Accellent Inc. Announces Third Quarter 2012 Results

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 Ended

Nine 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 profit

31,826

33,711

100,474

96,156

Operating expenses:

Selling, general and administrative expenses

14,165

12,833

42,677

41,502

Research and development expenses

602

419

2,081

1,364

Restructuring expenses

714

2,552

Loss (gain) on disposal of assets

6

(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 operations

13,318

16,231

44,458

39,787

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

54,763

56,074

Inventory

62,153

65,106

Assets held for sale, current portion

3,874

1,767

Prepaid expenses and other current assets

4,416

5,320

Total current assets

164,064

177,854

Property, plant and equipment, net

121,153

116,555

Long-term assets held for sale

16,250

6,019

Goodwill

619,443

619,443

Other intangible assets, net

149,687

138,482

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 payable

21,035

23,431

Accrued payroll and benefits

7,858

10,531

Accrued interest

19,519

18,822

Liabilities held for sale, current portion

1,908

972

Accrued expenses and other current liabilities

18,747

16,086

Total current liabilities

69,089

69,857

Long-term debt

712,967

713,210

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 capital

638,445

638,980

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 Ended

Nine 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, net

17,234

17,379

51,662

51,880

Provision for income taxes

1,853

1,110

3,898

3,233

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 - employees

271

182

761

364

Stock-based compensation - non-employees

23

23

68

68

Employee severance and relocation

492

500

1,306

1,870

(Income) loss from discontinued operations, net

(121

)

4,814

(944

)

3,659

Restructuring expenses

714

2,552

Executive recruiting costs

43

307

Plant closure costs

195

518

Currency translation (gain) loss

(1,233

)

(569

)

1,474

152

Loss (gain) on disposal of assets

6

(221