Press Release


Colfax Reports Fourth Quarter, Full Year 2009 Results

RICHMOND, Va., Feb 18, 2010 /PRNewswire via COMTEX News Network/ -- Colfax Corporation (NYSE: CFX), a global leader in fluid-handling solutions for critical applications, today announced financial results for the fourth quarter and full year ended December 31, 2009. On a year-over-year basis, highlights for the quarter and the year include:

Fourth quarter of 2009 (all comparisons versus the fourth quarter of 2008)

  • Net income of $5.1 million (12 cents per share - basic and diluted) including restructuring and other related charges of $7.4 million; adjusted net income (as defined below) of $11.2 million (26 cents per share), a decrease of 35.7% including positive currency effects of 2 cents per share
  • Net sales of $131.0 million, a decrease of 17.8%; organic sales decline (as defined below) of 23.5%
  • Operating income of $9.0 million; adjusted operating income (as defined below) of $18.3 million, a decrease of 36.2% including positive currency effects of $1.0 million
  • EBITDA (as defined below) of $12.8 million; adjusted EBITDA (as defined below) of $22.1 million, a decrease of 31.1% including positive currency effects of $1.2 million
  • Fourth quarter orders of $101.6 million, a decrease of 22.4%; organic order decline (as defined below) of 28.3%
  • Backlog of $290.9 million at period end

Full year 2009 (all comparisons versus 2008)

  • Net income of $21.7 million (50 cents per share - basic and diluted) including restructuring and other related charges of $18.2 million; adjusted net income (as defined below) of $40.1 million (93 cents per share), a decrease of 25.3% including negative currency effects of 9 cents per share
  • Net sales of $525.0 million, a decrease of 13.2%; organic sales decline (as defined below) of 8.1%
  • Operating income of $38.5 million; adjusted operating income (as defined below) of $66.2 million, a decrease of 27.1% including negative currency effects of $5.4 million
  • EBITDA (as defined below) of $52.9 million; adjusted EBITDA (as defined below) of $80.6 million, a decrease of 23.7% including negative currency effects of $5.9 million
  • Orders for the year of $462.4 million, a decrease of 32.2%; organic order decline (as defined below) of 29.0%.

Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline) are not financial measures calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP"). See below for a description of the measures' usefulness and a reconciliation of these measures to their most directly comparable preliminary GAAP financial measures.

"Our fourth quarter results came in as expected," said Clay Kiefaber, President and CEO of Colfax Corporation. "Looking at the year, Colfax faced a challenging environment. Sales were down 8% organically, driven by a 25% decline in our general industrial end market. A sharp rebound in our navy business helped to mitigate the impact of the weakness in general industrial. Organic orders decreased 29% in 2009 with declines in all markets except global navy which had a significant order increase of 72%. We made substantial progress on our restructuring efforts during the year as evidenced by our gross profit margin. We're continuing to implement our cost reduction plans which will help us leverage our cost structure as markets improve."

He added, "We are beginning to see some signs of economic recovery including sequential order improvement in the general industrial end market. However, we expect our businesses to continue to be under pressure in 2010 as most of them are later-cycle businesses and lag the broader economy. Our strong financial condition provides us with the flexibility to continue to weather current conditions. We remain focused on our growth initiatives in key end markets, cost reductions, and acquisition opportunities which will better position us when our markets fully recover. Based on our current backlog and order rates, we are expecting organic sales to decline in the range of 5% to 9% and adjusted net income per share to be $.67 to $.77 for 2010."

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, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA exclude asbestos liability and defense costs (income) and asbestos coverage litigation expenses, certain legacy legal charges, certain due diligence costs, restructuring and other related charges as well as one time initial public offering-related costs to the extent they impact the periods presented. Adjusted net income also reflects interest expense as if the initial public offering (IPO) had occurred at the beginning of 2007 and presents income taxes at an effective tax rate of 32% in 2009 and 34% in 2008. Adjusted net income per share in 2008 assumes the 44,006,026 shares outstanding at the closing of the IPO to be outstanding since January 1, 2007. Projected adjusted net income per share excludes actual and estimated restructuring and other related charges, asbestos coverage litigation expenses and asbestos liability and defense costs. Organic sales growth (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 changes in our capital structure and asset base, non-recurring items such as IPO-related costs, legacy asbestos issues (except in the case of EBITDA) and items outside the control of its operating management team.

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 preliminary GAAP results has been provided in the financial tables included in this press release.

