Symmetry Medical Reports Second Quarter 2011 Financial Results

WARSAW, Ind., Aug. 4, 2011 /PRNewswire/ –

Second Quarter Highlights:

— Revenue increased 7% year-over-year
— Operating income of $7.5 million; non-GAAP operating income of $9.7
million up 20% year-over-year
— Gross margin improves to 23.5%
— Net income of $4.2 million; non-GAAP net income of $5.6 million up 19%
year-over-year
— Lowers 2011 financial guidance to reflect industry trends

Symmetry Medical Inc. (NYSE: SMA), a leading global source of innovative medical
device solutions, including orthopedic implants, surgical instruments, and
sterilization cases and trays, announced second quarter 2011 financial results
for the period ended July 2, 2011.

Second Quarter Vs Prior Quarter
(in millions, except per
share data) 2011 2010 Change 2Q’11 1Q’11 Change
—- —- —— —– —– ——
Revenue $94.7 $88.8 7% $94.7 $95.8 -1%
Operating Income 7.5 7.8 -3% 7.5 3.1 141%
Net Income 4.2 4.5 -7% 4.2 1.4 207%
EPS $0.12 $0.13 -8% $0.12 $0.04 200%

Non-GAAP*
———
Operating Income* 9.7 8.1 20% 9.7 5.9 66%
Net Income* 5.6 4.7 19% 5.6 3.2 78%
EPS* $0.16 $0.13 23% $0.16 $0.09 78%

Revenue by Product:
——————-
Instruments $37.8 $35.4 7% $37.8 $39.2 -4%
Implants 26.5 28.5 -7% 26.5 27.2 -3%
Cases 24.8 19.8 25% 24.8 23.2 7%
Other 5.6 5.1 10% 5.6 6.2 -10%
— — — —
Total Revenue $94.7 $88.8 7% $94.7 $95.8 -1%

* Excludes charges for management transition costs in 2011, as well
as facility consolidation and severance costs incurred in 2011 and
2010. See “Non-GAAP Financial Measures” below.

Revenue for the second quarter 2011 was $94.7 million, up 6.6% compared to $88.8
million in the same period last year. The year-over-year revenue growth was
primarily driven by increased customer shipments in the Company’s instruments
and cases businesses.

Gross profit for the second quarter 2011 was $22.2 million, up 9.2% compared to
$20.4 million in the same period last year. Gross margin percentage for the
second quarter 2011 was 23.5% compared to 22.9% in the second quarter 2010 and
up from 20.2% in the first quarter 2011.

Selling, general and administrative expenses in the second quarter 2011 were
$13.0 million, compared to $12.3 million in the same period last year. The
increase in selling, general and administrative expenses in the second quarter
2011 was primarily due to increased employee compensation and benefits
associated with the previously announced hiring of the Company’s chief executive
officer and management transition related expenditures, as well as increased
research and development expenses. Facility closure and severance costs were
$1.7 million in the second quarter of 2011, compared to $0.3 million in the same
period last year.

Operating income for the second quarter 2011 was $7.5 million, compared to $7.8
million in the same period last year. Operating margin for the second quarter
2011 was 7.9%, compared to 8.7% in the same period last year. Excluding the
management transition costs, facility consolidation expenses and employee
severance referenced above, operating income for the second quarter 2011 was
$9.7 million, compared to $8.1 million in the same period last year.

The second quarter 2010 included a non-cash gain of $0.5 million for the mark to
market of the Company’s interest rate derivative. All existing interest rate
derivative instruments were unwound during November 2010 in connection with the
Company’s debt refinancing activities and therefore there was no such gain in
the second quarter 2011.

Income tax expense for the second quarter 2011 was $1.9 million, compared to
income tax expense of $2.4 million in the same period last year.

Net income for the second quarter 2011 was $4.2 million, or $0.12 per diluted
share, compared to $4.5 million, or $0.13 per diluted share, in the same period
last year. Excluding the management transition costs, facility consolidation
expenses and employee severance payments referenced above, net income for the
second quarter 2011 was $5.6 million, or $0.16 per diluted share, compared to
$0.13 in the same period last year.

The weighted average number of diluted shares outstanding during the second
quarter of 2011 was 35,989,891.

