First Quarter 2016 and Recent Highlights:
Symmetry Surgical Inc. (Nasdaq:SSRG) announced today
financial results for the first quarter ended April 2, 2016.
Thomas J. Sullivan, President and Chief
Executive Officer of Symmetry Surgical, stated, “Our first quarter
results include continued momentum in our U.S. business, which was
up 5%, partially offset by lower international results, where the
strength of the U.S. dollar impacted our business.”
Financial ResultsRevenue for
the first quarter 2016 was $21.2 million, up 2.2% compared to $20.8
million in the first quarter 2015. Revenue in the U.S. was $18.8
million, up 5.4% compared to the first quarter 2015, and
International revenue was $2.4 million, down 17.0% compared to
first quarter 2015 as a result of previously communicated headwinds
related to the continued strengthening of the U.S. dollar, which
causes our products to become more expensive for international
customers.
Revenue from Symmetry Surgical branded products
was $19.4 million, up 1.8% compared to the first quarter 2015 with
U.S. revenue growth offset by a decline in international sales of
Symmetry Surgical branded products. Revenue from Alliance products
was $1.9 million, up 7.2% compared to the first quarter 2015. The
first quarter 2015 comparisons have been adjusted to reflect the
transition of the Vesocclude™ product line from the Alliance
products category to the Symmetry Surgical branded category due to
Symmetry’s acquisition of Vesocclude Medical on August 28,
2015.
Gross profit for the first quarter 2016 was
$10.4 million, compared to $9.9 million in the first quarter 2015.
Gross margin for the first quarter 2016 was 48.9%, compared to
47.6% in the same period last year. The year-over-year improvement
in gross margin percent was driven by geographic mix, product mix
due to acquisitions, lower product costs due to favorable exchange
rates and product resourcing efforts, and tight cost
controls.
Total operating expenses in the first quarter
2016 increased to $9.8 million compared to $9.0 million in the
first quarter 2015. Operating expense was impacted by the Company’s
previously announced infrastructure investments, the addition of
the Vesocclude Medical expenses, and the impact of changes in
foreign currency, offset by the elimination of the medical device
excise tax. Operating income for the first quarter 2016 was $0.5
million, compared to $0.9 million in the first quarter 2015.
Net income for the first quarter 2016 was $0.3
million, or $0.03 per diluted share, compared to a net income of
$0.8 million, or $0.08 per diluted share, in the first quarter
2015. The weighted average number of shares used to calculate the
diluted net loss per share during the first quarter 2016 was
9,820,523.
EBITDA (which is defined below and excludes
impairment charges) for the first quarter 2016 was $1.9 million
compared to $2.8 million in the first quarter 2015. The Company
generated free cash flow (also defined below) of $3.1 million in
the first quarter 2015 and 2016.
Scott D. Kunkel, Senior Vice President and Chief
Financial Officer, stated, “Our effective tax rate in 2016 differs
from the U.S. Federal tax rate of 34.0% primarily due to the
adoption of a new accounting pronouncement which requires the
excess tax benefit resulting from the vesting of restricted stock
to be recorded as an income tax benefit.”
Mr. Kunkel added, “We continued to generate
positive free cash flow during the first quarter 2016. Cash
collections remained strong and we continued to strategically
invest in inventory and will continue to do so to support higher
service levels for our customers and drive growth. Our free cash
flow conversion was 159% and we continue to be very pleased with
our ability to generate cash.”
Financial GuidanceAs previously announced, due
to the anticipated closing of the definitive agreement for Symmetry
Surgical to be acquired by an affiliate of RoundTable Healthcare
Partners (“RoundTable”), the Company is suspending financial
guidance.
Conference CallDue to the
anticipated closing of the definitive agreement for Symmetry
Surgical to be acquired by an affiliate of RoundTable Healthcare
Partners (“RoundTable”), the Company will not be hosting a
conference call to discuss the first quarter 2016 financial
results.
