WARSAW, Ind., Nov. 1 /PRNewswire-FirstCall/ -- Symmetry Medical Inc. , a leading independent provider of products to the global orthopedic device industry, announced today financial results for the three-month and nine-month periods ended September 30, 2006.
The Company reported third quarter 2006 revenue of $60.7 million, a decrease of 9.7% from the third quarter of 2005. The Company’s third quarter revenue included $5.4 million from Riley Medical, which was acquired by the Company on May 1, 2006, and $0.6 million from Everest Metal, which was acquired on August 31, 2006.
Gross profit for the third quarter of 2006 was $13.6 million, a 30.9% decrease from gross profit of $19.7 million for the third quarter of 2005. Gross margin for the third quarter 2006 was 22.5%, compared to a gross margin of 29.4% for the third quarter 2005. The lower gross margin rate was primarily a result of higher fixed costs from the Company’s 2005 expansion across its global facilities, 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. These fixed costs have had an adverse, short term effect on the Company’s gross margins.
Operating income for the third quarter of 2006 was $6.2 million, a 49.2% decrease from operating income of $12.3 million for the third quarter of 2005. Operating margin for the third quarter 2006 was 10.3%, compared to an operating margin of 18.3% for the third quarter 2005.
Income before income taxes for the third quarter of 2006 was $3.8 million, a 64.6% decrease from income before income taxes of $10.8 million for the third quarter of 2005. The Company’s third quarter 2006 income before income taxes was negatively impacted by a non-cash expense of $1.1 million due to the revaluation of an interest rate swap.
Net income for the third quarter 2006 was $3.0 million, or $0.09 per diluted share, compared to a net income of $8.2 million, or $0.24 per diluted share, for the third quarter 2005. Excluding the non-cash expense for the revaluation of an interest rate swap, net income was $3.7 million or $0.11 per diluted share.
The weighted average number of diluted shares outstanding during the third quarter of 2006 was 35,171,000.
The Company reported revenue of $195.1 million for first nine months of 2006, a decrease of 3.0% from the same period of 2005. The Company’s nine-month revenue included $8.8 million from Riley Medical, which was acquired by the Company on May 1, 2006, and $0.6 million from Everest Metal, which was acquired on August 31, 2006.
Gross profit for the first nine months of 2006 was $50.9 million, a 16.0% decrease from gross profit of $60.6 million for the same period of 2005. Gross margin for the first nine months of 2006 was 26.1%, compared to a gross margin of 30.1% for the same period of 2005. The lower gross margin rate was primarily a result of higher fixed costs from the Company’s 2005 expansion across its global facilities, as well as sales reductions, which were more pronounced in the higher margin products within each of the Company’s product segments.
Operating income for the first nine months of 2006 was $29.5 million, a 25.1% decrease from operating income of $39.4 million for the same period of 2005. Operating margin for the first nine months of 2006 was 15.1%, compared to an operating margin of 19.6% for the same period of 2005.
Income before income taxes for the first nine months of 2006 was $27.4 million, a 22.7% decrease from income before income taxes of $35.4 million for the first nine months of 2005. The 2006 income before income taxes includes a $1.2 million gain on the sale of surplus land adjacent to the Company’s Sheffield, UK facility and a non-cash expense of $1.2 million resulting from the revaluation of an interest rate swap.
Net income for the first nine months of 2006 was $19.0 million, or $0.54 per diluted share, compared to a net income of $24.5 million, or $0.71 per diluted share, for the same period of 2005.
The weighted average number of diluted shares outstanding during the first nine months of 2006 was 35,162,000.
Brian Moore, President and Chief Executive Officer, stated, “Our third quarter financial results were below our expectations and reflect slower growth throughout the orthopedic industry. Slower industry growth disproportionately impacts our customers’ demand on the supply chain. We expect a recovery in 2007, although it is difficult to determine its pace and scale at this time.”
Mr. Moore continued, “Our focus continues to be on staying close to our customers. We also continue to strengthen our business through prudent investments and exploring acquisition opportunities. We are particularly pleased with the expansion of our customer base with 80 new customers year to date bringing our total customer base to over 800.”
Financial Guidance
The following estimates regarding 2006 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 that appears at the end of the release.
Based on the third quarter 2006 results, the Company is adjusting its full year 2006 financial guidance. It now expects full year 2006 revenue to be in the range of $253 million to $260 million. The Company expects full year 2006 earnings per diluted share in the range of $0.66 to $0.70.
