Symmetry Medical Reports Third Quarter 2012 Financial Results

Symmetry Medical Reports Third Quarter 2012 Financial Results

               Continued Debt Reduction; Leverage Ratio at 3.7x

Third Quarter Highlights:

  oRevenue of $100.9 million, up 20% year-over-year
  oGross margin of 28.0% compared to 18.7% year ago
  oOperating income of $10.2 million; as adjusted operating income of $14.0
    million, up 226% year-over-year and 16% sequentially
  oNet income of $3.7 million; as adjusted net income of $6.5 million, up
    183% year-over-year and 30% sequentially
  oGenerated strong cash from operations of $15.3 million
  oNarrows 2012 revenue and EPS guidance

WARSAW, Ind., Nov. 1, 2012 (GLOBE NEWSWIRE) -- Symmetry Medical Inc.
(NYSE:SMA), a leading global source of innovative medical device solutions,
including surgical instruments, orthopedic implants, and sterilization cases
and trays, announced third quarter 2012 financial results for the period ended
September 29, 2012.

                Third Quarter                  Vs Prior Quarter
(in millions,
except per share 2012        2011      Change   3Q'12      2Q'12      Change
data)
Revenue          $100.9    $84.0   20%      $100.9   $ 102.3   -1%
Operating income 10.2       1.7      500%     10.2      8.1       26%
Net income       3.7        0.5      640%     3.7       1.6       131%
EPS              $0.10     $0.01   900%     $0.10    $0.05    100%
                                                                
As Adjusted                                                      
Non-GAAP*
Operating        $14.0     $4.3    226%     $14.0    $12.1    16%
income*
Net income*      6.5        2.3      183%     6.5       5.0       30%
EPS*             $0.18     $0.06   200%     $0.18    $0.14    29%
                                                                
* Excludes non-cash charges for stock compensation expense, amortization of
intangible assets and debt issuance costs, as well as charges for management
transition costs, acquisition related costs, facility closure and severance,
SEC related legal costs and legal entity restructuring costs.See "As Adjusted
Financial Measures" below.

                                                    
(in millions, except per      Third Quarter           Vs Prior Quarter
share data)
Revenue by Product: by        2012     2011    Change 3Q'12    2Q'12    Change
Segment
OEM Solutions Revenue                                              
Instruments                   $29.6  $24.8 19%    $29.6  $28.5  4%
Implants                      25.6    26.7   -4%    25.6    25.1    2%
Cases                         14.2    15.9   -11%   14.2    14.5    -2%
Other                         6.7     6.1    10%    6.7     6.9     -3%
Total OEM Solutions Revenue   $76.1  $73.5 4%     $76.1  $75.0  1%
Symmetry Surgical Revenue     24.8    10.5   136%   24.8    27.3    -9%
                                                                  
Total Revenue                 $100.9 $84.0 20%    $100.9 $ 102.3 -1%

Revenue for the third quarter 2012 was $100.9 million, up 20.1% compared to
$84.0 million in the same period last year. The year-over-year revenue
increase was driven by growth in the Company's OEM Solutions and Symmetry
Surgical segments. Symmetry Surgical segment results for the third quarter
2012 included the Company's December 2011 acquisition of the surgical
instruments business of Codman & Shurtleff, Inc. and its August 2011
acquisition of Olsen Medical.

The increase in revenue in the Company's OEM Solutions segment to $76.1
million in the third quarter 2012 from $73.5 million in the third quarter 2011
was primarily driven by increased spending on instruments by OEM customers in
support of new product launches, partially offset by continued weaker case
customer demand. Third quarter 2012 OEM Solutions segment revenue was also
impacted by $1.4 million, or -1.9%, due to the unfavorable impact of foreign
currency exchange rates. On a sequential basis, third quarter 2012 OEM
Solutions revenue was up 1.4% compared to the second quarter 2012, driven by
increased demand in the Instruments and Implant categories, in-line with the
Company's expectations and indicative of the stable procedure growth reported
by the Company's OEM customers during the third quarter 2012.

The increase in revenue from the Company's Symmetry Surgical segment to $24.8
million in the third quarter 2012 from $10.5 million in the third quarter 2011
was primarily due to the inclusion of $13.7 million of revenues from the
Company's acquisition of the surgical instruments business of Codman &
Shurtleff, Inc. and Olsen Medical. Excluding these acquisitions, Symmetry
Surgical segment revenue increased 5.7% year-over-year and decreased 9.1%
sequentially.

