COLLEGEVILLE, Pa., Nov. 17 /PRNewswire/ -- Medical Device Manufacturing, Inc. (“MDMI” or the “Company”), a wholly owned subsidiary of UTI Corporation, announced strong third quarter results for the three months ended September 30, 2004, reflecting contributions from its acquisition of MedSource Technologies, Inc. on June 30, 2004 and continued strong organic growth.
Third Quarter Financial Results
Net sales for the third quarter of 2004 increased 122% to $100.3 million compared with $45.2 million in the corresponding period of 2003. The acquisition of MedSource contributed $43.4 million of net sales in the third quarter of 2004. The net loss for the third quarter of 2004 was $4.4 million and included $5.3 million of inventory step-up and restructuring charges related to the acquisition of MedSource. The net loss in the corresponding period of 2003 was $0.4 million. Adjusted EBITDA (1) for the third quarter of 2004 was $14.9 million compared to $7.7 million in the corresponding period of 2003. Reconciliations of non GAAP measures are provided in the financial statements accompanying this press release.
For the nine months ended September 30, 2004, net sales totaled $212.5 million, a 66% increase over net sales of $128.1 million in the corresponding period of 2003. The net loss for the nine months ended September 30, 2004 was $6.4 million and included $8.8 million of expenses related to inventory-step-up, restructuring and other charges and debt refinancing costs related to the acquisition of MedSource. The net loss in the corresponding period of 2003 was $1.2 million. Adjusted EBITDA for the first nine months ended September 30, 2004 was $35.4 million compared to $22.3 million in the corresponding period of 2003.
Pro Forma Financial Results (2)
Net sales for the third quarter of 2004 increased 13% to $100.3 million compared with pro forma net sales of $89.0 million in the corresponding period of 2003, reflecting strong growth in the cardiovascular, endoscopic and orthopedic markets. Adjusted EBITDA for the third quarter of 2004 increased 18% to $14.9 million versus $12.7 million in the corresponding period of 2003. Adjusted EBITDA margins for the third quarter of 2004 improved to 14.9% from 14.2% for the corresponding period of 2003.
Pro forma net sales for the nine months ended September 30, 2004 increased 15% to $306.3 million compared to pro forma net sales of $266.1 million in the corresponding period of 2003. Adjusted EBITDA for the nine months ended 2004 increased 23% to $47.7 million versus $38.9 million in the corresponding period of 2003. Adjusted EBITDA margins for the first nine months ended September 30, 2004 improved to 15.6% from 14.6% for the corresponding period in 2003.
Outlook
The Company expects total pro forma net sales for 2004 to be in the range of $404 - $408 million. For the full year 2005, the Company is projecting net sales of $420 - $430 million based on the following assumptions: (1) the core business will increase $40 - $55 million reflecting 11% - 15% growth; (2) facility closures related to the restructuring program will negatively impact net sales by $15 million due to select product lines that will not be transferred to other MDMI facilities (the products that are not scheduled to be transferred are unprofitable in the aggregate); and (3) the transfer of a number of products currently assembled by us back into a customer facility. Based on preliminary estimates, we expect our net sales from the specific customer initiated transfer to decline approximately $10 - $15 million in 2005 and $15 - $20 million in 2006.
Forward-looking Statements
This press release includes “forward-looking statements” including those statements made under the caption “Outlook” above. All statements included herein, other than statements of historical fact, constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed under “risk factors” contained in the Company’s Form S-4 registration statement, as amended, filed with the Securities and Exchange Commission (Commission File No. 333-118675). All forward-looking statements are expressly qualified in their entirety by such factors. We undertake no obligation to update publicly or publicly revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Conference Call
Ron Sparks, President and Chief Executive Officer, and Stew Fisher, Executive Vice President and Chief Financial Officer, will discuss third quarter results in a conference call scheduled for today, Wednesday, November 17, at 5:00 pm ET. The teleconference can be accessed by calling (800) 299-7098 pass code 35222658. Please dial in 10 to 15 minutes prior to the beginning of the call. The webcast will be available via the Internet at http://www.uticorporation.com/. A replay of the conference call will be available through December 3, 2004 via http://www.uticorporation.com/ or by telephone at (800) 299-7098 pass code 35222658.
