Symmetry Medical Reports First Quarter 2010 Financial Results

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WARSAW, Ind., May 6, 2010 /PRNewswire via COMTEX/ –Symmetry Medical Inc. (NYSE: SMA), a leading independent provider of products to the global orthopaedic device industry and other medical markets, announced first quarter 2010 financial results for the three-month period ended April 3, 2010.

                                  First Quarter            Vs Prior Quarter
    (in millions, except
     share data)             2010     2009  Change   1Q'10   4Q'09   Change
                             ----     ----  ------   -----   -----   ------

    Revenue                 $84.5   $101.4      -17%  $84.5   $76.4      11%
    Operating Income          3.9     11.2      -65%    3.9     1.2     225%
    Net Income                1.6      6.8      -76%    1.6     0.6     167%
    EPS                     $0.05    $0.19      -74%  $0.05   $0.02     150%

    Non-GAAP*
    ---------
    Operating Income*         4.4     11.3      -61%    4.4     3.1      42%
    Net Income*               2.0      6.9      -71%    2.0     1.8      11%
    EPS*                    $0.06    $0.19      -68%  $0.06   $0.05      20%

    Revenue by Product:
    -------------------
    Instruments             $33.4    $46.5      -28%  $33.4   $32.0       4%
    Implants                 28.2     29.1       -3%   28.2    24.8      14%
    Cases                    17.0     18.5       -8%   17.0    14.8      15%
    Other                     5.9      7.3      -19%    5.9     4.8      23%
                              ---      ---              ---     ---
         Total Revenue      $84.5   $101.4      -17%  $84.5   $76.4      11%

    * Excludes facility consolidation and severance costs incurred in
    2010 and 2009. See "Non-GAAP Measures" below.

Revenue for the first quarter 2010 was $84.5 million, up 10.6% on a sequential basis from the $76.4 million reported in the fourth quarter 2009, reflecting increased customer demand across all product lines. Revenue for the first quarter 2009 was $101.4 million.

Gross profit for the first quarter 2010 was $17.0 million, up 21.4% on a sequential basis from the $14.0 million reported in the fourth quarter 2009 and compared to $24.6 million in the first quarter 2009. Gross margin percentage for the first quarter 2010 was 20.2% compared to 18.3 % for the fourth quarter 2009 and 24.2% in the same period last year.

Selling, general and administrative expenses in the first quarter 2010 were $12.6 million, up from $10.9 million in the fourth quarter 2009 driven by investments in R&D, sales and marketing expenses as well as an increase in employee commissions and incentive accruals. Expenses were down 4.8% compared to $13.2 million in the first quarter 2009. The year-over-year decrease was driven primarily by cost controls implemented during the second half of 2009.

On a pre-tax basis, facility closure and severance costs were $0.5 million in the first quarter of 2010, compared to $0.1 million in the first quarter of 2009 and $2.0 million in the fourth quarter of 2009.

Operating income for the first quarter 2010 was $3.9 million, up from fourth quarter 2009 operating income of $1.2 million and compared to $11.2 million for the first quarter 2009. Operating margin for the first quarter 2010 was 4.6%, compared to 1.5% in the fourth quarter 2009 and 11.0% for the first quarter 2009. Excluding expenses related to facility consolidation and employee severance payments referenced above, operating income for the first quarter 2010 was $4.4 million compared to $3.1 million in the fourth quarter of 2009.

The first quarter 2010 included a non-cash gain of $0.3 million for the mark to market of the Company’s interest rate derivative, compared to a non-cash gain for the interest rate derivative of $0.4 million in the first quarter 2009.

Income tax expense for the first quarter 2010 was $0.8 million, compared to a tax expense of $3.2 million for the first quarter of 2009.

Net income for the first quarter 2010 was $1.6 million, or $0.05 per diluted share, up from $0.6 million, or $0.02 per diluted share, for the fourth quarter of 2009 and compared to $6.9 million, or $0.19 per diluted share, for the first quarter of 2009. Excluding the facility consolidation and employee severance payments referenced above, net income for the first quarter 2010 was $2.0 million, or $0.06 per diluted share compared to $0.05 per diluted share in the fourth quarter of 2009.

The weighted average number of diluted shares outstanding during the first quarter of 2010 was 35,729,115.

