Accellent Inc. Announces Third Quarter 2012 Results

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Accellent Inc. Announces Third Quarter 2012 Results

WILMINGTON, Mass.--(BUSINESS WIRE)-- Accellent Inc. (the "Company" or "Accellent"), a wholly owned subsidiary of Accellent Holdings Corp., today announced results for its fiscal third quarter ended September 30, 2012.

Third Quarter 2012 Financial Results


Net sales were $126.0 million in the third quarter of 2012 compared with $126.8 million in the third quarter of 2011. Income from continuing operations was $16.2 million in the third quarter of 2012, compared with $13.3 million in the third quarter of 2011. Net loss was $6.5 million in the third quarter of 2012 compared to $4.4 million in the third quarter of 2011.

Adjusted EBITDA in the third quarter of 2012 was $28.3 million, or 22.4% of net sales, compared to Adjusted EBITDA of $24.3 million, or 19.2% of net sales, in the third quarter of 2011.

"Despite on-going revenue challenges, we continued to improve our business fundamentals that drive sustainable profitable growth. In the third quarter, despite relatively flat sales, Adjusted EBITDA increased over 16% year over year. I am optimistic that our actions will continue to generate positive results" stated Donald Spence, President and CEO of Accellent.

Nine Months Ended September 30, 2012 Financial Results

Net sales decreased 2.1% to $376.5 million in the first nine months of 2012 compared with $384.5 million in the first nine months of 2011. Income from continuing operations was $39.8 million in the first nine months of 2012 compared with $44.5 million in the first nine months of 2011. Net loss was $19.1 million in the first nine months of 2012 compared with a net loss of $11.6 million in the first nine months of 2011.

Adjusted EBITDA for the first nine months of 2012 was $76.7 million, or 20.4% of net sales compared to Adjusted EBITDA of $77.1 million, or 20.0% of net sales in the first nine months of 2011.

Reconciliations of non-GAAP financial measures to GAAP financial measures are provided in the financial information accompanying this press release.

The financial information included in this press release reflect results from continuing operations for all periods presented and assets to be held and used. Results of discontinued operations and assets held for sale are presented separately for all periods presented.

Conference Call

Donald Spence, President and Chief Executive Officer, and Jeremy A. Friedman, Executive Vice President and Chief Financial Officer, will discuss our third quarter financial results in a conference call scheduled for today, November 8, 2012 at 5 p.m. Eastern Standard Time. The teleconference can be accessed live on the Internet through the Investor Relations section of the Accellent website at www.accellent.com or by calling (800) 446-1671 pass code 33716271. Please visit the website or dial in 10 to 15 minutes prior to the beginning of the call to download and install any necessary audio software. A replay of the conference call will be available via www.accellent.com or by telephone at (888) 843-7419 pass code 33716271 until November 15, 2012.

About Accellent

Accellent Holdings Corp., through its wholly owned subsidiary Accellent, Inc., provides fully integrated outsourced manufacturing and engineering services to the medical device industry primarily in the cardiology, endoscopy and orthopedic markets. Accellent has broad capabilities in precision component fabrication, finished device assembly, complete supply chain management capabilities and engineering services. These capabilities enhance customers' speed to market and return on investment by enabling them to refocus internal resources more efficiently. For more information, please visit www.accellent.com.

Forward-Looking Statements

This press release includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission on March 29, 2012. All forward-looking statements are expressly qualified in their entirety by such risk factors.

ACCELLENT INC.
Unaudited Condensed Consolidated Statements of Operations
(in thousands)
 
      
Three Months EndedNine Months Ended

September 30,
2011

September 30,
2012

September 30,
2011

September 30,
2012

Net sales$126,840$125,961$384,530$376,526
Cost of sales (exclusive of amortization) 95,014  92,250  284,056  280,370 
 
Gross profit31,82633,711100,47496,156
 
Operating expenses:
Selling, general and administrative expenses14,16512,83342,67741,502
Research and development expenses6024192,0811,364
Restructuring expenses7142,552
Loss (gain) on disposal of assets6(221)53(254)
Amortization of intangible assets 3,735  3,735  11,205  11,205 
 
Total operating expenses 18,508  17,480  56,016  56,369 
 
Income from continuing operations13,31816,23144,45839,787
 
Other (expense) income, net:
Interest expense, net(17,232)(17,379)(51,660)(51,879)
Other income (expense), net 1,247  592  (1,403) (90)
 
Total other (expense) income, net (15,985) (16,787) (53,063) (51,969)
 
Loss from continuing operations before income taxes(2,667)(556)(8,605)(12,182)
 
Provision for income taxes 1,853  1,110  3,898  3,233 
 
Net loss from continuing operations(4,520)(1,666)(12,503)(15,415)
Income (loss) from discontinued operations, net of tax 121  (4,814) 944  (3,659)
Net loss$(4,399)$(6,480)$(11,559)$(19,074)
 
ACCELLENT INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
    
 

December 31,
2011

September 30,
2012

Assets
Current assets:
Cash$38,858$49,587

Accounts receivable, net of allowances of $1,983 and $1,904 as of December 31, 2011 and
  September 30, 2012, respectively

54,76356,074
Inventory62,15365,106
Assets held for sale, current portion3,8741,767
Prepaid expenses and other current assets 4,416  5,320 
 
Total current assets164,064177,854
Property, plant and equipment, net121,153116,555
Long-term assets held for sale16,2506,019
Goodwill619,443619,443
Other intangible assets, net149,687138,482
Deferred financing costs and other assets, net 16,825  14,635 
 
Total assets$1,087,422 $1,072,988 
 
Liabilities and Stockholder's equity
Current liabilities:
Current portion of long-term debt$22$15
Accounts payable21,03523,431
Accrued payroll and benefits7,85810,531
Accrued interest19,51918,822
Liabilities held for sale, current portion1,908972
Accrued expenses and other current liabilities 18,747  16,086 
 
Total current liabilities69,08969,857
Long-term debt712,967713,210
Other liabilities 38,466  41,258 
 
Total liabilities 820,522  824,325 
 
Stockholder's equity:

Common stock, par value $0.01 per share, 50,000,000 shares authorized; 1,000 shares issued
  and outstanding at December 31, 2011 and September 30, 2012, respectively

Additional paid-in capital638,445638,980
Accumulated other comprehensive (loss)(1,266)(965)
Accumulated deficit (370,279) (389,352)
 
Total stockholder's equity 266,900  248,663 
 
Total liabilities and stockholder's equity$1,087,422 $1,072,988 
 
ACCELLENT INC.
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA
(in thousands)
      
 
Three Months EndedNine Months Ended

September 30,
2011

September 30,
2012
September 30,
2011
September 30,
2012
 
Net loss$(4,399)$(6,480)$(11,559)$(19,074)
Interest expense, net17,23417,37951,66251,880
Provision for income taxes1,8531,1103,8983,233
Depreciation and amortization 9,757  10,189  28,804  30,319 
 
EBITDA (1)$24,445 $22,198 $72,805 $66,358 
 
 
Adjustments:
Stock-based compensation - employees271182761364
Stock-based compensation - non-employees23236868
Employee severance and relocation4925001,3061,870
(Income) loss from discontinued operations, net(121)4,814(944)3,659
Restructuring expenses7142,552
Executive recruiting costs43307
Plant closure costs195518
Currency translation (gain) loss(1,233)(569)1,474152
Loss (gain) on disposal of assets6(221 Read Full Story

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