Accellent Inc. Announces First Quarter 2013 Results
Accellent Inc. Announces First Quarter 2013 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 first quarter ended March 31, 2013.
"While financial results in the first quarter were challenging, we remain confident in our strategy and continue to focus on improved execution of our business plans," stated Donald Spence, President and CEO of Accellent. "To enhance and speed our performance, during the first quarter of 2013, we completed our reorganization into two segments: Advanced Surgical and Cardio & Vascular. We believe that this change will align our strategy with our customers' needs by providing a deeper product focus and expertise, as we continue to drive growth."
First Quarter 2013 Financial Results
Net sales were $120.8 million in the first quarter of 2013 compared with $124.6 million in the first quarter of 2012. Loss from continuing operations was $43.5 million in the first quarter of 2013, compared with income from continuing operations of $10.0 million in the first quarter of 2012. Net loss was $62.1 million in the first quarter of 2013 compared to $7.0 million in the first quarter of 2012.
The loss from continuing operations and net loss for the three months ended March 31, 2013 include an estimated $51 million pre-tax goodwill impairment charge which came as a result of impairment testing required following the change in composition of our segments and reporting units. This impairment charge, subject to finalization, is associated with our new Advanced Surgical reporting unit. There was no impairment charge in 2012.
Adjusted EBITDA in the first quarter of 2013 was $18.5 million, or 15.3% of net sales, compared to Adjusted EBITDA of $21.6 million, or 17.4% of net sales, in the first quarter of 2012.
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 first quarter financial results in a conference call scheduled for today, May 14, 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 34754795. 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 34754795 until May 20, 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, 2012 filed with the Securities and Exchange Commission on April 1, 2013. All forward-looking statements are expressly qualified in their entirety by such risk factors.
ACCELLENT INC. | |||||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||
For the three months ended March 31, 2012 and 2013 | |||||||||||
(in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | March 31, | ||||||||||
Net sales | $ | 124,567 | $ | 120,798 | |||||||
Cost of sales (exclusive of amortization) | 95,106 | 94,928 | |||||||||
Gross profit | 29,461 | 25,870 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 14,855 | 14,247 | |||||||||
Research and development expenses | 473 | 452 | |||||||||
Impairment of goodwill | — | 51,000 | |||||||||
Restructuring expenses | 353 | (11 | ) | ||||||||
Gain on disposal of assets | (1 | ) | (44 | ) | |||||||
Amortization of intangible assets | 3,735 | 3,735 | |||||||||
Total operating expenses | 19,415 | 69,379 | |||||||||
Income (loss) from continuing operations | 10,046 | (43,509 | ) | ||||||||
Other (expense) income, net: | |||||||||||
Interest expense, net | (17,242 | ) | (17,306 | ) | |||||||
Other income (expense), net | 176 | (149 | ) | ||||||||
Total other (expense) income, net | (17,066 | ) | (17,455 | ) | |||||||
Loss from continuing operations before income taxes | (7,020 | ) | (60,964 | ) | |||||||
Provision for income taxes | 587 | 1,105 | |||||||||
Net loss from continuing operations | (7,607 | ) | (62,069 | ) | |||||||
Net income from discontinued operations, net of tax expense of $335 and $0 at March 31, 2012 and March 31, 2013, respectively | 621 | — | |||||||||
Net loss | $ | (6,986 | ) | $ | (62,069 | ) | |||||
ACCELLENT INC. | |||||||||||
Unaudited Condensed Consolidated Balance Sheets | |||||||||||
As of December 31, 2012 and March 31, 2013 | |||||||||||
(in thousands, except share and per share data) | |||||||||||
December 31, | March 31, | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash | $ | 59,902 | $ | 54,652 | |||||||
Accounts receivable, net of allowances of $2,106 and $1,966 as of December 31, 2012 and March 31, 2013, respectively | 49,403 | 54,134 | |||||||||
