February 2, 2017

COLFAX REPORTS FOURTH QUARTER 2016 RESULTS

Annapolis Junction, MD, Feb. 02, 2017 (GLOBE NEWSWIRE) --       

  • Exceeded full year 2016 guidance with fourth quarter net income per dilutive share of $0.31 and adjusted net income per share of $0.46
  • Drove structural cost changes to improve profitability
  • Delivered 7% organic Gas and Fluid Handling order growth
  • Completed acquisition that expands welding automation solutions business

Colfax Corporation (NYSE: CFX), a leading global manufacturer of gas- and fluid-handling and fabrication technology products and services, today announced its financial results for the quarter and year ended December 31, 2016.

For the fourth quarter of 2016, net income was $37.8 million, or $0.31 per dilutive share, compared to $44.2 million, or $0.36 per dilutive share, for the fourth quarter of 2015. Adjusted net income was $56.9 million, or $0.46 per share, compared to $63.0 million, or $0.51 per share for the comparable 2015 period. Full year 2016 net income was $128.1 million, or $1.04 per dilutive share, and adjusted net income was $191.8 million, or $1.56 per share.

The Company reported fourth quarter net sales of $0.93 billion, compared with $1.06 billion in the comparable 2015 quarter. The decrease included a 2.8% decline from foreign currency exchange rates. Fourth quarter operating income was $66.0 million or 7.1% of sales, and adjusted operating income was $90.8 million or 9.7% of sales. The prior year fourth quarter operating income margin was 6.1%, and the adjusted operating income margin was 9.5%.

"We delivered another solid profit performance this quarter expanding our operating margins despite a revenue decrease," said Matthew Trerotola, President and Chief Executive Officer. "Our teams effectively executed their global restructuring initiatives and significantly improved their cost positions. We also continued to apply CBS to improve commercial processes, contributing to the 7% organic increase in Gas and Fluid Handling orders in the quarter. This is the second consecutive quarter of order growth and was delivered in a stable, but not growing, end market environment. We believe this represents an early indication that our strategies to drive aftermarket and focus resources on the growing applications and regions are building momentum."

"Market conditions have not fully recovered as we enter 2017, and we are well positioned to deliver the incremental $50 million of structural cost savings included in our 2017 forecast. At the same time, we are pivoting the organization more toward growth and increasing the pace of new product launches and investments in growth regions. This increasing focus on organic growth is complemented by a more active acquisition pipeline."

In the fourth quarter, Colfax completed the acquisition of Arc Machines, Inc. ("AMI") for cash consideration of approximately $26 million. AMI is a leader in automated orbital TIG welding for niche applications ranging from the thinnest wall high purity tube welds to the heaviest application of cladding or pipe welding. "Our strengthened ESAB team has made great progress on profitability and the pace of technology development, launching a wide range of new products to enable higher productivity for our customers." Mr. Trerotola continued, "The acquisition of AMI builds on this progress, and we are very pleased to welcome the AMI team to ESAB and Colfax."

Conference Call and Webcast

Colfax will host a conference call to provide details about its results on Thursday, February 2, 2017 at 8:00 a.m. EST. The call will be open to the public through 877-303-7908 (U.S. callers) or 678-373-0875 (international callers) and referencing the conference ID number 58639787, or through webcast via Colfax's website at www.colfaxcorp.com under the "Investors" section. Access to a supplemental slide presentation can also be found at the Colfax website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call.
About Colfax Corporation

Colfax Corporation is a diversified global manufacturing and engineering company that provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers around the world under the Howden, Colfax Fluid Handling and ESAB brands. Colfax believes that its brands are among the most highly recognized in each of the markets that it serves. Colfax is traded on the NYSE under the ticker "CFX." Additional information about Colfax is available at www.colfaxcorp.com.

Non-GAAP Financial Measures and Other Adjustments

Colfax has provided in this press release financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are adjusted net income, adjusted net income per share, adjusted operating income, adjusted operating income margin, organic sales decline and organic order growth (decline). Adjusted net income, adjusted net income per share, adjusted operating income and adjusted operating income margin exclude Restructuring and other related charges, Asbestos coverage adjustment, and charges associated with the deconsolidation of our operations in Venezuela to the extent they impact the periods presented. Adjusted net income and adjusted net income per share for the year ended December 31, 2015 exclude the write-off of certain deferred financing fees and original issue discount associated with the refinancing of Colfax's credit agreement. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 27.5% and 28.6% for the fourth quarter and full year ended December 31, 2016, respectively. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 25.1% and 27.5% for the fourth quarter and full year ended December 31, 2015, respectively. Organic sales decline and organic order growth (decline) exclude the impact of acquisitions and foreign exchange rate fluctuations. These non-GAAP financial measures assist Colfax in comparing its operating performance on a consistent basis because, among other things, they remove the impact of restructuring and other related charges, asbestos coverage adjustments, Venezuela deconsolidation charges and write-off of certain deferred financing fees and original issue discount.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release.

