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): July 25, 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 July 25, 2013, Colfax Corporation issued a press release reporting financial results for the second quarter ended June 28, 2013. 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 July 25, 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 July 25, 2013, reporting financial results for the second quarter ended June 28, 2013. |
99.2 | Colfax Corporation slides for July 25, 2013 conference call reporting financial results for the second quarter ended June 28, 2013. |
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: July 25, 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 July 25, 2013, reporting financial results for the second quarter ended June 28, 2013. |
99.2 | Colfax Corporation slides for July 25, 2013 conference call reporting financial results for the second quarter ended June 28, 2013. |
COLFAX REPORTS RECORD SECOND QUARTER 2013 RESULTS
FULTON, MD - July 25, 2013 - Colfax Corporation (NYSE: CFX) today announced its financial results for the second quarter ended June 28, 2013. On a year-over-year basis, highlights for the second quarter and year-to-date period include:
Second Quarter of 2013 (all comparisons versus the second quarter of 2012)
• | Net income of $53.3 million ($0.52 per dilutive share); adjusted net income (as defined below) of $62.0 million ($0.56 per share, which includes a $0.02 per share gain related to the resolution of a previous tax position) |
• | Net sales of $1.074 billion, an increase of 2.7% from Q2 2012 net sales (an organic decrease of 0.3%) |
• | Operating income of $111.7 million; adjusted operating income (as defined below) of $116.6 million |
• | Second quarter gas- and fluid-handling orders of $478.2 million compared to orders of $534.5 million in Q2 2012, a decrease of 10.5% (an organic decrease of 10.0%) |
• | Gas- and fluid-handling backlog of $1.388 billion at period end |
Six Months Ended June 28, 2013 (all comparisons versus the six months ended June 29, 2012)
• | Net income of $75.9 million ($0.74 per dilutive share); adjusted net income (as defined below) of $95.5 million ($0.83 per share) |
• | Net sales of $2.021 billion, an increase of 4.6% from net sales for the six months ended June 29, 2012 (an organic decrease of 1.4%) |
• | Operating income of $184.0 million; adjusted operating income (as defined below) of $194.8 million |
• | Gas- and fluid-handling orders of $980.3 million, a decrease of 5.0% (an organic decrease of 7.3%) |
Adjusted net income, adjusted net income per share, adjusted operating income, organic sales growth (decrease) and organic order growth (decrease) 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 very pleased to report record operational results for the second quarter. The strong operating margins in both segments reflect the continued impact of our improvement plans. Although order growth in our long cycle gas- and fluid-handling business was impacted by trends specific to individual sectors, we anticipate solid growth in sales for this segment for the balance of 2013. Demand remained soft in the fabrication technology segment, but we continue to demonstrate that we can improve margins in the segment without sales growth. We continue to focus on acquisition opportunities to deploy funds we raised in our May equity offering.”
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 (decrease) and organic order growth (decrease). Adjusted net income, adjusted net income per share and adjusted operating income exclude asbestos coverage litigation expense, restructuring and other related charges, expenses 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 28.2% and 29.0% for the second quarter and six months ended June 28, 2013, respectively, and 31% for both the second quarter and six months ended June 29, 2012. Organic sales growth (decrease) and organic order growth (decrease) 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 asbestos insurance coverage issues, expenses and significant year-one fair value adjustment amortization expense related to the Charter acquisition and major restructuring programs.
