Colfax Reports First Quarter 2020 Results
May 7, 2020
- Reported $0.06 EPS from continuing operations and achieved $0.38 of adjusted EPS
- Sustained strong momentum in the first two months of the year
- Quickly implemented aggressive actions to address COVID-19 risks and impacts
- Amended credit agreement to provide ample liquidity and increased flexibility
ANNAPOLIS JUNCTION, MD, May 07, 2020 (GLOBE NEWSWIRE) — Colfax Corporation (NYSE: CFX), a leading diversified technology company, today announced its financial results for the first quarter of 2020.
The Company reported net income from continuing operations of $8 million or $0.06 per diluted share in the quarter, compared to a loss of $0.17 in the prior year quarter. On an adjusted basis, earnings of $0.38 per diluted share rose 2.7% from $0.37 in the prior year period. Adjustments to reported earnings are included in the reconciliation schedules provided.
Colfax reported net sales of $816 million, 19.4% higher than the previous year’s quarter due to the current year including a full quarter from DJO, partly offset by COVID-19-related demand reductions. On an organic basis, Colfax pro forma sales decreased 1.4% including approximately 4-5% benefit from extra selling days. Medical Technology segment pro forma sales increased 0.3% on an organic basis versus the prior year period, and the Fabrication Technology segment sales declined 6.2% on a reported basis and 2.2% organically versus the prior year period.
The Company also reported first quarter adjusted EBITA of $95.5 million or 11.7% of sales. The Fabrication Technology segment improved its adjusted EBITA margins by 70 basis points over the prior year first quarter to 14.8%, and the Medical Technology segment reported adjusted EBITA margins of 10.6%.
“Our strong momentum from 2019 continued for the first two months of 2020 with accelerating growth and margin expansion,”said Matt Trerotola, Colfax President and CEO. “As COVID-19 began impacting our business, we took quick actions to protect our associates while continuing to serve customers with essential products in a lower demand environment. We also implemented a program to reduce our second quarter spending by $80-90 million, which includes temporarily reducing salaries, implementing furloughs, lowering discretionary spending, and deferring other spending.”
“We are also contributing to the global fight against COVID-19 by providing products and solutions to directly help our customers,”commented Mr. Trerotola. “DJO’s MotionMD Telehealth solution ensures that products are delivered to patients remotely, helping to provide a virtual continuum of care during this time when many healthcare facilities are closed. We are also producing masks and hand sanitizer to help address current shortages. Within ESAB, our GCE Healthcare business increased production levels to meet demand of our medical gas controlling products to support healthcare systems during this challenging period.”
The Company finished the first quarter with $366 million of cash and access to $917 million of capacity under its credit agreement and other facilities. Colfax recently amended its credit agreement to provide for additional covenant flexibility as it addresses temporarily reduced customer demand levels. The Company believes it has ample liquidity and expects to complete 2020 without taking on new debt. In addition to spending reductions, the Company is reducing pricing and purchases from suppliers, re-phasing capital expenditures, and accelerating working capital process improvements to reduce overall cash outlays, including spending reductions, by over $100 million in Q2.
“Colfax’s Medical Technology business remains exposed to favorable long-term trends of aging and expanded access to healthcare, and our Fabrication Technology business has a diversified set of applications and superior exposure to higher-growth emerging markets,” commented Mr. Trerotola. “In the shorter-term, we are flexing our spending and using CBS processes and tools to address temporarily lower customer demand levels and deliver positive cash flow. We are protecting our ability to regain our momentum as the crisis abates. Our commitment to innovation is unchanged, our teams are staying close to customers, and our operations teams are ready to respond as demand improves.”
Due to the evolving and uncertain impact, scope and duration of the COVID-19 pandemic, the Company is withdrawing its previously communicated 2020 financial guidance and plans to discuss revenue trends in its call with investors later today.
Conference Call and Webcast
The Company will hold a conference call to discuss these results beginning at 8:00 a.m. Eastern today, which will be open to the public by calling +1-877-303-7908 (U.S. callers) and +1-678-373-0875 and referencing the conference ID number 1898585 and through webcast via Colfax’s website www.colfaxcorp.com under the “Investors” 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.