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Symmetry Medical Inc. (SMA)
UBS Global Healthcare Conference Call
May 20, 2013 09:30 ET
Tom Sullivan - President and Chief Executive Officer
Previous Statements by SMA
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Well, good morning everybody. My name is Tom Sullivan from Symmetry Medical. Thank you for taking some time to meet with us today and to learn a little bit more about our business. I am pleased to give you an overview of our organization, and as Terrence had alluded to I will be happy to take any specific direct questions during the breakout immediately following this session, of course, our disclaimer statement as a publicly-held company, and I call to life our forward-looking statement.
So, there is four key takeaways that I would like to talk to you today about Symmetry Medical, and I’ll give you additional color on each of these as I progress through the agenda. But the first is that at our core, we are a market leading supplier to the orthopedics industry. So, we are a manufacturer that sells products to the bluest of blue chip names in healthcare. We consider it quite a great place to be, particularly in orthopedics. The long-term demographics are encouraging and the opportunities for growth from a perspective of share, from a perspective of increased outsourcing and new product launches, we believe it’s a great place to have the core of our company be homed in. However, also we have a direct-to-hospital subsidiary, which we call, Symmetry Surgical, that brings some of our technologies directly to the healthcare marketplace. We like that space, because it diversifies our overall revenue, and it also has a significantly more fragmented customer space than being an OEM supplier. And I’ll tell you a great deal more about Symmetry Surgical and the value to us both tactically and strategically in a moment.
Thirdly, we remain committed as an organization and we have the resources to continue to diversify our portfolio. One of the things when you look at our stock over time you will see that it is rather lumpy from a revenue perspective. If you go back to when we went public in 2004, you will see that the revenue will go up and come down fairly significantly. And the reason for that is that a large piece of our sales, our OEM customers are capital purchases by our OEM customers in support of product launches. And consequently, when they are launching a product, you will see a spike in our revenue. And when that product launch is over, you will see the erosion of the revenue, and 2009 is probably the best possible example, I call your attention to. We believe that diversifying our revenue base to mitigate the highs and lows of these peaks and valleys is the appropriate step, and we continue to look at efforts to diversify as an OEM supplier, as well as our direct-to-hospital business.
And then finally for a company that is committed to long-term, we believe innovation remains the cornerstone of our long-term success, innovation as a contract manufacturer and innovation as a direct-to-hospital supplier. We invest a little over 1% of our revenue in research and development. And we have had some significant success recently in developing intellectual property that we are working hard to commercialize into new products. And I will speak to how innovation comes to life in our organization in a moment.
So, one of the things about Symmetry Medical just before I speak to the actual business side is how we behave as a company. We are in this for the long-term. We try to mitigate obviously our performance over the short-term and continue to meet shareholder expectations, but we believe the best solution for the long-term shareholder value is to remain committed to a long-term horizon and to do behavior in a way that will make us happy not only about winning, but the way in which we won. So, we have internally what we call our promise statement, and it speaks clearly to our priorities of fulfilling our promises to our customers, be they be a OEM customer or a patient, our promise to our teammates around the world, and with nearly 3,000 associates throughout Symmetry’s sites around the world, fulfilling that promise keeps those employees engaged and a vital part of our long-term success. And then ultimately if we do it right for our customers and right for our teammates, we know that they will reward us and reward you, our shareholders with long-term growth in our organization.
A little bit of the facts about Symmetry, roughly 35 years old today. We grew out of a small instruments shop in Warsaw, Indiana. Those of you that aren’t familiar with Warsaw, it is the orthopedic capital of the world. And Othy manufacturer is our parent organization from a long time ago opened up as an instrument supplier to the large companies in town there. Over the years Othy grew through acquisition and in 2004, we were taken public by Olympus Partners and brought together the best of Othy and the best of Mettis. Mettis was a forge shop more on the metals side of the business on implants. Today, that organization has grown to 17 locations around the world, approximately 3,000 associates as you can see. We are present in the United States, in the UK, Ireland, France, Germany, as well as in Malaysia. And in the United States, we have sites in both the Northeast and the Midwest as well as Nashville, Tennessee for our Symmetry Surgical location.