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): May 3, 2016
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.) |
420 National Business Parkway, 5th Floor
Annapolis Junction, MD 20701
(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 May 3, 2016, Colfax Corporation issued a press release reporting financial results for the three months ended April 1, 2016. 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 May 3, 2016 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 May 3, 2016, reporting financial results for the three months ended April 1, 2016. |
99.2 | Colfax Corporation slides for May 3, 2016 conference call reporting financial results for the three months ended April 1, 2016. |
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: May 3, 2016 By: /s/ C. Scott Brannan
Name: C. Scott Brannan
Title: Senior Vice President, Finance,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
99.1 | Colfax Corporation press release dated May 3, 2016, reporting financial results for the three months ended April 1, 2016. |
99.2 | Colfax Corporation slides for May 3, 2016 conference call reporting financial results for the three months ended April 1, 2016. |
COLFAX REPORTS FIRST QUARTER 2016 RESULTS
• | First quarter net income per dilutive share of $0.18, adjusted net income per share of $0.30. |
• | Results and market trends support current 2016 guidance range. |
• | Cost reduction programs remain on schedule. |
ANNAPOLIS JUNCTION, MD - May 3, 2016 - Colfax Corporation (NYSE: CFX), a leading global manufacturer of gas- and fluid-handling and fabrication technology products and services, today announced its financial results for the first quarter ended April 1, 2016.
For the first quarter of 2016, net income was $22.6 million, or $0.18 per dilutive share. Adjusted net income (as defined below) was $36.9 million, or $0.30 per share, compared to $44.5 million for the first quarter of 2015, or $0.36 per share.
Net sales were $876.8 million in the first quarter, a decrease of 3.8% from the prior year. Net sales decreased 0.3% organically compared to the first quarter of 2015. First quarter operating income was $48.5 million, with adjusted operating income (as defined below) of $66.1 million. Adjusted operating income margin (as defined below) was 7.5% in the first quarter.
First quarter gas- and fluid-handling orders decreased by 8.8% to $407.6 million compared to orders of $446.9 million for the first quarter of 2015, an organic order decline of 9.3%. Gas- and fluid-handling finished the period with backlog of $1,135.3 million.
Adjusted net income, adjusted net income per share, adjusted operating income, adjusted operating income margin, organic sales decrease and organic order 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.
Matthew Trerotola, President and Chief Executive Officer, stated, “We are pleased to report operating results that were in line with the expectations we discussed in December. We are making very good progress on our cost reduction initiatives, but our progress on growth initiatives continues to be largely offset by the choppy end market environment. While end market trends are mixed, solid performance in our shorter-cycle and aftermarket businesses is expected to largely offset the increased risk to project bookings for the balance of the year.”
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, adjusted operating income margin, organic sales decrease and organic order decrease. Adjusted net income, adjusted net income per share, adjusted operating income and adjusted operating income margin exclude Restructuring and other related charges. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.0% and 29.5% for the first quarters of 2016 and 2015 , respectively. Organic sales decrease and organic order 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 restructuring and other related charges.
