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 6, 2013
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.) |
8170 Maple Lawn Boulevard, Suite 180
Fulton, MD 20759
(Address of Principal Executive Offices) (Zip Code)
(301) 323-9000
(Registrant's telephone number, including area code)
(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 6, 2013, Colfax Corporation issued a press release reporting financial results for the fourth quarter and year ended December 31, 2012. 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 6, 2013 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 February 6, 2013, reporting financial results for the fourth quarter and year ended December 31, 2012. |
99.2 | Colfax Corporation slides for February 6, 2013 conference call reporting financial results for the fourth quarter and year ended December 31, 2012. |
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 6, 2013 | By: | /s/ C. Scott Brannan | ||
Name: | C. Scott Brannan | |||
Title: | Senior Vice President, Finance and Chief Financial Officer | |||
EXHIBIT INDEX
99.1 | Colfax Corporation press release dated February 6, 2013, reporting financial results for the fourth quarter and year ended December 31, 2012. |
99.2 | Colfax Corporation slides for February 6, 2013 conference call reporting financial results for the fourth quarter and year ended December 31, 2012. |
COLFAX REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS
FULTON, MD - February 6, 2013 - Colfax Corporation (NYSE: CFX) today announced its financial results for the fourth quarter and full year ended December 31, 2012. On a year-over-year basis, highlights for the fourth quarter and full year period include:
Fourth Quarter of 2012 (all comparisons versus the fourth quarter of 2011)
• | After $15.6 million of pre-tax year-one acquisition-related amortization expense, net income of $14.7 million (13 cents per share); adjusted net income (as defined below) of $50.5 million (42 cents per share), which includes a non-cash 9 cents per share gain related to a discrete deferred tax benefit recorded in the fourth quarter |
• | Net sales of $1.03 billion, organic sales decrease (as defined below) of 2.5% from fourth quarter 2011 proforma net sales (includes the comparable period sales for the operations acquired in the Charter acquisition) |
• | Operating income of $52.2 million; adjusted operating income (as defined below) of $88.9 million |
• | Operating cash flows of $163.2 million, including improved inventory management which also resulted in a negative impact on adjusted operating income due to under-absorption from lower production levels |
• | Fourth quarter gas- and fluid-handling orders of $520.3 million, an increase of 4.3%; organic order increase (as defined below) of 1.9% |
• | Gas- and fluid-handling backlog of $1.4 billion at period end |
Full Year 2012 (all comparisons versus full year 2011)
• | After pre-tax expenses of $78.2 million of year-one acquisition-related amortization expense and $43.6 million of Charter acquisition-related expense, a net loss of $83.4 million (92 cents per share); adjusted net income (as defined below) of $159.8 million ($1.34 per share), which includes a non-cash 12 cents per share gain related to discrete deferred tax benefits recorded in the third and fourth quarters |
• | Net sales of $3.9 billion, an increase of 1.9% from the full year 2011 proforma net sales (includes the comparable period sales for the operations acquired in the Charter acquisition); organic sales increase (as defined below) of 5.3% |
• | Operating income of $140.0 million; adjusted operating income (as defined below) of $334.9 million |
• | Gas- and fluid-handling orders of $2.0 billion, an increase of 3.7%; organic order increase (as defined below) of 2.8% |
Adjusted net income, adjusted net income per share, adjusted operating income, organic sales growth (decline) 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.
Steve Simms, President and Chief Executive Officer, stated, “We are pleased with the progress made in the fourth quarter on our improvement plans and growth initiatives, though actual results fell short of our targets. Although we had solid results in our long cycle gas- and fluid-handling business, revenues decreased in comparison to the very strong proforma 2011 fourth quarter. However, cost control and the benefit of previous restructuring initiatives resulted in profit margins for this business in line with our expectations. Volumes in our shorter cycle fabrication technology business continued to be negatively impacted by the challenging global economy, and adjusted operating margins were negatively impacted by specific items that are largely expected to positively impact the business in future periods. We believe that the increased orders during the quarter in our gas- and fluid-handling business, the Soldex acquisition and the specific actions taken during 2012, including our restructuring programs, position Colfax well moving into 2013.”