Gross profit for the third quarter 2012 was $28.2 million, up 79.2% compared
to $15.8 million in the same period last year. Gross margin percentage for the
third quarter 2012 was 28.0%, compared to 18.7% in the third quarter 2011. The
increase in gross margin was driven by a larger percentage of revenue from the
Company's higher margin Symmetry Surgical segment. Gross margin also
benefitted from improvements to OEM Solutions gross margin, which were driven
by increased leveraging of overhead costs due to higher sales volume,
improvements in scrap and consumables, and efficiencies resulting from the
Company's lean initiatives.

Sales, marketing, general and administrative expenses in the third quarter
2012 were $16.8 million, compared to $12.9 million in the same period last
year. The increase in the third quarter 2012 was primarily due to the
inclusion of $3.4 million of expenses related to the acquisitions of Olsen
Medical and the surgical instruments business of Codman & Shurtleff, Inc.
Additionally, intangible assets were acquired with both these acquisitions
which resulted in an increase of $1.3 million in amortization expense. The
third quarter 2012 also included a $0.8 million increase in stock compensation
expense and a $0.2 million increase in acquisition related costs compared to
the prior year. These increases were partially offset by the reduction of $0.4
million in management transition expenses and $0.4 million in SEC-related
legal costs from the same period last year. Facility closure and severance
costs were a benefit of $0.1 million in the third quarter of 2012, compared to
costs of $0.3 million in the same period last year.

Operating income for the third quarter 2012 was $10.2 million, up 512.0%
compared to $1.7 million in the same period last year. Operating margin was
10.1% in the third quarter 2012, compared to 2.0% in the same period last
year. Excluding amortization of intangible assets, stock compensation expense,
acquisition related costs, management transition costs, SEC-related legal
costs, facility closure and severance costs, and legal entity restructuring
costs, operating income for the third quarter 2012 was $14.0 million, up
228.9% compared to $4.3 million in the same period last year primarily driven
by significantly improved gross margin in the OEM Solutions segment as well as
the impact of the Codman surgical instruments and Olsen acquisitions.

Interest expense for the third quarter 2012 was $4.7 million, compared to
interest expense of $1.0 million in the same period last year.This increase
was driven by incremental debt utilized to complete the Codman surgical
instruments acquisition in December 2011.

Income tax expense for the third quarter 2012 was $1.9 million, compared to
income tax expense of $0.3 million in the same period last year driven by the
increase in pre-tax income. 

Net income for the third quarter 2012 was $3.7 million, or $0.10 per diluted
share, compared to net income of $0.5 million, or $0.01 per diluted share, in
the same period last year. Excluding amortization of intangible assets and
debt issuance costs, stock compensation expense, acquisition related costs,
management transition costs, SEC-related legal costs, facility closure and
severance costs, and legal entity restructuring costs referenced above, net
income for the third quarter 2012 was $6.5 million, or $0.18 per diluted
share, compared to $2.3 million, or $0.06 per diluted share in the same period
last year.

The weighted average number of diluted shares outstanding during the third
quarter of 2012 was 36,512,341.

Thomas J. Sullivan, President and Chief Executive Officer of Symmetry Medical,
stated, "Our third quarter results were in-line with our expectations,
reflecting low single digit orthopedic procedure volume growth and continued
margin improvement from our strategic operational initiatives. We generated
strong cash flow and continued to pay down our debt. In our core OEM Solutions
segment, our Symmetry Business System and cost containment initiatives
resulted in margin expansion versus the year ago period. In our Symmetry
Surgical segment, we achieved the significant milestone of fully integrating
the U.S. operations of the recently acquired Codman surgical instruments
business into our ERP infrastructure and Symmetry Surgical facility in
Nashville, TN.We also continued our global rollout with the successful
conversion away from our Johnson & Johnson transitional services agreements
into direct relationships with distributors in Hong Kong, Puerto Rico, Chile,
and Taiwan.

"Heading into the fourth quarter, orthopedic procedure growth remains stable,
but it did not slightly accelerate as we had expected, and our OEM customers
continue to be restrained with their capital spending and the ramp of new
product launches. In addition, as some have announced, we expect OEM customers
to employ conservative inventory management strategies heading into the end of
the year that could impact our fourth quarter results. Accordingly, we are
narrowing our full year 2012 guidance to a tighter range, with revenue now
expected to be $410 to $415 million, with a corresponding tightening of as
adjusted EPS guidance to $0.55 to $0.60."

Financial Guidance

The following forward-looking estimates regarding 2012 guidance reflect
current market conditions and foreign currency rates. Actual results may
differ materially, and the Company refers you to forward-looking statements
located at the end of the press release.

