Accellent Inc. Announces Fourth Quarter 2012 Results

Accellent Inc. Announces Fourth 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 fourth quarter ended December 31, 2012.

Fourth Quarter 2012 Financial Results


Net sales were $122.1 million in the fourth quarter of 2012 compared with $120.8 million in the fourth quarter of 2011. Income from continuing operations was $11.2 million in the fourth quarter of 2012, compared with $13.7 million in the fourth quarter of 2011. Net loss was $3.3 million in the fourth quarter of 2012 compared to $3.4 million in the fourth quarter of 2011.

Adjusted EBITDA in the fourth quarter of 2012 was $22.0 million, or 18.0% of net sales, compared to Adjusted EBITDA of $23.1 million, or 19.1% of net sales, in the fourth quarter of 2011.

"Although the challenging market conditions continued and we saw only slight growth in the fourth quarter of 2012, we remained focused on improving the fundamentals of the business," stated Donald Spence, President and CEO of Accellent. "With improved working capital management and the divestiture of non-strategic sites, we ended 2012 with a record cash balance of nearly $60 million. I am optimistic that our actions will continue to generate positive results."

Twelve Months Ended December 31, 2012 Financial Results

Net sales decreased 1.3% to $498.6 million in the twelve months of 2012 compared with $505.4 million in the twelve months of 2011. Income from continuing operations was $51.0 million in the twelve months of 2012 compared with $58.1 million in the twelve months of 2011. Net loss was $22.4 million in the twelve months of 2012 compared with a net loss of $14.9 million in the twelve months of 2011.

Adjusted EBITDA for the twelve months of 2012 was $98.7 million, or 19.8% of net sales compared to Adjusted EBITDA of $100.2 million, or 19.8% of net sales in the twelve 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 fourth quarter financial results in a conference call scheduled for today, March 27, 2013 at 5:00 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 (888) 895-5271 pass code 34513766. 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 34513766 until April 3, 2013.

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

Year Ended

December 31,
2011

December 31,
2012

December 31,
2011

December 31,
2012

Net sales

$

120,832

$

122,101

$

505,362

$

498,627

Cost of sales (exclusive of amortization)

92,070

95,605

376,126

375,975

Gross profit

28,762

26,496

129,236

122,652

Operating expenses:

Selling, general and administrative expenses

11,311

10,900

53,988

52,402

Research and development expenses

441

331

2,522

1,695

Restructuring expenses

348

314

348

2,866

Gain on disposal of assets

(739

)

(7

)

(686

)

(261

)

Amortization of intangible assets

3,734

3,734

14,939

14,939

Total operating expenses

15,095

15,272

71,111

71,641

Income from continuing operations

13,667

11,224

58,125

51,011

Other (expense) income, net:

Interest expense, net

(17,221

)

(17,217

)

(68,881

)

(69,096

)

Other income (expense), net

1,433

1,190

30

1,100

Total other (expense) income, net

(15,788

)

(16,027

)

(68,851

)

(67,996

)

Loss from continuing operations before income taxes

(2,121

)

(4,803

)

(10,726

)

(16,985

)

Provision for income taxes

1,235

(1,449

)

5,133

1,784

Net loss from continuing operations

(3,356

)

(3,354

)

(15,859

)

(18,769

)

Net income (loss) from discontinued operations, net of tax

(24

)

58

920

(3,601

)

Net loss

$

(3,380

)

$

(3,296

)

$

(14,939

)

$

(22,370

)

ACCELLENT INC.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

December 31,
2011

December 31,
2012

Assets

Current assets:

Cash

$

38,858

$

59,901

Accounts receivable, net of allowances of $1,983 and $2,106 as of December 31, 2011

December 31, 2012 respectively

54,763

49,404

Inventory

62,153

57,069

Assets held for sale, current portion

3,874

-

Prepaid expenses and other current assets

4,416

10,973

Total current assets

164,064

177,347

Property, plant and equipment, net

121,153

115,869

Long-term assets held for sale

16,250

-

Goodwill

619,443

619,443

Other intangible assets, net

149,687

134,747

Deferred financing costs and other assets, net

16,825

13,766

Total assets

$

1,087,422

$

1,061,172

Liabilities and Stockholder's equity

Current liabilities:

Current portion of long-term debt

$

22

$

11

Accounts payable

21,035

20,044

Accrued payroll and benefits

7,858

6,829

Accrued interest

19,519

19,323

Liabilities held for sale

1,908

-

Accrued expenses and other current liabilities

18,747

17,359

Total current liabilities

69,089

63,566

Long-term debt

712,967

713,294

Other liabilities

38,466

39,905

Total liabilities

820,522

816,765

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 December 31, 2012, respectively

-

-

Additional paid-in capital

638,445

639,610

Accumulated other comprehensive loss

(1,266

)

(2,554

)

Accumulated deficit

(370,279

)

(392,649

)

Total stockholder's equity

266,900

244,407

Total liabilities and stockholder's equity

$

1,087,422

$

1,061,172

ACCELLENT INC.

Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA

(in thousands)

Three Months Ended

Year Ended

December 31,
2011

December 31,
2012

December 31,
2011

December 31,
2012

Net income (loss)

$

(3,380

)

$

(3,296

)

$

(14,939

)

$

(22,370

)

Interest expense, net

17,219

17,216

68,881

69,096

Provision for income taxes

1,235

(1,449

)

5,133

1,784

Depreciation and amortization

8,207

8,850

37,011

39,169

EBITDA (1)

$

23,281

$

21,321

$

96,086

$

87,679

Adjustments:

Stock-based compensation - employees

260

345

1,021

709

Stock-based compensation - non-employees

22

22

90

90

Employee severance and relocation

341

828

1,647

2,698

(Income) loss on discontinued operations, net

24

(58

)

(920

)

3,601

Restructuring expenses

348

314

348

2,866

Executive recruiting costs

-

-

307

-

Plant closure costs

156

214

156

732

Currency translation (gain) loss

(1,377

)

(435

)

97

(283

)

Gain on disposal of assets

(738

)

(8

)

(686