Exhibit 99.1
PRESS RELEASE
Investors/Media:
The Ruth Group
Stephanie Carrington/Jason Rando
646-536-7017/7025
scarrington@theruthgroup.com
jrando@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 Reports Second Quarter 2006 Results
WARSAW, Ind., August 2, 2006 — Symmetry Medical Inc. (NYSE: SMA), an independent provider of products to the global orthopedic device industry, announced today second quarter 2006 financial results for the period ended July 1, 2006.
The Company reported second quarter 2006 revenue of $64.8 million, a decrease of 7.7% over the second quarter of 2005. The Company’s second quarter revenue includes $3.4 million from Riley Medical, which was acquired by the Company in May of 2006.
Gross profit for the second quarter of 2006 was $16.9 million, a 21.2% decrease from gross profit of $21.4 million for the second quarter of 2005. Gross margin for the second quarter 2006 was 26.1%, compared to a gross margin of 30.6% for the second quarter 2005. The lower gross margin rate was primarily a result of higher fixed costs from the 2005 expansion across the Company’s global facilities and reflects sales reductions, which were more pronounced in the higher margin products within each of the Company’s product segments.
Operating income for the second quarter of 2006 was $10.0 million, a 32.0% decrease over operating income of $14.7 million for the second quarter of 2005. Operating margin for the second quarter 2006 was 15.4%, compared to an operating margin of 20.9% for the second quarter 2005.
Income before income taxes for the second quarter of 2006 was $10.7 million, a 17.8% decrease over income before income taxes of $13.0 million for the second quarter of 2005. Second quarter 2006 income before income taxes included a $1.2 million gain on the sale of surplus land adjacent to the Company’s Sheffield, UK facility.
Net income for the second quarter 2006 was $7.7 million, or $0.22 per diluted share, compared to a net income of $8.6 million, or $0.25 per diluted share, for the second quarter 2005. This includes an Indiana Edge tax benefit of $0.3 million.
The weighted average number of diluted shares outstanding during the second quarter of 2006 was 35,177,000.
Brian Moore, President and Chief Executive Officer, stated, “Our revenue growth was impacted by the slowdown in demand for major orthopedic joints throughout the industry. Because of Symmetry’s position in the supply chain for these joints, we were affected disproportionately by these industry developments. These results were further impacted by reduced customer product launches. We are taking advantage of this slower period to extend our “Total Solutions” approach into other markets, as well as to increase acquisition activity. We believe that the Company remains very well positioned to respond to the upturn.”
Mr. Moore continued, “While the current market conditions impact the entire supply chain in orthopedic devices, we remain confident that Symmetry will continue as the leading provider to the orthopedic market.”
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.
For the full year 2006, the Company now expects revenue to be in the range of $260 million to $265 million. The Company expects full year 2006 earnings per diluted share in the range of $0.74 to $0.77.
Conference Call
Symmetry Medical will host a conference call at 8:00 a.m. EDT on Thursday, August 3, 2006. A live webcast 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) 700-7101 for domestic callers and (617) 213-8837 for international callers. The reservation number for both is 65747430. After the live webcast, the call will remain available on Symmetry’s website until August 31, 2006. In addition, a telephonic replay of the call will be available until August 17, 2006. In replay dial-in numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 97084244.
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
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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 website at www.sec.gov.
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Symmetry Medical Inc.
