RICHMOND, Va., Nov. 3 /PRNewswire-FirstCall/ -- Colfax Corporation
(NYSE: CFX), a global leader in fluid-handling solutions for
critical applications, today announced preliminary financial
results for the third quarter ended October 2, 2009. The
preliminary results do not reflect any potential adjustments from
the favorable asbestos ruling on October 14, 2009 for the Company's
Warren Pumps subsidiary. The Company expects additional information
related to this matter to become available prior to filing its
third quarter Form 10-Q with the SEC on or before November 16,
2009. Any adjustments that result from the Company's evaluation of
this information will be reflected in the Company's financial
statements included in its third quarter Form 10-Q. On a
year-over-year basis, highlights for the quarter and the first nine
months of 2009 include: Third quarter of 2009 (all comparisons
versus the third quarter of 2008) -- Net income of $1.8 million (4
cents per share - basic and diluted) including restructuring and
other related charges of $9.6 million; adjusted net income (as
defined below) of $10.0 million (23 cents per share), a decrease of
17.6% including negative currency effects of 1 cent per share --
Net sales of $128.5 million, a decrease of 16.2%; organic sales
decline (as defined below) of 12.0% -- Operating income of $3.7
million; adjusted operating income (as defined below) of $16.5
million, a decrease of 18.7% including negative currency effects of
$0.8 million -- EBITDA (as defined below) of $7.4 million; adjusted
EBITDA (as defined below) of $20.2 million, a decrease of 15.9%
including negative currency effects of $1.0 million -- Third
quarter orders of $124.3 million, a decrease of 28.5%; organic
order decline (as defined below) of 25.5% -- Backlog of $298.0
million at period end Year-to-date 2009 (all comparisons versus the
first nine months of 2008) -- Net income of $13.0 million (30 cents
per share - basic and diluted) including restructuring and other
related charges of $10.8 million; adjusted net income (as defined
below) of $28.9 million (67 cents per share), a decrease of 20.2%
including negative currency effects of 10 cents per share -- Net
sales of $394.1 million, a decrease of 11.6%; organic sales decline
(as defined below) of 2.5% -- Operating income of $23.8 million;
adjusted operating income (as defined below) of $47.9 million, a
decrease of 23.0% including negative currency effects of $6.4
million -- EBITDA (as defined below) of $34.4 million; adjusted
EBITDA (as defined below) of $58.5 million, a decrease of 20.4%
including negative currency effects of $7.2 million -- Orders for
the nine month period of $349.2 million, a decrease of 35.7%;
organic order decline (as defined below) of 29.9% Adjusted net
income, adjusted net income per share, adjusted operating income,
EBITDA, adjusted EBITDA, organic sales growth (decline) and organic
order growth (decline) 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 preliminary GAAP financial measures. "We are
pleased with our performance in this challenging environment," said
John Young, president and CEO of Colfax Corporation. "While overall
sales were down, our Navy and power generation businesses showed
good growth over last year's third quarter. On a sequential basis,
our organic orders were up 15% driven by increases in the
commercial marine, Navy, power generation and general industrial
markets. Backlog is also up slightly since the end of the second
quarter. We're continuing to streamline our operations and reduce
our cost structure. We've made significant progress on our cost
reduction initiatives and have reduced headcount by about 15%. We
expect to realize savings of approximately $16 million in 2009 or
about $22 million on an annualized basis. The benefits of our
efforts are evident in our margins. Our gross profit margin was up
40 basis points and we maintained our adjusted EBITDA margin
despite 16% lower sales than last year." He added, "We're
encouraged by the recent improvement in our order book but we are
continuing to have push-outs of project deliveries. Given the
uncertain economic environment, we remain cautious on our outlook.
Our strong balance sheet provides us the flexibility to weather
current conditions while pursuing acquisitions and organic growth
initiatives. Our strategy remains unchanged - we're focused on
providing unmatched expert solutions to our global customer base
while aligning capacity to meet demand. We're well positioned to
enhance profitability and our competitive position as conditions
improve." "Based on variable project timing and estimated mix,
we've lowered our projected sales and adjusted eps ranges for 2009.
