Symmetry Medical Inc. posted third-quarter sales of $87.2 million during the three months ended Oct. 3, down 22.2 percent compared with $112.1 million during the same period last year. Net income surged 113.5 percent to $5.4 million, compared with $2.5 million during Q3 2008:
Symmetry Medical Reports Third Quarter 2009 Financial Results
– Revenue reduction offset with significant cost reductions
– Third quarter Operating Income down 1% on a 22% revenue reduction, vs prior year
– Third quarter Net Income and EPS increase significantly vs prior year
– Total year guidance adjusted to reflect recent customer demand
WARSAW, Ind., Nov. 5 /PRNewswire-FirstCall/ — Symmetry Medical Inc. (NYSE: SMA), a leading independent provider of products to the global orthopaedic device industry and other medical markets, announced third quarter 2009 financial results for the period ended October 3, 2009.
(in millions, except Third Quarter Vs Prior Quarter share data) 2009 2008 Change 3Q'09 2Q'09 Change ----- ------ ------ ----- ------ ------ Revenue $87.2 $112.1 -22% $87.2 $101.0 -14% Operating Income 10.4 10.5 -1% 10.4 13.5 -23% Net Income 5.4 2.5 116% 5.4 9.0 -40% EPS $0.15 $0.07 114% $0.15 $0.25 -40% Revenue by Product: Instruments $41.3 $48.7 -15% $41.3 $46.9 -12% Implants 24.2 31.5 -23% 24.2 29.9 -19% Cases 16.4 23.0 -29% 16.4 18.9 -13% Other 5.3 8.9 -40% 5.3 5.3 0% ----- ------ ------ ----- ------ ------ Total Revenue $87.2 $112.1 -22% $87.2 $101.0 -14%
Revenue for the third quarter 2009 was $87.2 million, compared to $112.1 million reported in the third quarter 2008. Revenues during the quarter were unfavorably impacted by reduced customer demand across all segments of the business as well as a foreign currency translation effect of $2.7 million.
Gross profit for the third quarter 2009 was $21.2 million, compared to $25.7 million in the third quarter 2008. The year-over-year decrease was driven by lower customer demand as well as a one-time expense of $1.0 million for facility consolidation and staff reductions in the third quarter 2009.
Gross margin percentage for the third quarter 2009 was 24.4% compared to gross margin percentage of 22.9% in the same period last year. Gross margin improved despite the significantly lower volume. Aggressive cost cutting actions as well as significant improvements at the Sheffield, UK operating site drove the increase.
Selling, general and administrative expenses declined in the third quarter 2009 to $10.8 million, a 28.7% reduction from $15.2 million in the third quarter 2008. The year-over-year decrease in the third quarter 2009 was driven primarily by aggressive cost controls as well as a $1.6 million reduction in performance based compensation and restricted stock expense. Additionally, the third quarter 2008 included $0.9 million from Sheffield, UK investigation costs which did not repeat in 2009.
Operating income for the third quarter 2009 was $10.4 million compared to $10.5 million for the third quarter 2008. Operating margin of 12.0% for the third quarter 2009 was up from 9.4% for the third quarter 2008.
The third quarter 2009 included a non-cash gain of $0.2 million for the mark to market of the Company’s interest rate derivative, compared to a non-cash gain of $1.0 million in the third quarter 2008. Other expense of $0.7 million in the third quarter 2009 compares to $3.1 million in the third quarter 2008. The primary driver of this expense is realized and unrealized foreign exchange.
Income tax expense for the third quarter 2009 was $2.9 million, compared to $3.2 million for the third quarter of 2008.
Net income for the third quarter 2009 was $5.4 million, or $0.15 per diluted share, up from net income of $2.5 million, or $0.07 per diluted share, for the third quarter of 2008.
The weighted average number of diluted shares outstanding during the third quarter of 2009 was 35,620,317.
Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated, “While revenue declined in the third quarter 2009 due to softness across our sectors and broader economic conditions, we are pleased to significantly grow the bottom line year-over-year. This reflects the initiatives we undertook in anticipation of customer order softness in the second half of 2009. As our October 26, press release stated, we continue to see softness in the market and have revised our full year 2009 financial guidance to reflect current conditions. Despite this recent volatility across all segments of the business, we are encouraged by gains in market share we have realized as our customers consolidate suppliers and focus on assuring product quality and strong suppliers. We believe Symmetry has an advantage during this period as a result of our strong business model, strong cash position and our customer relationships.”
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.
Based on current order flow and anticipated customer demand for the remainder of the 2009, Symmetry is adjusting its previously stated annual revenue guidance to a range of $355 million to $365 million, from $385 million to $405 million. The Company now expects full year 2009 earnings per share to be in the range of $0.63 to $0.68 per diluted share, from $0.77 to $0.85.
Symmetry Medical will host a conference call to discuss the third quarter 2009 earnings at 8:00 a.m. ET on November 5, 2009. A live Web cast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.symmetrymedical.com. The dial-in numbers are (866) 383-8003 for domestic callers and (617) 597-5330 for international. The reservation number for both is 89255155. After the live webcast, the call will remain available on Symmetry Medical’s web site through January 5, 2010. In addition, a telephonic replay of the call will be available until November 19, 2009. The replay numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 69959746.
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.
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.