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 Thursday, July 25, 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 18212399, 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 2012 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:
Farand Pawlak, Director of Investor Relations
Colfax Corporation
301-323-9054
Farand.Pawlak@colfaxcorp.com
Colfax Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
June 28, 2013 | June 29, 2012 | June 28, 2013 | June 29, 2012 | ||||||||||||
Net sales | $ | 1,074,118 | $ | 1,045,653 | $ | 2,021,261 | $ | 1,932,019 | |||||||
Cost of sales | 736,296 | 730,791 | 1,392,714 | 1,375,451 | |||||||||||
Gross profit | 337,822 | 314,862 | 628,547 | 556,568 | |||||||||||
Selling, general and administrative expense | 221,225 | 231,992 | 433,703 | 444,048 | |||||||||||
Charter acquisition-related expense | — | 766 | — | 43,617 | |||||||||||
Restructuring and other related charges | 4,477 | 18,558 | 8,691 | 27,201 | |||||||||||
Asbestos coverage litigation expense | 468 | 3,240 | 2,174 | 5,527 | |||||||||||
Operating income | 111,652 | 60,306 | 183,979 | 36,175 | |||||||||||
Interest expense | 18,054 | 25,741 | 41,343 | 44,723 | |||||||||||
Income (loss) before income taxes | 93,598 | 34,565 | 142,636 | (8,548 | ) | ||||||||||
Provision for income taxes(1) | 26,398 | 15,933 | 43,161 | 73,281 | |||||||||||
Net income (loss) | 67,200 | 18,632 | 99,475 | (81,829 | ) | ||||||||||
Less: income attributable to noncontrolling interest, net of taxes | 8,808 | 6,266 | 13,448 | 11,403 | |||||||||||
Net income (loss) attributable to Colfax Corporation | 58,392 | 12,366 | 86,027 | (93,232 | ) | ||||||||||
Dividends on preferred stock | 5,086 | 5,073 | 10,168 | 8,807 | |||||||||||
Net income (loss) available to Colfax Corporation common shareholders | $ | 53,306 | $ | 7,293 | $ | 75,859 | $ | (102,039 | ) | ||||||
Net income (loss) per share- basic | $ | 0.53 | $ | 0.07 | $ | 0.75 | $ | (1.16 | ) | ||||||
Net income (loss) per share- diluted | $ | 0.52 | $ | 0.07 | $ | 0.74 | $ | (1.16 | ) | ||||||
__________
(1) Provision for income taxes for the six months ended June 29, 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.
Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
June 28, 2013 | June 29, 2012 | June 28, 2013 | June 29, 2012 | ||||||||||||
Adjusted Operating Income | |||||||||||||||
Operating income | $ | 111,652 | $ | 60,306 | $ | 183,979 | $ | 36,175 | |||||||
Restructuring and other related charges | 4,477 | 18,558 | 8,691 | 27,201 | |||||||||||
Charter acquisition-related expense | — | 766 | — | 43,617 | |||||||||||
Fair value adjustments - ESAB/Howden backlog and inventory amortization expense | — | 14,422 | — | 48,127 | |||||||||||
Asbestos coverage litigation expense | 468 | 3,240 | 2,174 | 5,527 | |||||||||||
Adjusted operating income | $ | 116,597 | $ | 97,292 | $ | 194,844 | $ | 160,647 | |||||||
Adjusted operating income margin | 10.9 | % | 9.3 | % | 9.6 | % | 8.3 | % | |||||||
Adjusted Net Income and Adjusted Net Income Per Share | |||||||||||||||
Net income (loss) attributable to Colfax Corporation | $ | 58,392 | $ | 12,366 | $ | 86,027 | $ | (93,232 | ) | ||||||
Restructuring and other related charges | 4,477 | 18,558 | 8,691 | 27,201 | |||||||||||
Charter acquisition-related expense | — | 766 | — | 43,617 | |||||||||||
Fair value adjustments - ESAB/Howden backlog and inventory amortization expense | — | 14,422 | — | 48,127 | |||||||||||
Asbestos coverage litigation expense | 468 | 3,240 | 2,174 | 5,527 | |||||||||||
Tax adjustment(1) | (1,354 | ) | (6,247 | ) | (1,354 | ) | 37,345 | ||||||||
Adjusted net income | 61,983 | 43,105 | 95,538 | 68,585 | |||||||||||
Adjusted net income margin | 5.8 | % | 4.1 | % | 4.7 | % | 3.5 | % | |||||||
Dividends on preferred stock | 5,086 | 5,073 | 10,168 | 8,807 | |||||||||||
Adjusted net income available to Colfax Corporation common shareholders | 56,897 | 38,032 | 85,370 | 59,778 | |||||||||||
Less: adjusted net income attributable to participating securities(2) | 916 | 4,859 | 4,571 | 7,129 | |||||||||||
$ | 55,981 | $ | 33,173 | $ | 80,799 | $ | 52,649 | ||||||||
Weighted-average shares outstanding - diluted | 111,522,958 | 94,733,164 | 97,285,037 | 88,825,431 | |||||||||||
Adjusted net income per share | $ | 0.56 | $ | 0.35 | $ | 0.83 | $ | 0.59 | |||||||
Net income (loss) per share— basic (in accordance with GAAP) | $ | 0.53 | $ | 0.07 | $ | 0.75 | $ | (1.16 | ) | ||||||
Net income (loss) per share— diluted (in accordance with GAAP) | 0.52 | 0.07 | 0.74 | (1.16 | ) | ||||||||||
__________
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 28.2% and 29.0% for the second quarter and six months ended June 28, 2013, respectively, and 31% for both the second quarter and six months ended June 29, 2012.