We now expect sales to be down organically 8% to 10% and expect
adjusted eps to be $.88 to $.94." Non-GAAP Financial Measures
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, EBITDA, adjusted EBITDA, organic
sales growth (decline) and organic order growth (decline). Adjusted
net income, adjusted net income per share, adjusted operating
income and adjusted EBITDA exclude asbestos liability and defense
costs (income) and asbestos coverage litigation expenses, certain
legacy legal charges, certain due diligence costs, restructuring
and other related charges as well as one time initial public
offering-related costs to the extent they impact the periods
presented. Adjusted net income also reflects interest expense as if
the initial public offering (IPO) had occurred at the beginning of
2007 and presents income taxes at an effective tax rate of 32% in
2009 and 34% in 2008. Adjusted net income per share in 2008 assumes
the 44,006,026 shares outstanding at the closing of the IPO to be
outstanding since January 1, 2007. Projected adjusted net income
per share excludes actual and estimated restructuring and other
related charges, asbestos coverage litigation expenses and asbestos
liability and defense costs. 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 changes in our capital structure and asset base,
non-recurring items such as IPO-related costs, legacy asbestos
issues (except in the case of EBITDA) and items outside the control
of its operating management team. 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
preliminary 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
and business strategy on Tuesday, November 3 at 8:00 a.m. ET. The
call will be open to the public through 877-718-5106 or
719-325-4871 and webcast via Colfax's website at
http://www.colfaxcorp.com/ under the "Investor Relations" 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 global leader in
critical fluid-handling products and technologies. Through its
global operating subsidiaries, Colfax manufactures positive
displacement industrial pumps and valves used in oil & gas,
power generation, commercial marine, global naval and general
industrial markets. Colfax's operating subsidiaries supply products
under the well-known brands Allweiler, Fairmount Automation,
Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren and Zenith.
Colfax is traded on the NYSE under the ticker "CFX." Additional
information about Colfax is available at
http://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
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 as
well as its 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 this date. 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. Colfax Corporation Condensed
Consolidated Statements of Operations Dollars in thousands, except
per share data (Preliminary(1) and unaudited) Three Months Ended
Nine Months Ended October 2, September 26, October 2, September 26,
2009 2008 2009 2008 ---- ---- ---- ---- Net sales $128,545 $153,461
$394,053 $445,543 Cost of sales 82,339 98,983 255,277 286,110
------ ------ ------- ------- Gross profit 46,206 54,478 138,776
159,433 Initial public offering related costs - - - 57,017 Selling,
general and administrative expenses 28,136 33,233 86,248 97,516
Research and development expenses 1,523 1,478 4,610 4,430
Restructuring and other related charges 9,608 - 10,755 - Asbestos
liability and defense costs (income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage litigation expenses 1,845 5,148 8,838 12,257
----- ----- ----- ------ Operating income (loss) 3,717 20,931
23,821 (5,038) Interest expense 1,834 1,951 5,466 9,684 ----- -----
----- ----- Income (loss) before income taxes 1,883 18,980 18,355
(14,722) Provision (benefit) for income taxes 64 5,329 5,309
(3,772) -- ----- ----- ------ Net income (loss) $1,819 $13,651
$13,046 $(10,950) ====== ======= ======= ======== Net income (loss)
per share-basic and diluted $0.04 $0.31 $0.30 $(0.43) ===== =====
===== ====== (1) The preliminary financial results as of and for
the three and nine months ended October 2, 2009 reflect
management's best estimate of the Company's net asbestos liability
based upon information currently available. The preliminary results
do not reflect any potential adjustments from the favorable
asbestos ruling on October 14, 2009 for the Company's Warren Pumps
subsidiary. The Company expects additional information related to
this matter to become available prior to filing its third quarter
Form 10-Q with the SEC on or before November 16, 2009. Any
adjustments that result from the Company's evaluation of this
information will be reflected in the Company's financial statements
included in its third quarter Form 10-Q. Colfax Corporation
Condensed Consolidated Balance Sheets Dollars in thousands
(Preliminary(1) and unaudited) October 2, December 31, 2009 2008
---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents $50,833
$28,762 Trade receivables, less allowance for doubtful accounts
89,601 101,064 Inventories, net 77,369 80,327 Asbestos insurance