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 operating income, organic sales growth (decline) and organic order growth. Adjusted net income, adjusted net income per share and adjusted operating income exclude asbestos coverage litigation expense, restructuring and other related charges, charges related to the Charter acquisition and fair value adjustments related to the ESAB and Howden inventory and backlog amortization expense to the extent they impact the periods presented. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 15% and 25% for the fourth quarter and full year ended December 31, 2012, respectively, and 30.5% for both the fourth quarter and full year ended December 31, 2011. Proforma organic sales growth and proforma organic order growth represent the proforma comparison of the change in existing businesses that includes the operations acquired in the Charter Acquisition for the comparable prior period (which excludes the results of operations acquired in the Charter Acquisition for the first 12 days of each year to date reporting period) excluding the impact due to acquisitions made by Colfax and Charter and foreign currency 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 asbestos coverage litigation, costs related to the Charter acquisition, major restructuring programs and significant year-one fair value adjustment amortization expense.
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 on Wednesday, February 6, 2013 at 8:00 a.m. EDT. The call will be open to the public through 877-303-7908 (U.S. callers) or 678-373-0875 (international callers) and referencing the conference ID number 92180966 , 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 diversified global manufacturing and engineering company that provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers around the world under the Howden, Colfax Fluid Handling and ESAB brands. Colfax believes that its brands are among the most highly recognized in each of the markets that it serves. 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 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 factors detailed in Colfax's reports filed with the U.S. Securities and Exchange Commission including its 2011 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 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:
Scott Brannan, Chief Financial Officer
Colfax Corporation
301-323-9005
Scott.Brannan@colfaxcorp.com
Colfax Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net sales | $ | 1,027,397 | $ | 177,791 | $ | 3,913,856 | $ | 693,392 | |||||||
Cost of sales | 719,827 | 116,247 | 2,761,731 | 453,293 | |||||||||||
Gross profit | 307,570 | 61,544 | 1,152,125 | 240,099 | |||||||||||
Selling, general and administrative expense | 234,261 | 39,385 | 895,452 | 162,761 | |||||||||||
Charter acquisition-related expense | — | 25,324 | 43,617 | 31,052 | |||||||||||
Restructuring and other related charges | 16,994 | 2,162 | 60,060 | 9,680 | |||||||||||
Asbestos coverage litigation expense | 4,147 | 2,246 | 12,987 | 10,700 | |||||||||||
Operating income (loss) | 52,168 | (7,573 | ) | 140,009 | 25,906 | ||||||||||
Interest expense | 23,290 | 1,412 | 91,570 | 5,919 | |||||||||||
Income (loss) before income taxes | 28,878 | (8,985 | ) | 48,439 | 19,987 | ||||||||||
Provision for income taxes (1)(2) | 3,812 | 7,095 | 90,703 | 15,432 | |||||||||||
Net income (loss) | 25,066 | (16,080 | ) | (42,264 | ) | 4,555 | |||||||||
Less: income attributable to noncontrolling interest, net of taxes | 5,330 | — | 22,138 | — | |||||||||||
Net income (loss) attributable to Colfax Corporation | 19,736 | (16,080 | ) | (64,402 | ) | 4,555 | |||||||||
Dividends on preferred stock | 5,072 | — | 18,951 | — | |||||||||||
Net income (loss) available to Colfax Corporation common shareholders | $ | 14,664 | $ | (16,080 | ) | $ | (83,353 | ) | $ | 4,555 | |||||
Net income (loss) per share - basic | $ | 0.14 | $ | (0.37 | ) | $ | (0.92 | ) | $ | 0.10 | |||||
Net income (loss) per share - diluted | $ | 0.13 | $ | (0.37 | ) | $ | (0.92 | ) | $ | 0.10 | |||||
__________
(1) Provision for income taxes the year ended December 31, 2012 was significantly impacted by the reassessment of certain deferred tax assets as of the date of the Charter acquisition, which resulted in an increase in the Company's valuation allowance, and the Charter acquisition-related expenses that are either not deductible for tax purposes or were incurred in jurisdictions where no tax benefit can be recognized.
(2) Income tax provision for the fourth quarter and full year ended December 31,2012 includes a $9.9 million gain and $12.8 million gain, respectively, from discrete deferred tax benefits recorded to reflect lower tax rates enacted in Sweden during the fourth quarter and the United Kingdom during the third quarter.
Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Adjusted Operating Income | ||||||||||||||||
Operating income (loss) | $ | 52,168 | $ | (7,573 | ) | $ | 140,009 | $ | 25,906 | |||||||
Restructuring and other related charges | 16,994 | 2,162 | 60,060 | 9,680 | ||||||||||||
Charter acquisition-related expense | — | 25,324 | 43,617 | 31,052 | ||||||||||||
Fair value adjustments - ESAB/Howden backlog and inventory amortization expense | 15,614 | — | 78,196 | — | ||||||||||||
Asbestos coverage litigation expense | 4,147 | 2,246 | 12,987 | 10,700 | ||||||||||||
Adjusted operating income | $ | 88,923 | $ | 22,159 | $ | 334,869 | $ | 77,338 | ||||||||
Adjusted operating income margin | 8.7 | % | 12.5 | % | 8.6 | % | 11.2 | % | ||||||||
Adjusted Net Income and Adjusted Net Income Per Share | ||||||||||||||||
Net income (loss) attributable to Colfax Corporation | $ | 19,736 | $ | (16,080 | ) | $ | (64,402 | ) | $ | 4,555 | ||||||
Restructuring and other related charges | 16,994 | 2,162 | 60,060 | 9,680 | ||||||||||||
Charter acquisition-related expense | — | 25,324 | 43,617 | 31,052 | ||||||||||||
Fair value adjustments - ESAB/Howden backlog and inventory amortization expense | 15,614 | — | 78,196 | — | ||||||||||||
Asbestos coverage litigation expense | 4,147 | 2,246 | 12,987 | 10,700 | ||||||||||||
Tax adjustment(1) | (6,022 | ) | 767 | 29,297 | (6,351 | ) | ||||||||||
Adjusted net income | 50,469 | 14,419 | 159,755 | 49,636 | ||||||||||||
Adjusted net income margin | 4.9 | % | 8.1 | % | 4.1 | % | 7.2 | % | ||||||||
Dividends on preferred stock | 5,072 | — | 18,951 | — | ||||||||||||
Adjusted net income available to Colfax Corporation common shareholders | 45,397 | 14,419 | 140,804 | 49,636 | ||||||||||||
Less: net income attributable to participating securities(2) | 5,831 | — | 18,087 | — | ||||||||||||
$ | 39,566 | $ | 14,419 | $ | 122,717 | $ | 49,636 | |||||||||
Weighted-average shares outstanding - diluted | 94,978,755 | 44,279,400 | 91,918,513 | 44,268,110 | ||||||||||||
Adjusted net income per share | $ | 0.42 | $ | 0.33 | $ | 1.34 | $ | 1.12 | ||||||||
Net income (loss) per share— diluted (in accordance with GAAP) | $ | 0.13 | $ | (0.37 | ) | $ | (0.92 | ) | $ | 0.10 | ||||||
__________
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 15% and 25% for the fourth quarter and full year ended December 31, 2012, respectively, and 30.5% for the fourth quarter and full year ended December 31, 2011.
(2) Adjusted net income per share was calculated consistently with the two-class method in accordance with GAAP as the Series A preferred stock are considered participating securities. Losses are not allocated to the preferred stock.
Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)
Net Sales | Orders | |||||||||||||||||||
$ | % | $ | % | |||||||||||||||||
Proforma for the three months ended December 31, 2011 | $ | 1,049.8 | $ | 499.0 | ||||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing Businesses | (26.5 | ) | (2.5 | )% | 9.6 | 1.9 | % | |||||||||||||
Acquisitions | 34.2 | 3.3 | % | 22.1 | 4.4 | % | ||||||||||||||
Foreign Currency Translation | (30.1 | ) | (2.9 | )% | (10.4 | ) | (2.0 | )% | ||||||||||||
Total | (22.4 | ) | (2.1 | )% | 21.3 | 4.3 | % | |||||||||||||
For the three months ended December 31, 2012 | $ | 1,027.4 | $ | 520.3 | ||||||||||||||||
Net Sales | Orders | Backlog at Period End | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
Proforma as of and for the year ended December 31, 2011 | $ | 3,839.1 | $ | 1,924.6 | $ | 1,288.3 | ||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing Businesses | 202.2 | 5.3 | % | 54.0 | 2.8 | % | 117.5 | 9.1 | % | |||||||||||
Acquisitions | 86.5 | 2.2 | % | 100.4 | 5.2 | % | 9.4 | 0.7 | % | |||||||||||
Foreign Currency Translation | (213.9 | ) | (5.6 | )% | (83.0 | ) | (4.3 | )% | (33.8 | ) | (2.6 | )% | ||||||||
Total | 74.8 | 1.9 | % | 71.4 | 3.7 | % | 93.1 | 7.2 | % | |||||||||||
As of and for the year ended December 31, 2012 | $ | 3,913.9 | $ | 1,996.0 | $ | 1,381.4 | ||||||||||||||
Fourth Quarter 2012 Earnings Conference Call February 6, 2013
2 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 including its 2011 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 presentation speaks only as of this date. Colfax disclaims any duty to update the information herein. Forward-Looking Statements
