WARSAW, Ind., Feb. 8 /PRNewswire-FirstCall/ -- Symmetry Medical Inc. , a leading independent provider of products to the global orthopedic device industry, announced today fourth quarter and full year 2006 financial results for the period ended December 30, 2006.
The Company reported fourth quarter 2006 revenue of $58.5 million, a decrease of 6.6% from the fourth quarter of 2005 and a decrease of 3.8% from the third quarter 2006. The Company's fourth quarter revenue included $5.6 million from Riley Medical, which was acquired by the Company on May 2, 2006, and $1.8 million from Everest Metal, which was acquired on August 31, 2006.
Gross margin reported for the fourth quarter 2006 was 24.3%, a decrease of 440 basis points from the fourth quarter of 2005, however, an increase of 180 basis points from the third quarter 2006 when the gross margin was 22.5%. The improved gross margin from the third quarter 2006 was driven by cost reductions in response to lower second half 2006 volume.
Net income for the fourth quarter 2006 was $5.1 million, or $0.15 per diluted share, compared to a net income of $7.3 million, or $0.21 per diluted share, for the fourth quarter 2005. On a sequential quarter basis, net income was up 70.5% from the $3.0 million reported in the third quarter of 2006. Net income for the fourth quarter 2006 was positively impacted by lower income tax expense attributable primarily to a federal research and development tax credit of $0.6 million and an Indiana State tax credit of $0.4 million. This compares to $0.3 million from a federal research and development tax credit recorded in the fourth quarter of 2005.
The Company reported total year 2006 revenue of $253.6 million, a decrease of 3.9% from total year 2005. Net income for the total year 2006 was $24.1 million, a decrease of 24.2% driven by lower utilization of the fixed costs, as well as sales reductions which were more pronounced in the higher margin products within each of the Company's product segments. As a leader in the orthopedic outsourcing industry, the Company is sustaining its capacity and ability to meet a return to higher levels of activity. Total year 2006 earnings per diluted share was $0.69 compared to $0.92 for full year 2005.
In December 2006, Symmetry Medical opened a 15,000 square foot manufacturing facility in Malaysia to support its growing customer base in Asia and to facilitate greater expansion in the region. Initially, the facility will focus on manufacturing cases. The Company believes the long-term benefits of increasing its case manufacturing presence in Asia will assist in market penetration and expanded customer relationships within the region.
On January 9, 2007, Symmetry acquired Clamonta Limited, a leading supplier of precision products to the global aerospace industry based in Warwickshire, United Kingdom. The transaction expands Symmetry's aerospace offering and product expertise, providing a more complete Total Solutions(R) offering to major aerospace customers.
Brian Moore, President and Chief Executive Officer, stated, "While we continue to experience the extended effects of the slower growth in the orthopedic industry, we believe our business has stabilized and should generate some modest sequential revenue growth in the first quarter of 2007. This stabilization is reflected in the improvement in our gross margin and operating margin, both of which increased on a sequential quarter basis. The European market is generating improved results led by revenues into the United Kingdom, which were up 46.4% in the fourth quarter on a year-over-year basis."
Mr. Moore continued, "We are pleased with the operating results from the Riley and Everest acquisitions completed in 2006, both of which have exceeded our integration expectations. These acquisitions expanded our presence in Ireland and Switzerland, providing two platforms for long-term incremental growth. Our focus remains on being well positioned for a resurgence of growth in our core orthopedics business while capitalizing on our market leadership to diversify into additional medical device markets. Our acquisition of Riley Medical is a key example of this strategy. Riley provided us with increased presence in the spine and endoscopy markets, as well as internationally, and we see additional opportunities for growth. We will also continue to evaluate acquisitions to expand across medical device specialties."
Financial Guidance
The following estimates regarding 2007 earnings guidance are based on current market conditions and foreign currency comparisons and are forward-looking. Actual results may differ materially and we refer you to the statement on forward-looking statements appearing at the end of the release.
For the full year 2007, the Company expects revenue to be in the range of $253 million to $275 million. The Company currently expects full year 2007 earnings per diluted share in the range of $0.73 to $0.80.
AAOS
Symmetry Medical will be participating in the American Academy of Orthopaedic Surgeons (AAOS) 2007 Annual Meeting in San Diego, CA, February 14-16, 2007. Symmetry Medical products and technologies will be located at Booth 1822.
Conference Call
Symmetry Medical will host a conference call at 8:00 a.m. EST on Thursday, February 8, 2007. A live Web cast of the conference call will be available online from the investor relations page of the Company's corporate Web site at http://www.symmetrymedical.com. The dial-in numbers are (866) 362-4829 for domestic callers and (617) 597-5346 for international callers. The reservation number for both is 31251629. After the live Web cast, the call will remain available on Symmetry's Web site through March 8, 2007. In addition, a telephonic replay of the call will be available until February 15, 2007. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 58877836.