Conference Call
Symmetry Medical will host a conference call at 8:00 a.m. EST on Thursday, November 2, 2006. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website at http://www.symmetrymedical.com. The dial-in numbers are (866) 831-6291 for domestic callers and (617) 213-8860 for international callers. The reservation number for both is 12006750. After the live webcast, the call will remain available on Symmetry’s Web site through November 30, 2006. In addition, a telephonic replay of the call will be available until November 16, 2006. The replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 25739287.
About Symmetry Medical Inc.
Symmetry Medical Inc. is an 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: The Ruth Group Stephanie Carrington/Jason Rando 646-536-7017/7025 scarrington@theruthgroup.comjrando@theruthgroup.com Contact: Symmetry Medical Inc. Andrew Miclot Senior Vice President Marketing, Sales & Business Development Investor Relations Officer 574-269-7390 ext. 1002 Symmetry Medical Inc. Consolidated Balance Sheets September 30, December 31, 2006 2005 (In Thousands, Except Per Share Data) (unaudited) Assets: Current Assets: Cash and cash equivalents $9,616 $12,471 Accounts receivables, net 48,278 44,908 Inventories 44,867 38,783 Refundable income taxes 221 185 Deferred income taxes 2,345 1,867 Derivative valuation asset - 414 Other current assets 2,893 4,032 Total current assets 108,220 102,660 Property and equipment, net 103,350 93,106 Derivative valuation asset - 170 Goodwill 154,037 124,518 Intangible assets, net of accumulated amortization 33,574 16,327 Other assets 1,061 864 Total Assets $400,242 $337,645 Liabilities and Shareholders’ Equity: Current Liabilities: Accounts payable $16,494 $18,983 Accrued wages and benefits 8,815 10,997 Derivative valuation liability 496 - Other accrued expenses 3,105 2,696 Income tax payable - 1,241 Deferred income taxes 112 - Revolving line of credit 4,682 - Current portion of capital lease obligations 2,846 3,239 Current portion of long-term debt 3,700 1,313 Total current liabilities 40,250 38,469 Deferred income taxes 11,743 11,139 Derivative valuation liability 600 - Capital lease obligations, less current portion 6,196 8,532 Long-term debt, less current portion 60,500 26,250 Total Liabilities 119,289 84,390 Shareholders’ Equity: Common Stock, $.0001 par value; 72,410 shares authorized; shares issued (September 30, 2006--35,100; December 31, 2005--34,704) 4 3 Additional paid-in capital 271,022 268,973 Retained earnings (deficit) 1,670 (17,378) Accumulated other comprehensive income 8,257 1,657 Total Shareholders’ Equity 280,953 253,255 Total Liabilities and Shareholders’ Equity $400,242 $337,645 Symmetry Medical Inc. Consolidated Statements of Operations Three Months Ended Nine Months Ended Sept. 30, Oct. 1, Sept. 30, Oct. 1, 2006 2005 2006 2005 (In Thousands, Except Per Share Data) (unaudited) (unaudited) (unaudited)(unaudited) Revenue $60,740 $67,228 $195,113 $201,165 Cost of Revenue 47,093 47,486 144,239 140,593 Gross Profit 13,647 19,742 50,874 60,572 Selling, general, and administrative expenses 7,410 7,455 21,341 21,157 Operating Income 6,237 12,287 29,533 39,415 Other (income) expense: Interest expense 1,350 635 2,936 2,347 Derivatives valuation (gain)/loss 1,273 (65) 1,680 (172) Other (203) 927 (2,482) 1,811 Income before income taxes 3,817 10,790 27,399 35,429 Income tax expense 826 2,567 8,351 10,922 Net income applicable to common shareholders $2,991 $8,223 $19,048 $24,507 Net income (loss) applicable to common shareholders per share: Basic $0.09 $0.24 $0.55 $0.73 Diluted $0.09 $0.24 $0.54 $0.71 Weighted average common shares and equivalent shares outstanding: Basic 34,841 34,310 34,796 33,575 Diluted 35,171 34,987 35,162 34,526
Symmetry Medical Inc.
CONTACT: Investors, Stephanie Carrington, +1-646-536-7017,scarrington@theruthgroup.com, or Media, Jason Rando, +1-646-536-7025,jrando@theruthgroup.com, both of The Ruth Group, for Symmetry Medical Inc.;or Andrew Miclot, Senior Vice President Marketing, Sales & BusinessDevelopment, Investor Relations Officer of Symmetry Medical Inc.,+1-574-269-7390, ext. 1002
Web site: http://www.symmetrymedical.com/