(2) Adjusted net income per share for periods prior to April 23, 2013 were calculated consistently with the two-class method in accordance with GAAP as the Series A preferred stock were considered participating securities. Subsequent to April 23, 2013, adjusted net income per share was calculated consistently with the if-converted method in accordance with GAAP as the Series A preferred stock were no longer participating securities. Adjusted net income per share for the six months ended June 28, 2013 excludes the impact of 12,173,291 common stock equivalent shares as their inclusion would be anti-dilutive.
Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)
Net Sales | Orders | |||||||||||||||||||
$ | % | $ | % | |||||||||||||||||
For the three months ended June 29, 2012 | $ | 1,045.7 | $ | 534.5 | ||||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing Businesses | (2.7 | ) | (0.3 | )% | (53.6 | ) | (10.0 | )% | ||||||||||||
Acquisitions(1) | 37.4 | 3.6 | % | 6.0 | 1.1 | % | ||||||||||||||
Foreign Currency Translation | (6.3 | ) | (0.6 | )% | (8.7 | ) | (1.6 | )% | ||||||||||||
Total | 28.4 | 2.7 | % | (56.3 | ) | (10.5 | )% | |||||||||||||
For the three months ended June 28, 2013 | $ | 1,074.1 | $ | 478.2 | ||||||||||||||||
Net Sales | Orders | Backlog at Period End | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
As of and for the six months ended June 29, 2012 | $ | 1,932.0 | $ | 1,032.0 | $ | 1,375.9 | ||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing Businesses | (26.7 | ) | (1.4 | )% | (75.1 | ) | (7.3 | )% | 23.2 | 1.7 | % | |||||||||
Acquisitions(1) | 142.6 | 7.4 | % | 39.5 | 3.8 | % | 21.2 | 1.5 | % | |||||||||||
Foreign Currency Translation | (26.6 | ) | (1.4 | )% | (16.1 | ) | (1.5 | )% | (31.9 | ) | (2.3 | )% | ||||||||
Total | 89.3 | 4.6 | % | (51.7 | ) | (5.0 | )% | 12.5 | 0.9 | % | ||||||||||
As of and for the six months ended June 28, 2013 | $ | 2,021.3 | $ | 980.3 | $ | 1,388.4 | ||||||||||||||
(1) Represents the incremental sales, orders and order backlog as a result of our acquisitions of Charter, Soldex and Co-Vent. The impact related to the Charter Acquisition represents 12 days of activity for ESAB and Howden as the acquisition closed on January 13, 2012.
SECOND QUARTER 2013 | EARNINGS CONFERENCE CALL
2 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 reports filed with the U.S. Securities and Exchange Commission including its 2012 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.
