(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.001 per share | CFX | New York Stock Exchange |
5.75% Tangible Equity Units | CFXA | New York Stock Exchange |
Date: | February 21, 2020 | Colfax Corporation | ||
By: | /s/ Douglas J. Pitts | |||
Name: | Douglas J. Pitts | |||
Title: | Vice President | |||
Controller and Chief Accounting Officer | ||||
(Principal Accounting Officer) |
• | Reported $0.24 EPS from continuing operations and achieved $0.61 of adjusted EPS |
• | Delivered 7.5% year-on-year sales growth in Medical Technology segment including 7.8% organic improvement |
• | Improved Fabrication Technology operating income and adjusted EBITA margins by over 300 basis points |
• | Reaffirming 2020 adjusted EPS guidance of $2.10 to $2.20 |
• | Adjusted net income represents net income (loss) from continuing operations excluding restructuring and other related charges, pension settlement loss, debt extinguishment charges, acquisition-related amortization and other non-cash charges, strategic transaction costs, and loss on short-term investments related to the 2017 divestiture of the Fluid Handling business. |
• | Adjusted EBITA represents net income (loss) from continuing operations excluding restructuring and other related charges, acquisition-related amortization and other non-cash charges, and strategic transaction costs, as well as provision (benefit) for income taxes, loss on short-term investments, interest expense, net and pension settlement loss. Colfax presents adjusted EBITA margin, which is subject to the same adjustments as adjusted EBITA. Further, Colfax presents adjusted EBITA (and adjusted EBITA margin) on a segment basis, where we exclude the impact of strategic transaction costs and acquisition-related amortization and other non-cash charges from segment operating income. |
• | Adjusted EBITDA represents Adjusted EBITA plus depreciation and other amortization. |
• | Core or organic sales growth (decline) excludes the impact of acquisitions and foreign exchange rate fluctuations. |
• | Free cash flow represents operating cash flow less purchases of property, plant and equipment (“PP&E”) plus proceeds from sales of PP&E. |
Three Months Ended | Year Ended | ||||||||||||||
December 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||
Net sales | $ | 888,373 | $ | 574,931 | $ | 3,327,458 | $ | 2,193,083 | |||||||
Cost of sales | 492,530 | 393,336 | 1,926,402 | 1,463,707 | |||||||||||
Gross profit | 395,843 | 181,595 | 1,401,056 | 729,376 | |||||||||||
Selling, general and administrative expense | 285,861 | 145,393 | 1,132,149 | 548,763 | |||||||||||
Restructuring and other related charges | 18,098 | 9,434 | 65,295 | 29,077 | |||||||||||
Operating income | 91,884 | 26,768 | 203,612 | 151,536 | |||||||||||
Pension settlement loss (gain) | — | (39 | ) | 33,616 | (39 | ) | |||||||||
Interest expense, net | 32,683 | 15,628 | 119,503 | 49,083 | |||||||||||
Loss on short-term investments | — | — | — | 10,128 | |||||||||||
Income from continuing operations before income taxes | 59,201 | 11,179 | 50,493 | 92,364 | |||||||||||
Income tax expense (benefit) | 24,790 | (25,432 | ) | 31,630 | (29,508 | ) | |||||||||
Net income from continuing operations | 34,411 | 36,611 | 18,863 | 121,872 | |||||||||||
Income (loss) from discontinued operations, net of taxes | (49,744 | ) | 11,839 | (536,009 | ) | 32,601 | |||||||||
Net income (loss) | (15,333 | ) | 48,450 | (517,146 | ) | 154,473 | |||||||||
Less: income attributable to noncontrolling interest, net of taxes | 1,530 | 2,556 | 10,500 | 14,277 | |||||||||||
Net income (loss) attributable to Colfax Corporation | $ | (16,863 | ) | $ | 45,894 | (527,646 | ) | 140,196 | |||||||
Net income (loss) per share - basic | |||||||||||||||
Continuing operations | $ | 0.24 | $ | 0.32 | $ | 0.10 | $ | 1.01 | |||||||
Discontinued operations | $ | (0.36 | ) | $ | 0.07 | $ | (3.99 | ) | $ | 0.16 | |||||
Consolidated operations | $ | (0.12 | ) | $ | 0.39 | $ | (3.89 | ) | $ | 1.17 | |||||
Net income (loss) per share - diluted | |||||||||||||||
