NASHVILLE, Tenn., May 05, 2016 (GLOBE NEWSWIRE) — Symmetry Surgical Inc. (Nasdaq:SSRG) announced today financial results for the first quarter ended April 2, 2016.
Financial Results
Revenue for the first quarter 2016 was $21.2 million, up 2.2% compared to $20.8 million in the first quarter 2015. Revenue in the U.S. was $18.8 million, up 5.4% compared to the first quarter 2015, and International revenue was $2.4 million, down 17.0% compared to first quarter 2015 as a result of previously communicated headwinds related to the continued strengthening of the U.S. dollar, which causes our products to become more expensive for international customers.
Revenue from Symmetry Surgical branded products was $19.4 million, up 1.8% compared to the first quarter 2015 with U.S. revenue growth offset by a decline in international sales of Symmetry Surgical branded products. Revenue from Alliance products was $1.9 million, up 7.2% compared to the first quarter 2015. The first quarter 2015 comparisons have been adjusted to reflect the transition of the Vesocclude™ product line from the Alliance products category to the Symmetry Surgical branded category due to Symmetry’s acquisition of Vesocclude Medical on August 28, 2015.
Gross profit for the first quarter 2016 was $10.4 million, compared to $9.9 million in the first quarter 2015. Gross margin for the first quarter 2016 was 48.9%, compared to 47.6% in the same period last year. The year-over-year improvement in gross margin percent was driven by geographic mix, product mix due to acquisitions, lower product costs due to favorable exchange rates and product resourcing efforts, and tight cost controls.
Total operating expenses in the first quarter 2016 increased to $9.8 million compared to $9.0 million in the first quarter 2015. Operating expense was impacted by the Company’s previously announced infrastructure investments, the addition of the Vesocclude Medical expenses, and the impact of changes in foreign currency, offset by the elimination of the medical device excise tax. Operating income for the first quarter 2016 was $0.5 million, compared to $0.9 million in the first quarter 2015.
Net income for the first quarter 2016 was $0.3 million, or $0.03 per diluted share, compared to a net income of $0.8 million, or $0.08 per diluted share, in the first quarter 2015. The weighted average number of shares used to calculate the diluted net loss per share during the first quarter 2016 was 9,820,523.
EBITDA (which is defined below and excludes impairment charges) for the first quarter 2016 was $1.9 million compared to $2.8 million in the first quarter 2015. The Company generated free cash flow (also defined below) of $3.1 million in the first quarter 2015 and 2016.
Scott D. Kunkel, Senior Vice President and Chief Financial Officer, stated, “Our effective tax rate in 2016 differs from the U.S. Federal tax rate of 34.0% primarily due to the adoption of a new accounting pronouncement which requires the excess tax benefit resulting from the vesting of restricted stock to be recorded as an income tax benefit.”
Mr. Kunkel added, “We continued to generate positive free cash flow during the first quarter 2016. Cash collections remained strong and we continued to strategically invest in inventory and will continue to do so to support higher service levels for our customers and drive growth. Our free cash flow conversion was 159% and we continue to be very pleased with our ability to generate cash.”
Financial Guidance
As previously announced, due to the anticipated closing of the definitive agreement for Symmetry Surgical to be acquired by an affiliate of RoundTable Healthcare Partners (“RoundTable”), the Company is suspending financial guidance.
Conference Call
Due to the anticipated closing of the definitive agreement for Symmetry Surgical to be acquired by an affiliate of RoundTable Healthcare Partners (“RoundTable”), the Company will not be hosting a conference call to discuss the first quarter 2016 financial results.
About Symmetry Surgical Inc.
Symmetry Surgical is dedicated to developing and delivering high-quality, innovative surgical instruments that meet clinicians’ needs and improve patients’ lives. Our team collaborates with healthcare providers around the world to provide medical devices that exceed our customers’ expectations and provide solutions for today’s needs and tomorrow’s growth. Our rich and diverse history creates one of the industry’s most comprehensive surgical instrument portfolios, which includes our well-known brands such as BOOKWALTER®, GREENBERG®, OLSEN®, SYMMETRY®, SHARP KERRISON™, FLASH PAK®, CLASSIC®, CLASSIC PLUS®, SECTO®, QUAD-LOCK®, RAPIDCLEAN®, MAGNAFREE®, MIDAS TOUCH®, MICROSECT®, ULTRA INSTRUMENTS®, MULTIPAK®, ACCESS SURGICAL INTERNATIONAL®, RILEY MEDICAL®, TRANSPAK®, OPTI-LENGTH®, THE ULTRA SYSTEM®, BOOKWALTER ROTILT®, SYMMETRY ACCESS™, and VESOCCLUDE™. Symmetry Surgical is headquartered in Nashville, TN. For more information, please visit www.symmetrysurgical.com.