asset 26,031 26,473 Asbestos insurance receivable 34,972 36,371
Other current assets 21,589 21,860 ------ ------ Total current
assets 300,395 294,857 Deferred income taxes, net 51,576 53,428
Property, plant and equipment, net 93,060 92,090 Goodwill and
intangible assets, net 180,613 179,046 Long-term asbestos insurance
asset 267,396 277,542 Deferred loan costs, pension and other assets
16,594 16,113 ------ ------ Total assets $909,634 $913,076 ========
======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES:
Current portion of long-term debt and capital leases $7,698 $5,420
Accounts payable 37,992 52,138 Accrued asbestos liability 28,103
28,574 Other accrued liabilities 71,600 68,154 ------ ------ Total
current liabilities 145,393 154,286 Long-term debt, less current
portion 85,236 91,701 Long-term asbestos liability 316,218 328,684
Pension and accrued post-retirement benefits 129,663 130,188 Other
liabilities 40,055 41,286 ------ ------ Total liabilities 716,565
746,145 Shareholders' equity 193,069 166,931 ------- ------- Total
liabilities and shareholders' equity $909,634 $913,076 ========
======== (1) The preliminary financial results as of and for the
three and nine months ended October 2, 2009 reflect management's
best estimate of the Company's net asbestos liability based upon
information currently available. The preliminary results do not
reflect any potential adjustments from the favorable asbestos
ruling on October 14, 2009 for the Company's Warren Pumps
subsidiary. The Company expects additional information related to
this matter to become available prior to filing its third quarter
Form 10-Q with the SEC on or before November 16, 2009. Any
adjustments that result from the Company's evaluation of this
information will be reflected in the Company's financial statements
included in its third quarter Form 10-Q. Colfax Corporation
Condensed Consolidated Statement of Cash Flows Dollars in thousands
(Preliminary(1) and unaudited) Nine Months Ended October 2,
September 26, 2009 2008 ---- ---- Cash flows from operating
activities: Net income (loss) $13,046 $(10,950) Adjustments to
reconcile net income to cash provided by operating activities:
Depreciation, amortization and fixed asset impairment charges
11,240 11,345 Noncash stock-based compensation 1,970 10,814 Other
adjustments for non-cash items 474 5,430 Deferred income taxes 362
(18,063) Changes in working capital 6,087 (26,315) Changes in other
operating assets and liabilities 823 (2,952) --- ------ Net cash
provided by (used in) operating activities 34,002 (30,691) Cash
flows from investing activities: Purchases of fixed assets (7,779)
(13,329) Acquisitions, net of cash received (1,260) - Proceeds from
sale of fixed assets 238 23 --- -- Net cash used in investing
activities (8,801) (13,306) Cash flows from financing activities:
Borrowings under term credit facility - 100,000 Payments under term
credit facility (3,750) (207,778) Proceeds from borrowings on
revolving credit facilities - 28,185 Repayments of borrowings on
revolving credit facilities - (28,158) Proceeds from the issuance
of common stock, net of offering costs - 193,020 Dividends paid to
preferred shareholders - (38,546) Other (447) (3,446) ---- ------
Net cash (used in) provided by financing activities (4,197) 43,277
Effect of exchange rates on cash 1,067 556 ----- --- Increase
(decrease) in cash and cash equivalents 22,071 (164) Cash and cash
equivalents, beginning of year 28,762 48,093 ------ ------ Cash and
cash equivalents, end of year $50,833 $47,929 ======= ======= (1)
The preliminary financial results as of and for the three and nine
months ended October 2, 2009 reflect management's best estimate of
the Company's net asbestos liability based upon information
currently available. The preliminary results do not reflect any
potential adjustments from the favorable asbestos ruling on October
14, 2009 for the Company's Warren Pumps subsidiary. The Company
expects additional information related to this matter to become
available prior to filing its third quarter Form 10-Q with the SEC
on or before November 16, 2009. Any adjustments that result from
the Company's evaluation of this information will be reflected in
the Company's financial statements included in its third quarter
Form 10-Q. Colfax Corporation Reconciliation of GAAP to non-GAAP
Financial Measures Dollars in thousands, except per share data
(Preliminary(1) and unaudited) Three Months Ended Nine Months Ended
October 2, September 26, October 2, September 26, 2009 2008 2009
2008 ---- ---- ---- ---- EBITDA Net income (loss) $1,819 $13,651
$13,046 $(10,950) Interest expense 1,834 1,951 5,466 9,684
Provision (benefit) for income taxes 64 5,329 5,309 (3,772)
Depreciation and amortization 3,681 3,695 10,592 11,345 ----- -----
------ ------ EBITDA $7,398 $24,626 $34,413 $6,307 ====== =======
======= ====== EBITDA margin 5.8% 16.0% 8.7% 1.4% Adjusted EBITDA
Net income (loss) $1,819 $13,651 $13,046 $(10,950) Interest expense
1,834 1,951 5,466 9,684 Provision(benefit) for income taxes 64
5,329 5,309 (3,772) Depreciation and amortization 3,681 3,695