Based on the third quarter 2012 results, the Company is refining its full year
2012 revenue and earnings per share guidance. For the full year 2012, the
Company expects revenue to be in the range of $410 million to $415 million,
compared to the previous guidance of $410 million to $425 million. The Company
expects full year 2012 GAAP earnings per diluted share to be in the range of
$0.26 to $0.31 and full year 2012 as adjusted* earnings per diluted share to
be in the range of $0.55 to $0.60. This compares to the previous full year
2012 guidance of GAAP earnings per diluted share in the range of $0.30 to
$0.40 and as adjusted* earnings per diluted share in the range of $0.55 to
$0.65. The as adjusted* earnings per diluted share guidance excludes the
impact of amortization of intangible assets and debt issuance costs, stock
compensation expense, acquisition related costs, legal entity restructuring
costs, SEC-related legal costs, management transition costs, and facility
closure and severance costs. These items are expected to negatively impact
full year 2012 GAAP earnings per diluted share by approximately $0.29.

Diluted earnings per share – GAAP         $0.26 - $0.31
                                         
Estimated Amortization                    ($0.17)
Estimated stock compensation expense      ($0.07)
Estimated all other adjustments           ($0.05)
                                         
Diluted earnings per share – as adjusted* $0.55 - $0.60

Conference Call

Symmetry Medical will host a conference call to discuss third quarter 2012
financial results at 8:00 a.m. ET on November 1, 2012. 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 (888) 771-4371 for domestic callers and (847) 585-4405 for
international. The confirmation number for both is 33565480 (please reference
"Zack Kubow" as host and "Symmetry Medical" as the Company). After the live
webcast, the call will remain available on Symmetry Medical's website through
February 1, 2013. In addition, a telephonic replay of the call will be
available until November 8, 2012. The replay numbers are (888) 843-7419 for
domestic callers and (630) 652-3042 for international callers. Please use
passcode 3356 5480#.

About Symmetry Medical Inc.

Symmetry Medical Inc. is a leading global source of innovative medical device
solutions, including surgical instruments, orthopedic implants, and
sterilization cases and trays. The Company's thousands of Teammates provide
design, development and worldwide production capabilities for these products
to customers in the orthopedic industry, other medical device markets, and
specialized non-healthcare markets. Symmetry's trusted reputation and brands,
broad Intellectual Property portfolio and commitment to innovation enable it
to collaborate with hundreds of global medical device manufacturers as well as
thousands of hospitals to provide solutions for today's needs and tomorrow's
growth.

As Adjusted Non-GAAP Measures

The as adjusted* measures, including adjusted operating income, net income and
EPS, shown in this release exclude the impact of amortization of intangible
assets and debt issuance costs, stock compensation expense, acquisition
related costs, legal entity restructuring costs, SEC-related legal costs,
management transition costs, and facility closure and severance costs.

Reconciliations of these non-GAAP measures to the most directly comparable
GAAP measure are included after the financial information included in this
press release.These measures are not in accordance with, or an alternative
for, GAAP and may be different from non-GAAP measures used by other
companies.Management believes these non-GAAP measures improve management's
and investors' ability to better compare the company's ongoing financial
performance between periods and with other companies.

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.

Symmetry Medical Inc.
Consolidated Statements of Operations
                                                                
                            Three Months Ended       Nine Months Ended
                            September 29, October 1, September 29, October 1,
                             2012          2011       2012          2011
                            (In Thousands, Except Per Share Data)
                            (unaudited)
                                                                
Revenue                      $100,929    $84,039  $303,949    $274,538
Cost of revenue              72,703       68,285    223,808      217,233
                                                                
Gross profit                 28,226       15,754    80,141       57,305
Research and development     1,293        966       2,998        3,031
expenses
Sales and marketing expenses 6,107        4,140     19,868       13,354
General and administrative   10,730       8,733     32,331       26,084
expenses
Facility closure and         (76)         253       596          2,526
severance
                                                                
                                                                
Operating income             10,172       1,662     24,348       12,310
Other (income) expense:                                          
Interest expense             4,737        964       14,905       2,754
Derivatives valuation gain   (116)        --        (179)        --
Other                        (108)        (160)     (562)        591
                                                                
Income before income taxes   5,659        858       10,184       8,965
Income tax expense           1,921        331       3,980        2,901
                                                                
Net income                   $3,738      $527     $6,204      $6,064
                                                                
Net income per share:                                            
Basic                        $0.10       $0.01    $0.17       $0.17
                                                                
Diluted                      $0.10       $0.01    $0.17       $0.17
                                                                
                                                                
Weighted average common
shares and equivalent shares                                     
outstanding:
Basic                        36,044       35,546    35,951       35,537
Diluted                      36,512       36,021    36,360       36,000