About UTI Corporation and MDMI
UTI Corporation through its wholly owned subsidiary MDMI provides fully integrated contract manufacturing and design services to medical device manufacturers in the cardiology, endoscopy and orthopedic markets. UTI has broad capabilities in design & engineering services, precision component fabrication, finished device assembly and complete supply chain management. This enhances customers speed to market and return on investment, by allowing companies to refocus internal resources more efficiently. For more information please visit http://www.uticorporation.com/.
For further information, please contact: Investors, Stewart A. Fisher, EVP and CFO of UTI Corporation, +1-610-409-2225, fishersa@uticorporation.com; or Media, Nanette Pietroforte of FischerHealth, Inc., +1-310-577-7870, ext. 161, npietroforte@fischerhealth.com, for Medical Device Manufacturing, Inc.
Medical Device Manufacturing, Inc. Consolidated Statements of Operations (in thousands) (unaudited) Three Months Ended Pro Forma Sept. 30, 2004 Sept. 30, 2003 Sept. 30, 2003 Net Sales $100,338 $89,008 $45,192 Cost of Sales 77,497 65,195 31,579 Gross Profit 22,841 23,813 13,613 Selling, General & Admin. Expenses 14,106 15,886 8,079 Research & Development Expenses 847 635 635 Restructuring and Other Charges 2,107 1,525 129 Amortization of Intangibles 1,487 1,640 1,398 Income From Operations 4,294 4,127 3,372 Interest Expense, Net 7,382 7,188 3,984 Other Expense 19 3 3 Losses Before Income Taxes (3,107) (3,064) (615) Income Tax Expense (Benefit) 1,284 (1,284) (241) Net Loss $(4,391) $(1,180) $(374) Medical Device Manufacturing, Inc. Reconciliation of Net Loss to EBITDA to Adjusted EBITDA (in thousands) (unaudited) Three Months Ended Pro Forma Sept. 30, 2004 Sept. 30, 2003 Sept. 30, 2003 Net Loss $(4,391) $(1,180) $(374) Income Tax Expense 1,284 (1,284) (241) Interest Expense, net 7,382 7,188 3,984 Depreciation and Amortization 5,285 5,653 3,028 EBITDA (1) $9,560 $9,777 $6,397 Inventory Step-up 3,201 -- -- Restructuring and Other Charges 2,107 1,614 218 Executive Officer Transition -- 1,572 1,572 Non-Cash Equity Related Charges 55 (285) (443) Adjusted EBITDA (1) $14,923 $12,678 $7,744 Medical Device Manufacturing, Inc. Consolidated Statements of Operations (in thousands) (unaudited) Nine Months Ended Pro Forma Pro Forma Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 Net Sales $212,485 $128,052 $306,259 $266,136 Cost of Sales 155,155 88,891 226,199 191,778 Gross Profit 57,330 39,161 80,060 74,358 Selling, General & Admin. Expenses 30,681 21,224 45,837 47,405 Research & Development Expenses 2,023 1,938 2,023 1,938 Restructuring and Other Charges 2,107 1,533 4,689 46,653 Amortization of Intangibles 3,937 3,602 4,421 4,328 Income From Operations 18,582 10,864 23,090 (25,966) Interest Expense, Net 19,397 12,825 21,713 21,555 Other Expense 3,284 (5) (105) 106 Losses Before Income Taxes (4,099) (1,956) 1,482 (47,627) Income Tax Expense (Benefit) 2,341 (763) 2,624 (3,295) Net Loss $(6,440) $(1,193) $(1,142) $(44,332) Medical Device Manufacturing, Inc. Reconciliation of Net Loss to EBITDA to Adjusted EBITDA (in thousands) (unaudited) Nine Months Ended Pro Forma Pro Forma Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2004 2003 2004 2003 Net Loss $(6,440) $(1,193) $(1,142) $(44,333) Income Tax Expense 2,341 (763) 2,624 (3,295) Interest Expense, net 19,397 12,825 21,713 21,555 Depreciation and Amortization 11,289 8,602 16,094 16,489 EBITDA (1) 26,587 19,471 39,289 (9,583) Inventory Step-up 3,397 -- 3,397 -- Impairment of Goodwill -- -- -- 40,000 Debt Prepayment Penalty 3,295 -- -- -- Restructuring and Other Charges 2,107 1,610 4,689 6,730 Executive Officer Transition -- 1,572 -- 1,572 Non-Cash Equity Related Charges 161 (332) 460 167 Gain on sale of property (118) -- (118) -- Adjusted EBITDA (1) 35,429 22,321 47,717 38,886 Medical Device Manufacturing, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) Sept. 30, 2004 Dec. 31, 2003 Assets