About Symmetry Medical Inc.
Symmetry Medical Inc. is a leading independent provider of implants and related instruments and cases to the orthopedic device industry. The Company also designs, develops and produces these products for companies in other segments of the medical device market, including dental, 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," "will," "should," "expect," "believe," "estimate," "intend," and similar words indicating possible future expectations, events or actions. Such predictive statements are not guarantees of future performance, and actual results could differ materially from our current expectations. Certain factors that could cause actual results to differ include: the loss of one or more customers; the development of new products or product innovations by our competitors; product liability; changes in management; changes in conditions effecting the economy, orthopedic device manufacturers or the medical device industry generally; and changes in government regulation of medical devices and third-party reimbursement practices. 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.
Investors/Media: Contact: The Ruth Group Symmetry Medical Inc. Stephanie Carrington/Jason Rando Andrew Miclot 646-536-7017/7025 Senior Vice President scarrington@theruthgroup.com Marketing, Sales & Business Development jrando@theruthgroup.com Investor Relations Officer 574-269-7390 ext. 1002 Symmetry Medical Inc. Consolidated Statements of Operations Three Months Ended Years Ended December December December December 30, 2006 31, 2005 30, 2006 31, 2005 (In Thousands, Except Per Share Data) (unaudited)(unaudited)(unaudited) Revenue $58,456 $62,601 $253,569 $263,766 Cost of Revenue 44,228 44,634 188,467 185,227 Gross Profit 14,228 17,967 65,102 78,539 Selling, general, and administrative expenses 7,099 6,413 28,440 27,570 Operating Income 7,129 11,554 36,662 50,969 Other (income) expense: Interest expense 1,512 607 4,448 2,954 Derivatives valuation (gain)/loss 637 74 2,317 (98) Other (718) 61 (3,201) 1,872 Income before income taxes 5,698 10,812 33,098 46,241 Income tax expense 597 3,519 8,949 14,441 Net income applicable to common shareholders $5,101 $7,293 $24,149 $31,800 Net income applicable to common shareholders per share: Basic $0.15 $0.21 $0.69 $0.94 Diluted $0.15 $0.21 $0.69 $0.92 Weighted average common shares and equivalent shares outstanding: Basic 34,929 34,642 34,829 33,841 Diluted 35,165 35,101 35,156 34,670 Symmetry Medical Inc. Consolidated Balance Sheets December December 30, 2006 31, 2005 (In Thousands, Except Per Share Data) (unaudited) Assets: Current Assets: Cash and cash equivalents $11,721 $12,471 Accounts receivables, net 47,506 44,908 Inventories 47,392 38,783 Refundable income taxes 111 185 Deferred income taxes 2,826 1,867 Derivative valuation asset - 414 Other current assets 3,965 4,032 Total current assets 113,521 102,660 Property and equipment, net 106,147 93,106 Derivative valuation asset - 170 Goodwill 156,241 124,518 Intangible assets, net of accumulated amortization 33,257 16,327 Other assets 981 864 Total Assets $410,147 $337,645 Liabilities and Shareholders' Equity: Current Liabilities: Accounts payable $14,861 $18,983 Accrued wages and benefits 7,816 10,997 Other accrued expenses 4,104 2,696 Income tax payable 850 1,241 Derivative valuation liability 1,184 - Deferred income taxes 249 - Revolving line of credit - - Current portion of capital lease obligations 3,500 3,239 Current portion of long-term debt 5,550 1,313 Total current liabilities 38,114 38,469 Deferred income taxes 11,832 11,139 Derivative valuation liability 549 - Capital lease obligations, less current portion 5,142 8,532 Long-term debt, less current portion 63,650 26,250 Total Liabilities 119,287 84,390 Shareholders' Equity: Common Stock, $.0001 par value; 72,410 shares authorized; shares issued December 30, 2006 -- 35,107; December 31, 2005 -- 34,704) 4 3 Additional paid-in capital 271,387 268,973 Retained earnings (deficit) 6,771 (17,378) Accumulated other comprehensive income 12,698 1,657 Total Shareholders' Equity 290,860 253,255 Total Liabilities and Shareholders' Equity $410,147 $337,645
Symmetry Medical Inc.CONTACT: Investors/Media: Stephanie Carrington, +1-646-536-7017,scarrington@theruthgroup.com, or Jason Rando, +1-646-536-7025,jrando@theruthgroup.com, both of The Ruth Group; or Andrew Miclot, SeniorVice President, Marketing, Sales & Business Development, Investor RelationsOfficer, of Symmetry Medical Inc., +1-574-269-7390 ext. 1002
Web site: http://www.symmetrymedical.com/