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 Tuesday, May 3, 2016 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 75888280, 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 2015 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:
Terry Ross, Vice President of Investor Relations
Colfax Corporation
301-323-9054
Terry.Ross@colfaxcorp.com
Colfax Corporation
Condensed Consolidated Statements of Income
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended | |||||||
April 1, 2016 | March 27, 2015 | ||||||
Net sales | $ | 876,843 | $ | 911,070 | |||
Cost of sales | 596,322 | 616,632 | |||||
Gross profit | 280,521 | 294,438 | |||||
Selling, general and administrative expense | 214,387 | 213,232 | |||||
Restructuring and other related charges | 17,668 | 3,753 | |||||
Operating income | 48,466 | 77,453 | |||||
Interest expense | 9,120 | 12,044 | |||||
Income before income taxes | 39,346 | 65,409 | |||||
Provision for income taxes | 13,136 | 9,134 | |||||
Net income | 26,210 | 56,275 | |||||
Less: income attributable to noncontrolling interest, net of taxes | 3,595 | 4,219 | |||||
Net income attributable to Colfax Corporation | 22,615 | 52,056 | |||||
Net income per share - basic and diluted | $ | 0.18 | $ | 0.42 | |||
Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
In thousands, except per share data
(Unaudited)
Three Months Ended | |||||||
April 1, 2016 | March 27, 2015 | ||||||
Adjusted Operating Income | |||||||
Operating income | $ | 48,466 | $ | 77,453 | |||
Restructuring and other related charges | 17,668 | 3,753 | |||||
Adjusted operating income | $ | 66,134 | $ | 81,206 | |||
Adjusted operating income margin | 7.5 | % | 8.9 | % | |||
Three Months Ended | |||||||
April 1, 2016 | March 27, 2015 | ||||||
Adjusted Net Income and Adjusted Net Income Per Share | |||||||
Net income attributable to Colfax Corporation | $ | 22,615 | $ | 52,056 | |||
Restructuring and other related charges | 17,668 | 3,753 | |||||
Tax adjustment(1) | (3,398 | ) | (11,262 | ) | |||
Adjusted net income | $ | 36,885 | $ | 44,547 | |||
Adjusted net income margin | 4.2 | % | 4.9 | % | |||
Weighted-average shares outstanding - diluted | 123,242,884 | 125,092,635 | |||||
Adjusted net income per share | $ | 0.30 | $ | 0.36 | |||
Net income per share— diluted (in accordance with GAAP) | $ | 0.18 | $ | 0.42 | |||
__________
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.0% and 29.5% for the first quarter of 2016 and 2015, respectively.
Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)
Net Sales | Orders | Backlog at Period End | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
As of and for the three months ended March 27, 2015 | $ | 911.1 | $ | 446.9 | $ | 1,350.9 | ||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing Businesses | (2.4 | ) | (0.3 | )% | (41.5 | ) | (9.3 | )% | (195.3 | ) | (14.5 | )% | ||||||||
Acquisitions(1) | 22.2 | 2.4 | % | 23.4 | 5.2 | % | 47.7 | 3.5 | % | |||||||||||
Foreign Currency Translation | (54.1 | ) | (5.9 | )% | (21.2 | ) | (4.7 | )% | (68.0 | ) | (5.0 | )% | ||||||||
Total | (34.3 | ) | (3.8 | )% | (39.3 | ) | (8.8 | )% | (215.6 | ) | (16.0 | )% | ||||||||
As of and for the three months ended April 1, 2016 | $ | 876.8 | $ | 407.6 | $ | 1,135.3 | ||||||||||||||
(1) Represents the incremental sales, orders and order backlog as a result of our acquisitions of RootsTM blowers and compressors and Simsmart Technologies.
FIRST QUARTER 2016 | 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 2015 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.