Q2 2013 RESULTS
4 Q2 2013 HIGHLIGHTS • Adjusted net income of $62.0 million ($0.56 per share) compared to $43.1 million ($0.35 per share) in Q2 2012 • Net sales of $1.07 billion, an increase of 2.7% from Q2 2012 net sales of $1.05 billion (an organic decrease of 0.3%) • Adjusted operating income of $116.6 million compared to $97.3 million in Q2 2012 • Second quarter gas- and fluid-handling orders of $478.2 million compared to orders of $534.5 million in Q2 2012, a decrease of 10.5% (an organic decrease of 10.0%) • Gas- and fluid-handling backlog of $1.4 billion at period end
5 YEAR TO DATE 2013 HIGHLIGHTS • Adjusted net income of $95.5 million ($0.83 per share) compared to $68.6 million ($0.59 per share) in the six months ended June 29, 2012 • Net sales of $2.02 billion, an increase of 4.6% from the six months ended June 29, 2012 net sales of $1.93 billion (an organic decrease of 1.4%) • Adjusted operating income of $194.8 million compared to $160.6 million in the six months ended June 29, 2012 • Gas- and fluid-handling orders of $980.3 million compared to orders of $1.03 billion in the six months ended June 29, 2012, a decrease of 5.0% (an organic decrease of 7.3%)
GAS AND FLUID HANDLING
7 GAS AND FLUID HANDLING Q2 2013 HIGHLIGHTS • Net sales of $516.8 million compared to Q2 2012 net sales of $496.5 million in Q2 2012 (an organic increase of 3.6%) • Adjusted segment operating income of $69.9 million and adjusted segment operating income margin of 13.5% – Improvement over Q2 2012 of 90 basis points • Second quarter orders of $478.2 million compared to $534.5 million in Q2 2012, a decrease of 10.5% • Backlog of $1.4 billion at period end
8 GAS AND FLUID HANDLING YTD 2013 HIGHLIGHTS • Net sales of $941.9 million compared to net sales of $921.8 million in the six months ended June 29, 2012, an increase of 2.2% (an organic increase of 1.2%) • Adjusted segment operating income of $114.1 million and adjusted segment operating income margin of 12.1% • Orders of $980.3 million compared to $1.03 billion in the six months ended June 29, 2012, a decrease of 5.0%
9 ORDERS AND BACKLOG $534.5 $478.2 $1,032.0 $980.3 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 $1,100.0 $1,200.0 Q2 2012 Q2 2013 YTD 2012 YTD 2013 $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 $1.44B $1.38B ORDERS BACKLOG(1) (1) Backlog data for the periods prior to Q1 2012 are presented on a proforma basis. Note: Dollars in millions (unaudited). $1.39B QTD YTD Existing Businesses (10.0)% (7.3)% Acquisitions 1.1 % 3.8 % FX Translation (1.6)% (1.5)% Total Growth (10.5)% (5.0)%
10 GEOGRAPHIC EXPOSURE YTD 2013 REVENUE $496.5 $516.8 $921.8 $941.9 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 Q2 2012 Q2 2013 YTD 2012 YTD 2013 67% 33% Foremarket Aftermarket REVENUE AFTERMARKET REVENUE YTD 2013 52% 48% Developed Economies Emerging Markets Note: Dollars in millions (unaudited). QTD YTD Existing Businesses 3.6 % 1.2 % Acquisitions 0.9 % 2.1 % FX Translation (0.4)% (1.1)% Total Growth 4.1 % 2.2 %
11 Q2 2013 SALES AND ORDERS BY END MARKET Power Generation 39% Oil, Gas & Petro-chemical 22% Marine 11% Mining 5% General Industrial and Other 23% SALES: $516.8 Million Total Growth (Decline) Organic Growth (Decline) Power Generation 39.4 % 40.2 % Oil, Gas & Petrochemical (10.7)% (9.5)% Marine 4.0 % 2.4 % Mining (56.3)% (55.4)% General Industrial & Other 5.3 % 1.2 % Total 4.1 % 3.6 % Power Generation 37% Oil, Gas & Petro-chemical 23% Marine 12% Mining 6% General Industrial and Other 22% ORDERS: $478.2 Million Total (Decline) Growth Organic (Decline) Growth Power Generation (2.0)% (1.3)% Oil, Gas & Petrochemical (21.9)% (21.7)% Marine 4.3 % 2.5 % Mining (49.3)% (34.6)% General Industrial & Other 3.0 % (2.9)% Total (10.5)% (10.0)%
