             $ 669.2          
 
7
 
COLFAX CORPORATION
Reconciliation of Projected 2009 Net Income Per Share to Adjusted Net Income Per Share
Preliminary and Unaudited
(amounts in dollars)

   
EPS Range
  
             
Projected 2009 net income per share - fully diluted
   $ 0.80     $ 0.87  
                 
Asbestos coverage litigation
     0.28       0.28  
Asbestos liability and defense costs
     0.16       0.16  
Income tax benefit at 32%
     (0.14 )     (0.14 )
                 
Projected 2009 adjusted net income per share - fully diluted
   $ 1.10     $ 1.17  
 
Contact:
Mitzi Reynolds, Vice President, Investor Relations
Colfax Corporation
804-327-5689
 
8


Exhibit 99.2

February 20, 2009

Q4 2008 Earnings Call

 

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 reports filed with the U.S. Securities and
Exchange Commission as well as its Registration Statement on Form S-1 under the caption “Risk
Factors”.  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.

Forward-Looking Statements

1

 

Adjusted net income of $17.5 million (40 cents per share), an increase of 19.1%

Net sales of $159.3 million, an increase of 10.9% (organic growth of 19.1%)

Adjusted operating income of $28.6 million, an increase of 14.9%

Adjusted EBITDA of $32.1 million, an increase of 10.8%

Fourth quarter orders of $126.3 million, a decrease of 19.3% (organic decrease of
15.8%)

Record backlog of $337.3 million

Strong performance in 2008

Q4 2008 Highlights

2

 

Adjusted net income of $53.7 million ($1.22 per share), an increase of 32.8%

Net sales of $604.9 million, an increase of 19.5% (organic growth of 13.9%)

Adjusted operating income of $90.8 million, an increase of 24.5%

Adjusted EBITDA of $105.6 million, an increase of 19.8%

Orders of $669.2 million, an increase of 15.1% (organic growth of 7.0%)

Strong performance in 2008

2008 Highlights

3

 

____________________

Note: Dollars in millions.

2008

2007

Q4 2008

Q4 2007

$700.0

$600.0

$500.0

$400.0

$300.0

$200.0

$100.0

$0.0

$669.2

$581.5

$126.3

$156.5

Orders

Backlog

Steady backlog growth

Orders and Backlog

15.2%

(5.0)%

--

5.2%

--

15.0%

--

15.1%

(19.3)%

Total Growth

6.1%

--

  (5.5)%

--

FX Translation

2.0%

--

    2.0%

--

Acquisitions

7.0%

--

(15.8)%

--

Existing
Businesses

$179.3

$292.8

$337.3

$118.3

$0.0

$80.0

$160.0

$240.0

$320.0

$400.0

2005

2006

2007

2008

4

 

2008

2007

-

Q4 2008

Q4 2007

$700.0

$600.0

$500.0

$400.0

$300.0

$200.0

$100.0

$0.0

$604.9

$506.3

$159.3

$143.7

Consistent track record of profitable sales growth

Revenue and Adjusted EBITDA

(1)

Refer to Appendix for Non-GAAP reconciliation.

__________________

Note: Dollars in millions.      

19.5%

10.9%

Total Growth

4.5%

--

(8.8)%

--

FX Translation

1.1%

--

0.6%

--

Acquisitions

13.9%

--

19.1%

--

Existing
Businesses

-

17.5%

17.4%

20.1%

20.1%

% Margin

Revenue

Adjusted EBITDA (1)

$28.9

$32.1

$88.2

$105.6

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

Q4 2007

Q4 2008

-

2007

2008

5

 

Well positioned in five attractive and diverse end markets

Q4 2008 Sales and Orders by End Market

Q4 2008 Orders: $126.3 million

Q4 2008 Sales: $159.3 million

8%

Global Navy

39%

Industrial

General

24%

Marine

Commercial

15%

Oil & Gas

14%

Generation

Power

Oil & Gas

18%

Commercial

Marine

17%

General

Industrial

38%

Global Navy

10%

Power

Generation

17%

6

 