3 Q4 and Full Year 2012 Results
4 Q4 2012 Highlights • Adjusted net income of $50.5 million ($0.42 per share) compared to $14.4 million ($0.33 per share) in Q4 2011 • Net sales of $1.03 billion, a decrease of 2.1% from Q4 2011 proforma net sales of $1.05 billion (an organic decrease of 2.5%) • Adjusted operating income of $88.9 million compared to $22.2 million in Q4 2011 • Fourth quarter gas- and fluid-handling orders of $520.3 million compared to proforma orders of $499.0 million in Q4 2011, an increase of 4.3% (an organic increase of 1.9%) • Gas- and fluid-handling backlog of $1.4 billion at period end
5 Full Year 2012 Highlights • Adjusted net income of $159.8 million ($1.34 per share) compared to $49.6 million ($1.12 per share) in 2011 • Net sales of $3.9 billion, an increase of 1.9% from full year 2011 proforma net sales of $3.8 billion (an organic increase of 5.3%) • Adjusted operating income of $334.9 million compared to $77.3 million in 2011 • Gas- and fluid-handling orders of $2.0 billion compared to proforma orders of $1.925 billion in 2011, an increase of 3.7% (organic increase of 2.8%)
6 Gas- and Fluid- Handling
7 Gas- and Fluid-Handling Q4 2012 Highlights • Net sales of $514.4 million compared to proforma net sales of $530.3 million in Q4 2011, a decrease of 3.0% (an organic decrease of 2.9%) • Adjusted segment operating income of $62.4 million and adjusted segment operating income margin of 12.1% • Q4 2012 orders of $520.3 million compared to proforma orders of $499.0 million in Q4 2011, an increase of 4.3% (an organic increase of 1.9%) • Backlog of $1.4 billion at period end
8 Gas- and Fluid-Handling Full Year 2012 Highlights • Net sales of $1.901 billion compared to proforma net sales of $1.757 billion in 2011, an increase of 8.2% (an organic increase of 9.2%) • Adjusted segment operating income of $215.7 million and adjusted segment operating income margin of 11.3% • Orders of $2.0 billion compared to proforma orders of $1.925 billion in 2011, an increase of 3.7% (an organic increase of 2.8%)
9 Orders and Backlog Orders(1) $499.0 $520.3 $1,924.6 $1,996.0 $0.0 $250.0 $500.0 $750.0 $1,000.0 $1,250.0 $1,500.0 $1,750.0 $2,000.0 Q4 2011 Q4 2012 YTD 2011 YTD 2012 (1) Order and backlog data for the periods prior to Q2 2012 are presented on a proforma basis. __________________ Note: Dollars in millions (unaudited). QTD YTD Existing Businesses 1.9 % 2.8 % Acquisitions 4.4 % 5.2 % FX Translation (2.0)% (4.3)% Total Growth 4.3 % 3.7 % $1.29B $1.38B $1.38B Backlog(1)
Developed Economies 52% Emerging Markets 48% Foremarket 68% Aftermarket 32% 10 Revenue Revenue(1) $530.3 $514.4 $1,757.1 $1,901.1 $0.0 $250.0 $500.0 $750.0 $1,000.0 $1,250.0 $1,500.0 $1,750.0 $2,000.0 Q4 2011 Q4 2012 YTD 2011 YTD 2012 (1) Q4 2011 and YTD 2011 sales are presented on a proforma basis. __________________ Note: Dollars in millions (unaudited). Aftermarket Revenue – 2012 Geographic Exposure – 2012 QTD YTD Existing Businesses (2.9)% 9.2 % Acquisitions 2.3 % 3.3 % FX Translation (2.4)% (4.3)% Total Growth (3.0)% 8.2 %
Mining 11% Marine 9% Oil, Gas & Petro- chemical 21% Power Generation 32% General Industrial and Other 27% Oil, Gas & Petro- chemical 22% Marine 12% Mining 7% General Industrial and Other 24% Power Generation 35% 11 Q4 2012 Sales and Orders by End Market Total Growth (Decline) Organic Growth (Decline) Power Generation 1.6 % 1.6 % Oil, Gas & Petrochemical (14.4)% (13.1)% Marine 6.0 % 6.6 % Mining (23.8)% (18.0)% General Industrial & Other 7.9 % 4.1% Total (3.0)% (2.9)% Total (Decline) Growth Organic (Decline) Growth Power Generation (11.3)% (10.7)% Oil, Gas & Petrochemical 3.8 % 6.5 % Marine 4.2 % 2.2 % Mining 50.0 % 54.4 % General Industrial & Other 14.1 % 0.6 % Total 4.3 % 1.9 % __________________ Note: Dollars in millions (unaudited). Total and organic growth (decline) is calculated on a proforma basis. Sales: $514.4 million Orders: $520.3 million