Q1 2016 RESULTS
4 Q1 2016 HIGHLIGHTS • Organic revenue decline of 0.3% Q1 2016 Q1 2015 (In millions, except per share data) Revenue $ 876.8 $ 911.1 Adjusted Operating Profit $ 66.1 $ 81.2 Margin % 7.5 % 8.9 % Adjusted Net Income $ 36.9 $ 44.5 Adjusted EPS $ 0.30 $ 0.36 Unaudited
FABRICATION TECHNOLOGY
6 FABRICATION TECHNOLOGY Q1 2016 RESULTS REVENUE Note: Dollars in millions (unaudited). ADJUSTED OPERATING PROFIT 11.7% 10.3% AFTERMARKET REVENUE 2016 GEOGRAPHIC EXPOSURE 2016 Volume (2.5)% Price/ Mix 0.6% Acquisitions —% FX Translation (7.3)% Total Decline (9.2)%
GAS AND FLUID HANDLING
8 GAS AND FLUID HANDLING Q1 2016 RESULTS REVENUE Existing Businesses 1.7% Acquisitions 5.3% FX Translation (4.5)% Total Growth 2.5% Note: Dollars in millions (unaudited). ADJUSTED OPERATING PROFIT 8.6% 7.8% AFTERMARKET REVENUE 2016 GEOGRAPHIC EXPOSURE 2016
9 ORDERS Existing Businesses (9.3)% Acquisitions 5.2% FX Translation (4.7)% Total Decline (8.8)% Note: Dollars in millions (unaudited). BACKLOG ORDERS AND BACKLOG Existing Businesses (14.5)% Acquisitions 3.5% FX Translation (5.0)% Total Decline (16.0)%
10 Q1 2016 SALES AND ORDERS BY END MARKET SALES: $432.7 million Total (Decline) Growth Organic (Decline) Growth Power Generation (5.4)% (1.8)% Oil, Gas & Petrochemical 25.3% 24.7% Marine (8.0)% (5.5)% Mining (33.9)% (24.3)% General Industrial & Other 7.8% (1.4)% Total 2.5% 1.7% ORDERS: $407.6 million Total Growth (Decline) Organic Growth (Decline) Power Generation 6.2% 11.8% Oil, Gas & Petrochemical (35.9)% (38.0)% Marine (18.9)% (16.1)% Mining (53.3)% (42.4)% General Industrial & Other 8.3% (1.3)% Total (8.8)% (9.3)%
11 POWER GENERATION MARKET PERSPECTIVE SALES & ORDERS (DECLINE) GROWTH • Served by both Howden and Colfax Fluid Handling • Order increase due to strong bookings in China • Changes in China power market regulatory directives may negatively impact 2016 orders and 2017 revenues for new power capacity • Outlook for revenue stable for remainder of 2016, but order growth likely impacted in China 2016 SALES SPLIT 2016 ORDERS SPLIT HIGHLIGHTS Q1 2016 vs. Q1 2015 Total Organic Sales (5.4)% (1.8)% Orders 6.2% 11.8% 33% 37%
12 OIL, GAS & PETROCHEMICAL MARKET PERSPECTIVE SALES & ORDERS GROWTH (DECLINE) • Served by both Howden and Colfax Fluid Handling • Period over period comparisons are difficult due to the timing of large projects • Project deferrals largely from customer spend restrictions are pushing orders into future quarters • Expanding our addressable market to partially offset expected continuation of end market decline 2016 SALES SPLIT 2016 ORDERS SPLIT HIGHLIGHTS Q1 2016 vs. Q1 2015 Total Organic Sales 25.3% 24.7% Orders (35.9)% (38.0)% 22% 16%
13 MARINE MARKET PERSPECTIVE SALES & ORDERS DECLINE • Primarily served by Colfax Fluid Handling • Defense business continues to perform well • Despite slower start, expect orders down in high single digits for full year 2016 SALES SPLIT 2016 ORDERS SPLIT HIGHLIGHTS Note: Marine market comprised of commercial marine and government, or defense, customers Q1 2016 vs. Q1 2015 Total Organic Sales (8.0)% (5.5)% Orders (18.9)% (16.1)% 10% 11%
14 MINING MARKET PERSPECTIVE SALES & ORDERS DECLINE • Primarily served by Howden • Remains a depressed market; focused on winning targeted projects 2016 SALES SPLIT 2016 ORDERS SPLIT HIGHLIGHTS Q1 2016 vs. Q1 2015 Total Organic Sales (33.9)% (24.3)% Orders (53.3)% (42.4)% 3% 3%
15 GENERAL INDUSTRIAL & OTHER MARKET PERSPECTIVE SALES & ORDERS GROWTH (DECLINE) • Includes both Howden and Colfax Fluid Handling • Weak demand for heavy industrial capital equipment continued driver of sales and order declines • Rate of sales and order decline has moderated to levels expected for balance of 2016 2016 SALES SPLIT 2016 ORDERS SPLIT HIGHLIGHTS Q1 2016 vs. Q1 2015 Total Organic Sales 7.8% (1.4)% Orders 8.3% (1.3)% 32% 33%
RESULTS OF OPERATIONS
17 INCOME STATEMENT SUMMARY (unaudited) Refer to Appendix for Non-GAAP reconciliation and footnotes. Note: Dollars in millions, except per share amounts. Three Months Ended April 1, 2016 March 27, 2015 Net sales $ 876.8 $ 911.1 Gross profit $ 280.5 $ 294.4 % of sales 32.0 % 32.3 % SG&A expense $ 214.4 $ 213.2 % of sales 24.5 % 23.4 % Adjusted operating income $ 66.1 $ 81.2 % of sales 7.5 % 8.9 % Adjusted net income $ 36.9 $ 44.5 % of sales 4.2 % 4.9 % Adjusted net income per share $ 0.30 $ 0.36
APPENDIX
19 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, adjusted operating income margin, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share, adjusted operating income and adjusted operating income margin exclude the impact of Restructuring and other related charges. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.0% and 29.5% for the first quarters of 2016 and 2015, respectively. 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 restructuring and other related charges. Sales and order information by end market are estimates. We periodically update our customer groupings order to refine these estimates.