About RoundTable Healthcare Partners
RoundTable Healthcare Partners, Lake Forest, IL, is an operating-oriented private equity firm focused exclusively on the healthcare industry. RoundTable partners with companies that can benefit from its extensive industry relationships and proven operating and transaction expertise. RoundTable has established a successful track record of working with owner/founders, family companies, management teams, entrepreneurs, and corporate partners who share a vision and believe in the value creation potential of its partnership model. RoundTable has raised $2.75 billion in committed capital, including four equity funds totaling $2.15 billion and three subordinated debt funds totaling $600 million.
Non-GAAP Measures
EBITDA is Earnings Before Interest, Taxes, Depreciation, Amortization and Asset Impairment. Free Cash Flow (FCF) is Net Cash Provided by (Used In) Operating Activities less Purchases of Property and Equipment. Free Cash Flow Conversion is the ratio of Free Cash Flow to EBITDA. Reconciliations of these non-GAAP measures 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. Forward-looking statements in this press release include, but are not limited to, statements about the benefits and effects of the transaction, the expected timing of the completion of the transaction, the amounts to be received by shareholders. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, uncertainties as to the timing of the transaction; uncertainties as to whether Symmetry shareholders will approve the transaction; the risk that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or the terms of such approval; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, customers, vendors and other business partners; the risk that shareholder litigation in connection with the transaction may result in significant costs of defense, indemnification and liability; other business effects, including the effects of industry, economic or political conditions outside of the parties’ control; operating costs and business disruption following completion of the transaction, including adverse effects on employee retention and on Symmetry’s business relationships with third parties; transaction costs; and the risks identified under the heading “Risk Factors” in Symmetry’s Annual Report on Form 10-K, filed with the SEC on March 1, 2016, as well as Symmetry’s subsequent Current Reports on Form 8-K and other information filed by the Company with the SEC. Symmetry cautions investors not to place considerable reliance on the forward-looking statements contained in this press release. You are encouraged to read Symmetry’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this release, and Symmetry undertakes no obligation to update or revise any of these statements. Symmetry’s business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.
IMPORTANT ADDITIONAL INFORMATION ABOUT THIS TRANSACTION AND WHERE TO FIND IT
In connection with the proposed merger, the Company plans to file with the SEC a proxy statement and other documents. The Company will make the proxy statement available to its shareholders. Investors are urged to read the proxy statement and other materials filed with the SEC when they become available, because they will contain important information about the Company and the proposed transaction. The definitive proxy statement and other documents filed by the Company with the SEC will be available free of charge at the SEC’s website (www.sec.gov) and from the Company. Requests for copies of the proxy statement and other documents filed by the Company with the SEC may be made by contacting Zack Kubow by phone at (646) 536-7020 or by email atzkubow@theruthgroup.com.
The Company, its directors, executive officers and other persons related to the Company may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the proposed transaction. Information about the directors and executive officers of the Company and their ownership of Company common stock is set forth in the Company’s annual report on Form 10-K for the fiscal year ended January 2, 2016, which was filed with the SEC on March 1, 2016 and in its proxy statement for its 2016 annual meeting of stockholders, which was filed with the SEC on March 14, 2016. These documents can be obtained free of charge from the sources indicated above. Certain directors, executive officers and other persons related to the Company may have direct or indirect interests in the transaction due to securities holdings, vesting of equity awards and the terms of their employment arrangements with the Company. Additional information regarding the participants in the solicitation of the Company’s shareholders will be included in the proxy statement.
| Symmetry Surgical, Inc. | |||||||||
| Consolidated Statements of Operations | |||||||||
| In Thousands, Except Per Share Data | |||||||||
