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Symmetry Medical Reports Second Quarter 2009 Financial Results
Posted by: gurufocus (IP Logged)
Date: August 6, 2009 06:33AM

Press Release: Symmetry Medical Reports Second Quarter 2009 Financial Results

WARSAW, Ind., Aug. 6 /PRNewswire-FirstCall/ -- Symmetry Medical Inc. (NYSE: SMA), a leading independent provider of products to the global orthopaedic device industry and other medical markets, announced second quarter 2009 financial results for the period ended July 4, 2009.

(in millions,              Second Quarter           Vs Prior Quarter
     except share data)    2009     2008   Change   2Q\'09    1Q\'09    Change
    Revenue             $ 101.0  $ 109.8     -8%  $ 101.0   $ 101.4     0%
    Operating Income       13.5     12.5      8%     13.5      11.2    21%
    Net Income              9.0      6.2     45%      9.0       6.8    31%
    EPS                  $ 0.25   $ 0.17     47%   $ 0.25    $ 0.19    32%
    Revenue by Product:
    Instruments          $ 46.9   $ 45.1      4%   $ 46.9    $ 46.5     1%
    Implants               29.9     31.2     -4%     29.9      29.1     3%
    Cases                  18.9     23.4    -19%     18.9      18.5     2%
    Other                   5.3     10.1    -48%      5.3       7.3   -28%
    Total Revenue       $ 101.0  $ 109.8     -8%  $ 101.0   $ 101.4     0%

Revenue for the second quarter 2009 was $101.0 million, compared to $109.8 million reported in the second quarter 2008. Revenues during the quarter were unfavorably impacted by a foreign currency translation effect of $5.9 million.

Gross profit for the second quarter 2009 was $26.8 million, compared to $27.4 million in the second quarter 2008. Gross margin percentage for the second quarter 2009 was 26.5% compared to gross margin percentage of 25.0% in the same period last year and 24.2% in the first quarter 2009. Gross margin expansion for the quarter was driven by improved financial performance at the Company\'s Sheffield unit as well as improved efficiencies across other operating units.

Selling, general and administrative expenses were $13.2 million for the second quarter 2009, down 11.4% from $14.9 million for the second quarter 2008. The year-over-year decrease reflected the elimination of professional fees related to the Sheffield, UK investigation, cost savings and improved operating efficiencies during the second quarter 2009. These savings were partially offset by a $0.5 million increase in non-cash compensation expense. Second quarter 2008 included investigation costs of approximately $1.4 million.

Operating income for the second quarter 2009 was $13.5 million, up from $12.5 million for the second quarter 2008. During the second quarter 2009, operating income at the Company\'s Sheffield, UK unit was $0.1 million compared to operating losses of $3.9 and $1.6 million in the second quarter 2008 and first quarter 2009, respectively. Operating margin of 13.4% for the second quarter 2009 represented an increase from 11.4% for the second quarter 2008.

The second quarter 2009 included a non-cash gain of $0.2 million in the mark to market of the Company\'s interest rate derivative, compared to a non-cash gain of $1.4 million in the second quarter 2008. This $1.2 million unfavorable year-over-year comparison was partially offset by favorable taxes in the second quarter of 2009.

Income tax expense for the second quarter 2009 was $3.2 million, compared to $4.9 million for the second quarter of 2008. The Company\'s overall corporate tax rate in the second quarter decreased over the second quarter of 2008 due to the finalization of a prior year international tax liability.

Net income for the second quarter 2009 was $9.0 million, or $0.25 per diluted share, up from net income of $6.2 million, or $0.17 per diluted share, for the second
quarter of 2008.

The weighted average number of diluted shares outstanding during the second quarter of 2009 was 35,529,311.

Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated, "We are pleased with our strong second quarter 2009 bottom line performance. It reflects initiatives we undertook in anticipation of a continuing slowdown in the economy and challenging conditions certain sectors of our business. These early initiatives reduced our SG&A costs and resulted in operational efficiencies that improved our gross profit. We are particularly encouraged that Sheffield has reached operating profitability. We expect further improvement at that facility as it benefits from solid pricing and material cost savings."

Mr. Moore continued, "As we move into the second half of 2009, we continue to manage our business conservatively, increasing operating efficiency and focusing on bottom line performance. While we expect demand in the overall orthopedic market to remain soft during the second half of the year, our strong market position and excellent customer relationships are proving to be valuable to our orthopedic customers in these challenging times as we continue to gain market share. We believe that our business model will position us to expand our global presence and have taken steps to do so in 2009."

Financial Guidance

The following forward-looking estimates regarding 2009 guidance reflect current market conditions and foreign currency rates. Actual results may differ materially, and we refer you to forward-looking statements located at the end of the press release.

For the full year 2009, Symmetry is adjusting its previously stated annual revenue guidance to a range of $385 million to $405 million, from $405 million to $420 million. This adjustment reflects second quarter 2009 results, current order flow and anticipated customer demand for the remainder of the year. Notwithstanding these challenges, the Company is reaffirming full year 2009 earnings guidance within the range of $0.77 to $0.85 per diluted share, as a result of strong second quarter 2009 performance, improved performance at Sheffield, additional efficiencies and cost controls across the business.