CAUTIONARY NOTE CONCERNING FORWARD LOOKING STATEMENTS:

This press release may contain forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Colfax's plans, objectives, expectations and intentions and other statements that are not historical or current fact. Forward-looking statements are based on Colfax's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Colfax's results to differ materially from current expectations include, but are not limited to factors detailed in Colfax's reports filed with the U.S. Securities and Exchange Commission including its 2015 Annual Report on Form 10-K under the caption "Risk Factors." In addition, these statements are based on a number of assumptions that are subject to change. This press release speaks only as of the date hereof. Colfax disclaims any duty to update the information herein.

The term "Colfax" in reference to the activities described in this press release may mean one or more of Colfax's global operating subsidiaries and/or their internal business divisions and does not necessarily indicate activities engaged in by Colfax Corporation.



Colfax Corporation
Consolidated Statements of Income
Dollars in thousands, except per share data
(Unaudited)

  Three Months Ended   Year Ended
  December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015
               
Net sales $ 933,751     $ 1,061,464     $ 3,647,047     $ 3,967,053  
Cost of sales 645,133     728,039     2,501,396     2,715,279  
Gross profit 288,618     333,425     1,145,651     1,251,774  
Selling, general and administrative expense 197,798     232,843     825,240     905,952  
Asbestos coverage adjustment         8,226      
Restructuring and other related charges 24,853     35,519     74,170     61,177  
Operating income 65,967     65,063     238,015     284,645  
Interest expense, net 5,393     10,593     30,016     47,743  
Income before income taxes 60,574     54,470     207,999     236,902  
Provision for income taxes 17,755     5,941     62,808     49,724  
Net income 42,819     48,529     145,191     187,178  
Less: income attributable to noncontrolling interest, net of taxes 5,047     4,332     17,080     19,439  
Net income attributable to Colfax Corporation $ 37,772     $ 44,197     $ 128,111     $ 167,739  
Net income per share - basic $ 0.31     $ 0.36     $ 1.04     $ 1.35  
Net income per share - diluted $ 0.31     $ 0.36     $ 1.04     $ 1.34  


Colfax Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
Dollars in thousands, except per share data
(Unaudited)

  Three Months Ended   Year Ended
  December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015
Adjusted Operating Income              
Operating income $ 65,967     $ 65,063     $ 238,015     $ 284,645  
Operating income margin 7.1 %   6.1 %   6.5 %   7.2 %
Asbestos coverage adjustment         8,226      
Restructuring and other related charges 24,853     35,519     74,170     61,177  
Loss on deconsolidation of Venezuelan operations         2,369      
Adjusted operating income $ 90,820     $ 100,582     $ 322,780     $ 345,822  
Adjusted operating income margin 9.7 %   9.5 %   8.9 %   8.7 %


  Three Months Ended   Year Ended
  December 31, 2016   December 31, 2015   December 31, 2016   December 31, 2015
Adjusted Net Income and
Adjusted Net Income Per Share
             
Net income attributable to Colfax Corporation $ 37,772     $ 44,197     $ 128,111     $ 167,739  
Asbestos coverage adjustment         8,226      
Restructuring and other related charges 24,853     35,519     74,170     61,177  
Loss on deconsolidation of Venezuelan operations         2,369      
Debt extinguishment charges- Refinancing of credit agreement             4,731  
Tax adjustment(1) (5,758 )   (16,678 )   (21,040 )   (33,549 )
Adjusted net income $ 56,867     $ 63,038     $ 191,836     $ 200,098  
Adjusted net income margin 6.1 %   5.9 %   5.3 %   5.0 %
Weighted-average shares outstanding - diluted 123,385     124,102     123,199     124,870  
Adjusted net income per share $ 0.46     $ 0.51     $ 1.56     $ 1.60  
Net income per share— diluted
(in accordance with GAAP)
$ 0.31     $ 0.36     $ 1.04     $ 1.34  

__________
(1) The effective tax rates used to calculate adjusted net income and adjusted net income per share are 27.5% and 28.6% for the fourth quarter and full year ended December 31, 2016, respectively, and 25.1% and 27.5% for the fourth quarter and full year ended December 31, 2015.


Colfax Corporation
Change in Sales, Orders and Backlog
Dollars in millions
(Unaudited)

  Net Sales   Orders    
  $   %   $   %        
                       
For the three months ended December 31, 2015 $ 1,061.5         $ 425.0              
Components of Change:                      
Existing Businesses (98.2 )   (9.3 )%   29.6     7.0 %        
Acquisitions(1) 1.3     0.1 %       %        
Foreign Currency Translation (30.8 )   (2.8 )%   (11.6 )   (2.8 )%        
Total (127.7 )   (12.0 )%   18.0     4.2 %        
For the three months ended December 31, 2016 $ 933.8         $ 443.0              
                       