Brian Moore, President and Chief Executive Officer of Symmetry Medical, stated, “We are encouraged with the improving environment in the orthopedic industry and the results of our cost control initiatives, both of which contributed positively to our first quarter 2010 results. Our strong 11% sequential revenue growth was driven by the ongoing stabilization of our business that began during the fourth quarter 2009. We are continuing to see positive signs of recovery with order intake greater than reported sales for the second consecutive quarter. Our strategic focus remains on positioning ourselves for the reacceleration of orthopedic industry growth and increasing our market share.”

Mr. Moore continued, “As a reflection of the improved environment and order intake, we are increasing full-year 2010 revenue guidance. We believe we will continue to gain volume leverage and increase efficiencies to improve bottom line performance.”

Financial Guidance

The following forward-looking estimates regarding 2010 guidance reflect current market conditions and foreign currency rates. Actual results may differ materially, and the Company refers you to forward-looking statements located at the end of the press release.

For the full year 2010, the Company is increasing revenue guidance to a range of $330 million to $340 million, up from the previously announced range of $320 million to $340 million. The increase is based on current order flow and anticipated customer demand for the remainder of 2010.

The Company is raising its full year 2010 earnings per diluted share guidance in the range of $0.45 to $0.50, up from the previously announced range of $0.43 to $0.50.

Conference Call

Symmetry Medical will host a conference call to discuss first quarter 2010 financial results at 8:00 a.m. ET on May 6, 2010.A live Web cast of the conference call will be available online from the investor relations page of the Company’s corporate website at www.symmetrymedical.com. The dial-in numbers are (866) 543-6405for domestic callers and (617) 213-8897 for international. The reservation number for both is 49665172.After the live webcast, the call will remain available on Symmetry Medical’s web site through August 6, 2010. In addition, a telephonic replay of the call will be available until May 20, 2010. The replay numbers are (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use reservation code 13569203.

About Symmetry Medical Inc.

Symmetry Medical Inc. is a leading independent provider of implants and related instruments and cases to the orthopaedic device industry. The Company also designs, develops and produces these products for companies in other segments of the medical device market, including arthroscopy, dental, laparoscopy, osteobiologic and endoscopy sectors and provides limited specialized products and services to non-healthcare markets, such as the aerospace market.

Non-GAAP Measures

The non-GAAP measures, including adjusted operating income, net income and EPS, shown in this release exclude facility consolidation and severance costs. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measure are included after the financial information included in this press release. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Management believes these non-GAAP measures improve management’s and investors’ the ability to better compare the company’s ongoing financial performance between periods and with other companies.

Forward-Looking Statements

Statements in the press release regarding Symmetry Medical Inc.’s business which are not historical facts may be “forward-looking statements” that involve risks and uncertainties, within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictive in nature and are frequently identified by the use of terms such as “may,” “might,” “will,” “should,” “expect,” “believe,” “anticipate,” “plan,” “estimate,” “intend,” and similar words indicating possible future expectations, events or actions. Such predictive statements are not guarantees of future performance, and actual outcomes and results could differ materially from our current expectations. We refer you to the “Risk Factors” and “Forward Looking-Statements” sections in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission as well as the Company’s other filings with the SEC, which are available on the SEC’s Web site at www.sec.gov.

    Contact:                            Investors:
    Symmetry Medical Inc.               The Ruth Group
                                         Nick Laudico/R.J.
    Fred L. Hite                         Pellegrino
    Senior Vice President                         (646) 536-7030/7009
    Chief Financial Officer             nlaudico@theruthgroup.com
    (574) 371-2218                       rpellegrino@theruthgroup.com

                                        Media:
                                        Jason Rando
                                        The Ruth Group
                                        (646) 536-7025
                                        jrando@theruthgroup.com

    Symmetry Medical Inc.
    Consolidated Statements of Operations

                                                      Three Months Ended
                                                      ------------------
                                                  April 3,        April 4,
                                                         2010           2009
                                                         ----           ----
                                                   (In Thousands, Except Per
                                                          Share Data)
                                                         (unaudited)

    Revenue                                           $84,494       $101,422
    Cost of Revenue                                    67,458         76,864
                                                       ------         ------
    Gross Profit                                       17,036         24,558
    Selling, general and administrative expenses       12,604         13,245
    Facility closure and severance costs                  520            108
                                                          ---            ---