Continuing operations | $ | 0.24 | $ | 0.32 | $ | 0.10 | $ | 1.00 | |||||||
Discontinued operations | $ | (0.36 | ) | $ | 0.07 | $ | (3.99 | ) | $ | 0.16 | |||||
Consolidated operations | $ | (0.12 | ) | $ | 0.39 | $ | (3.89 | ) | $ | 1.16 |
Three Months Ended | |||||||
December 31, 2019 | December 31, 2018 | ||||||
Adjusted Net Income and Adjusted Net Income Per Share | |||||||
Net income from continuing operations attributable to Colfax Corporation (1) | $ | 32.9 | $ | 37.7 | |||
Restructuring and other related charges - pretax (2) | 23.0 | 9.4 | |||||
Acquisition-related amortization and other non-cash charges - pretax (3) | 14.5 | 12.0 | |||||
Strategic transaction costs - pretax (4) | 4.4 | 6.6 | |||||
Tax adjustment (5) | 8.6 | (15.8 | ) | ||||
Adjusted net income from continuing operations | $ | 83.4 | $ | 49.8 | |||
Adjusted net income margin from continuing operations | 9.4 | % | 8.7 | % | |||
Weighted-average shares outstanding - diluted (in millions) | 137.6 | 117.9 | |||||
Adjusted net income per share continuing operations | $ | 0.61 | $ | 0.42 | |||
Net income per share - diluted from continuing operations (GAAP) | $ | 0.24 | $ | 0.32 |
Three Months Ended | |||||||
December 31, 2019 | December 31, 2018 | ||||||
Net income from continuing operations (GAAP) | $ | 34.4 | $ | 36.6 | |||
Income tax expense (benefit) | 24.8 | (25.4 | ) | ||||
Interest expense, net | 32.7 | 15.6 | |||||
Restructuring and other related charges(1) | 23.0 | 9.4 | |||||
Strategic transaction costs(2) | 4.4 | 6.6 | |||||
Acquisition-related amortization and other non-cash charges(3) | 14.5 | 12.0 | |||||
Adjusted EBITA (non-GAAP) | $ | 133.8 | $ | 54.7 | |||
Net income margin from continuing operations (GAAP) | 3.9 | % | 6.4 | % | |||
Adjusted EBITA margin (non-GAAP) | 15.1 | % | 9.5 | % |
Net Sales | ||||||||||||||||||||
Fabrication Technology | Medical Technology(1) | Total Colfax | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
For the three months ended December 31, 2018 | $ | 574.9 | $ | 310.6 | $ | 885.5 | ||||||||||||||
Components of Change: | ||||||||||||||||||||
Existing businesses(2) | (8.9 | ) | (1.5 | )% | 24.1 | 7.8 | % | 15.2 | 1.7 | % | ||||||||||
Acquisitions(3) | 0.1 | — | % | 1.1 | 0.4 | % | 1.2 | 0.1 | % | |||||||||||
Foreign currency translation(4) | (11.4 | ) | (2.0 | )% | (2.1 | ) | (0.7 | )% | (13.5 | ) | (1.5 | )% | ||||||||
(20.2 | ) | (3.5 | )% | 23.1 | 7.5 | % | 2.9 | 0.3 | % | |||||||||||
For the three months ended December 31, 2019 | $ | 554.7 | $ | 333.7 | $ | 888.4 |
December 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 109,632 | $ | 77,153 | |||
Trade receivables, less allowance for doubtful accounts of $32,634 and $26,844 | 561,865 | 386,588 | |||||
Inventories, net | 571,558 | 359,655 | |||||
Other current assets | 161,190 | 137,801 | |||||
Current portion of assets held for sale | — | 997,244 | |||||
Total current assets | 1,404,245 | 1,958,441 | |||||
Property, plant and equipment, net | 491,241 | 327,155 | |||||
Goodwill | 3,202,517 | 1,497,832 | |||||
Intangible assets, net | 1,719,019 | 628,300 | |||||
Lease asset - right of use | 173,320 | — | |||||
Other assets | 396,490 | 463,525 | |||||
Assets held for sale, less current portion | — | 1,740,705 | |||||
Total assets | $ | 7,386,832 | $ | 6,615,958 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Current portion of long-term debt | $ | 27,642 | $ | 5,020 | |||
Accounts payable | 359,782 | 291,233 | |||||
Accrued liabilities | 469,890 | 290,844 | |||||
Current portion of liabilities held for sale | — | 612,248 | |||||
Total current liabilities | 857,314 | 1,199,345 | |||||
Long-term debt, less current portion | 2,284,184 | 1,192,408 | |||||
Non-current lease liability | 136,399 | — | |||||
Other liabilities | 619,307 | 651,864 | |||||
Liabilities held for sale, less current portion | — | 95,395 | |||||
Total liabilities | 3,897,204 | 3,139,012 | |||||
Equity: | |||||||
Common stock, $0.001 par value; 400,000,000 shares authorized; 118,059,082 and 117,275,217 issued and outstanding as of December 31, 2019 and 2018, respectively | 118 | 117 | |||||