Thomas J. Sullivan, President and Chief Executive Officer of Symmetry Medical,
stated, “Our second quarter results were in-line with our expectations. We made
strides in improving our overall operational performance and our efforts
resulted in strong year-over-year and sequential margin improvements. We
achieved these results while continuing our focus on ensuring that Symmetry is
the leader in providing our customers with best-in-class quality and service.
During the quarter we further streamlined and enhanced our management team and
continued our journey to a more efficient, centralized organization with a
uniform quality, regulatory and IT infrastructure across all of our facilities.
As we announced yesterday, the acquisition of Olsen Medical will complement our
hospital direct distribution business, SSI, and coupled with internally
developed products that SSI will launch in the third quarter, positions the
Division for continued growth. Our research and development team will now focus
on developing innovative technology and higher margin proprietary products that
will add value for our OEM customers and spur future growth. Looking at the
second half of 2011, we experienced decreased orders beginning in late May,
driven by lower volume trends in the orthopedic industry and customer spending
reductions. We have taken prudent actions to adjust our costs while maintaining
our strong infrastructure and Total Solutions capabilities, which will allow us
to gain market share and drive improved margins and profitability as the
industry growth recovers.”

Financial Guidance

The following forward-looking estimates regarding 2011 guidance reflect current
market conditions and foreign currency rates. Actual results may differ
materially, and the Company refers you to forward-looking statements located at
the end of the press release.

For the full year 2011, based on the Company’s actual financial results for the
first six months of 2011, the acquisition of Olsen Medical, and current trends
in the orthopedic and medical device industries, the Company is lowering its
financial guidance. The Company now expects full year 2011 revenue to be in the
range of $354 million to $370 million, compared to the previously guided range
of $363 million to $383 million. The Company now expects full year 2011 GAAP
earnings per diluted share to be in the range of $0.32 to $0.46 and full year
2011 non-GAAP earnings per diluted share to be in the range of $0.43 to $0.57,
compared to the previously guided ranges of $0.50 to $0.58 and $0.57 to $0.65,
respectively. The non-GAAP earnings per diluted share guidance excludes the
impact of management transition costs, facility consolidation expenses and
employee severance, which are expected to negatively impact full year 2011 GAAP
earnings per diluted share by approximately $0.11.

Conference Call

Symmetry Medical will host a conference call to discuss second quarter 2011
financial results at 8:00 a.m. ET on August 4, 2011. A live Web cast of the
conference call will be available online from the investor relations page of the
Company’s corporate Web site at www.symmetrymedical.com. The dial-in numbers are
(866) 825-3209 for domestic callers and (617) 213-8061 for international. The
reservation number for both is 36436342.After the live Web cast, the call will
remain available on Symmetry Medical’s Web site through November 4, 2011. In
addition, a telephonic replay of the call will be available until August 11,
2011. The replay numbers are (888) 286-8010for domestic callers and (617)
801-6888for international callers. Please use reservation code 65124571.

About Symmetry Medical Inc.

Symmetry Medical Inc. is a leading global source of innovative medical device
solutions, including orthopedic implants, surgical instruments, and
sterilization cases and trays. The Company’s nearly 3,000 Teammates provide
design, development and worldwide production capabilities for these products to
customers in the orthopedic industry, other medical device markets, and
specialized non-healthcare markets. Symmetry’s trusted reputation and brands,
broad Intellectual Property portfolio and commitment to innovation enable it to
collaborate with hundreds of global medical device manufacturers as well as
thousands of hospitals to provide solutions for today’s needs and tomorrow’s
growth.

Non-GAAP Measures

The non-GAAP measures, including adjusted operating income, net income and EPS,
shown in this release exclude facility closure, severance costs, and management
transition costs. Reconciliations of these non-GAAP measures to the most
directly comparable GAAP measure are included after the financial information
included in this press release. These measures are not in accordance with, or an
alternative for, GAAP and 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.

Forward-Looking Statements

Statements in the press release regarding Symmetry Medical Inc.’s business which
are not historical facts may be “forward-looking statements” that involve risks
and uncertainties, within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are predictive in
nature and are frequently identified by the use of terms such as “may,” “might,”
“will,” “should,” “expect,” “believe,” “anticipate,” “plan,” “estimate,”
“intend,” and similar words indicating possible future expectations, events or
actions. Such predictive statements are not guarantees of future performance,
and actual outcomes and results could differ materially from our current
expectations. We refer you to the “Risk Factors” and “Forward
Looking-Statements” sections in the Company’s most recent Annual Report on Form
10-K filed with the Securities and Exchange Commission as well as the Company’s
other filings with the SEC, which are available on the SEC’s Web site at
www.sec.gov.