12 Full Year 2012 Sales and Orders by End Market Total Growth (Decline) Organic Growth (Decline) Power Generation 13.8 % 15.3 % Oil, Gas & Petrochemical 8.3 % 4.9 % Marine (7.5)% (3.7)% Mining 15.5 % 21.9 % General Industrial & Other 7.4 % 8.8 % Total 8.2 % 9.2 % Total Growth (Decline) Organic Growth (Decline) Power Generation 8.0 % 9.6 % Oil, Gas & Petrochemical 1.3 % (8.0)% Marine (2.1)% 1.8 % Mining 8.6 % 15.7 % General Industrial & Other 1.4 % 0.3 % Total 3.7 % 2.8 % __________________ Note: Dollars in millions (unaudited). Total and organic growth (decline) is calculated on a proforma basis. Sales: $1,901.1 million Orders: $1,996.0 million Power Generation 33% Oil, Gas & Petro- chemical 24% Marine 11% Mining 9% General Industrial and Other 23% Mining 9% Marine 12% Oil, Gas & Petro- chemical 23% Power Generation 32% General Industrial and Other 24%
13 Power Generation Market Perspective Sales & Orders Growth (Decline) Colfax 2012 Sales Split Colfax 2012 Orders Split Highlights Served by both Howden and Colfax Fluid Handling Driven by global fundamental undersupply of electricity Growth is strong in China, South Africa and South East Asia 33% Power Gen. __________________ Note: Total and organic growth (decline) is calculated on a proforma basis. Q4 2012 vs. Q4 2011 YTD 2012 vs. YTD 2011 Total Organic Total Organic Sales 1.6% 1.6% 13.8% 15.3% Orders (11.3)% (10.7)% 8.0% 9.6% 32% Power Gen.
14 Oil, Gas & Petrochemical Market Perspective Sales & Orders (Decline) Growth 23% OG&P 24% OG&P Highlights Served by both Howden and Colfax Fluid Handling National oil companies in Latin America and Russia expanding production and refinery capacity Continued weakness in construction of pipelines for heavy crudes __________________ Note: Total and organic growth (decline) is calculated on a proforma basis. Q4 2012 vs. Q4 2011 YTD 2012 vs. YTD 2011 Total Organic Total Organic Sales (14.4)% (13.1)% 8.3 % 4.9% Orders 3.8% 6.5% 1.3% (8.0)% Colfax 2012 Sales Split Colfax 2012 Orders Split
15 Marine Market Perspective Sales & Orders Growth (Decline) Highlights Primarily served by Colfax Fluid Handling New ship build is down from 2011 peak Q4 orders strong for oil & gas service vessels __________________ Note: Total and organic growth (decline) is calculated on a proforma basis. Marine market comprised of commercial marine and government, or defense, customers Q4 2012 vs. Q4 2011 YTD 2012 vs. YTD 2011 Total Organic Total Organic Sales 6.0% 6.6% (7.5)% (3.7)% Orders 4.2% 2.2% (2.1)% 1.8% Colfax 2012 Sales Split Colfax 2012 Orders Split 12% Marine 11% Marine
16 Mining Market Perspective Sales & Orders (Decline) Growth 9% Mining Colfax 2012 Orders Split Highlights Primarily served by Howden Driven by demand of mined resources, including: coal, iron ore, copper, gold, nickel and potash Received largest order in at least the past 15 years during quarter 9% Mining __________________ Note: Total and organic growth (decline) is calculated on a proforma basis. Q4 2012 vs. Q4 2011 YTD 2012 vs. YTD 2011 Total Organic Total Organic Sales (23.8)% (18.0)% 15.5% 21.9% Orders 50.0% 54.4% 8.6% 15.7% Colfax 2012 Sales Split
17 General Industrial & Other Market Perspective Sales & Orders Growth 24% GI&O Highlights Includes both Howden and Colfax Fluid Handling Strong sales and orders for industrial fans and compressors, particularly for steel industry Continued weakness in European market for industrial pumps 23% GI&O __________________ Note: Total and organic growth is calculated on a proforma basis. Q4 2012 vs. Q4 2011 YTD 2012 vs. YTD 2011 Total Organic Total Organic Sales 7.9% 4.1% 7.4% 8.8% Orders 14.1% 0.6% 1.4% 0.3% Colfax 2012 Sales Split Colfax 2012 Orders Split
18 Fabrication Technology
19 Fabrication Technology Q4 2012 Highlights • Net sales of $513.0 million compared to proforma net sales of $519.5 million in Q4 2011, a decrease of 1.3% (an organic decline of 2.2%) • Adjusted segment operating income of $33.9 million and adjusted operating income margin of 6.6% – Soldexa contributed $3 million in operating profit before approximately $5 million in transaction and acquisition accounting expenses – Balance of platform operating income margin of 7.2%, reduced largely by lower fixed cost absorption on inventory reduction and expenses to finalize and launch new Warrior equipment line. • Revenue and operating income negatively impacted by the start up of a new consumables facility in the U.S.