Current Assets Cash and Cash Equivalents $7,403 $3,974 Accounts Receivable, Net 50,913 20,661 Inventories 62,321 28,776 Prepaid Expenses 4,713 1,764 Total Current Assets 125,350 55,175 Property and Equipment, Net 84,110 39,258 Goodwill, Net 300,346 113,855 Intangibles 75,280 68,813 Other Assets, Net 16,604 2,034 Total Assets $601,690 $279,135 Liabilities and stockholder’s equity Current Liabilities Current Portion of Long-Term Debt $1,963 $12,370 Accounts Payable 20,465 7,574 Accrued Expenses 46,869 52,595 Total Current Liabilities 69,297 72,539 Notes Payable and Long-Term Debt 366,580 123,876 Other Long-Term Liabilities 28,353 13,314 Total Liabilities 464,230 209,729 Redeemable Preferred Stock 30 12,593 Stockholder’s Equity 137,430 56,813 Total Liabilities and Stockholder’s Equity $601,690 $279,135 (1) The Company defines Adjusted EBITDA as EBITDA (net income (loss) before net interest expense, income tax expense, depreciation and amortization) plus (i) expenses (minus gains) that we do not consider reflective of our ongoing operations and (ii) certain non cash compensation charges. As presented, Adjusted EBITDA includes inventory step-up, restructuring and other charges, executive officer transition and certain non-cash equity related charges and, for the nine month periods presented, also impairment of goodwill and gain on the sale of property. We use EBITDA and Adjusted EBITDA as a supplemental measure of our performance. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider EBITDA and Adjusted EBITDA in isolation, or as a substitute for analysis of our results as reported under GAAP. We present EBITDA and Adjusted EBITDA because we consider them important supplemental measures of the Company’s performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of high yield issuers, many of which present EBITDA and/or Adjusted EBITDA when reporting their results. (2) We have presented pro forma results of operations for the periods presented because (i) our 2003 historical results do not include operating results for MedSource, (ii) our 2004 historical results do not include a full nine months of operating results for MedSource for the nine months ended September 30, 2004, and (iii) our capital structure changed significantly on June 30, 2004 as a result of the MedSource acquisition and related financing and other transactions described below. Accordingly, we believe the pro forma results of operations presented herein are useful in understanding our 2004 operating results. The Company’s pro forma results of operations for the periods presented give effect to the following transactions as if they had occurred on January 1, 2003: the Venusa acquisition which occurred February 28, 2003; the MedSource Acquisition and related payment of MedSource’s then existing debt; the payment of the Company’s old senior secured credit facility and senior subordinated indebtedness and UTI’s old senior indebtedness; the borrowings under our new senior secured credit facility; the issuance of the Company’s $175 million principal amount 10% senior subordinated notes due 2012; and the payment of fees and expenses related to the foregoing. Such information is presented for comparative purposes only and does not purport to represent what our results of operations would actually have been had these transactions occurred on the date indicated or to project our results of operations for any future period or date. The basis for the Company’s pro forma results is detailed in its registration statement on Form S-4, as amended, filed with the Securities and Exchange Commission (Commission File No. 333-118675).
Medical Device Manufacturing, Inc.
CONTACT: Investors, Stewart A. Fisher, EVP and CFO of UTI Corporation,+1-610-409-2225, fishersa@uticorporation.com; or Media, Nanette Pietroforte ofFischerHealth, Inc., +1-310-577-7870, ext. 161,npietroforte@fischerhealth.com, for Medical Device Manufacturing, Inc.
Web site: http://www.uticorporation.com/