  Net Sales   Orders   Backlog at Period End
  $   %   $   %   $   %
                       
As of and for the year ended December 31, 2015 $ 3,967.1         $ 1,794.8         $ 1,140.9      
Components of Change:                      
Existing Businesses (223.8 )   (5.6 )%   (49.3 )   (2.7 )%   (66.6 )   (5.8 )%
Acquisitions(2) 52.9     1.3 %   66.6     3.7 %       %
Foreign Currency Translation (149.2 )   (3.8 )%   (59.8 )   (3.4 )%   (45.1 )   (4.0 )%
Total (320.1 )   (8.1 )%   (42.5 )   (2.4 )%   (111.7 )   (9.8 )%
As of and for the year ended December 31, 2016 $ 3,647.0         $ 1,752.3         $ 1,029.2      

__________
(1) Represents the incremental sales as a result of our acquisition of AMI.
(2) Represents the incremental sales and orders as a result of our acquisitions of AMI, RootsTM blowers and compressors, and Simsmart Technologies.


Colfax Corporation
Consolidated Balance Sheets
Dollars in thousands, except share amounts
(Unaudited)

  December 31,
  2016   2015
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 221,730     $ 197,469  
Trade receivables, less allowance for doubtful accounts of $41,511 and $39,505 913,614     888,166  
Inventories, net 403,857     420,386  
Other current assets 246,396     224,872  
Total current assets 1,785,597     1,730,893  
Property, plant and equipment, net 604,214     644,536  
Goodwill 2,563,326     2,817,687  
Intangible assets, net 899,340     995,712  
Other assets 532,982     544,091  
Total assets $ 6,385,459     $ 6,732,919  
       
LIABILITIES AND EQUITY      
CURRENT LIABILITIES:      
Current portion of long-term debt $ 5,406     $ 5,792  
Accounts payable 605,895     569,445  
Customer advances and billings in excess of costs incurred 151,015     195,038  
Accrued liabilities 344,358     346,069  
Total current liabilities 1,106,674     1,116,344  
Long-term debt, less current portion 1,286,738     1,411,755  
Other liabilities 898,703     948,264  
Total liabilities 3,292,115     3,476,363  
Equity:      
Common stock, $0.001 par value; 400,000,000 shares authorized; 122,780,261 and 123,486,425 issued and outstanding 123     123  
Additional paid-in capital 3,199,682     3,199,267  
Retained earnings 685,411     557,300  
Accumulated other comprehensive loss (988,345 )   (686,715 )
Total Colfax Corporation equity 2,896,871     3,069,975  
Noncontrolling interest 196,473     186,581  
Total equity 3,093,344     3,256,556  
Total liabilities and equity $ 6,385,459     $ 6,732,919  


Colfax Corporation
Consolidated Statements of Cash Flows
Dollars in thousands
(Unaudited)

  Year Ended December 31,
  2016   2015
Cash flows from operating activities:      
Net income $ 145,191     $ 187,178  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization and impairment charges 143,258     154,542  
Stock-based compensation expense 19,020     16,321  
Non-cash interest expense 4,176     10,101  
Deferred income tax benefit (1,682 )   (22,717 )
Changes in operating assets and liabilities:      
Trade receivables, net (50,958 )   64,048  
Inventories, net 19,665     (390 )
Accounts payable 52,308     2,548  
Customer advances and billings in excess of costs incurred (37,210 )   (21,094 )
Changes in other operating assets and liabilities (46,794 )   (86,724 )
Net cash provided by operating activities 246,974     303,813  
Cash flows from investing activities:      
Purchases of fixed assets (63,251 )   (69,877 )
Acquisitions, net of cash received (25,992 )   (196,007 )
Other, net 7,249     18,927  
Net cash used in investing activities (81,994 )   (246,957 )
Cash flows from financing activities:      
Borrowings under term credit facility     750,000  
Payments under term credit facility (37,500 )   (1,232,872 )
Proceeds from borrowings on revolving credit facilities and other 896,742     1,498,039  
Repayments of borrowings on revolving credit facilities and other (978,024 )   (1,104,055 )
Proceeds from issuance of common stock, net 2,206     6,052  
Repurchases of common stock (20,812 )   (27,367 )
Other (7,830 )   (21,066 )
Net cash used in financing activities (145,218 )   (131,269 )
Effect of foreign exchange rates on Cash and cash equivalents 4,499     (33,566 )
Increase (decrease) in Cash and cash equivalents 24,261     (107,979 )
Cash and cash equivalents, beginning of period 197,469     305,448  
Cash and cash equivalents, end of period $ 221,730     $ 197,469  
       
Supplemental Disclosure of Cash Flow Information:      
Interest payments $ 35,838     $ 36,363  
Income tax payments, net 77,104     79,540  

Terry Ross, Vice President of Investor Relations

Colfax Corporation

301-323-9054

Terry.Ross@colfaxcorp.com

Primary Logo

Source: Colfax Corporation

News Provided by Acquire Media


Close window | Back to top

Copyright 2017 Colfax Corporation