At December 31, 2009, the Company standardized its definition of an order among its businesses, as well as the methodology for calculating the currency impact on backlog. Orders and backlog are presented in accordance with the revised methodology for all periods presented. As a result, orders for the quarter and year ended December 31, 2008 increased by $4.7 million, or 3.7%, and $12.9 million, or 1.9%, respectively. Backlog for the year ended December 31, 2008 increased by $11.6 million, or 3.4%. Applying the revised methodology, orders for the quarter and year ended December 31, 2009 decreased by $3.8 million, or 3.6%, and increased $7.7 million, or 1.7%, respectively. Backlog for 2009 increased by $21.7 million, or 8.1%.

Conference Call and Webcast

Colfax will host a conference call to provide details about its results and outlook on Thursday, February 18 at 8:00 a.m. ET. The call will be open to the public through 877-303-7908 or 678-373-0875 and webcast via Colfax's website at http://www.colfaxcorp.com under the "Investor Relations" 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 global leader in critical fluid-handling products and technologies. Through its global operating subsidiaries, Colfax manufactures positive displacement industrial pumps and valves used in oil & gas, power generation, commercial marine, global naval and general industrial markets. Colfax's operating subsidiaries supply products under the well-known brands Allweiler, Fairmount Automation, Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren and Zenith. Colfax is traded on the NYSE under the ticker "CFX." Additional information about Colfax is available at www.colfaxcorp.com.

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 facts. 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 as well as its 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 this date. 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
                  Condensed Consolidated Statements of Operations
                    Dollars in thousands, except per share data
                                    (Unaudited)

                           Three Months Ended               Year Ended
                      December 31,   December 31,  December 31,   December 31,
                             2009           2008          2009           2008
                             ----           ----          ----           ----

    Net sales            $130,971       $159,311      $525,024       $604,854
    Cost of sales          83,960        101,557       339,237        387,667
                           ------        -------       -------        -------

    Gross profit           47,011         57,754       185,787        217,187
    Initial public
     offering
     related costs              -              -             -         57,017
    Selling,
     general and
     administrative
     expenses              27,426         27,718       113,674        125,234
    Research and
     development
     expenses               1,320          1,426         5,930          5,856
    Restructuring
     and other
     related
     charges                7,420              -        18,175              -
    Asbestos
     liability and
     defense
     (income) costs        (1,017)         1,978        (2,193)        (4,771)
    Asbestos
     coverage
     litigation
     expenses               2,904          4,905        11,742         17,162
                            -----          -----        ------         ------

    Operating
     income                 8,958         21,727        38,459         16,689
    Interest
     expense                1,746          2,138         7,212         11,822
                            -----          -----         -----         ------

    Income before
     income taxes           7,212         19,589        31,247          4,867
    Provision for
     income taxes           2,092          9,210         9,525          5,438
                            -----          -----         -----          -----

    Net income
     (loss)                $5,120        $10,379       $21,722          $(571)
                           ======        =======       =======          =====

    Net income
     (loss) per
     share-basic
     and diluted            $0.12          $0.24         $0.50         $(0.11)
                            =====          =====         =====         ======






                              Colfax Corporation
                     Condensed Consolidated Balance Sheets
                             Dollars in thousands
                          (Preliminary and unaudited)

                                                              December 31,
                                                             2009     2008
                                                             ----     ----

    ASSETS
    CURRENT ASSETS:
      Cash and cash equivalents                           $49,963  $28,762
      Trade receivables, less allowance for doubtful
       accounts                                            88,493  101,064
      Inventories, net                                     71,150   80,327
      Asbestos insurance asset                             30,606   26,473
      Asbestos insurance receivable                        28,991   36,371
      Other current assets                                 20,358   21,860
                                                           ------   ------

    Total current assets                                  289,561  294,857
    Deferred income taxes, net                             52,023   53,428
    Property, plant and equipment, net                     90,434   92,090
    Goodwill and intangible assets, net                   179,206  179,046
    Long-term asbestos insurance asset                    358,843  277,542
    Long-term asbestos insurance receivable                16,876        -
    Deferred loan costs, pension and other assets          16,188   16,113
                                                           ------   ------
    Total assets                                       $1,003,131 $913,076
                                                       ========== ========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Current portion of long-term debt and capital
       leases                                              $8,969   $5,420
      Accounts payable                                     36,579   52,138
      Accrued asbestos liability                           34,866   28,574
      Other accrued liabilities                            63,785   68,154
                                                           ------   ------