About Symmetry Surgical
Inc.Symmetry Surgical is dedicated to developing and
delivering high-quality, innovative surgical instruments that meet
clinicians' needs and improve patients' lives. Our team
collaborates with healthcare providers around the world to provide
medical devices that exceed our customers' expectations and provide
solutions for today's needs and tomorrow's growth. Our rich and
diverse history creates one of the industry's most comprehensive
surgical instrument portfolios, which includes our well-known
brands such as BOOKWALTER®, GREENBERG®, OLSEN®, SYMMETRY®, SHARP
KERRISON™, FLASH PAK®, CLASSIC®, CLASSIC PLUS®, SECTO®, QUAD-LOCK®,
RAPIDCLEAN®, MAGNAFREE®, MIDAS TOUCH®, MICROSECT®, ULTRA
INSTRUMENTS®, MULTIPAK®, ACCESS SURGICAL INTERNATIONAL®, RILEY
MEDICAL®, TRANSPAK®, OPTI-LENGTH®, THE ULTRA SYSTEM®, BOOKWALTER
ROTILT®, SYMMETRY ACCESS™, and VESOCCLUDE™. Symmetry Surgical is
headquartered in Nashville, TN. For more information, please visit
www.symmetrysurgical.com.
About RoundTable Healthcare
PartnersRoundTable Healthcare Partners, Lake Forest, IL,
is an operating-oriented private equity firm focused exclusively on
the healthcare industry. RoundTable partners with companies that
can benefit from its extensive industry relationships and proven
operating and transaction expertise. RoundTable has established a
successful track record of working with owner/founders, family
companies, management teams, entrepreneurs, and corporate partners
who share a vision and believe in the value creation potential of
its partnership model. RoundTable has raised $2.75 billion in
committed capital, including four equity funds totaling $2.15
billion and three subordinated debt funds totaling $600
million.
Non-GAAP MeasuresEBITDA is
Earnings Before Interest, Taxes, Depreciation, Amortization and
Asset Impairment. Free Cash Flow (FCF) is Net Cash Provided by
(Used In) Operating Activities less Purchases of Property and
Equipment. Free Cash Flow Conversion is the ratio of Free Cash Flow
to EBITDA. Reconciliations of these non-GAAP measures may be
different from non-GAAP measures used by other companies.
Management believes these non-GAAP measures improve management's
and investors' ability to better compare the company's ongoing
financial performance between periods and with other companies.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTSThis press release includes
forward-looking statements. These forward-looking statements
generally can be identified by the use of words such as
“anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,”
“estimate,” “forecast,” “goal,” “project,” and other words of
similar meaning. Forward-looking statements in this press
release include, but are not limited to, statements about the
benefits and effects of the transaction, the expected timing of the
completion of the transaction, the amounts to be received by
shareholders. Each forward-looking statement contained in
this press release is subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by such statement. Applicable risks and uncertainties
include, among others, uncertainties as to the timing of the
transaction; uncertainties as to whether Symmetry shareholders will
approve the transaction; the risk that competing offers will be
made; the possibility that various closing conditions for the
transaction may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant approval
for the consummation of the transaction, or the terms of such
approval; the effects of disruption from the transaction making it
more difficult to maintain relationships with employees, customers,
vendors and other business partners; the risk that shareholder
litigation in connection with the transaction may result in
significant costs of defense, indemnification and liability; other
business effects, including the effects of industry, economic or
political conditions outside of the parties’ control; operating
costs and business disruption following completion of the
transaction, including adverse effects on employee retention and on
Symmetry’s business relationships with third parties; transaction
costs; and the risks identified under the heading “Risk Factors” in
Symmetry’s Annual Report on Form 10-K, filed with the SEC on March
1, 2016, as well as Symmetry’s subsequent Current Reports on Form
8-K and other information filed by the Company with the SEC.
Symmetry cautions investors not to place considerable reliance on
the forward-looking statements contained in this press
release. You are encouraged to read Symmetry’s filings with
the SEC, available at www.sec.gov, for a discussion of these and
other risks and uncertainties. The forward-looking statements in
this press release speak only as of the date of this release, and
Symmetry undertakes no obligation to update or revise any of these
statements. Symmetry’s business is subject to substantial
risks and uncertainties, including those referenced above.
Investors, potential investors, and others should give careful
consideration to these risks and uncertainties.
IMPORTANT ADDITIONAL INFORMATION ABOUT
THIS TRANSACTION AND WHERE TO FIND ITIn connection with
the proposed merger, the Company plans to file with the SEC a proxy
statement and other documents. The Company will make the
proxy statement available to its shareholders. Investors
are urged to read the proxy statement and other materials filed
with the SEC when they become available, because they will contain
important information about the Company and the proposed
transaction. The definitive proxy statement and other
documents filed by the Company with the SEC will be available free
of charge at the SEC’s website (www.sec.gov) and from the Company.