20 Fabrication Technology Full Year 2012 Highlights • Net sales of $2.0 billion, a decrease of 3.3% compared to proforma 2011 sales (an organic increase of 2.0%) • Adjusted segment operating income of $157.2 million and adjusted operating income margin of 7.8% • Higher consumable volumes in North America, South America and Russia
Developed Economies 41% Emerging Markets 59% Equipment 26% Consumables 74% 21 Revenue Revenue(1) $519.5 $513.0 $2,082.0 $2,012.7 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 $1,800.0 $2,000.0 $2,200.0 Q4 2011 Q4 2012 YTD 2011 YTD 2012 (1) Q4 2011 and YTD 2011 sales are presented on a proforma basis. __________________ Note: Dollars in millions (unaudited). Revenue – 2012 Geographic Exposure – 2012 QTD YTD Volume (2.9)% 1.0 % Price/Mix 0.7 % 1.0 % Acquisitions 4.2 % 1.3 % FX Translation (3.3)% (6.6)% Total Decline (1.3)% (3.3)%
22 Results of Operations
23 Income Statement Summary (unaudited) Refer to Appendix for Non-GAAP reconciliation and footnotes. __________________ Note: Dollars in millions, except per share amounts. December 31, 2012 December 31, 2011 Net sales 1,027.4$ 177.8$ Gross profit 307.6$ 61.5$ % of sales 29.9 % 34.6 % SG&A expense 234.3$ 39.4$ % of sales 22.8 % 22.2 % Adjusted operating income 88.9$ 22.2$ % of sales 8.7 % 12.5 % Adjusted net income 50.5$ 14.4$ % of sales 4.9 % 8.1 % Adjusted net income per share 0.42$ 0.33$ Three Months Ended
24 Income Statement Summary (unaudited) Refer to Appendix for Non-GAAP reconciliation and footnotes. __________________ Note: Dollars in millions, except per share amounts. December 31, 2012 December 31, 2011 Net sales 3,913.9$ 693.4$ Gross profit 1,152.1$ 240.1$ % of sales 29.4 % 34.6 % SG&A expense 895.5$ 162.8$ % of sales 22.9 % 23.5 % Adjusted operating income 334.9$ 77.3$ % of sales 8.6 % 11.1 % Adjusted net income 159.8$ 49.6$ % of sales 4.1 % 7.2 % Adjusted net income per share 1.34$ 1.12$ Year Ended
25 Appendix
26 Disclaimer Colfax has provided 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, projected adjusted net income per share, adjusted operating income, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share, projected adjusted net income per share and adjusted operating income exclude asbestos coverage litigation expense, expenses related to major restructuring programs or any additional structural changes announced in the future, expenses related to the Charter acquisition and significant year-one fair value adjustment amortization expense. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 15% and 25% for the fourth quarter and full year ended December 31, 2012, respectively, and 30.5% for both the fourth quarter and full year ended December 31, 2011. Projected adjusted earnings per share was calculated using a 31% effective tax rate for 2013. Organic sales growth (decline) and organic order growth (decline) exclude the impact of bolt-on acquisitions and foreign exchange rate fluctuations and are presented on a proforma basis (the proforma comparison includes the 2011 sales and orders for Howden and ESAB, excluding the first 12 days of the year to date reporting period). 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 asbestos insurance coverage issues, costs related to the Charter acquisition, major restructuring programs and significant year-one fair value adjustment amortization expense. Sales and order information by end market are estimates. We periodically update our customer groupings order to refine these estimates.
