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| 8-K - ACCELLENT INC. 8-K - ACCELLENT INC | acc-q3x2013form8xk.htm |
Exhibit 99.1
Media Contact: Laura Tringali
978-570-6900
laura.tringali@accellent.com
Investor Contact: Richard Johnson
978-570-6900
richard.johnson@accellent.com
Accellent Inc. Announces Third Quarter 2013 Results
Wilmington, MA (November 7, 2013) - Accellent Inc. (the “Company” or “Accellent”) today announced results for its fiscal third quarter ended September 30, 2013.
Third Quarter 2013 Financial Results
Third quarter 2013 net sales of $135.4 million increased 7.5% from $126.0 million in the third quarter of 2012. Net sales in our cardio & vascular business of $82.8 million increased 5.1% from $78.7 million for the same quarter last year. Net sales in our advanced surgical business of $52.7 million were 11.5% higher than $47.2 million for the third quarter of 2012.
Adjusted EBITDA in the third quarter of 2013 increased 8.6% to $30.6 million, or 22.6% of net sales, compared to Adjusted EBITDA of $28.2 million, or 22.3% of net sales, in the third quarter of 2012.
“Building on last quarter's momentum, we delivered strong results across our business with Q3 being another successful quarter,” stated Donald Spence, Chairman and CEO of Accellent. “Our third quarter results continue to demonstrate our ability to align our strategy with our customers' needs. We remain confident in our ability to deliver overall operational improvement and meaningful long term growth.”
Income from continuing operations was $20.9 million in the third quarter of 2013, compared with income from continuing operations of $16.2 million in the third quarter of 2012. Net income was $2.4 million in the third quarter of 2013 compared to a net loss of $6.5 million in the third quarter of 2012.
Nine Months Ended September 30, 2013 Financial Results
Net sales increased 2.8% to $387.0 million in the first nine months of 2013, compared with $376.5 million in the first nine months of 2012. Net sales in our cardio & vascular business of $239.4 million increased 2.0% from $234.6 million for the same period last year. Net sales in our advanced surgical business of $147.6 million were 4.0% higher than $141.9 million for the first nine months of 2012.
Adjusted EBITDA for the first nine months of 2013 increased 0.9% to $76.6 million, or 19.8% of net sales compared to Adjusted EBITDA of $75.9 million, or 20.2% of net sales in the first nine months of 2012.
Loss from continuing operations was $17.0 million in the first nine months of 2013, compared with income from continuing operations of $39.8 million in the first nine months of 2012. Net loss was $72.4 million in the first nine months of 2013 compared with a net loss of $19.1 million in the first nine months of 2012. The loss from continuing operations and net loss for the nine months ended September 30, 2013
include a $63.1 million pre-tax goodwill impairment charge associated with our advanced surgical reporting unit. There was no impairment charge in 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, Chairman and Chief Executive Officer, and Richard Johnson, Interim Chief Financial Officer, will discuss our third quarter financial results in a conference call scheduled for today, November 7, 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 (800) 446-1671 pass code 35825346. 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 35825346 until November 14, 2013.
About Accellent
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
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2012 | September 30, 2013 | September 30, 2012 | September 30, 2013 | ||||||||||||
Net sales | $ | 125,961 | $ | 135,437 | $ | 376,526 | $ | 386,968 | |||||||
Cost of sales (exclusive of amortization) | 92,250 | 97,561 | 280,370 | 287,819 | |||||||||||
Gross profit | 33,711 | 37,876 | 96,156 | 99,149 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 12,833 | 12,511 | 41,502 | 39,536 | |||||||||||
Research and development expenses | 419 | 508 | 1,364 | 1,507 | |||||||||||
Impairment of goodwill | — | — | — | 63,128 | |||||||||||
Restructuring expenses | 714 | 66 | 2,552 | (115 | ) | ||||||||||
(Gain) loss on disposal of assets | (221 | ) | 204 | (254 | ) | 896 | |||||||||
Amortization of intangible assets | 3,735 | 3,735 | 11,205 | 11,205 | |||||||||||
Total operating expenses | 17,480 | 17,024 | 56,369 | 116,157 | |||||||||||
Income (loss) from continuing operations | 16,231 | 20,852 | 39,787 | (17,008 | ) | ||||||||||
Other (expense) income, net: | |||||||||||||||
Interest expense, net | (17,379 | ) | (17,288 | ) | (51,879 | ) | (51,865 | ) | |||||||
Other income (expense), net | 592 | (103 | ) | (90 | ) | (283 | ) | ||||||||
Total other expense, net | (16,787 | ) | (17,391 | ) | (51,969 | ) | (52,148 | ) | |||||||
(Loss) income from continuing operations before income taxes | (556 | ) | 3,461 | (12,182 | ) | (69,156 | ) | ||||||||