Requests for copies of the proxy statement and other documents
filed by the Company with the SEC may be made by contacting Zack
Kubow by phone at (646) 536-7020 or by email at
zkubow@theruthgroup.com.
The Company, its directors, executive officers
and other persons related to the Company may be deemed to be
participants in the solicitation of proxies from the Company’s
shareholders in connection with the proposed transaction.
Information about the directors and executive officers of the
Company and their ownership of Company common stock is set forth in
the Company’s annual report on Form 10-K for the fiscal year ended
January 2, 2016, which was filed with the SEC on March 1, 2016 and
in its proxy statement for its 2016 annual meeting of stockholders,
which was filed with the SEC on March 14, 2016. These documents can
be obtained free of charge from the sources indicated above.
Certain directors, executive officers and other persons related to
the Company may have direct or indirect interests in the
transaction due to securities holdings, vesting of equity awards
and the terms of their employment arrangements with the
Company. Additional information regarding the
participants in the solicitation of the Company’s shareholders will
be included in the proxy statement.
Symmetry
Surgical, Inc. |
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Consolidated
Statements of Operations |
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In Thousands,
Except Per Share Data |
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|
|
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Three Months Ended |
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April 2, |
|
April 4, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
Revenue |
|
$ |
21,240 |
|
|
$ |
20,774 |
|
|
Cost of revenue |
|
|
10,861 |
|
|
|
10,889 |
|
|
Gross profit |
|
|
10,379 |
|
|
|
9,885 |
|
|
Sales and marketing
expenses |
|
|
4,699 |
|
|
|
4,473 |
|
|
General and
administrative expenses |
|
|
5,138 |
|
|
|
4,561 |
|
|
|
|
|
|
|
|
Operating income |
|
|
542 |
|
|
|
851 |
|
|
Other (income)
expense: |
|
|
|
|
|
Interest expense |
|
|
46 |
|
|
|
64 |
|
|
Other |
|
|
188 |
|
|
|
(263 |
) |
|
|
|
|
|
|
|
Income before income
taxes |
|
|
308 |
|
|
|
1,050 |
|
|
Income tax expense |
|
|
34 |
|
|
|
294 |
|
|
|
|
|
|
|
|
Net income |
|
$ |
274 |
|
|
$ |
756 |
|
|
|
|
|
|
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|
Net income per
share: |
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
Weighted average common
shares and equivalent shares outstanding: |
|
|
|
|
|
Basic |
|
|
9,733 |
|
|
|
9,587 |
|
|
Diluted |
|
|
9,821 |
|
|
|
9,603 |
|
|
|
|
|
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Symmetry
Surgical, Inc. |
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Consolidated
Balance Sheets |
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In
Thousands |
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April 2, |
|
January 2, |
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
ASSETS: |
|
(unaudited) |
|
|
|
Current Assets: |
|
|
|
|
|
Cash |
|
$ |
11,242 |
|
|
$ |
8,072 |
|
|
Accounts receivable,
net |
|
|
9,045 |
|
|
|
10,922 |
|
|
Inventories |
|
|
24,058 |
|
|
|
23,076 |
|
|
Other current
assets |
|
|
1,646 |
|
|
|
1,624 |
|
|
|
|
|
|
|
|
Total current
assets |
|
|
45,991 |
|
|
|
43,694 |
|
|
Property and equipment,
net |
|
|
2,117 |
|
|
|
2,258 |
|
|
Deferred income
taxes |
|
|
24,285 |
|
|
|
24,291 |
|
|
Goodwill |
|
|
9,344 |
|
|
|
9,341 |
|
|
Intangible assets, net
of accumulated amortization |
|
|
72,377 |
|
|
|
73,719 |
|
|
Other assets |
|
|
654 |
|
|
|
678 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
154,768 |
|
|
$ |
153,981 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY: |
