Accellent Inc. Announces Third Quarter 2012 Results

WILMINGTON, Mass. --(Business Wire)--

Accellent Inc. (the "Company" or "Accellent"), a wholly owned subsidiary of Accellent Holdings Corp., today announced results for its fiscal third quarter ended September 30, 2012.

Third Quarter 2012 Financial Results

Net sales were $126.0 million in the third quarter of 2012 compared with $126.8 million in the third quarter of 2011. Income from continuing operations was $16.2 million in the third quarter of 2012, compared with $13.3 million in the third quarter of 2011. Net loss was $6.5 million in the third quarter of 2012 compared to $4.4 million in the third quarter of 2011.

Adjusted EBITDA in the third quarter of 2012 was $28.3 million, or 22.4% of net sales, compared to Adjusted EBITDA of $24.3 million, or 19.2% of net sales, in the third quarter of 2011.

"Despite on-going revenue challenges, we continued to improve our business fundamentals that drive sustainable profitable growth. In the third quarter, despite relatively flat sales, Adjusted EBITDA increased over 16% year over year. I am optimistic that our actions will continue to generate positive results" stated Donald Spence, President and CEO of Accellent.

Nine Months Ended September 30, 2012 Financial Results

Net sales decreased 2.1% to $376.5 million in the first nine months of 2012 compared with $384.5 million in the first nine months of 2011. Income from continuing operations was $39.8 million in the first nine months of 2012 compared with $44.5 million in the first nine months of 2011. Net loss was $19.1 million in the first nine months of 2012 compared with a net loss of $11.6 million in the first nine months of 2011.

Adjusted EBITDA for the first nine months of 2012 was $76.7 million, or 20.4% of net sales compared to Adjusted EBITDA of $77.1 million, or 20.0% of net sales in the first nine months of 2011.

Reconciliations of non-GAAP financial measures to GAAP financial measures are provided in the financial information accompanying this press release.

The financial information included in this press release reflect results from continuing operations for all periods presented and assets to be held and used. Results of discontinued operations and assets held for sale are presented separately for all periods presented.

Conference Call

Donald Spence, President and Chief Executive Officer, and Jeremy A. Friedman, Executive Vice President and Chief Financial Officer, will discuss our third quarter financial results in a conference call scheduled for today, November 8, 2012 at 5 p.m. Eastern Standard Time. The teleconference can be accessed live on the Internet through the Investor Relations section of the Accellent website at www.accellent.com or by calling (800) 446-1671 pass code 33716271. Please visit the website or dial in 10 to 15 minutes prior to the beginning of the call to download and install any necessary audio software. A replay of the conference call will be available via www.accellent.com or by telephone at (888) 843-7419 pass code 33716271 until November 15, 2012.

About Accellent

Accellent Holdings Corp., through its wholly owned subsidiary Accellent, Inc., provides fully integrated outsourced manufacturing and engineering services to the medical device industry primarily in the cardiology, endoscopy and orthopedic markets. Accellent has broad capabilities in precision component fabrication, finished device assembly, complete supply chain management capabilities and engineering services. These capabilities enhance customers' speed to market and return on investment by enabling them to refocus internal resources more efficiently. For more information, please visit www.accellent.com.

Forward-Looking Statements

This press release includes "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. All statements included herein, other than statements of historical fact, may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the risk factors contained in the Company's Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission on March 29, 2012. All forward-looking statements are expressly qualified in their entirety by such risk factors.

ACCELLENT INC.
Unaudited Condensed Consolidated Statements of Operations
(in thousands)


	Three Months Ended						Nine Months Ended
	September 30, 2011			September 30, 2012			September 30, 2011			September 30, 2012
Net sales	$	126,840		$	125,961		$	384,530		$	376,526
Cost of sales (exclusive of amortization)		95,014			92,250			284,056			280,370

Gross profit		31,826			33,711			100,474			96,156

Operating expenses:
Selling, general and administrative expenses		14,165			12,833			42,677			41,502
Research and development expenses		602			419			2,081			1,364
Restructuring expenses		-			714			-			2,552
Loss (gain) on disposal of assets		6			(221	)		53			(254	)
Amortization of intangible assets		3,735			3,735			11,205			11,205

