2013-02-06 12:06:20 -
COLFAX REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS
FULTON, MD - February 6, 2013 - Colfax Corporation (NYSE: CFX) today announced
its financial results for the fourth quarter and full year ended December
31, 2012. On a year-over-year basis, highlights for the fourth quarter and full
year period include:
Fourth Quarter of 2012 (all comparisons versus the fourth quarter of 2011)
* After $15.6 million of pre-tax year-one acquisition-related amortization
expense, net income of $14.7 million (13 cents per share); adjusted net
income (as defined below) of $50.5 million (42 cents per share), which
includes a non-cash 9 cents per share gain related to a discrete deferred
tax benefit recorded in the fourth quarter
* Net sales of $1.03 billion, organic sales decrease (as defined below) of
2.5% from fourth quarter 2011 proforma net sales (includes the comparable
period sales for the operations acquired in the Charter acquisition)
* Operating income of $52.2 million; adjusted operating income (as defined
below) of $88.9 million
* Operating cash flows of $163.2 million, including improved inventory
management which also resulted in a negative impact on adjusted operating
income due to under-absorption from lower production levels
* Fourth quarter gas- and fluid-handling orders of $520.3 million, an increase
of 4.3%; organic order increase (as defined below) of 1.9%
* Gas- and fluid-handling backlog of $1.4 billion at period end
Full Year 2012 (all comparisons versus full year 2011)
* After pre-tax expenses of $78.2 million of year-one acquisition-related
amortization expense and $43.6 million of Charter acquisition-related
expense, a net loss of $83.4 million (92 cents per share); adjusted net
income (as defined below) of $159.8 million ($1.34 per share), which
includes a non-cash 12 cents per share gain related to discrete deferred tax
benefits recorded in the third and fourth quarters
* Net sales of $3.9 billion, an increase of 1.9% from the full year 2011
proforma net sales (includes the comparable period sales for the operations
acquired in the Charter acquisition); organic sales increase (as defined
below) of 5.3%
* Operating income of $140.0 million; adjusted operating income (as defined
below) of $334.9 million
* Gas- and fluid-handling orders of $2.0 billion, an increase of 3.7%; organic
order increase (as defined below) of 2.8%
Adjusted net income, adjusted net income per share, adjusted operating income,
organic sales growth (decline) and organic order growth 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 GAAP
financial measures.
Steve Simms, President and Chief Executive Officer, stated, "We are pleased with
the progress made in the fourth quarter on our improvement plans and growth
initiatives, though actual results fell short of our targets. Although we had
solid results in our long cycle gas- and fluid-handling business, revenues
decreased in comparison to the very strong proforma 2011 fourth quarter.
However, cost control and the benefit of previous restructuring initiatives
resulted in profit margins for this business in line with our expectations.
Volumes in our shorter cycle fabrication technology business continued to be
negatively impacted by the challenging global economy, and adjusted operating
margins were negatively impacted by specific items that are largely expected to
positively impact the business in future periods. We believe that the increased
orders during the quarter in our gas- and fluid-handling business, the Soldex
acquisition and the specific actions taken during 2012, including our
restructuring programs, position Colfax well moving into 2013."
Non-GAAP Financial Measures and Other Adjustments
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,
organic sales growth (decline) and organic order growth. Adjusted net income,
adjusted net income per share and adjusted operating income exclude asbestos
coverage litigation expense, restructuring and other related charges, charges
related to the Charter acquisition and fair value adjustments related to the
ESAB and Howden inventory and backlog amortization expense to the extent they
impact the periods presented. The effective tax rates used to calculate adjusted
net income and adjusted net income per share are 15% and 25% for the fourth
quarter and full year ended December 31, 2012, respectively, and 30.5% for both
the fourth quarter and full year ended December 31, 2011. Proforma organic sales
growth and proforma organic order growth represent the proforma comparison of
the change in existing businesses that includes the operations acquired in the
Charter Acquisition for the comparable prior period (which excludes the results
of operations acquired in the Charter Acquisition for the first 12 days of each
year to date reporting period) excluding the impact due to acquisitions made by
Colfax and Charter and foreign currency 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 asbestos coverage
litigation, costs related to the Charter acquisition, major restructuring
programs and significant year-one fair value adjustment amortization expense.