Additional paid-in capital | 3,445,597 | 3,057,982 | |||||
Retained earnings | 479,560 | 991,838 | |||||
Accumulated other comprehensive loss | (483,845 | ) | (780,177 | ) | |||
Total Colfax Corporation equity | 3,441,430 | 3,269,760 | |||||
Noncontrolling interest | 48,198 | 207,186 | |||||
Total equity | 3,489,628 | 3,476,946 | |||||
Total liabilities and equity | $ | 7,386,832 | $ | 6,615,958 |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | (517,146 | ) | $ | 154,473 | 169,507 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Divestiture impairment loss | 449,000 | — | — | ||||||||
Impairment of goodwill, intangibles and property, plant and equipment | — | 7,086 | 183,751 | ||||||||
Depreciation, amortization and other impairment charges | 236,026 | 141,877 | 132,203 | ||||||||
Stock-based compensation expense | 21,960 | 25,103 | 21,548 | ||||||||
Non-cash interest expense | 9,937 | 4,415 | 4,519 | ||||||||
Loss on short-term investments | — | 10,128 | — | ||||||||
Deferred income tax expense (benefit) | (590 | ) | (66,573 | ) | 12,066 | ||||||
Loss (gain) on sale of property, plant and equipment | 61 | (21,108 | ) | (11,243 | ) | ||||||
(Gain) loss on sale of business | (14,233 | ) | 4,337 | (308,388 | ) | ||||||
Pension settlement loss (gain) | 77,390 | (39 | ) | 46,933 | |||||||
Changes in operating assets and liabilities: | |||||||||||
Trade receivables, net | 49,924 | (72,405 | ) | (44,345 | ) | ||||||
Inventories, net | (44,887 | ) | (47,156 | ) | (34,023 | ) | |||||
Accounts payable | (119,325 | ) | 70,085 | 10,266 | |||||||
Changes in other operating assets and liabilities | (17,169 | ) | 16,144 | 35,976 | |||||||
Net cash provided by operating activities | 130,948 | 226,367 | 218,770 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | (125,402 | ) | (69,646 | ) | (68,765 | ) | |||||
Proceeds from sale of property, plant and equipment | 7,781 | 34,829 | 21,224 | ||||||||
Acquisitions, net of cash received | (3,151,056 | ) | (290,918 | ) | (346,764 | ) | |||||
Proceeds from sale of business, net | 1,635,920 | 18,404 | 490,308 | ||||||||
Sale of short-term investments, net | — | 139,480 | — | ||||||||
Other, net | — | — | (6,127 | ) | |||||||
Net cash (used in) provided by investing activities | (1,632,757 | ) | (167,851 | ) | 89,876 | ||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings on term credit facility | 1,725,000 | — | — | ||||||||
Payments under term credit facility | (1,387,500 | ) | (131,250 | ) | (65,628 | ) | |||||
Proceeds from borrowings on revolving credit facilities and other | 2,045,083 | 1,271,051 | 1,046,457 | ||||||||
Repayments of borrowings on revolving credit facilities and other | (2,273,802 | ) | (981,563 | ) | (1,632,658 | ) | |||||
Proceeds from borrowings on senior unsecured notes | 1,000,000 | — | 374,450 | ||||||||
Payment of debt issuance costs | (23,380 | ) | — | — | |||||||
Proceeds from prepaid stock purchase contracts | 377,814 | — | — | ||||||||
Proceeds from issuance of common stock, net | 11,879 | 4,699 | 6,944 | ||||||||
Payment for noncontrolling interest share repurchase | (93,505 | ) | — | — | |||||||
Payments for common stock repurchases | — | (200,000 | ) | — | |||||||
Other | (12,095 | ) | (10,090 | ) | (10,012 | ) | |||||
Net cash provided by (used in) financing activities | 1,369,494 | (47,153 | ) | (280,447 | ) | ||||||
Effect of foreign exchange rates on Cash and cash equivalents | (3,072 | ) | (28,363 | ) | 12,090 | ||||||
(Decrease) increase in Cash and cash equivalents | (135,387 | ) | (17,000 | ) | 40,289 | ||||||
Cash and cash equivalents, beginning of period | 245,019 | 262,019 | 221,730 | ||||||||
Cash and cash equivalents, end of period | $ | 109,632 | $ | 245,019 | $ | 262,019 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||||||
Non-cash consideration received from sale of business | $ | — | $ | — | $ | 206,415 | |||||
Interest payments | $ | 139,268 | $ | 50,389 | $ | 43,496 | |||||
Income tax payments, net | $ | 134,915 | $ | 97,452 | $ | 70,668 |