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
6,680 |
|
|
$ |
6,240 |
|
|
Accrued wages and
benefits |
|
|
1,734 |
|
|
|
1,785 |
|
|
Other accrued
expenses |
|
|
1,136 |
|
|
|
1,540 |
|
|
Contingent purchase
liability, current |
|
|
2,073 |
|
|
|
1,047 |
|
|
Accrued income
taxes |
|
|
119 |
|
|
|
201 |
|
|
|
|
|
|
|
|
Total current
liabilities |
|
|
11,742 |
|
|
|
10,813 |
|
|
Contingent purchase
liability, non-current |
|
|
120 |
|
|
|
1,136 |
|
|
Other long-term
liabilities |
|
|
1,046 |
|
|
|
1,019 |
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
12,908 |
|
|
|
12,968 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
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Stockholders'
Equity: |
|
|
|
|
|
Common Stock, $.0001
par value; 50,000 shares authorized; 10,740 shares issued April 2,
2016; 10,535 shares issued January 2, 2016 |
|
|
1 |
|
|
|
1 |
|
|
Additional paid-in
capital |
|
|
140,906 |
|
|
|
140,460 |
|
|
Retained earnings |
|
|
1,358 |
|
|
|
1,084 |
|
|
Accumulated other
comprehensive loss |
|
|
(405 |
) |
|
|
(532 |
) |
|
|
|
|
|
|
|
Total Stockholders'
Equity |
|
|
141,860 |
|
|
|
141,013 |
|
|
|
|
|
|
|
|
Total Liabilities and
Equity |
|
$ |
154,768 |
|
|
$ |
153,981 |
|
|
|
|
|
|
|
|
Symmetry Surgical, Inc. |
|
|
|
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|
Reconciliation of EBITDA, Free Cash
Flow, Free Cash Flow
Conversion |
|
|
|
In Thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
April 2, |
|
April 4, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Net income,
as reported |
|
$ |
274 |
|
|
$ |
756 |
|
|
Adjustments: |
|
|
|
|
|
|
Interest |
|
|
46 |
|
|
|
64 |
|
|
|
Tax expense |
|
|
34 |
|
|
|
294 |
|
|
|
Depreciation |
|
|
218 |
|
|
|
241 |
|
|
|
Amortization |
|
|
1,359 |
|
|
|
1,400 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
1,931 |
|
|
$ |
2,755 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
April 2, |
|
April 4, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
$ |
3,145 |
|
|
$ |
3,189 |
|
|
Less:
purchases of property and equipment |
|
|
(76 |
) |
|
|
(53 |
) |
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
3,069 |
|
|
$ |
3,136 |
|
|
|
|
|
|
|
|
|
Free cash flow conversion (ratio free cash flow to
EBITDA) |
|
158.9 |
% |
|
|
113.8 |
% |
|
|
|
|
|
|
|
|
Symmetry Surgical, Inc. |
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|
Revenue by Product and Geography |
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In Thousands |
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First Quarter |
|
Vs Prior Quarter |
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|
|
1Q'16 |
|
1Q'15 |
|
Change |
|
1Q'16 |
|
4Q'15 |
|
Change |
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
Revenue by
Product: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Symmetry Surgical
branded |
$ |
19,374 |
|
|
$ |
19,034 |
|
|
|
1.8 |
% |
|
$ |
19,374 |
|
|
$ |
20,058 |
|
|
|
-3.4 |
% |
|
|
Alliance Partners |
|
1,866 |
|
|
|
1,740 |
|
|
|
7.2 |
% |
|
|
1,866 |
|
|
|
2,082 |
|
|
|
-10.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
21,240 |
|
|
$ |
20,774 |
|
|
|
2.2 |
% |
|
$ |
21,240 |
|
|
$ |
22,140 |
|
|
|
-4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by
Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
18,815 |
|
|
$ |
17,854 |
|
|
|
5.4 |
% |
|
$ |
18,815 |
|
|
$ |
19,377 |
|
|
|
-2.9 |
% |
|
|
International |
|
2,425 |
|
|
|
2,920 |
|
|
|
-17.0 |
% |
|
|
2,425 |
|
|
|
2,763 |
|
|
|
-12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue |
$ |
21,240 |
|
|
$ |
20,774 |
|
|
|
2.2 |
% |
|
$ |
21,240 |
|
|
$ |
22,140 |
|
|
|
-4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Contact:
Zack Kubow
The Ruth Group
646-536-7020
zkubow@theruthgroup.com
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