27 Non-GAAP Reconciliation (unaudited) ____________________ Note: Dollars in thousands, except per share amounts. (1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 15% and 25% for the fourth quarter and full year ended December 31, 2012, respectively, and 30.5% for both the fourth quarter and full year ended December 31, 2011. (2) Adjusted net income per share was calculated consistently with the two-class method in accordance with GAAP as the Series A preferred stock are considered participating securities. Losses are not allocated to the preferred stock. December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Adjusted Net Income and Adjusted Net Income Per Share Net income (loss) attributable to Colfax Corporation 19,736$ (16,080)$ (64,402)$ 4,555$ Restructuring and other related charges 16,994 2,162 60,060 9,680 Charter acquisition-related expense — 25,324 43,617 31,052 Fair value adjustments - ESAB/Howden backlog and inventory amortization expense 15,614 — 78,196 — Asbestos coverage litigation expense 4,147 2,246 12,987 10,700 Tax adjustment(1) (6,022) 767 29,297 (6,351) Adjusted net income 50,469 14,419 159,755 49,636 Adjusted net income margin 4.9 % 8.1 % 4.1 % 7.2 % Dividends on preferred stock 5,072 — 18,951 — Adjusted net income available to Colfax Corporation common shareholders 45,397 14,419 140,804 49,636 Less: net income attributable to participating securities(2) 5,831 — 18,087 — 39,566$ 14,419$ 122,717$ 49,636$ Weighted-average shares outstanding - diluted 94,978,755 44,279,400 91,918,513 44,268,110 A justed net income per share 0.42$ 0.33$ 1.34$ 1.12$ Net income (loss) per share— basic (in accordance with GAAP) 0.14$ (0.37)$ (0.92)$ 0.10$ Net income (loss) per share— diluted (in accordance with GAAP) 0.13$ (0.37)$ (0.92)$ 0.10$ Three Months Ended Year Ended
28 Non-GAAP Reconciliation (unaudited) ____________________ Note: Dollars in thousands. Corporate and Other Corporate and Other Net sales $ - $ - Soldexa net sales Operating income (loss) 39,405 7.7 % 20,306 4.0 % (7,543) 52,168 5.1 % 23,171 13.0 % (30,744) (7,573) (4.3)% Charter acquisition-related expense - - - - - 25,324 25,324 Restructuring and other related charges 3,273 13,616 105 16,994 2,162 - 2,162 Asbestos coverage litigation expense 4,147 - - 4,147 2,246 - 2,246 Fair value adjustments - ESAB/Howden backlog and inventory amortization expense 15,614 - - 15,614 - - - A justed operating income (loss) $ 62,439 12.1 % $ 33,922 6.6 % $ (7,438) $ 88,923 8.7 % $ 27,579 15.5 % $ (5,420) $ 22,159 12.5 % Add: Soldexa operating loss (1,531) Balance of platform adjusted operating income $ 35,453 7.2 % $ 177,791 $ 1,027,397 Q4 2012 Q4 2011 Gas and Fluid Handling Fabrication Technology Total Colfax Corporation Fluid Handling Total Colfax Corporation $ 491,362 21,602 $ 514,433 $ 512,964 $ 177,791
29 Non-GAAP Reconciliation (unaudited) ____________________ Note: Dollars in thousands. Corporate and Other Corporate and Other Net sales —$ —$ Operating income (loss) 132,872 7.0 % 94,948 4.7 % (87,811) 140,009 3.6 % 78,032$ 11.3 % (52,126)$ 25,906 3.7 % Charter acquisition-related expense — — 43,617 43,617 — 31,052 31,052 Restructuring and other related charges 8,652 45,236 6,172 60,060 8,631 1,049 9,680 Asbestos coverage litigation expense 12,987 — — 12,987 10,700 — 10,700 Fair value adjustments - ESAB/Howden backlog and inventory amortization expense 61,211 16,985 — 78,196 — — — Adjusted operating income (loss) 215,722$ 11.3 % 157,169$ 7.8 % (38,022)$ 334,869$ 8.6 % 97,363$ 14.0 % (20,025)$ 77,338$ 11.2 % 1,901,132$ 2,012,724$ 3,913,856$ 693,392$ 693,392$ YTD Q4 2012 YTD Q4 2011 Gas and Fluid Handling Fabrication Technology Total Colfax Corporation Fluid Handling Total Colfax Corporation