    Total current liabilities                             144,199  154,286
    Long-term debt, less current portion                   82,516   91,701
    Long-term asbestos liability                          408,903  328,684
    Pension and accrued post-retirement benefits          126,953  130,188
    Other liabilities                                      41,728   41,286
                                                           ------   ------
    Total liabilities                                     804,299  746,145
    Shareholder's equity                                  198,832  166,931
                                                          -------  -------
    Total liabilities and shareholders' equity         $1,003,131 $913,076
                                                       ========== ========






                               Colfax Corporation
                 Condensed Consolidated Statement of Cash Flows
                              Dollars in thousands
                           (Preliminary and unaudited)

                                                              Year ended
                                                              December 31,
                                                             2009      2008
                                                             ----      ----
    Cash flows from operating activities:
    Net income (loss)                                     $21,722     $(571)
    Adjustments to reconcile net income (loss) to
     cash provided by (used in) operating activities:
        Depreciation, amortization and fixed asset
         impairment charges                                15,074    14,788
        Noncash stock-based compensation                    2,593    11,330
        Other adjustments for non-cash items                  613     5,608
        Deferred income taxes                               3,593   (13,357)
        Changes in working capital                          6,144   (29,148)
        Changes in other operating assets and
         liabilities                                      (11,453)  (21,631)
                                                          -------   -------
            Net cash provided by (used in) operating
             activities                                    38,286   (32,981)

    Cash flows from investing activities:
        Purchases of fixed assets                         (11,006)  (18,645)
        Acquisitions, net of cash received                 (1,260)     (439)
        Proceeds from sale of fixed assets                    219        23
                                                              ---        --
            Net cash used in investing activities         (12,047)  (19,061)

    Cash flows from financing activities:
        Borrowings under term credit facility                   -   100,000
        Payments under term credit facility                (5,000) (210,278)
        Proceeds from borrowings on revolving credit
         facilities                                             -    28,185
        Repayments of borrowings on revolving credit
         facilities                                             -   (28,158)
        Proceeds from the issuance of common stock, net
         of offering costs                                      -   193,020
        Repurchases of common stock                             -    (5,731)
        Dividends paid to preferred shareholders                -   (38,546)
        Other                                                (417)   (3,656)
                                                             ----    ------
            Net cash (used in) provided by financing
             activities                                    (5,417)   34,836

        Effect of exchange rates on cash                      379    (2,125)
                                                              ---    ------

        Increase (decrease) in cash and cash equivalents   21,201   (19,331)
        Cash and cash equivalents, beginning of year       28,762    48,093
                                                           ------    ------
            Cash and cash equivalents, end of year        $49,963   $28,762
                                                          =======   =======






                            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,   December 31,   December 31,   December 31,
                            2009           2008           2009           2008
                            ----           ----           ----           ----

    EBITDA
    Net income
     (loss)               $5,120        $10,379        $21,722          $(571)

    Interest
     expense               1,746          2,138          7,212         11,822
    Provision for
     income taxes          2,092          9,210          9,525          5,438
    Depreciation
     and
     amortization          3,834          3,443         14,426         14,788
                           -----          -----         ------         ------

    EBITDA               $12,792        $25,170        $52,885        $31,477
                         =======        =======        =======        =======
    EBITDA margin            9.8%          15.8%          10.1%           5.2%

    Adjusted EBITDA
    Net income
     (loss)               $5,120        $10,379        $21,722          $(571)

    Interest
     expense               1,746          2,138          7,212         11,822
    Provision for
     income taxes          2,092          9,210          9,525          5,438
    Depreciation
     and
     amortization          3,834          3,443         14,426         14,788
    Restructuring
     and other
     related
     charges               7,420              -         18,175              -
    IPO-related
     costs                     -              -              -         57,017
    Legacy legal
     adjustment                -              -              -          4,131
    Due diligence
     costs                     -              -              -            582
    Asbestos
     liability and
     defense
     (income)
     costs                (1,017)         1,978         (2,193)        (4,771)
    Asbestos
     coverage
     litigation
     expenses              2,904          4,905         11,742         17,162
                           -----          -----         ------         ------

    Adjusted
     EBITDA              $22,099        $32,053        $80,609       $105,598
                         =======        =======        =======       ========
    Adjusted
     EBITDA margin          16.9%          20.1%          15.4%          17.5%

    Adjusted Net Income
     and Adjusted
     Earnings per Share
    Net income
     (loss)               $5,120        $10,379        $21,722          $(571)