10,592 11,345 Restructuring and other related charges 9,608 -
10,755 - IPO-related costs - - - 57,017 Legacy legal adjustment - -
- 4,131 Due diligence costs - 582 - 582 Asbestos liability and
defense costs (income) 1,377 (6,312) 4,504 (6,749) Asbestos
coverage litigation expense 1,845 5,148 8,838 12,257 ----- -----
----- ------ Adjusted EBITDA $20,228 $24,044 $58,510 $73,545
======= ======= ======= ======= Adjusted EBITDA margin 15.7% 15.7%
14.8% 16.5% Adjusted Net Income and Adjusted Earnings per Share Net
income (loss) $1,819 $13,651 $13,046 $(10,950) Restructuring and
other related charges 9,608 - 10,755 - IPO-related costs - - -
57,017 Legacy legal adjustment - - - 4,131 Due diligence costs -
582 - 582 Asbestos liability and defense costs (income) 1,377
(6,312) 4,504 (6,749) Asbestos coverage litigation expense 1,845
5,148 8,838 12,257 Interest adjustment to effect IPO at beginning
of period - - - 2,302 Tax adjustment to effective rate of 32% and
34%, respectively (4,644) (926) (8,276) (22,410) ------ ---- ------
------- Adjusted net income $10,005 $12,143 $28,867 $36,180 =======
======= ======= ======= Adjusted net income margin 7.8% 7.9% 7.3%
8.1% Weighted average shares outstanding - diluted 43,324,995 -
43,274,177 - Shares outstanding at closing of IPO - 44,006,026 -
44,006,026 Adjusted net income per share $0.23 $0.28 $0.67 $0.82
===== ===== ===== ===== Net income per share-basic and diluted in
accordance with GAAP $0.04 $0.31 $0.30 $(0.43) ===== ===== =====
====== Adjusted Operating Income Operating income (loss) $3,717
$20,931 $23,821 $(5,038) Restructuring and other related charges
9,608 - 10,755 - IPO-related costs - - - 57,017 Legacy legal
adjustment - - - 4,131 Due diligence costs - 582 - 582 Asbestos
liability and defense costs (income) 1,377 (6,312) 4,504 (6,749)
Asbestos coverage litigation expense 1,845 5,148 8,838 12,257 -----
----- ----- ------ Adjusted operating income $16,547 $20,349
$47,918 $62,200 ======= ======= ======= ======= Adjusted operating
income margin 12.9% 13.3% 12.2% 14.0% (1) The preliminary financial
results as of and for the three and nine months ending October 2,
2009 reflect management's best estimate of the Company's net
asbestos liability based upon information currently available. The
preliminary results do not reflect any potential adjustments from
the favorable asbestos ruling on October 14, 2009 for the Company's
Warren Pumps subsidiary. The Company expects additional information
related to this matter to become available prior to filing its
third quarter Form 10-Q with the SEC on or before November 16,
2009. Any adjustments that result from the Company's evaluation of
this information will be reflected in the Company's financial
statements included in its third quarter Form 10-Q. Colfax
Corporation Sales and Orders Growth Dollars in millions (unaudited)
Sales Orders $ % $ % ------ ----- ------ ----- Three Months Ended
September 26, 2008 $153.5 $173.8 Components of Change: Existing
Businesses (18.4) (12.0)% (44.3) (25.5)% Acquisitions 0.5 0.3% 0.4
0.2% Foreign Currency Translation (7.1) (4.6)% (5.6) (3.2)% -----
----- Total (25.0) (16.2)% (49.5) (28.5)% ------ ------ Three
Months Ended October 2, 2009 $128.5 $124.3 ====== ====== Sales
Orders Backlog at $ % $ % Period End ------ ----- ------ -----
---------- Nine Months Ended September 26, 2008 $445.5 $542.9
$383.1 Components of Change: Existing Businesses (11.4) (2.5)%
(162.6) (29.9)% (83.9) (21.9)% Acquisitions 0.5 0.1% 0.4 0.1% 0.5
0.1% Foreign Currency Translation (40.5) (9.1)% (31.5) (5.8)% (1.7)
(0.4)% ----- ------ ----- Total (51.4) (11.6)% (193.7) (35.7)%
(85.1) (22.2)% ------ ------ ------ Nine Months Ended October 2,
2009 $394.1 $349.2 $298.0 ====== ====== ====== Colfax Corporation
Reconciliation of Projected 2009 Net Income Per Share(1) to
Adjusted Net Income Per Share Amounts in Dollars (unaudited) EPS
Range --------- Projected net income per share - fully diluted
$0.35 $0.41 Restructuring and other related charges incurred year-
to-date 0.17 0.17 Estimated fourth quarter restructuring and other
related charges(2) 0.06 0.06 Asbestos coverage litigation 0.19 0.19
Asbestos liability and defense costs 0.11 0.11 ---- ---- Projected
adjusted net income per share - fully diluted $0.88 $0.94 =====
===== (1) Does not reflect any potential adjustments from the
favorable asbestos ruling on October 14, 2009 for the Company's
Warren Pumps subsidiary. The Company expects additional information
related to this matter to become available prior to filing its
third quarter Form 10-Q with the SEC on or before November 16,
2009. Any adjustments that result from the Company's evaluation of
this information will be reflected in the Company's financial
statements included in its third quarter Form 10-Q. (2) Represents
estimated costs related to restructuring actions implemented
through November 3, 2009. DATASOURCE: Colfax Corporation CONTACT:
Mitzi Reynolds, Vice President, Investor Relations of Colfax
Corporation, +1-804-327-5689 Web Site: http://www.colfaxcorp.com/
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