12 YTD 2013 SALES AND ORDERS BY END MARKET Power Generation 38% Oil, Gas & Petro-chemical 22% Marine 12% Mining 5% General Industrial and Other 23% SALES: $941.9 Million Total Growth (Decline) Organic Growth (Decline) Power Generation 29.4 % 30.5 % Oil, Gas & Petrochemical (13.1)% (13.8)% Marine 2.6 % 1.1 % Mining (35.6)% (33.6)% General Industrial & Other (2.0)% (6.8)% Total (2.2)% (1.2)% Power Generation 40% Oil, Gas & Petro-chemical 24% Marine 11% Mining 5% General Industrial and Other 20% ORDERS: $980.3 Million Total Growth (Decline) Organic Growth (Decline) Power Generation 11.5 % 8.0 % Oil, Gas & Petrochemical (11.6)% (13.3)% Marine 5.6 % 3.7 % Mining (54.1)% (45.3)% General Industrial & Other (6.7)% (12.9)% Total (5.0)% (7.3)%
13 POWER GENERATION MARKET PERSPECTIVE SALES & ORDERS GROWTH (DECLINE) 40% • Served by both Howden and Colfax Fluid Handling • Driven by fundamental global undersupply of electricity • Growth is driven by environmental upgrades in China and the U.S. and strong pump sales to natural gas-combined cycle power stations YTD 2013 SALES SPLIT YTD 2013 ORDERS SPLIT 38% HIGHLIGHTS Q2 2013 vs. Q2 2012 YTD 2013 vs. YTD 2012 Total Organic Total Organic Sales 39.4 % 40.2 % 29.4 % 30.5 % Orders (2.0)% (1.3)% 11.5 % 8.0 %
14 OIL, GAS & PETROCHEMICAL MARKET PERSPECTIVE SALES & ORDERS DECLINE 24% • Served by both Howden and Colfax Fluid Handling • Period over period comparisons are difficult due to the timing of large projects • Quoting activity remains strong across all major served markets led by transportation, low sulfur fuels and Middle Eastern capacity increases YTD 2013 SALES SPLIT YTD 2013 ORDERS SPLIT 22% HIGHLIGHTS Q2 2013 vs. Q2 2012 YTD 2013 vs. YTD 2012 Total Organic Total Organic Sales (10.7)% (9.5)% (13.1)% (13.8)% Orders (21.9)% (21.7)% (11.6)% (13.3)%
15 MARINE MARKET PERSPECTIVE SALES & ORDERS GROWTH (DECLINE) 11% • Primarily served by Colfax Fluid Handling • Order growth for five consecutive quarters despite overall decline in new shipbuilding activity • Introduction of important new product - Smart Technology CM-1000 – Provides shipowners substantial energy savings by varying pump activity to meet actual cooling demand YTD 2013 SALES SPLIT YTD 2013 ORDERS SPLIT 12% HIGHLIGHTS Note: Marine market comprised of commercial marine and government, or defense, customers Q2 2013 vs. Q2 2012 YTD 2013 vs. YTD 2012 Total Organic Total Organic Sales 4.0 % 2.4 % 2.6 % 1.1 % Orders 4.3 % 2.5 % 5.6 % 3.7 %
16 MINING MARKET PERSPECTIVE SALES & ORDERS (DECLINE) GROWTH 5% • Primarily served by Howden • Driven by demand of mined resources, including: coal, iron ore, copper, gold, nickel and potash • Overall market environment in capital equipment for mining applications remains subdued, particularly in Australia YTD 2013 SALES SPLIT YTD 2013 ORDERS SPLIT 5% HIGHLIGHTS Q2 2013 vs. Q2 2012 YTD 2013 vs. YTD 2012 Total Organic Total Organic Sales (56.3)% (55.4)% (35.6) % (33.6) % Orders (49.3)% (34.6)% (54.1)% (45.3)%
