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Symmetry Medical Reports Fourth Quarter and Full Year 2008 Financial Results

Posted on: Tuesday, 24 February 2009, 07:00 CST

Fourth Quarter 2008 Highlights:

-- Revenue of $99.7 million, up 23.6% year-over-year or up 30.9% on a constant currency basis

-- Net income of $11.3 million or $0.32 per diluted share, compared to a net loss of $5.4 million in fourth quarter 2007

Full Year 2008 Highlights:

-- Revenue of $423.4 million, up 45.5% year-over-year or up 46.4% on a constant currency basis

-- Net income of $24.0 million or $0.68 per diluted share, compared to a net loss of $0.1 million in 2007

WARSAW, Ind., Feb. 24 /PRNewswire-FirstCall/ -- Symmetry Medical Inc. (NYSE: SMA), a leading independent provider of products to the global orthopedic device industry and other medical markets, announced today fourth quarter and full year 2008 financial results for the period ended January 3, 2009.

Fourth Quarter Full Year (in millions, except share data) 2008 2007 Change 2008 2007 Change Revenue $99.7 $80.7 24% $423.4 $290.9 46% Operating Income 9.5 3.6 166% 42.0 13.1 221% Net Income 11.3 (5.4) 311% 24.0 (0.1) Fav EPS (Diluted) $0.32 $(0.16) 300% $0.68 $- Fav Revenue by Product: Instruments $44.4 $28.5 56% $177.5 $79.1 124% Implants 29.6 23.2 27% 122.6 96.9 27% Cases 18.5 19.2 -3% 86.4 77.2 12% Other 7.2 9.8 -27% 36.9 37.8 -2% Total Revenue $99.7 $80.7 24% $423.4 $290.9 46%

Revenue for the fourth quarter 2008 was $99.7 million, up 23.6% or up 30.9% assuming foreign exchange rates in 2008 consistent with those experienced in 2007 ("a constant currency basis") from $80.7 million reported in the fourth quarter 2007. Fourth quarter 2008 revenue included an incremental $12.9 million from the Company's New Bedford, Massachusetts manufacturing facility, which was acquired from DePuy Orthopaedics, Inc. in January 2008. Excluding this acquisition, the Company achieved organic revenue growth of 7.7% or 15.0% on a constant currency basis over the fourth quarter of 2007.

Gross profit for the fourth quarter 2008 was $23.3 million, an increase of 57.4% from $14.8 million for the fourth quarter 2007. Gross margin percentage for the fourth quarter 2008 was 23.4% compared to a gross margin percentage of 18.4% in the same period last year and 22.9% in the third quarter 2008. Excluding the Sheffield, UK operating unit, gross margin was 26.2% in the fourth quarter 2008 and 27.4% in the third quarter 2008.

Selling, general and administrative expenses were $13.9 million for the fourth quarter 2008, compared to $11.3 million in the fourth quarter 2007. The two primary drivers for the year-over-year increase include non-cash stock based compensation and the addition of the New Bedford facility which was acquired in January 2008.

Operating income for the fourth quarter of 2008 was $9.5 million compared to $3.6 million for the fourth quarter 2007. Operating margin for the fourth quarter 2008 was 9.5%, an increase from 4.4% for the fourth quarter 2007.

Net income for the fourth quarter 2008 was $11.3 million, or $0.32 per diluted share, compared to a net loss of $5.4 million, or $(0.16) per diluted share, for the fourth quarter of 2007. The net impact of various tax items on the fourth quarter 2008 results was $6.9 million or $0.20 per diluted share, made up of income tax benefits primarily from the realization of losses on the Company's initial investment in the Sheffield, UK operations partially offset by additional tax provisions for uncertain tax positions worth $8.7 million. Fourth quarter net income was also adversely impacted by the provision of $1.8 million for tax valuation allowances associated with the Company's UK operations.

2008 full year revenue was $423.4 million, a 45.5% increase or a 46.4% increase on a constant currency basis over the full year 2007. The Company achieved organic revenue growth of 23.4% or 24.3% on a constant currency basis over the full year 2007. Gross margin percentage for the full year 2008 was 23.7% compared to 18.1% for 2007. Excluding the Sheffield operations, full year 2008 gross margin was 28.2%. Net income for the full year 2008 was $24.0 million, or $0.68 per diluted share, compared to a net loss of $0.1 million for the full year 2007. The net impact of the various tax items on the full year results was a favorable $5.0 million or $0.14 per diluted share, made up of income tax benefits primarily from the realization of losses on the Company's initial investment in the Sheffield, UK operations partially offset by additional tax provisions for uncertain tax positions worth $8.0 million. Full year net income was also adversely impacted by the provision of $3.0 million for tax valuation allowances associated with the Company's UK operations. Also impacting 2008 results is approximately $5.0 million non-recurring professional fees related to the Sheffield investigation.

The weighted average number of diluted shares outstanding during the fourth quarter of 2008 was 35,368,601.

Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated, "Fourth quarter results reflect the continuing strength of our business and position in the orthopedic industry, with revenue up 31% on a constant currency basis from 2007. Our bottom line was impacted by the favorable tax initiative that will have significant cash benefits.