20 NON-GAAP RECONCILIATION (unaudited) _____________________ Note: Dollars in thousands. Three Months Ended April 1, 2016 Three Months Ended March 27, 2015 Gas and Fluid Handling Fabrication Technology Corporate and Other Total Colfax Corporation Gas and Fluid Handling Fabrication Technology Corporate and Other Total Colfax Corporation Net sales $ 432,738 $ 444,105 $ — $ 876,843 $ 422,209 $ 488,861 $ — $ 911,070 Operating income (loss) 23,330 5.4 % 38,810 8.7 % (13,674 ) 48,466 5.5 % 33,612 8.0 % 56,238 11.5 % (12,397 ) 77,453 8.5 % Restructuring and other related charges 10,593 7,075 — 17,668 2,645 1,108 — 3,753 Adjusted operating income (loss) $ 33,923 7.8 % $ 45,885 10.3 % $ (13,674 ) $ 66,134 7.5 % $ 36,257 8.6 % $ 57,346 11.7 % $ (12,397 ) $ 81,206 8.9 %
21 NON-GAAP RECONCILIATION (unaudited) (1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 29.0% and 29.5% for the first quarters of 2016 and 2015, respectively. _____________________ Note: Dollars in thousands, except per share amounts. Three Months Ended April 1, 2016 March 27, 2015 Adjusted Net Income and Adjusted Net Income Per Share Net income attributable to Colfax Corporation $ 22,615 $ 52,056 Restructuring and other related charges 17,668 3,753 Tax adjustment(1) (3,398 ) (11,262 ) Adjusted net income $ 36,885 $ 44,547 Adjusted net income margin 4.2 % 4.9 % Weighted-average shares outstanding - diluted 123,242,884 125,092,635 Adjusted net income per share $ 0.30 $ 0.36 Net income per share— diluted (in accordance with GAAP) $ 0.18 $ 0.42
22 CHANGE IN SALES, ORDERS AND BACKLOG (unaudited) _____________________ Note: Dollars in millions. (1) Represents the incremental sales, orders and order backlog as a result of our acquisitions of RootsTM blowers and compressors and Simsmart Technologies. Net Sales Orders Backlog at Period End $ % $ % $ % As of and for the three months ended March 27, 2015 $ 911.1 $ 446.9 $ 1,350.9 Components of Change: Existing Businesses (2.4 ) (0.3 )% (41.5 ) (9.3 )% (195.3 ) (14.5 )% Acquisitions(1) 22.2 2.4 % 23.4 5.2 % 47.7 3.5 % Foreign Currency Translation (54.1 ) (5.9 )% (21.2 ) (4.7 )% (68.0 ) (5.0 )% Total (34.3 ) (3.8 )% (39.3 ) (8.8 )% (215.6 ) (16.0 )% As of and for the three months ended April 1, 2016 $ 876.8 $ 407.6 $ 1,135.3