) recorded first-quarter fiscal 2012 adjusted earnings of 7 cents a
share, in line with the Zacks Consensus Estimate. Adjusted earnings
exclude facility consolidation expenses, acquisitions, debt
issuance and legal costs, impairment and amortization of
intangibles, severance costs and management transition charges.
Profit in the reported quarter was $0.8 million (or 2 cents a
share), down 42.9% year over year.
Revenues and Margins
Revenues rose 5.1% year over year to $100.7 million in the first
quarter, beating the Zacks Consensus Estimate of $99 million,
boosted by higher sales across the company's Symmetry Surgical
business. This was, however, partially dampened by lower sales in
the Original Equipment Manufacturer ("OEM") Solutions division.
Revenues from the core OEM Solutions segment dropped 15% to $74
million due to decline in sales to major orthopedic OEM customers
on account of weak procedure growth and inventory curtailment.
Among the sub-segments, Symmetry witnessed yet another fall
across its implants, instruments and surgical cases businesses in
the reported quarter, which fell 9%, 16% and 25% to $24.8 million,
$27 million and $15.9 million, respectively.
Revenues from the smaller Symmetry Surgical unit soared almost
threefold to $26.7 million in the quarter, buoyed by the Olsen
Medical and Codman & Shurtleff, Inc. acquisition, which
contributed roughly $16.1 million to the division's
Gross margin increased to 25% from 20.2% a year ago, led by
higher margin in the Surgical business and was partially offset by
lofty production and manufacturing costs associated with the OEM
business. However, this did not have much of an impact as the
company has regularly undertaken cost controlling measures with
respect to labor, consumables and scrap.
Adjusted operating margin was roughly at 10% versus 7.3% a year
ago. Selling, general and administrative charges, as a percentage
of sales, were 18.6% compared with 16.3% in the prior-year
Symmetry exited first quarter fiscal 2012 with cash and cash
equivalents of roughly $23.2 million, up 31.3% year over year.
Total long-term debt increased three-fold year over year to $253.8
Guidance and Recommendation
Symmetry has retained its revenue guidance for 2012. The company
continues to expect sales in a band of $410 million and $425
million for the full year.
The earnings per share (on a reported basis) target has been set
in a range of 30 cents to 40 cents for 2012. Adjusted earnings per
share are expected between 55 cents and 65 cents. The forecast
excludes facility closure/severance, acquisition, impairment,
amortization and legal charges, which are expected to dilute 2012
earnings by roughly 25 cents a share.
Symmetry is the largest OEM provider of implants and related
surgical instruments and cases to orthopedic devices manufacturers.
Its major customers include Johnson & Johnson's DePuy,
Symmetry has created a distinct competitive niche in the
orthopedic devices market with its "Total Solutions Approach." The
company is investing in revamping its management structure and
enhancing customer collaboration, which should push growth moving
Symmetry, in December 2011, completed its $165 million takeover
of the surgical instruments business of Codman. Besides
diversifying its revenue base, the acquisition enables Symmetry to
broaden its global presence.
However, Symmetry still faces price and procedure volume
pressure on the orthopedic front. Also, the company's high spending
may continue to weigh on its bottom line. Currently, we have a
Neutral recommendation on the stock. Symmetry currently retains a
short-term Zacks #2 Rank (Buy).
SYMMETRY MEDICL (SMA): Free Stock Analysis
STRYKER CORP (SYK): Free Stock Analysis Report
ZIMMER HOLDINGS (ZMH): Free Stock Analysis
To read this article on Zacks.com click here.