Provision for income taxes | 999 | 1,035 | 2,717 | 3,158 | |||||||||||
Net (loss) income from continuing operations | (1,555 | ) | 2,426 | (14,899 | ) | (72,314 | ) | ||||||||
Net loss from discontinued operations, net of tax of $111 and $515 for the three and nine months ended September 30, 2012, respectively, and net of tax of $0 for the three and nine months ended September 30, 2013, respectively | (4,925 | ) | (63 | ) | (4,175 | ) | (63 | ) | |||||||
Net (loss) income | $ | (6,480 | ) | $ | 2,363 | $ | (19,074 | ) | $ | (72,377 | ) | ||||
ACCELLENT INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31, 2012 | September 30, 2013 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 59,902 | $ | 64,577 | |||
Accounts receivable, net of allowances of $2,106 and $2,508 as of December 31, 2012 and September 30, 2013, respectively | 49,403 | 56,735 | |||||
Inventory | 57,069 | 63,329 | |||||
Prepaid expenses and other current assets | 10,973 | 3,403 | |||||
Total current assets | 177,347 | 188,044 | |||||
Property, plant and equipment, net | 114,809 | 116,315 | |||||
Assets held for sale | 1,060 | 880 | |||||
Goodwill | 619,443 | 556,315 | |||||
Other intangible assets, net | 134,747 | 123,543 | |||||
Deferred financing costs and other assets, net | 13,766 | 11,634 | |||||
Total assets | $ | 1,061,172 | $ | 996,731 | |||
Liabilities and Stockholders' equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 11 | $ | 7 | |||
Accounts payable | 20,044 | 22,259 | |||||
Accrued payroll and benefits | 6,829 | 11,766 | |||||
Accrued interest | 19,323 | 18,804 | |||||
Accrued expenses and other current liabilities | 17,359 | 15,915 | |||||
Total current liabilities | 63,566 | 68,751 | |||||
Long-term debt | 713,294 | 713,560 | |||||
Other liabilities | 39,905 | 40,984 | |||||
Total liabilities | 816,765 | 823,295 | |||||
Commitments and contingencies (Note 12) | |||||||
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 September 30, 2013, respectively | — | — | |||||
Additional paid-in capital | 639,610 | 640,503 | |||||
Accumulated other comprehensive loss | (2,554 | ) | (2,041 | ) | |||
Accumulated deficit | (392,649 | ) | (465,026 | ) | |||
Total stockholders’ equity | 244,407 | 173,436 | |||||
Total liabilities and stockholders’ equity | $ | 1,061,172 | $ | 996,731 | |||
ACCELLENT INC.
Unaudited Revenue by Segment
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2012 | September 30, 2013 | September 30, 2012 | September 30, 2013 | ||||||||||||
Net Sales*: | |||||||||||||||
Cardio & Vascular segment | $ | 78,719 | $ | 82,772 | $ | 234,630 | $ | 239,351 | |||||||
Advanced Surgical segment | 47,242 | 52,665 | 141,896 | 147,617 | |||||||||||
Total Net Sales | $ | 125,961 | $ | 135,437 | $ | 376,526 | $ | 386,968 | |||||||
*Results do not include intersegment net sales
ACCELLENT INC.
Reconciliation of Net (Loss) Income to EBITDA to Adjusted EBITDA
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2012 | September 30, 2013 | September 30, 2012 | September 30, 2013 | ||||||||||||
RECONCILIATION OF NET (LOSS) INCOME TO EBITDA: | |||||||||||||||
Net (loss) income | $ | (6,480 | ) | $ | 2,363 | $ | (19,074 | ) | $ | (72,377 | ) | ||||
Interest expense, net | 17,379 | 17,288 | 51,879 | 51,865 | |||||||||||
Provision for income taxes | 999 | 1,035 | 2,717 | 3,158 | |||||||||||
Depreciation and amortization | 10,090 | 8,406 | 29,578 | 24,634 | |||||||||||
EBITDA (1) | $ | 21,988 | $ | 29,092 | $ | 65,100 | $ | 7,280 | |||||||
Adjustments: | |||||||||||||||
Impairment of goodwill | — | — | — | 63,128 | |||||||||||
Stock-based compensation – employees | 182 | 418 | 364 | 818 | |||||||||||
Stock-based compensation - non-employees | 23 | 30 | 68 | 90 | |||||||||||
Employee severance and relocation | 500 | 152 | 1,870 | 971 | |||||||||||
Loss from discontinued operations, net | 4,925 | 63 | 4,175 | 63 | |||||||||||
Restructuring expenses | 714 | 66 | 2,552 | (115 | ) | ||||||||||
Plant closure costs & other | 194 | 27 | 517 | 1,244 | |||||||||||
Currency (gain) loss | (568 | ) | 111 | 152 | 1,231 | ||||||||||
(Gain) loss on disposal of assets | (221 | ) | 204 | (254 | ) | 896 | |||||||||
Other taxes | 80 | 70 | 395 | 218 | |||||||||||
Management fees to stockholder | 335 | 351 | 1,005 | 1,055 | |||||||||||
Realized gain on available for sale security | — | — | — | (242 | ) | ||||||||||
Adjusted EBITDA (1) | $ | 28,152 | $ | 30,584 | $ | 75,944 | $ | 76,637 | |||||||
(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 impairment of goodwill, restructuring charges and related plant closure costs, stock compensation charges, severance and relocation costs, results from discontinued operations, 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, management fees, and gains and losses from the sale of available for sale securities.
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.