                                                                
Symmetry Medical Inc.
Consolidated Balance Sheets
In Thousands
                                                   September 29, December 31,
                                                    2012          2011
                                                   (unaudited)   
ASSETS:                                                          
Current Assets:                                                  
Cash and cash equivalents                           $12,366     $18,931
Accounts receivable, net                            53,035       51,835
Inventories                                         72,872       84,678
Refundable income taxes                             3,866        5,090
Deferred income taxes                               10,290       7,535
Derivative valuation asset                          179          --
Other current assets                                4,005        4,863
                                                                
Total current assets                                156,613      172,932
Property and equipment, net                         100,760      103,363
Goodwill                                            228,783      229,112
Intangible assets, net of accumulated amortization  118,414      124,276
Other assets                                        8,203        9,182
                                                                
Total Assets                                        $612,773    $638,865
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY:                            
Current Liabilities:                                             
Accounts payable                                    $26,655     $23,343
Accrued wages and benefits                          11,786       7,637
Other accrued expenses                              7,366        5,825
Accrued income taxes                                67           522
Current portion of derivative valuation liability   495          --
Deferred income taxes                               --           39
Revolving line of credit                            718          6,567
Current portion of capital lease obligations        522          483
Current portion of long-term debt                   11,111       5,904
                                                                
Total current liabilities                           58,720       50,320
Accrued income taxes                                6,981        6,844
Deferred income taxes                               19,989       18,459
Derivative valuation liability, less current        3,868        --
portion
Other liabilities                                   654          619
Capital lease obligations, less current portion     1,514        1,907
Long-term debt, less current portion                210,777      259,317
                                                                
Total Liabilities                                   302,503      337,466
                                                                
Shareholders' Equity:                                            
Common Stock, $.0001 par value; 75,000 shares
authorized; shares issued September 29,             4            4
2012--36,788; December 31, 2011--36,426
Additional paid-in capital                          286,619      283,071
Retained earnings                                   23,344       17,140
Accumulated other comprehensive income              303          1,184
                                                                
Total Shareholders' Equity                          310,270      301,399
                                                                
Total Liabilities and Shareholders' Equity          $612,773    $638,865

                                                              
                                                              
Reconciliation of As Adjusted                                  
Financial Measures
                               Three Months Ended
                               September 29,       June 30,     October 1,
                                2012                2012         2011
                               (In Thousands, Except Per Share Data)
                               (unaudited)
                                                              
Operating income, as reported   $10,172           $8,114     $1,662
Adjustments:                                                   
Amortization of intangible      2,017              2,008       722
assets
Stock Compensation expense*     1,126              1,003       307
Management transition costs     58                 58          477
Acquisition related costs**     635                264         475
SEC-related legal costs***      --                 12          356
Facility closure and severance  (76)               299         253
Legal entity restructuring****  54                 315         --
                                                              
Operating income, as adjusted   $13,986           $12,073    $4,252
                                                              
Net income, as reported         $3,738            $1,636     $527
Adjustments:                                                   
Amortization of intangible      1,311              1,305       469
assets
Amortization of debt issuance   295                315         57
costs
Stock Compensation expense*     732                652         200
Management transition costs     38                 38          310
Acquisition related costs**     413                172         309
SEC-related legal costs***      --                 8           231
Facility closure and severance  (49)               194         164
Legal entity restructuring****  35                 630         --
                                                              
Net income, as adjusted         $6,513            $4,950     $2,267
                                                              
                                                              
Earning per diluted share, as   $0.10             $0.05      $0.01
reported
Impact of adjustments           0.08               0.09        0.05
                                                              
Earning per diluted share, as   $0.18             $0.14      $0.06
adjusted
                                                              
* Stock compensation expense is included in two adjustment categories; stock
compensation expense and management transition costs.Management transition
costs for the three months ended October 1, 2011 included stock compensation
expense of $226.
** Third quarter 2012 represents acquisition costs of$635.Second quarter
2012 and third quarter 2011 include $173 and $189, respectively, of
acquisition costs; $91 and $286, respectively, of non-cash purchase accounting
inventory step-up amortization.
*** Second quarter 2012 and third quarter 2011 include professional fees
associated with the informal SEC inquiry which concluded in early 2012.
**** Legal entity restructuring during the second and third quarters of 2012
include professional fees, foreign currency impact and a net unfavorable
income tax impact.

CONTACT: Symmetry Medical Inc.
         Fred L. Hite
         Senior Vice President
         Chief Financial Officer
         (574) 371-2218
        
         Investors and Media:
         The Ruth Group
         Zack Kubow
         (646) 536-7020
         zkubow@theruthgroup.com
 
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