17 GENERAL INDUSTRIAL & OTHER MARKET PERSPECTIVE SALES & ORDERS DECLINE 20% • Includes both Howden and Colfax Fluid Handling • Soft market conditions in chemical processing sector • Transportation sector weak across geographies YTD 2013 SALES SPLIT YTD 2013 ORDERS SPLIT 23% HIGHLIGHTS Q2 2013 vs. Q2 2012 YTD 2013 vs. YTD 2012 Total Organic Total Organic Sales 5.3 % 1.2 % (2.0)% (6.8)% Orders 3.0 % (2.9)% (6.7)% (12.9)%
FABRICATION TECHNOLOGY
19 FABRICATION TECHNOLOGY Q2 2013 HIGHLIGHTS • Net sales of $557.3 million compared to net sales of $549.2 million in Q2 2012, an increase of 1.5% (an organic decline of 3.8%) • Adjusted segment operating income of $59.4 million and adjusted segment operating income margin of 10.7% – Sequential margin improvement of 220 basis points – Improvement over Q2 2012 of 240 basis points
20 FABRICATION TECHNOLOGY YTD 2013 HIGHLIGHTS • Net sales of $1.08 billion compared to net sales of $1.01 billion in the six months ended June 29, 2012, an increase of 6.9% (an organic decline of 3.7%) • Adjusted segment operating income of $103.9 million and adjusted segment operating income margin of 9.6% – Improvement over the six months ended June 29, 2012 of 170 basis points
21 GEOGRAPHIC EXPOSURE YTD 2013 REVENUE $549.2 $557.3 $1,010.2 $1,079.4 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 $1,100.0 Q2 2012 Q2 2013 YTD 2012 YTD 2013 74% 26% Consumables Equipment REVENUE REVENUE YTD 2013 38% 62% Developed Economies Emerging Markets Note: Dollars in millions (unaudited). QTD YTD Volume (2.9)% (5.0)% Price/ Mix (0.9)% 1.3% Acquisitions 6.0 % 12.2 % FX Translation (0.7)% (1.6)% Total Growth 1.5 % 6.9 %
RESULTS OF OPERATIONS
23 INCOME STATEMENT SUMMARY (unaudited) Refer to Appendix for Non-GAAP reconciliation and footnotes. Note: Dollars in millions, except per share amounts. June 28, 2013 June 29, 2012 June 28, 2013 June 29, 2012 Net sales 1,074.1$ 1,045.7$ 2,021.3$ 1,932.0$ Gross profit 337.8$ 314.9$ 628.5$ 556.6$ % of sales 31.4 % 30.1 % 31.1 % 28.8 % SG&A expense 221.2$ 232.0$ 433.7$ 444.0$ % of sales 20.6 % 22.2 % 21.5 % 23.0 % Adjusted operating income 116.6$ 97.3$ 194.8$ 160.6$ % of sales 10.9 % 9.3 % 9.6 % 8.3 % Adjusted net income 62.0$ 43.1$ 95.5$ 68.6$ % of sales 5.8 % 4.1 % 4.7 % 3.6 % Adjusted net income per share 0.56$ 0.35$ 0.83$ 0.59$ Three Months Ended Six Months Ended
APPENDIX
25 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, adjusted operating income, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share and adjusted operating income exclude asbestos coverage litigation expense, expenses related to major restructuring programs and expenses and significant year-one fair value adjustment amortization expense related to the Charter acquisition, 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 28.2% and 29.0% for the second quarter and six months ended June 28, 2013, respectively, and 31% for both the second quarter and six months ended June 29, 2012. Organic sales growth (decline) and organic order growth (decline) exclude the impact of acquisitions and foreign exchange rate fluctuations. These non-GAAP financial measures assist Colfax in comparing its operating performance on a consistent basis because, among other things, they remove the impact of asbestos insurance coverage issues and expenses, expenses and year-one fair value adjustment amortization expense related to the Charter acquisition and major restructuring programs. Sales and order information by end market are estimates. We periodically update our customer groupings order to refine these estimates.