2008 Sales: $604.9 million

2008 Sales and Orders by End Market

Well positioned in five attractive and diverse end markets

2008 Orders: $669.2 million

14%

Generation

Power

6%

Global Navy

41%

Industrial

General

14%

Oil & Gas

25%

Marine

Commercial

Commercial

Marine

26%

Oil & Gas

16%

General

Industrial

37%

Global Navy

7%

Power

Generation

14%

7

 

Q4 2008 Year-Over-Year Results

Orders down 62.5% year-over-year (-58.2% organic growth)

Sales up 21.4% year-over-year (34.4% organic growth)

2008 Year-Over-Year Results

Orders up 4.9% year-over-year (-2.4% organic growth)

Sales up 24.1% year-over-year (17.1% organic growth)

Market Trends

International trade and demand for bulk commodities and oil continuing to drive
new ship construction

Aging fleet, environmental regulations requiring ship owners to upgrade or
replace ships

Local presence required to effectively serve customers and capture aftermarket
business

Declining orders and risk of potential cancellations/project delays

Executing strategies to drive profitable sales growth

Colfax Q4 08
Orders Split

17%
Comm.
Marine

Colfax Q4 08
Sales Split

24%
Comm.
Marine

Commercial Marine Market Perspective

8

 

Strong product portfolio capable of solving needs of evolving oil & gas market

Colfax Q4 08
Orders Split

18%
O&G

Colfax Q4 08
Sales Split

15%
O&G

Q4 2008 Year-Over-Year Results

Orders up 35.8% year-over-year (37.2% organic growth)

Sales up 8.9% year-over-year (10.7% organic growth)

2008 Year-Over-Year Results

Orders up 38.2% year-over-year (33.6% organic growth)

Sales up 4.9% year-over-year (2.1% organic growth)

Market Trends

Capacity constraints and global demand 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

Volatile oil prices and economic downturn resulting in project delays

Oil & Gas Market Perspective

9

 

Leading supplier of lubrication solutions to power generation OEMs

Colfax Q4 08
Orders Split

17%
Power
Gen.

Colfax Q4 08
Sales Split

14%
Power
Gen.

Q4 2008 Year-Over-Year Results

Orders up 50.0% year-over-year (59.2% organic growth)

Sales down 8.4% year-over-year (-2.8% organic growth)

2008 Year-Over-Year Results

Orders up 17.6% year-over-year (12.9% organic growth)

Sales up 25.5% year-over-year (21.3% organic growth)

Market Trends

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

Power Generation Market Perspective

10

 

Developing innovative fluid handling products and systems to drive future growth

Colfax Q4 08
Orders Split

10%
Navy

Colfax Q4 08
Sales Split

8%
Navy

Q4 2008 Year-Over-Year Results

Orders up 84.7% year-over-year (38.3% organic growth)

Sales up 26.9% year-over-year (20.1% organic growth)

YTD 2008 Year-Over-Year Results

Orders up 58.0% year-over-year (22.1% organic growth)

Sales up 11.1% year-over-year (-2.3% organic growth)

Market Trends

New ships replacing older decommissioned vessels in the U.S.

Sovereign navies around the world expanding fleets to address heightened
national security level concerns

Increased demand for integrated fluid handling systems and solutions to reduce
operating costs

Global Navy Market Perspective

11

 

Leading supplier of highly engineered fluid handling products and systems with global reach

Colfax Q4 08
Orders Split

Colfax Q4 08
Sales Split

39%
General
Industrial

Q4 2008 Year-Over-Year Results

Orders down 22.2% year-over-year (-14.7% organic growth)

Sales up 11.0% year-over-year (22.8% organic growth)

2008 Year-Over-Year Results

Orders up 8.4% year-over-year (1.0% organic growth)

Sales up 21.9% year-over-year (16.9% 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

Uncertain economy impacting some end markets

38%
General
Industrial

General Industrial Perspective

12

 

Refer to Appendix for Non-GAAP reconciliation.