    Restructuring
     and other
     related
     charges               7,420              -         18,175              -
    IPO-related
     costs                     -              -              -         57,017
    Legacy legal
     adjustment                -              -              -          4,131
    Due diligence
     costs                     -              -              -            582
    Asbestos
     liability and
     defense
     (income)
     costs                (1,017)         1,978         (2,193)        (4,771)
    Asbestos
     coverage
     litigation
     expenses              2,904          4,905         11,742         17,162
    Interest
     adjustment to
     effect IPO at
     beginning of
     period                    -              -              -          2,302
    Tax
     adjustment to
     effective
     rate of 32%
     and 34%,
     respectively         (3,194)           210         (9,346)       (22,201)
                          ------            ---         ------        -------

    Adjusted net
     income              $11,233        $17,472        $40,100        $53,651
                         =======        =======        =======        =======
    Adjusted net
     income margin           8.6%          11.0%           7.6%           8.9%

    Weighted
     average
     shares
     outstanding -
     diluted          43,449,493              -     43,325,704              -
    Shares
     outstanding
     at closing of
     IPO                       -     44,006,026              -     44,006,026
    Adjusted net
     income per
     share                 $0.26          $0.40          $0.93          $1.22
                           =====          =====          =====          =====

    Net income
     (loss) per
     share-basic
     and diluted
     in accordance
     with GAAP             $0.12          $0.24          $0.50         $(0.11)
                           =====          =====          =====         ======

    Adjusted
     Operating
     Income
    Operating
     income               $8,958        $21,727        $38,459        $16,689

    Restructuring
     and other
     related
     charges               7,420              -         18,175              -
    IPO-related
     costs                     -              -              -         57,017
    Legacy legal
     adjustment                -              -              -          4,131
    Due diligence
     costs                     -              -              -            582
    Asbestos
     liability and
     defense
     (income)
     costs                (1,017)         1,978         (2,193)        (4,771)
    Asbestos
     coverage
     litigation
     expenses              2,904          4,905         11,742         17,162
                           -----          -----         ------         ------

    Adjusted
     operating
     income              $18,265        $28,610        $66,183        $90,810
                         =======        =======        =======        =======
    Adjusted
     operating
     income margin          13.9%          18.0%          12.6%          15.0%






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


                               Sales          Orders
                              $      %        $      %
                           --------------- ---------------

    Three Months Ended
     December 31, 2008     $159.3          $131.0

    Components of Change:
    Existing
     Businesses             (37.5) (23.5)%  (37.1) (28.3)%
    Acquisitions              0.5    0.3%     1.0    0.8%
    Foreign
     Currency
     Translation              8.7    5.4%     6.7    5.1%

                            -----           -----
          Total             (28.3) (17.8)%  (29.4) (22.4)%
                            -----           -----
    Three Months Ended
     December 31, 2009     $131.0          $101.6
                           ======          ======


                                Sales          Orders            Backlog at
                              $      %        $      %           Period End
                           --------------  ---------------     ---------------

    Year ended
     December 31, 2008     $604.9          $682.1              $349.0

    Components of Change:
    Existing Businesses     (48.8)  (8.1)% (198.0) (29.0)%      (66.8) (19.1)%
    Acquisitions              1.0    0.2%     1.4    0.2%         0.7    0.2%
    Foreign Currency
     Translation            (32.1)  (5.3)%  (23.1)  (3.4)%        8.0    2.3%

                            -----          ------               -----
          Total             (79.9) (13.2)% (219.7) (32.2)%      (58.1) (16.6)%
                           ------          ------              ------
    Year ended
     December 31,  2009    $525.0          $462.4              $290.9
                           ======          ======              ======






                             Colfax Corporation
                Reconciliation of Projected 2010 Net Income Per Share
                      to Adjusted Net Income Per Share
                            Amounts in Dollars
                               (Unaudited)


                                                                 EPS Range
                                                                 ---------

    Projected net income per share - fully diluted              $0.41 $0.51

    Estimated restructuring and other related charges(1)         0.06  0.06
    Asbestos coverage litigation                                 0.14  0.14
    Asbestos liability and defense costs                         0.06  0.06
                                                                 ----  ----

    Projected adjusted net income per share - fully diluted     $0.67 $0.77
                                                                ===== =====


    (1) Represents estimated costs related to restructuring actions
        implemented through February 15, 2010, including $.03 per share of
        termination benefits for the Company's former CEO. Assumes
        continuation of the German furlough program throughout 2010.




SOURCE Colfax Corporation

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