26 NON-GAAP RECONCILIATION (unaudited) (1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 28.2% and 29.0% for the second quarter and six months ended June 28, 2013, respectively, and 31% for both the second quarter and six months ended June 29, 2012. (2) Adjusted net income per share for periods prior to April 23, 2013 were calculated consistently with the two-class method in accordance with GAAP as the Series A preferred stock were considered participating securities. Subsequent to April 23, 2013, adjusted net income per share was calculated consistently with the if- converted method in accordance with GAAP as the Series A preferred stock were no longer participating securities. Adjusted net income per share for the six months ended June 28, 2013 excludes the impact of 12,173,291 common stock equivalent shares as their inclusion would be anti-dilutive. _____________________ Note: Dollars in thousands, except per share amounts. June 28, 2013 June 29, 2012 June 28, 2013 June 29, 2012 Adjusted Net Income and Adjusted Net Income Per Share Net income (loss) attributable to Colfax Corporation 58,392$ 12,366$ 86,027$ (93,232)$ Restructuring and other related charges 4,477 18,558 8,691 27,201 Charter acquisition-related expense — 766 — 43,617 Fair value adjustments - ESAB/Howden backlog and inventory amortization expense — 14,422 — 48,127 Asbestos coverage litigation expense 468 3,240 2,174 5,527 Tax adjustment(1) (1,354) (6,247) (1,354) 37,345 Adjusted net income 61,983 43,105 95,538 68,585 Adjusted net income margin 5.8 % 4.1 % 4.7 % 3.5 % Dividends on preferred stock 5,086 5,073 10,168 8,807 Adjusted net income available to Colfax Corporation common shareholders 56,897 38,032 85,370 59,778 Less: adjusted net income attributable to participating securities (2) 916 4,859 4,571 7,129 55,981$ 33,173$ 80,799$ 52,649$ Weighted-average shares outstanding - diluted 111,522,958 94,733,164 97,285,037 88,825,431 Adjusted net income per share 0.56$ 0.35$ 0.83$ 0.59$ Net income (loss) per share— diluted (in accordance with GAAP) 0.52$ 0.07$ 0.74$ (1.16)$ Three Months Ended Six Months Ended
27 NON-GAAP RECONCILIATION (unaudited) _____________________ Note: Dollars in thousands. Corporate and Other Corporate and Other Net sales —$ —$ Operating income (loss) 110,462 11.7 % 96,670 9.0 % (23,153) 183,979 9.1 % 61,106 6.6 % 43,285 4.3 % (68,216) 36,175 1.9 % Charter acquisition-related expense — — — — — — 43,617 43,617 Restructuring and other related charges 1,466 7,225 — 8,691 3,815 19,122 4,264 27,201 Asbestos coverage litigation expense 2,174 — — 2,174 5,527 — — 5,527 Fair value adjustments - ESAB/Howden backlog and inventory amortization expense — — — — 31,142 16,985 — 48,127 Adjusted operating income (loss) 114,102$ 12.1 % 103,895$ 9.6 % (23,153)$ 194,844$ 9.6 % 101,590$ 11.0 % 79,392$ 7.9 % (20,335)$ 160,647$ 8.3 % 1,932,019$ 941,868$ 1,079,393$ 2,021,261$ 921,826$ 1,010,193$ Q2 2013 - YTD Q2 2012 - YTD Gas and Fluid Handling Fabrication Technology Total Colfax Corporation Gas and Fluid Handling Fabrication Technology Total Colfax Corporation Corporate and Other Corporate and Other Net sales —$ —$ Operating income (loss) 69,247 13.4 % 55,143 9.9 % (12,738) 111,652 10.4 % 42,077 8.5 % 32,405 5.9 % (14,176) 60,306 5.8 % Charter acquisition-related expense — — — — — — 766 766 Restructuring and other related charges 193 4,284 — 4,477 3,035 13,006 2,517 18,558 Asbestos coverage litigation expense 468 — 468 3,240 — 3,240 Fair value adjustments - ESAB/Howden backlog and invent ry amortization expense — — — — 14,4 0 22 — 14,422 Adjusted operating income (loss) 69,908$ 13.5 59,427$ 10.7 (12,738)$ 116,597$ 10.9 62,752$ 12.6 45,433$ 8.3 (10,893)$ 97,292$ 9.3 Q2 2013 - QTD Q2 2012 - QTD Gas and Fluid Handling Fabrication Technology Total Colfax Corporation Gas and Fluid Handling Fabrication Technology Total Colfax Corporation 1,045,653$ 516,763$ 557,355$ 1,074,118$ 496,495$ 549,158$