__________________

Note: Dollars in millions.      

Income Statement Summary

Three Months Ended

Delta

12/31/2008

12/31/2007

$

%

Orders

$         126.3

$         156.5

$  (30.2)

-19.3%

Sales

$         159.3

$         143.7

$    15.6

10.9%

Gross Profit

$           57.8

$           49.2

$      8.5

17.4%

   % of Sales

36.3%

34.2%

SG&A Expense

$           27.7

$           23.2

$      4.5

19.4%

R&D Expense

1.4

              

1.1

              

0.3

      

31.2%

Operating Expenses

$           29.1

$           24.3

$      4.8

19.9%

   % of Sales

18.3%

16.9%

Adjusted Operating Income

$           28.6

$           24.9

$      3.7

14.9%

   % of Sales

18.0%

17.3%

Adusted EBITDA

$           32.1

$           28.9

$      3.1

10.8%

   % of Sales

20.1%

20.1%

Adjusted Net Income

$           17.5

$           14.7

$      2.8

19.1%

   % of Sales

11.0%

10.2%

13

 

Refer to Appendix for Non-GAAP reconciliation.

__________________

Note: Dollars in millions.

Income Statement Summary

Delta

12/31/2008

12/31/2007

$

%

Orders

$         669.2

$         581.5

$    87.7

15.1%

Sales

$         604.9

$         506.3

$    98.6

19.5%

Gross Profit

$         217.2

$         175.6

$    41.6

23.7%

   % of Sales

35.9%

34.7%

Adjusted SG&A Expense

$         120.5

$           98.5

$    22.0

22.4%

R&D Expense

5.9

              

4.2

              

1.7

      

40.7%

Operating Expenses

$         126.4

$         102.7

$    23.7

23.1%

   % of Sales

20.9%

20.3%

Adjusted Operating Income

$           90.8

$           72.9

$    17.9

24.5%

   % of Sales

15.0%

14.4%

Adusted EBITDA

$         105.6

$           88.2

$    17.4

19.8%

   % of Sales

17.5%

17.4%

Adjusted Net Income

$           53.7

$           40.4

$    13.2

32.8%

   % of Sales

8.9%

8.0%

Year Ended

14

 

____________________

Note: Dollars in millions.

Statement of Cash Flows Summary
(Preliminary & Unaudited)

Year Ended

December 31,

2008

2007

Net (Loss) Income

(0.6)

$        

64.9

$      

Non-Cash Expenses

18.4

         

39.0

         

Change in Working Capital and Accrued Liabilities

(27.7)

        

3.3

           

Other

(21.6)

        

(32.7)

        

Total Operating Activities

(31.5)

$      

74.5

$      

Capital Expenditures

(20.1)

$      

(13.6)

$      

Acquisitions

(0.4)

         

(33.0)

        

Proceeds from Sale of Fixed Assets

-

0.1

           

Total Investing Activities

(20.5)

$      

(46.5)

$      

Net Borrowings

(110.3)

$   

14.7

$      

Proceeds from IPO, Net of Offering Costs

193.0

      

-

Dividends Paid

(38.5)

        

-

Common Stock Repurchases

(5.7)

         

-

Other

(3.7)

         

(3.0)

         

Total Financing Activities

34.8

$      

11.7

$      

Effect of Exchange Rates on Cash

(2.1)

         

0.8

           

(Decrease) Increase in Cash

(19.3)

40.5

Cash Beginning of Period

48.1

         

7.6

           

Cash End of Period

28.8

$      

48.1

$      

15

 

Strong Financial Condition(1)

Debt to adjusted EBITDA < 1 times

Approximately $130 million available on revolver (expires in 2013)

Approximately $29 million in cash

Strong balance sheet and credit availability provide flexibility

(1) As of FYE 2008

16

 