30 Sales & Order Growth (unaudited) ____________________ Note: Dollars in millions. $ % $ % Proforma for the three months ended December 31, 2011 1,049.8$ 499.0$ Components of Change: Existing Businesses (26.5) (2.5)% 9.6 1.9 % Acquisitions 34.2 3.3 % 22.1 4.4 % Foreign Currency Translation (30.1) (2.9)% (10.4) (2.0)% Total (22.4) (2.1)% 21.3 4.3 % For the three months ended December 31, 2012 1,027.4$ 520.3$ $ % $ % $ % Proforma as of and for the year ended December 31, 2011 3,839.1$ 1,924.6$ 1,288.3$ Components of Change: Existing Businesses 202.2 5.3 % 54.0 2.8 % 117.5 9.1 % Acquisitions 86.5 2.2 % 100.4 5.2 % 9.4 0.7 % Foreign Currency Translation (213.9) (5.6)% (83.0) (4.3)% (33.8) (2.6)% Total 74.8 1.9 % 71.4 3.7 % 93.1 7.2 % As of and for the year ended December 31, 2012 3,913.9$ 1,996.0$ 1,381.4$ Net Sales Orders Net Sales Orders Backlog at Period End
31 Balance Sheet (unaudited) 2012 2011 ASSETS CURRENT ASSETS: Cash and cash equivalents 482,449$ 75,108$ Trade receivables, less allowance for doubtful accounts of $16,464 and $2,578 873,382 117,475 Inventories, net 493,649 56,136 Other current assets 285,906 102,489 Total current assets 2,135,386 351,208 Property, plant and equipment, net 688,570 90,939 Goodwill 2,074,230 204,844 Intangible assets, net 779,049 41,029 Other assets 447,492 400,523 Total assets 6,124,727$ 1,088,543$ LIABILITIES AND EQUITY CURRENT LIABILITIES: Current portion of long-term debt 34,799$ 10,000$ Accounts payable 699,626 54,035 Accrued liabilities 456,947 176,007 Total current liabilities 1,191,372 240,042 Long-term debt, less current portion 1,693,512 101,518 Other liabilities 1,083,557 557,708 Total liabilities 3,968,441 899,268 Equity: Preferred stock, $0.001 par value; 20,000,000 and 10,000,000 shares authorized; 13,877,552 and none issued and outstanding 14 — Common stock, $0.001 par value; 400,000,000 and 200,000,000 shares authorized; 94,067,418 and 43,697,570 issued and outstanding 94 44 Additional paid-in capital 2,197,694 415,527 Accumulated deficit (138,856) (55,503) Accumulated other comprehensive loss (146,594) (170,793) Total Colfax Corporation equity 1,912,352 189,275 Noncontrolling interest 243,934 — Total equity 2,156,286 189,275 Total liabilities and equity 6,124,727$ 1,088,543$ December 31, ____________________ Note: Dollars in thousands.
32 2013 Outlook Summary Revenue Range 2013 Total (1) $4.175 billion To $4.250 billion EPS and Adjusted Net Income Range 2013 Net income per share $1.40 To $1.60 Adjusted net income $186,600 To $209,600 2013 Adjusted net income per share (1) $1.70 To $1.90 Assumptions Asbestos coverage litigation $5 million Asbestos liability and defense costs $9 million Restructuring costs $30 million Euro $1.30 Tax rate - Adjusted basis/GAAP 30-31%/33% Outstanding shares – common and equivalents/preferred 96 million/13.9 million (1) Excludes impact of asbestos coverage litigation costs and restructuring charges. (See Non-GAAP Reconciliation included in this Appendix) Note: Guidance as of 2/6/13
33 2013 Outlook Summary (continued) Assumptions (continued) Depreciation $75 million Amortization $40 million Interest Expense (based on LIBOR and EURIBOR = 25 bps) $90 million Capital Expenditures 2.5% of revenue Pension funding in excess of expense $30 million Preferred dividend $20 million Note: Guidance as of 2/6/13
34 2013 Organic Growth Outlook Note: Guidance as of 2/6/13 2013 Forecast Organic Growth Fluid handling (4)-0% Howden 4-6% Fabrication Technology 0-2%
35 2013 Rollforward ____________________ Note: Dollars in thousands, except per share amounts. Guidance as of 2/6/13 (See Non-GAAP Reconciliation included in this Appendix) Low High 2012 Actuals- sales/ adjusted operating income ESAB/ Howden additional 2 weeks Soldexa/ Covent incremental Projected before growth/ cost actions Organic revenue at 1%; 20% fall-through 50,000 10,000 Organic revenue at 3%; 25% fall-through 125,000 31,000 Cost actions — — 55,000 65,000 4,175,000 4,250,000 425,000 456,000 Interest expense (90,000) (90,000) Tax (100,000) (108,000) Noncontrolling interest (28,000) (28,000) Adjusted net income- Colfax 207,000 230,000 Preferred dividends (20,400) (20,400) 186,600$ 209,600$ 1.70$ 1.90$ Adjusted EPS Range Sales Income 3,914,000$ 335,000$ 71,000 5,000 140,000 20,000 4,125,000 360,000
36 Non-GAAP Reconciliation (unaudited) Note: Guidance as of 2/6/13 Projected net income per share - diluted 1.40$ 1.60$ Restructuring costs 0.27 0.27 Asbestos coverage litigation 0.05 0.05 Tax adjustment (0.02) (0.02) Projected adjusted net income per share - diluted 1.70$ 1.90$ 2013 EPS Range