    Operating Income                                    3,912         11,205
    Other (income)/expense:
    Interest expense                                    1,563          1,820
    Derivatives valuation gain                           (308)          (394)
    Other                                                 181           (296)
                                                          ---           ----

    Income before income taxes                          2,476         10,075
    Income tax expense                                    845          3,228
                                                          ---          -----

    Net income                                         $1,631        $6 ,847
                                                       ======        =======

    Net income per share:
    Basic                                               $0.05         $0 .19
                                                        =====         ======
    Diluted                                             $0.05         $0 .19
                                                        =====         ======

    Weighted average common shares and equivalent
     shares outstanding:
    Basic                                              35,442         35,286
    Diluted                                            35,729         35,381

    Symmetry Medical Inc.
    Consolidated Balance Sheets

                                                                      January
                                                          April 3,       2,
                                                               2010       2010
                                                               ----       ----
                                                             (In Thousands)
                                                        (unaudited)

    Assets:
    Current Assets:
    Cash and cash equivalents                               $10,460    $14,219
    Accounts receivable, net                                 46,139     38,221
    Inventories                                              60,825     62,301
    Refundable income taxes                                   2,282      3,048
    Deferred income taxes                                     5,581      5,816
    Other current assets                                      4,644      3,648
                                                              -----      -----

    Total current assets                                    129,931    127,253
    Property and equipment, net                             109,997    113,369
    Goodwill                                                153,191    153,813
    Intangible assets, net of accumulated amortization       41,708     42,729
    Other assets                                              1,160      1,181
                                                              -----      -----
    Total Assets                                           $435,987   $438,345
                                                           ========   ========

    Liabilities and Shareholders' Equity:
    Current Liabilities:
    Accounts payable                                        $22,711    $19,494
    Accrued wages and benefits                                8,749      7,607
    Other accrued expenses                                    4,354      5,113
    Accrued income taxes                                         24        257
    Deferred income taxes                                        76         78
    Revolving line of credit                                  1,216      3,320
    Current portion of capital lease obligations                485        529
    Current portion of long-term debt                        21,770     20,400
                                                             ------     ------
    Total current liabilities                                59,385     56,798
    Accrued Income Taxes                                      6,419      6,362
    Deferred income taxes                                    17,063     17,646
    Derivative valuation liability                            2,831      2,982
    Capital lease obligations, less current portion           2,758      2,887
    Long-term debt, less current portion                     67,470     69,200
                                                             ------     ------

    Total Liabilities                                       155,926    155,875
                                                            -------    -------

    Shareholders' Equity:
    Common Stock, $.0001 par value; 75,000 shares
     authorized; shares issued April 3, 2010--35,954;
     January 2, 2010--35,840                                      4          4
    Additional paid-in capital                              278,475    278,176
    Retained earnings                                         1,908        277
    Accumulated other comprehensive income (loss)              (326)     4,013
                                                               ----      -----
    Total Shareholders' Equity                              280,061    282,470
                                                            -------    -------
    Total Liabilities and Shareholders' Equity             $435,987   $438,345
                                                           --------   --------

    Reconciliation of Non-GAAP Financial
     Measures
                                                 Three Months Ended
                                                 ------------------
                                          April 3,     Jan 2,   April 4,
                                               2010       2010       2009
                                               ----       ----       ----
                                              (In Thousands, Except Per
                                                     Share Data)
                                                     (unaudited)

    Operating Income, as reported            $3,912     $1,151    $11,205
    Facility closure and severance costs        520      1,958        108
                                                ---      -----        ---

    Operating Income excluding facility
     closure and severance costs             $4,432     $3,109    $11,313
                                             ======     ======    =======

    Net Income, as reported                  $1,631       $554     $6,847
    Facility closure and severance costs        338      1,273         70
                                                ---      -----        ---

    Net Income excluding facility closure
     and severance costs                     $1,969     $1,827     $6,917
                                             ======     ======     ======

    Earning per diluted share                 $0.05      $0.02      $0.19
    Impact of facility closure and
     severance costs per diluted share         0.01       0.03       0.00
                                               ----       ----       ----

    Earning per diluted share, excluding
     facility closure and severance costs     $0.06     $0 .05      $0.19
                                              -----     ------      -----

SOURCE Symmetry Medical Inc.

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