Adjusted EPS for 2009 of $1.10 to $1.17

2009 Outlook Summary

$585 million

to

$570 million

2009 Total

3%

to

1%

2009 Organic growth (1)

Revenue Range

$1.17

to

$1.10

2009 Adjusted net income per share (2)

$0.87

to

$0.80

2009 Net income per share

EPS Range

(1)  Excludes impact of foreign exchange rate fluctuations and acquisitions

(2)  Excludes impact of asbestos coverage litigation and asbestos liability and defense costs

(See Appendix for Non-GAAP reconciliation)

$2.5 million

Incremental public company costs

43.3 million

Outstanding shares

$8 million

Interest expense

32%

Tax rate

$1.41

Euro

$7 million

Asbestos liability and defense costs

$12 million

Asbestos coverage litigation

Assumptions

17

 

Well Positioned for the Future

Leading Brand Names
Generating Aftermarket

Sales and Services

Experienced Management
Team in Place to Grow  
Organically and Through
Strategic Acquisitions

Global Leader in Specialty
Fluid Handling Products

Proven Application

Expertise in Solving

Critical Customer Needs

Serving Fast

Growing Infrastructure

Driven End Markets

CBS-Driven Culture Focused
on Profitable Sales Growth

18

 

Appendix

19

 

Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, adjusted
selling, general and administrative expenses, organic sales growth and organic order growth are non-GAAP financial
measures. Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA
exclude asbestos liability and defense cost (income) and asbestos coverage litigation expense, certain legacy legal
charges, certain due diligence costs, as well as one time initial public offering-related costs. Adjusted selling, general
and administrative expenses exclude certain legacy legal charges and certain due diligence costs.  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 34%. Adjusted net income per share 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
asbestos coverage litigation and asbestos liability and defense costs, and presents income tax benefit at 32%.  Organic
sales growth and organic order growth 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.

Sales and order information by end market are estimates.  We periodically update our customer groupings in order to
refine these estimates.  During the fourth quarter of 2008, reclassifications of previously reported amounts were made to
conform to current period presentation.  No changes have been made to total sales or orders.

Disclaimer

20

 

____________________

Note: Dollars in thousands.

Non-GAAP Reconciliation

December 31,

December 31,

December 31,

December 31,

2008

2007

2008

2007

EBITDA

Net income (loss)

10,379

$         

28,992

$         

(571)

$            

64,882

$         

Interest expense

2,138

            

4,830

            

11,822

           

19,246

           

Provision for income taxes

9,210

            

17,715

           

5,438

            

39,147

           

Depreciation and amortization

3,443

            

4,034

            

14,788

           

15,239

           

EBITDA

25,170

$         

55,571

$         

31,477

$         

138,514

$      

EBITDA margin

15.8%

38.7%

5.2%

27.4%

Adjusted EBITDA

Net income (loss)

10,379

$         

28,992

$         

(571)

$            

64,882

$         

Interest expense

2,138

            

4,830

            

11,822

           

19,246

           

Provision for income taxes

9,210

            

17,715

           

5,438

            

39,147

           

Depreciation and amortization

3,443

            

4,034

            

14,788

           

15,239

           

IPO-related costs

-

                 

-

                 

57,017

           

-

                     

Legacy legal adjustment

-

                 

-

                 

4,131

            

-

                     

Due diligence costs

-

                 

-

                 

582

               

-

                     

Asbestos liability and defense (income) costs

1,978

            

(31,946)

         

(4,771)

            

(63,978)

         

Asbestos coverage litigation expense

4,905

            

5,314

            

17,162

           

13,632

           

Adjusted EBITDA

32,053

$         

28,939

$         

105,598

$      

88,168

$         

Adjusted EBITDA margin

20.1%

20.1%

17.5%

17.4%

Three Months Ended

Year Ended

21

 

____________________

Note: Dollars in thousands, except per share amounts.