28 SALES & ORDERS GROWTH (unaudited) _____________________ Note: Dollars in millions. (1) Represents the incremental sales, orders and order backlog as a result of our acquisitions of Charter, Soldex and Co-Vent. The impact related to the Charter Acquisition represents 12 days of activity for ESAB and Howden as the acquisition closed on January 13, 2012. $ % $ % For the three months ended June 29, 2012 1,045.7$ 534.5$ Components of Change: Existing Businesses (2.7) (0.3)% (53.6) (10.0)% Acquisitions(1) 37.4 3.6 % 6.0 1.1 % Foreign Currency Translation (6.3) (0.6)% (8.7) (1.6)% Total 28.4 2.7 % (56.3) (10.5)% For the three months ended June 28, 2013 1,074.1$ 478.2$ $ % $ % $ % As of and for the six months ended June 29, 2012 1,932.0$ 1,032.0$ 1,375.9$ Components of Change: Existing Businesses (26.7) (1.4)% (75.1) (7.3)% 23.2 1.7 % Acquisitions(1) 142.6 7.4 % 39.5 3.8 % 21.2 1.5 % Foreign Currency Translation (26.6) (1.4)% (16.1) (1.5)% (31.9) (2.3)% Total 89.3 4.6 % (51.7) (5.0)% 12.5 0.9 % As of and for the six months ended June 28, 2013 2,021.3$ 980.3$ 1,388.4$ Backlog at Period End Net Sales Orders Net Sales Orders
29 EPS GUIDANCE (unaudited) _____________________ Dollars in thousands, except share data. Low High EBIT (1) 432,000 456,000 Interest Expense (78,000) (78,000) Tax (107,000) (114,000) Noncontrolling Interest (27,000) (27,000) Adjusted net income - Colfax 220,000 237,000 Adjusted Net Income Allocated to Participating Securities (4,500) (4,500) Preferred Dividends (20,500) (20,500) Adjusted Net Income for Common Shareholders 195,000 212,000 Average Shares - Common and Equivalents 100,500 100,500 - If Converted 112,700 112,700 $1.95 $2.10 (1) High end of range same as 2/6/13 Guidance Note: Guidance as of 7/25/13
30 NON-GAAP RECONCILIATION (unaudited) Projected net income per share - diluted 1.70$ 1.85$ Restructuring costs 0.24 0.24 Asbestos coverage litigation 0.03 0.03 Tax adjustment (0.02) (0.02) - Projected adjusted net income per share - diluted 1.95$ 2.10$ 2013 Note: Guidance as of 7/25/13
31 EPS ILLUSTRATION USING ANALYST CONSENSUS (unaudited) _____________________ Dollars in thousands, except share data. Note: This slide is for illustrative purposes to highlight the relationship between full year earnings per share calculated on a discrete basis compared to the earnings per share calculated each quarter. This is not intended to represent management’s expectation regarding the allocation of full year guidance between each quarter. 6 month Full Year Sum of Q1 Q2 YTD Actual Q3 (1) Q4(1) 2013 Qtrs Adjusted EPS 0.26 0.56 $0.53 $0.65 2.05 2.00 Adjusted NI - Colfax 95,538 61,000 75,000 231,538 (before P.S. dividends) Adjusted NI - Colfax Common 85,370 56,000 70,000 211,370 Adjusted Net Income Allocated to Participating Securities 4,571 — — 4,571 Weighted Average Shares - > Common and Equivalents 97,200 103,000 103,000 100,500 > If Converted 109,400 115,000 115,000 112,700 (1) Based on analyst consensus per Thomson Reuters as of July 23, 2013; Colfax does not provide quarterly guidance.