Symmetry Medical Inc.
Consolidated Statements of Operations

Three Months Ended YTD
—————— —
July 2, July 3, July 2, July 3,
2011 2010 2011 2010
—- —- —- —-
(In Thousands, Except Per Share Data)
(unaudited)

Revenue $94,721 $88,824 $190,499 $173,318
Cost of Revenue 72,493 68,461 148,948 135,919
—— —— ——- ——-

Gross Profit 22,228 20,363 41,551 37,399
Selling, general
and
administrative
expenses 13,014 12,272 28,630 24,876
Facility closure
and severance
costs 1,689 340 2,273 860

Operating Income 7,525 7,751 10,648 11,663
Other
(income)/expense:
Interest expense 907 1,498 1,790 3,061
Derivatives
valuation gain – (480) – (788)
Other 551 (100) 751 81
— —- — —

Income before
income taxes 6,067 6,833 8,107 9,309
Income tax
expense 1,892 2,354 2,570 3,199
—– —– —– —–

Net income $4,175 $4,479 $5,537 $6,110
====== ====== ====== ======

Net income per
share:
Basic $0.12 $0.13 $0.15 $0.17
===== ===== ===== =====

Diluted $0.12 $0.13 $0.15 $0.17
===== ===== ===== =====

Weighted average
common shares
and equivalent
shares
outstanding:
Basic 35,540 35,448 35,507 35,445
Diluted 35,990 35,807 35,963 35,768

Symmetry Medical Inc.
Consolidated Balance Sheets
In Thousands

January
July 2, 1,
2011 2011
—- —-

ASSETS: (unaudited)
Current Assets:
Cash and cash equivalents $16,393 $15,067
Accounts receivable, net 54,384 50,457
Inventories 77,953 70,373
Refundable income taxes 3,222 1,911
Deferred income taxes 4,925 4,597
Other current assets 4,584 3,281
—– —–

Total current assets 161,461 145,686
Property and equipment, net 106,971 107,879
Goodwill 155,595 154,218
Intangible assets, net of
accumulated amortization 38,323 39,601
Other assets 3,631 2,570
—– —–

Total Assets $465,981 $449,954
======== ========

LIABILITIES AND SHAREHOLDERS’
EQUITY:
Current Liabilities:
Accounts payable $23,804 $23,097
Accrued wages and benefits 9,730 6,808
Other accrued expenses 6,048 3,881
Accrued income taxes 682 233
Deferred income taxes 28 -
Revolving line of credit 6,251 3,692
Current portion of capital lease
obligations 482 454
Current portion of long-term debt 1,081 1,397
—– —–

Total current liabilities 48,106 39,562
Accrued income taxes 6,664 6,564
Deferred income taxes 17,481 17,692
Capital lease obligations, less
current portion 2,179 2,418
Long-term debt, less current
portion 82,834 87,349
—— ——

Total Liabilities 157,264 153,585
——- ——-

Shareholders’ Equity:
Common Stock, $.0001 par value;
75,000 shares authorized; shares
issued July 2, 2011–36,286;
January 1, 2011–35,950 4 4
Additional paid-in capital 281,327 279,592
Retained earnings 19,785 14,248
Accumulated other comprehensive
income 7,601 2,525
—– —–

Total Shareholders’ Equity 308,717 296,369
——- ——-

Total Liabilities and
Shareholders’ Equity $465,981 $449,954
======== ========

Reconciliation of Non-GAAP Financial Measures

Three Months Ended
——————
July April July
2, 2, 3,
2011 2011 2010
—- —- —-
(In Thousands, Except
Per Share Data)
(unaudited)

Operating Income, as reported $7,525 $3,123 $7,751
Special charges of management
transition costs 518 2,169 -
Facility closure and severance costs 1,689 584 340
—– — —

Operating Income excluding special
charges of management transition
costs and facility closure and
severance costs $9,732 $5,876 $8,091
====== ====== ======

Net Income, as reported $4,175 $1,362 $4,479
Special charges of management
transition costs 337 1,409 -
Facility closure and severance costs 1,098 380 221
—– — —

Net Income excluding special charges
of management transition costs and
facility closure and severance costs $5,610 $3,151 $4,700
====== ====== ======

Earning per diluted share $0.12 $0.04 $0.13
Impact of special charges of
management transition costs and
facility closure and severance costs
per diluted share 0.04 0.05 -
—- —- —

Earning per diluted share, excluding
special charges of management
transition costs and facility closure
and severance costs $0.16 $0.09 $0.13
===== ===== =====

Contact: Investors and Media:

Symmetry Medical Inc. The Ruth Group
Fred L. Hite Zack Kubow
Senior Vice President (646) 536-7020
Chief Financial Officer zkubow@theruthgroup.com
(574) 371-2218

SOURCE Symmetry Medical Inc.