"We are encouraged by the continuing improvement at our Sheffield, UK facility, the performance of our New Bedford facility which was well above expectations and the continued development of our Malaysia facility."

Mr. Moore continued, "Looking forward into 2009, we have an optimistic outlook on the many opportunities that our strong market position offers. However, given the current macroeconomic climate, we are managing the business on a conservative basis as we gauge the extent and breadth of the impact on the orthopedic arena."

Financial Guidance

The following forward-looking estimates regarding 2009 earnings guidance are based on current market conditions and foreign currency comparisons. Actual results may differ materially, and we refer you to forward-looking statements located at the end of the press release.

For the full year 2009, the Company expects revenue to be in the range of $405 million to $420 million. On a constant currency basis, we expect a revenue increase of 2%-6% for the full year. The Company currently expects full year 2009 earnings per diluted share in the range of $0.75 to $0.85. With regard to the Company's Sheffield, UK unit, the Company expects to incur smaller net operating losses during the first half 2009 prior to reaching operating profitability in the second half of 2009.

AAOS

Symmetry Medical will be participating in the American Academy of Orthopedic Surgeons (AAOS) 2009 Annual Meeting in Las Vegas, NV, February 25 - March 1, 2009. Symmetry Medical products and technologies will be located at Booth 2659.

Conference Call

Symmetry Medical will host a conference all at 9:00 a.m. ET on February 24, 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) 713-8566 for domestic callers and (617) 597-5325 for international. The reservation number for both is 36114752. After the live Web cast, the call will remain available on Symmetry Medical's Web site through May 24, 2009. In addition, a telephonic replay of the call will be available until March 3, 2009. The replay numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 50628687.

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 arthroscopy, dental, laparoscopy, 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," "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.

Investors/Media: The Ruth Group Nick Laudico/Jason Rando 646-536-7030/7025 nlaudico@theruthgroup.com jrando@theruthgroup.com Contact: Symmetry Medical Inc. Fred Hite Senior Vice President Chief Financial Officer (574) 371-2218

Symmetry Medical Inc. Consolidated Statements of Operations Three Months Ended Twelve Months Ended January 3, December 29, January 3, December 29, 2009 2007 2009 2007 (In Thousands, Except Per Share Data) (unaudited) (unaudited) Revenue $99,662 $80,662 $423,406 $290,922 Cost of Revenue 76,315 65,825 323,048 238,343 Gross Profit 23,347 14,837 100,358 52,579 Selling, general, and administrative expenses 13,866 11,274 58,340 39,484 Operating Income 9,481 3,563 42,018 13,095 Other (income) expense: Interest expense 1,792 1,909 10,092 6,917 Derivatives valuation (gain)/ loss (1,419) (1,100) (2,460) 1,740 Other 293 5,768 2,874 (503) Income before income taxes 8,815 (3,014) 31,512 4,941 Income tax expense (2,502) 2,359 7,493 5,090 Net income $11,317 $(5,373) $24,019 $(149) Net income per share: Basic $0.32 $(0.16) $0.68 $- Diluted $0.32 $(0.16) $0.68 $- Weighted average common shares and equivalent shares outstanding: Basic 35,196 35,134 35,170 35,089 Diluted 35,369 35,306 35,357 35,268

Symmetry Medical Inc. Consolidated Balance Sheets January 3, December 29, 2009 2007 (In Thousands) Assets: Current Assets: Cash and cash equivalents $10,191 $12,089 Accounts receivable, net 52,845 42,992 Inventories 61,111 45,353 Refundable income taxes 6,610 6,516 Deferred income taxes 3,993 2,551 Derivative valuation asset - 2 Other current assets 3,154 2,940 Total current assets 137,904 112,443 Property and equipment, net 115,045 100,424 Goodwill 153,521 141,985 Intangible assets, net of accumulated amortization 45,039 44,567 Other assets 1,728 1,011 Total Assets $453,237 $400,430 Liabilities and Shareholders' Equity: Current Liabilities: Accounts payable $26,929 $34,518 Accrued wages and benefits 12,784 10,922 Other accrued expenses 5,186 8,096 Income tax payable 2,637 2,394 Derivative valuation liability - 74 Deferred income taxes - 407 Revolving line of credit 2,495 6,511 Current portion of capital lease obligations 1,034 2,487 Current portion of long-term debt 16,900 10,900 Total current liabilities 67,965 76,309 Deferred income taxes 18,131 12,136 Derivative valuation liability 3,771 1,917 Capital lease obligations, less current portion 3,356 4,032 Long-term debt, less current portion 107,600 68,500 Total Liabilities 200,823 162,894 Commitments and contingencies (Note 15) Shareholders' Equity: Common Stock, $.0001 par value; 72,410 shares authorized; shares issued January 3, 2009--35,801; December 29, 2007-- 35,444; December 30, 2006--35,107) 4 4 Additional paid-in capital 275,890 272,623 Accumulated deficit (21,507) (45,526) Accumulated other comprehensive income (1,973) 10,435 Total Shareholders' Equity 252,414 237,536 Total Liabilities and Shareholders' Equity $453,237 $400,430

SOURCE Symmetry Medical Inc.

Source: PR Newswire

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