Consolidated Statements of
Operations
| | Three Months Ended | | Six Months Ended | |
| | July1, | | July2, | | July1, | | July2, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | (In Thousands, Except Per Share Data) | |
| | (unaudited) | | (unaudited) | |
Revenue | | $ | 64,760 | | $ | 70,177 | | $ | 134,373 | | $ | 133,937 | |
Cost of Revenue | | 47,873 | | 48,735 | | 97,145 | | 93,108 | |
| | | | | | | | | |
Gross Profit | | 16,887 | | 21,442 | | 37,228 | | 40,829 | |
Selling, general, and administrative expenses | | 6,892 | | 6,754 | | 13,932 | | 13,702 | |
| | | | | | | | | |
Operating Income | | 9,995 | | 14,688 | | 23,296 | | 27,127 | |
Other (income) expense: | | | | | | | | | |
Interest expense | | 925 | | 773 | | 1,586 | | 1,712 | |
Derivatives valuation (gain)/loss | | 408 | | 189 | | 407 | | (107 | ) |
Other | | (2,059 | ) | 681 | | (2,280 | ) | 883 | |
| | | | | | | | | |
Income before income taxes | | 10,721 | | 13,045 | | 23,583 | | 24,639 | |
Income tax expense | | 3,042 | | 4,426 | | 7,526 | | 8,356 | |
| | | | | | | | | |
Net income applicable to common shareholders | | $ | 7,679 | | $ | 8,619 | | $ | 16,057 | | $ | 16,283 | |
| | | | | | | | | |
Net income (loss) applicable to common shareholders per share: | | | | | | | | | |
Basic | | $ | 0.22 | | $ | 0.26 | | $ | 0.46 | | $ | 0.49 | |
Diluted | | $ | 0.22 | | $ | 0.25 | | $ | 0.46 | | $ | 0.47 | |
| | | | | | | | | |
Weighted average common shares and equivalent shares outstanding: | | | | | | | | | |
Basic | | 34,830 | | 33,239 | | 34,774 | | 33,207 | |
Diluted | | 35,177 | | 34,477 | | 35,157 | | 34,296 | |
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Symmetry Medical Inc.
Consolidated Balance Sheets
| | July1, | | December 31, | |
| | 2006 | | 2005 | |
| | (In Thousands, Except Per Share Data) | |
| | (unaudited) | | | |
Assets: | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 10,686 | | $ | 12,471 | |
Accounts receivables, net | | 49,667 | | 44,908 | |
Inventories | | 43,942 | | 38,783 | |
Refundable income taxes | | 145 | | 185 | |
Deferred income taxes | | 2,166 | | 1,867 | |
Derivative valuation asset | | — | | 414 | |
Other current assets | | 4,119 | | 4,032 | |
| | | | | |
Total current assets | | 110,725 | | 102,660 | |
Propertyand equipment, net | | 101,688 | | 93,106 | |
Derivative valuation asset | | 477 | | 170 | |
Goodwill | | 153,392 | | 124,518 | |
Intangible assets, net of accumulated amortization | | 27,537 | | 16,327 | |
Other assets | | 1,066 | | 864 | |
Total Assets | | $ | 394,885 | | $ | 337,645 | |
| | | | | |
Liabilities and Shareholders' Equity: | | | | | |
Current Liabilities: | | | | | |
Accounts payable | | $ | 16,219 | | $ | 18,983 | |
Accrued wages and benefits | | 8,567 | | 10,997 | |
Derivative valuation liability | | 300 | | — | |
Other accrued expenses | | 3,606 | | 2,696 | |
Income tax payable | | 725 | | 1,241 | |
Revolving line of credit | | 2,371 | | — | |
Current portion of capital lease obligations | | 3,017 | | 3,239 | |
Current portion of long-term debt | | 2,150 | | 1,313 | |
| | | | | |
Total current liabilities | | 36,955 | | 38,469 | |
Deferred income taxes | | 11,691 | | 11,139 | |
Capital lease obligations, less current portion | | 6,826 | | 8,532 | |
Long-term debt, less current portion | | 62,350 | | 26,250 | |
Total Liabilities | | 117,822 | | 84,390 | |
| | | | | |
Shareholders' Equity: | | | | | |
Common Stock, $.0001 par value; 72,410 shares authorized; shares issued July 1, 2006—34,894; December 31, 2005—34,704) | | 3 | | 3 | |
Additional paid-in capital | | 270,794 | | 268,973 | |
Retained earnings (deficit) | | (1,321 | ) | (17,378 | ) |
Accumulated other comprehensive income | | 7,587 | | 1,657 | |
Total Shareholders' Equity | | 277,063 | | 253,255 | |
Total Liabilities and Shareholders' Equity | | $ | 394,885 | | $ | 337,645 | |
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