| Three Months Ended | |||||||||
| April 2, | April 4, | ||||||||
| 2016 | 2015 | ||||||||
| (unaudited) | (unaudited) | ||||||||
| Revenue | $ | 21,240 | $ | 20,774 | |||||
| Cost of revenue | 10,861 | 10,889 | |||||||
| Gross profit | 10,379 | 9,885 | |||||||
| Sales and marketing expenses | 4,699 | 4,473 | |||||||
| General and administrative expenses | 5,138 | 4,561 | |||||||
| Operating income | 542 | 851 | |||||||
| Other (income) expense: | |||||||||
| Interest expense | 46 | 64 | |||||||
| Other | 188 | (263 | ) | ||||||
| Income before income taxes | 308 | 1,050 | |||||||
| Income tax expense | 34 | 294 | |||||||
| Net income | $ | 274 | $ | 756 | |||||
| Net income per share: | |||||||||
| Basic | $ | 0.03 | $ | 0.08 | |||||
| Diluted | $ | 0.03 | $ | 0.08 | |||||
| Weighted average common shares and equivalent shares outstanding: | |||||||||
| Basic | 9,733 | 9,587 | |||||||
| Diluted | 9,821 | 9,603 | |||||||
| Symmetry Surgical, Inc. | |||||||||
| Consolidated Balance Sheets | |||||||||
| In Thousands | |||||||||
| April 2, | January 2, | ||||||||
| 2016 | 2016 | ||||||||
| ASSETS: | (unaudited) | ||||||||
| Current Assets: | |||||||||
| Cash | $ | 11,242 | $ | 8,072 | |||||
| Accounts receivable, net | 9,045 | 10,922 | |||||||
| Inventories | 24,058 | 23,076 | |||||||
| Other current assets | 1,646 | 1,624 | |||||||
| Total current assets | 45,991 | 43,694 | |||||||
| Property and equipment, net | 2,117 | 2,258 | |||||||
| Deferred income taxes | 24,285 | 24,291 | |||||||
| Goodwill | 9,344 | 9,341 | |||||||
| Intangible assets, net of accumulated amortization | 72,377 | 73,719 | |||||||
| Other assets | 654 | 678 | |||||||
| Total Assets | $ | 154,768 | $ | 153,981 | |||||
| LIABILITIES AND EQUITY: | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 6,680 | $ | 6,240 | |||||
| Accrued wages and benefits | 1,734 | 1,785 | |||||||
| Other accrued expenses | 1,136 | 1,540 | |||||||
| Contingent purchase liability, current | 2,073 | 1,047 | |||||||
| Accrued income taxes | 119 | 201 | |||||||
| Total current liabilities | 11,742 | 10,813 | |||||||
| Contingent purchase liability, non-current | 120 | 1,136 | |||||||
| Other long-term liabilities | 1,046 | 1,019 | |||||||
| Total Liabilities | 12,908 | 12,968 | |||||||
| Commitments and contingencies | |||||||||
| Stockholders’ Equity: | |||||||||
| Common Stock, $.0001 par value; 50,000 shares authorized; 10,740 shares issued April 2, 2016; 10,535 shares issued January 2, 2016 | 1 | 1 | |||||||
| Additional paid-in capital | 140,906 | 140,460 | |||||||
| Retained earnings | 1,358 | 1,084 | |||||||
| Accumulated other comprehensive loss | (405 | ) | (532 | ) | |||||
| Total Stockholders’ Equity | 141,860 | 141,013 | |||||||
| Total Liabilities and Equity | $ | 154,768 | $ | 153,981 | |||||
| Symmetry Surgical, Inc. | ||||||||||
| Reconciliation of EBITDA, Free Cash Flow, Free Cash Flow Conversion | ||||||||||
| In Thousands | ||||||||||
| Three Months Ended | ||||||||||
| April 2, | April 4, | |||||||||
| 2016 | 2015 | |||||||||
| (unaudited) | ||||||||||
| Net income, as reported | $ | 274 | $ | 756 | ||||||
| Adjustments: | ||||||||||
| Interest | 46 | 64 | ||||||||
| Tax expense | 34 | 294 | ||||||||
| Depreciation | 218 | 241 | ||||||||
| Amortization | 1,359 | 1,400 | ||||||||
| EBITDA | $ | 1,931 | $ | 2,755 | ||||||
| Three Months Ended | ||||||||||
| April 2, | April 4, | |||||||||
| 2016 | 2015 | |||||||||
| (unaudited) | ||||||||||
| Net cash provided by operating activities | $ | 3,145 | $ | 3,189 | ||||||
| Less: purchases of property and equipment | (76 | ) | (53 | ) | ||||||
| Free cash flow | $ | 3,069 | $ | 3,136 | ||||||
| Free cash flow conversion (ratio free cash flow to EBITDA) | 158.9 | % | 113.8 | % | ||||||
| Symmetry Surgical, Inc. | |||||||||||||||||||||||||
| Revenue by Product and Geography | |||||||||||||||||||||||||
| In Thousands | |||||||||||||||||||||||||
| First Quarter | Vs Prior Quarter | ||||||||||||||||||||||||
| 1Q’16 | 1Q’15 | Change | 1Q’16 | 4Q’15 | Change | ||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||||
| Revenue by Product: | |||||||||||||||||||||||||
| Symmetry Surgical branded | $ | 19,374 | $ | 19,034 | 1.8 | % | $ | 19,374 | $ | 20,058 | -3.4 | % | |||||||||||||
| Alliance Partners | 1,866 | 1,740 | 7.2 | % | 1,866 | 2,082 | -10.4 | % | |||||||||||||||||
| Total Revenue | $ | 21,240 | $ | 20,774 | 2.2 | % | $ | 21,240 | $ | 22,140 | -4.1 | % | |||||||||||||
| Revenue by Geography | |||||||||||||||||||||||||
| United States | $ | 18,815 | $ | 17,854 | 5.4 | % | $ | 18,815 | $ | 19,377 | -2.9 | % | |||||||||||||
| International | 2,425 | 2,920 | -17.0 | % | 2,425 | 2,763 | -12.2 | % | |||||||||||||||||
| Total Revenue | $ | 21,240 | $ | 20,774 | 2.2 | % | $ | 21,240 | $ | 22,140 | -4.1 | % | |||||||||||||
Investor Contact: Zack Kubow The Ruth Group 646-536-7020 zkubow@theruthgroup.com