Non-GAAP Reconciliation

December 31,

December 31,

December 31,

December 31,

2008

2007

2008

2007

Adjusted Net Income and Adjusted Earnings per Share

Net income (loss)

10,379

$         

28,992

$         

(571)

$            

64,882

$         

IPO-related costs

-

                     

-

                     

57,017

           

-

                     

Legacy legal adjustment

-

                     

-

                     

4,131

            

-

                     

Due diligence costs

-

                     

-

                     

582

               

-

                     

Asbestos liability and defense (income) costs

1,978

            

(31,946)

         

(4,771)

            

(63,978)

         

Asbestos coverage litigation expense

4,905

            

5,314

            

17,162

           

13,632

           

Interest adjustment to effect IPO at beginning of period

-

                     

2,143

            

2,302

            

7,536

            

Tax adjustment to 34% effective rate

210

               

10,161

           

(22,201)

         

18,333

           

Adjusted net income

17,472

$         

14,664

$         

53,651

$         

40,405

$         

Adjusted net income margin

11.0%

10.2%

8.9%

8.0%

Shares outstanding at closing of IPO

44,006,026

   

44,006,026

   

44,006,026

   

44,006,026

   

Adjusted net income per share

0.40

$            

0.33

$            

1.22

$            

0.92

$            

Net income (loss) per share-basic

    and diluted in accordance with GAAP

0.24

$            

0.77

$            

(0.11)

$            

1.79

$            

Adjusted Operating Income

Operating income

21,727

$         

51,537

$         

16,689

$         

123,275

$      

IPO-related costs

-

                     

-

                     

57,017

           

-

                     

Legacy legal adjustment

-

                     

-

                     

4,131

            

-

                     

Due diligence costs

-

                     

-

                     

582

               

-

                     

Asbestos liability and defense (income) costs

1,978

            

(31,946)

         

(4,771)

            

(63,978)

         

Asbestos coverage litigation expense

4,905

            

5,314

            

17,162

           

13,632

           

Adjusted operating income

28,610

$         

24,905

$         

90,810

$         

72,929

$         

Adjusted operating income margin

18.0%

17.3%

15.0%

14.4%

Three Months Ended

Year Ended

22

 

____________________

Note: Dollars in thousands.

Non-GAAP Reconciliation

December 31,

December 31,

December 31,

December 31,

2008

2007

2008

2007

Adjusted SG&A Expense

Selling, general and administrative expenses

27,718

$  

23,223

$  

125,234

$  

98,500

$  

Legacy legal adjustment

-

              

-

              

4,131

        

-

              

Due diligence costs

-

              

-

              

582

           

-

              

Adjusted selling, general and administrative expenses

27,718

$  

23,223

$  

120,521

$  

98,500

$  

Three Months Ended

Year Ended

23

 

____________________

Note: Dollars in millions.

Sales & Order Growth

$

%

$

%

Three Months Ended December 31, 2007

143.7

$           

156.5

$           

Components of Growth:

Organic growth from existing businesses

27.4

               

19.1%

(24.7)

            

(15.8%)

  

Acquisitions

0.8

                 

0.6%

3.1

                 

2.0%

Foreign currency translation

(12.6)

            

(8.8%)

   

(8.6)

               

(5.5%)

   

Total Growth

15.6

               

10.9%

(30.2)

            

(19.3%)

  

Three Months Ended December 31, 2008

159.3

$           

126.3

$           

$

%

$

%

Year Ended December 31, 2007

506.3

$           

581.5

$           

Components of Growth:

Organic growth from existing businesses

70.2

               

13.9%

40.9

               

7.0%

Acquisitions

5.5

                 

1.1%

11.7

               

2.0%

Foreign currency translation

22.9

               

4.5%

35.1

               

6.1%

Total Growth

98.6

               

19.5%

87.7

               

15.1%

Year Ended December 31, 2008

604.9

$           

669.2

$           

Sales

Orders

Sales

Orders

24

 

Non-GAAP Reconciliation

Projected 2009 net income per share - fully diluted

0.80

$      

0.87

$      

Asbestos coverage litigation

           0.28

           0.28

Asbestos liability and defense costs

0.16

         

           0.16

Income tax benefit at 32%

(0.14)

        

         (0.14)

Projected 2009 adjusted net income per share - fully diluted

$        1.10

$        1.17

EPS Range

25