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 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 on
Wednesday, February 6, 2013 at 8:00 a.m. EDT. The call will be open to the
public through 877-303-7908 (U.S. callers) or 678-373-0875 (international
callers) and referencing the conference ID number 92180966 , or through webcast
via Colfax's website at www.colfaxcorp.com under the "Investors" 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 diversified global manufacturing and engineering company
that provides gas- and fluid-handling and fabrication technology products and
services to commercial and governmental customers around the world under the
Howden, Colfax Fluid Handling and ESAB brands. Colfax believes that its brands
are among the most highly recognized in each of the markets that it serves.
Colfax is traded on the NYSE under the ticker "CFX." Additional information
about Colfax is available at 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 fact.
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 including its
2011 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 the date hereof. 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.
Contact:
Scott Brannan, Chief Financial Officer Colfax Corporation 301-323-9005
Scott.Brannan@colfaxcorp.com
Colfax Corporation
Condensed Consolidated Statements of Operations
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------------------- ----------------------------
2012 2011 2012 2011
--------------- ------------- --------------- ------------
Net sales $ 1,027,397 $ 177,791 $ 3,913,856 $ 693,392
Cost of sales 719,827 116,247 2,761,731 453,293
--------------- ------------- --------------- ------------
Gross profit 307,570 61,544 1,152,125 240,099
Selling, general and
administrative
expense 234,261 39,385 895,452 162,761
Charter acquisition-
related expense - 25,324 43,617 31,052
Restructuring and
other related
charges 16,994 2,162 60,060 9,680
Asbestos coverage
litigation expense 4,147 2,246 12,987 10,700
--------------- ------------- --------------- ------------
Operating income
(loss) 52,168 (7,573 ) 140,009 25,906
Interest expense 23,290 1,412 91,570 5,919
--------------- ------------- --------------- ------------
Income (loss) before
income taxes 28,878 (8,985 ) 48,439 19,987
Provision for income
taxes( (1)(2)) 3,812 7,095 90,703 15,432
--------------- ------------- --------------- ------------
Net income (loss) 25,066 (16,080 ) (42,264 ) 4,555
Less: income
attributable to
noncontrolling
interest, net of
taxes 5,330 - 22,138 -
--------------- ------------- --------------- ------------
Net income (loss)
attributable to
Colfax Corporation 19,736 (16,080 ) (64,402 ) 4,555
Dividends on
preferred stock 5,072 - 18,951 -
--------------- ------------- --------------- ------------
Net income (loss)
available to Colfax
Corporation common
shareholders $ 14,664 $ (16,080 ) $ (83,353 ) $ 4,555
--------------- ------------- --------------- ------------
Net income (loss)
per share - basic $ 0.14 $ (0.37 ) $ (0.92 ) $ 0.10
--------------- ------------- --------------- ------------
Net income (loss)
per share - diluted $ 0.13 $ (0.37 ) $ (0.92 ) $ 0.10
--------------- ------------- --------------- ------------
__________
((1) )Provision for income taxes the year ended December 31, 2012 was
significantly impacted by the reassessment of certain deferred tax assets as of
the date of the Charter acquisition, which resulted in an increase in the
Company's valuation allowance, and the Charter acquisition-related expenses that
are either not deductible for tax purposes or were incurred in jurisdictions
where no tax benefit can be recognized.
((2) ) Income tax provision for the fourth quarter and full year ended December
31,2012 includes a $9.9 million gain and $12.8 million gain, respectively, from
discrete deferred tax benefits recorded to reflect lower tax rates enacted in
Sweden during the fourth quarter and the United Kingdom during the third
quarter.
Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in thousands, except per share data
(Unaudited)
Three Months Ended
December 31, Year Ended December 31,
------------------------- -------------------------
2012 2011 2012 2011
------------ ------------ ------------- -----------
Adjusted Operating Income
Operating income (loss) $ 52,168 $ (7,573 ) $ 140,009 $ 25,906
Restructuring and other
related charges 16,994 2,162 60,060 9,680
Charter acquisition-
related expense - 25,324 43,617 31,052
Fair value adjustments -
ESAB/Howden backlog and
inventory amortization
expense 15,614 - 78,196 -
Asbestos coverage
litigation expense 4,147 2,246 12,987 10,700
------------ ------------ ------------- -----------
Adjusted operating income $ 88,923 $ 22,159 $ 334,869 $ 77,338
------------ ------------ ------------- -----------
Adjusted operating income
margin 8.7 % 12.5 % 8.6 % 11.2 %
Adjusted Net
Income and
Adjusted Net
Income Per
Share
Net income
(loss)
attributable to
Colfax
Corporation. $ 19,736 $ (16,080 ) $ (64,402 ) $ 4,555
Restructuring
and other
related charges 16,994 2,162 60,060 9,680
Charter
acquisition-
related expense - 25,324 43,617 31,052
Fair value
adjustments -
ESAB/Howden
backlog and
inventory
amortization
expense 15,614 - 78,196 -
Asbestos
coverage
litigation
expense 4,147 2,246 12,987 10,700
+---------------+
|Tax |
|adjustment((1))| (6,022 ) 767 29,297 (6,351 )
+---------------+ ---------------- ----------------- ----------------- ---------------
Adjusted net
income 50,469 14,419 159,755 49,636
---------------- ----------------- ----------------- ---------------
Adjusted net
income margin 4.9 % 8.1 % 4.1 % 7.2 %
Dividends on
preferred stock 5,072 - 18,951 -
---------------- ----------------- ----------------- ---------------
Adjusted net
income
available to
Colfax
Corporation
common
shareholders 45,397 14,419 140,804 49,636
+---------------+
|Less: net |
|income |
|attributable to|
|participating |
|securities((2))| 5,831 - 18,087 -
+---------------+ ---------------- ----------------- ----------------- ---------------
$ 39,566 $ 14,419 $ 122,717 $ 49,636
---------------- ----------------- ----------------- ---------------
Weighted-
average shares
outstanding -
diluted 94,978,755 44,279,400 91,918,513 44,268,110
Adjusted net
income per
share $ 0.42 $ 0.33 $ 1.34 $ 1.12
---------------- ----------------- ----------------- ---------------
Net income
(loss) per
share- diluted
(in accordance
with GAAP) $ 0.13 $ (0.37 ) $ (0.92 ) $ 0.10
---------------- ----------------- ----------------- ---------------
__________
((1) )The effective tax rates used to calculate adjusted net income and adjusted
net income per share are 15% and 25% for the fourth quarter and full year ended
December 31, 2012, respectively, and 30.5% for the fourth quarter and full year
ended December 31, 2011.
((2) )Adjusted net income per share was calculated consistently with the two-
class method in accordance with GAAP as the Series A preferred stock are
considered participating securities. Losses are not allocated to the preferred
stock.
Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)
Net Sales Orders
----------------------- -----------------------
$ % $ %
------------- --------- ------------- ---------
Proforma for
the three
months ended
December
31, 2011 $ 1,049.8 $ 499.0
Components
of Change:
Existing
Businesses (26.5 ) (2.5 )% 9.6 1.9 %
Acquisitions 34.2 3.3 % 22.1 4.4 %
Foreign
Currency
Translation (30.1 ) (2.9 )% (10.4 ) (2.0 )%
------------- --------- ------------- ---------
Total (22.4 ) (2.1 )% 21.3 4.3 %
------------- --------- ------------- ---------
For the
three months
ended
December
31, 2012 $ 1,027.4 $ 520.3
------------- -------------
Backlog at Period
Net Sales Orders End
----------------------- ----------------------- ----------------------
$ % $ % $ %
------------- --------- ------------- --------- ------------- --------
Proforma as
of and for
the year
ended
December
31, 2011 $ 3,839.1 $ 1,924.6 $ 1,288.3
Components
of Change:
Existing
Businesses 202.2 5.3 % 54.0 2.8 % 117.5 9.1 %
Acquisitions 86.5 2.2 % 100.4 5.2 % 9.4 0.7 %
Foreign
Currency
Translation (213.9 ) (5.6 )% (83.0 ) (4.3 )% (33.8 ) (2.6 )%
------------- --------- ------------- --------- ------------- --------
Total 74.8 1.9 % 71.4 3.7 % 93.1 7.2 %
------------- --------- ------------- --------- ------------- --------
As of and
for the year
ended
December
31, 2012 $ 3,913.9 $ 1,996.0 $ 1,381.4
------------- ------------- -------------
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Colfax Corp via Thomson Reuters ONE
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