Inventory | 57,069 | 59,904 | |||||||||
Prepaid expenses and other current assets | 10,973 | 4,123 | |||||||||
Total current assets | 177,347 | 172,813 | |||||||||
Property, plant and equipment, net | 115,869 | 115,417 | |||||||||
Goodwill | 619,443 | 568,443 | |||||||||
Other intangible assets, net | 134,747 | 131,012 | |||||||||
Deferred financing costs and other assets, net | 13,766 | 13,081 | |||||||||
Total assets | $ | 1,061,172 | $ | 1,000,766 | |||||||
Liabilities and Stockholders' equity | |||||||||||
Current liabilities: | |||||||||||
Current portion of long-term debt | $ | 11 | $ | 7 | |||||||
Accounts payable | 20,044 | 21,206 | |||||||||
Accrued payroll and benefits | 6,829 | 8,879 | |||||||||
Accrued interest | 19,323 | 19,020 | |||||||||
Accrued expenses and other current liabilities | 17,359 | 15,806 | |||||||||
Total current liabilities | 63,566 | 64,918 | |||||||||
Long-term debt | 713,294 | 713,382 | |||||||||
Other liabilities | 39,905 | 40,135 | |||||||||
Total liabilities | 816,765 | 818,435 | |||||||||
Stockholders' equity: | |||||||||||
Common stock, par value $0.01 per share, 50,000,000 shares authorized; 1,000 shares issued and outstanding at December 31, 2012 and March 31, 2013, respectively | — | — | |||||||||
Additional paid-in capital | 639,610 | 639,825 | |||||||||
Accumulated other comprehensive loss | (2,554 | ) | (2,776 | ) | |||||||
Accumulated deficit | (392,649 | ) | (454,718 | ) | |||||||
Total stockholders' equity | 244,407 | 182,331 | |||||||||
Total liabilities and stockholders' equity | $ | 1,061,172 | $ | 1,000,766 | |||||||
ACCELLENT INC. | |||||||||||
Reconciliation of Net Loss to EBITDA to Adjusted EBITDA | |||||||||||
(in thousands) | |||||||||||
Three Months Ended | |||||||||||
March 31, | March 31, 2013 | ||||||||||
RECONCILIATION OF NET LOSS TO EBITDA: | |||||||||||
Net loss | $ | (6,986 | ) | $ | (62,069 | ) | |||||
Interest expense, net | 17,242 | 17,306 | |||||||||
Provision for income taxes | 587 | 1,105 | |||||||||
Depreciation and amortization | 9,650 | 8,126 | |||||||||
EBITDA (1) | $ | 20,493 | $ | (35,532 | ) | ||||||
Adjustments: | |||||||||||
Impairment of goodwill | — | 51,000 | |||||||||
Stock-based compensation - employees | 40 | 215 | |||||||||
Stock-based compensation - non-employees | 23 | 30 | |||||||||
Employee severance and relocation | 814 | 402 | |||||||||
Income from discontinued operations, net | (621 | ) | — | ||||||||
Restructuring expenses | 353 | (11 | ) | ||||||||
Plant closure costs | 169 | 1,170 | |||||||||
Currency (gain) loss | (185 | ) | 848 | ||||||||
Gain on disposal of assets | (1 | ) | (44 | ) | |||||||
Other taxes | 205 | 84 | |||||||||
Management fees to stockholder | 335 | 352 | |||||||||
Adjusted EBITDA (1) | $ | 21,625 | $ | 18,514 | |||||||
(1) EBITDA and Adjusted EBITDA presented in this press release are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity.
EBITDA represents net income (loss) before net interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to give effect to certain non-cash items and other adjustments, all of which are defined in the indentures governing our debt. The adjustments include adjustments for restructuring charges and related plant closure costs, stock compensation charges, severance and relocation costs, executive recruiting costs, currency gains and losses, gains and losses on derivative instruments, gains and losses resulting from the disposal of property and equipment, certain non-income based taxes, losses on debt extinguishment, and management fees.
We believe that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide as additional information for investors. We consider it an important supplemental measure of our performance and we believe that both are frequently used by securities analysts, investors and other interested parties in the evaluation of high yield issuers.
Investor Contact:
Accellent Inc.
Jeremy Friedman, 978-570-6900
Executive Vice President and Chief Financial Officer
jeremy.friedman@accellent.com
KEYWORDS: United States North America Massachusetts
INDUSTRY KEYWORDS:
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