Conference Call

Symmetry Medical will host a conference call to discuss the second quarter 2009 earnings at 8:00 a.m. ET on August 6, 2009. A live webcast of the conference call will be available online from the investor relations page of the Company\'s corporate web site at www.symmetrymedical.com. The dial-in numbers are (800) 561-2693 for domestic callers and (617) 614-3523 for international. The reservation number for both is 75125435. After the live webcast, the call will remain available on Symmetry Medical\'s web site through October 6, 2009. In addition, a telephonic replay of the call will be available until August 13, 2009. The replay numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 44821864 to access the call.

About Symmetry Medical Inc.

Symmetry Medical Inc. is a leading independent provider of implants and related instruments and cases to the orthopaedic device industry. The Company also designs, develops and produces these products for companies in other segments of the medical device market, including arthroscopy, dental, laparoscopy, osteobiologic and endoscopy sectors and provides limited specialized products and services to non-healthcare markets, such as the aerospace market.

Forward-Looking Statements

Statements in the press release regarding Symmetry Medical Inc.\'s business which are not historical facts may be "forward-looking statements" that involve risks and uncertainties, within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictive in nature and are frequently identified by the use of terms such as "may," "might," "will," "should," "expect," "believe," "anticipate," "plan," "estimate," "intend," and similar words indicating possible future expectations, events or actions. Such predictive statements are not guarantees of future performance, and actual outcomes and results could differ materially from our current expectations. We refer you to the "Risk Factors" and "Forward Looking-Statements" sections in the Company\'s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as the Company\'s other filings with the SEC, which are available on the SEC\'s Web site at www.sec.gov.

Symmetry Medical Inc.
    10-Q

    Consolidated Statements of Operations

                     Three Months Ended       Six Months Ended
                     July 4,     June 28,    July 4,    June 28,
                      2009        2008        2009        2008
                        (In Thousands, Except Per Share Data)
                   (unaudited) (unaudited) (unaudited) (unaudited)


    Revenue        $ 100,954    $ 109,787   $ 202,376   $ 211,649
    Cost of Revenue   74,183       82,373     151,047     160,289

    Gross Profit      26,771       27,414      51,329      51,360
    Selling, general
     and
     administrative
     expenses         13,230       14,926      26,582      29,309

    Operating Income  13,541       12,488      24,747      22,051
    Other (income)/
     expense:
    Interest expense   1,564        2,917       3,384       5,617
    Derivatives
     valuation
     gain               (175)      (1,381)       (568)       (215)
    Other                (12)        (189)       (308)       (352)

    Income before
     income taxes     12,164       11,141      22,239      17,001
    Income tax
     expense           3,189        4,939       6,417       6,832

    Net income       $ 8,975      $ 6,202    $ 15,822    $ 10,169

    Net income
     per share:
    Basic            $ 0 .25       $ 0.18      $ 0.45      $ 0.29
    Diluted          $ 0 .25       $ 0.17      $ 0.44      $ 0.28

    Weighted average
     common shares
     and
     equivalent
     shares
     outstanding:
    Basic             35,326       35,155      35,289      35,154
    Diluted           35,529       35,323      35,437      35,329



    Symmetry Medical Inc.
    10-Q

    Consolidated Balance Sheets

                                             July 4,    January 3,
                                              2009        2009
                                                 (In Thousands)
    Assets:                                (unaudited)
    Current Assets:
    Cash and cash equivalents               $ 18,516   $  10,191
    Accounts receivable, net                  52,598      52,845
    Inventories                               68,334      61,111
    Refundable income taxes                      830       6,610
    Deferred income taxes                      5,256       3,993
    Other current assets                       4,913       3,154

    Total current assets                     150,447     137,904
    Property and equipment, net              118,507     115,045
    Goodwill                                 153,760     153,521
    Intangible assets, net of accumulated
     Amortization                             44,260      45,039
    Other assets                               1,402       1,728

    Total Assets                           $ 468,376   $ 453,237

    Liabilities and Shareholders\' Equity:
    Current Liabilities:
    Accounts payable                        $ 24,449    $ 26,929
    Accrued wages and benefits                 9,865      12,784
    Other accrued expenses                     4,864       5,186
    Income tax payable                         2,530       2,637
    Deferred income taxes                        109           -
    Revolving line of credit                   7,096       2,495
    Current portion of capital lease
     obligations                                 668       1,034
    Current portion of long-term debt         18,650      16,900

    Total current liabilities                 68,231      67,965
    Deferred income taxes                     23,332      18,131
    Derivative valuation liability             3,370       3,771
    Capital lease obligations, less current
     portion                                   3,129       3,356
    Long-term debt, less current portion      95,400     107,600

    Total Liabilities                        193,462     200,823

    Commitments and contingencies (Note 14)

    Shareholders\' Equity:
    Common Stock, $.0001 par value; 75,000
     Shares authorized; shares issued July
     4, 2009--35,811; January 3, 2009--35,801      4           4
    Additional paid-in capital               277,716     275,890
    Accumulated deficit                       (5,685)    (21,507)
    Accumulated other comprehensive loss       2,879      (1,973)

    Total Shareholders\' Equity               274,914     252,414

    Total Liabilities and Shareholders\'
     Equity                                $ 468,376   $ 453,237
Investors/Media:                      Contact:
    The Ruth Group                        Symmetry Medical Inc.
    Nick Laudico/Jason Rando              Fred Hite
    646-536-7030/7025                     Senior Vice President
    nlaudico@theruthgroup.com             Chief Financial Officer
    jrando@theruthgroup.com               (574) 371-2218

Source: PRNewsWire



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