Total operating expenses		18,508			17,480			56,016			56,369

Income from continuing operations		13,318			16,231			44,458			39,787

Other (expense) income, net:
Interest expense, net		(17,232	)		(17,379	)		(51,660	)		(51,879	)
Other income (expense), net		1,247			592			(1,403	)		(90	)

Total other (expense) income, net		(15,985	)		(16,787	)		(53,063	)		(51,969	)

Loss from continuing operations before income taxes		(2,667	)		(556	)		(8,605	)		(12,182	)

Provision for income taxes		1,853			1,110			3,898			3,233

Net loss from continuing operations		(4,520	)		(1,666	)		(12,503	)		(15,415	)
Income (loss) from discontinued operations, net of tax		121			(4,814	)		944			(3,659	)
Net loss	$	(4,399	)	$	(6,480	)	$	(11,559	)	$	(19,074	)

ACCELLENT INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)


	December 31, 2011			September 30, 2012
Assets
Current assets:
Cash	$	38,858		$	49,587
Accounts receivable, net of allowances of $1,983 and $1,904 as of December 31, 2011 and September 30, 2012, respectively		54,763			56,074
Inventory		62,153			65,106
Assets held for sale, current portion		3,874			1,767
Prepaid expenses and other current assets		4,416			5,320

Total current assets		164,064			177,854
Property, plant and equipment, net		121,153			116,555
Long-term assets held for sale		16,250			6,019
Goodwill		619,443			619,443
Other intangible assets, net		149,687			138,482
Deferred financing costs and other assets, net		16,825			14,635

Total assets	$	1,087,422		$	1,072,988

Liabilities and Stockholder's equity
Current liabilities:
Current portion of long-term debt	$	22		$	15
Accounts payable		21,035			23,431
Accrued payroll and benefits		7,858			10,531
Accrued interest		19,519			18,822
Liabilities held for sale, current portion		1,908			972
Accrued expenses and other current liabilities		18,747			16,086

Total current liabilities		69,089			69,857
Long-term debt		712,967			713,210
Other liabilities		38,466			41,258

Total liabilities		820,522			824,325

Stockholder's equity:
Common stock, par value $0.01 per share, 50,000,000 shares authorized; 1,000 shares issued and outstanding at December 31, 2011 and September 30, 2012, respectively		-			-
Additional paid-in capital		638,445			638,980
Accumulated other comprehensive (loss)		(1,266	)		(965	)
Accumulated deficit		(370,279	)		(389,352	)

Total stockholder's equity		266,900			248,663

Total liabilities and stockholder's equity	$	1,087,422		$	1,072,988

ACCELLENT INC.
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDA
(in thousands)


	Three Months Ended						Nine Months Ended
	September 30, 2011			September 30, 2012			September 30, 2011			September 30, 2012

Net loss	$	(4,399	)	$	(6,480	)	$	(11,559	)	$	(19,074	)
Interest expense, net		17,234			17,379			51,662			51,880
Provision for income taxes		1,853			1,110			3,898			3,233
Depreciation and amortization		9,757			10,189			28,804			30,319

EBITDA (1)	$	24,445		$	22,198		$	72,805		$	66,358


Adjustments:
Stock-based compensation - employees		271			182			761			364
Stock-based compensation - non-employees		23			23			68			68
Employee severance and relocation		492			500			1,306			1,870
(Income) loss from discontinued operations, net		(121	)		4,814			(944	)		3,659
Restructuring expenses		-			714			-			2,552
Executive recruiting costs		43			-			307			-
Plant closure costs		-			195			-			518
Currency translation (gain) loss		(1,233	)		(569	)		1,474			152
Loss (gain) on disposal of assets		6			(221	)		52			(255	)
Other taxes		50			80			297			395
Management fees to stockholder		319			335			957			1,005

Adjusted EBITDA (1)	$	24,295		$	28,251		$	77,083		$	76,686

(1) EBITDA and Adjusted EBITDA presented in this press release are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity.

EBITDA represents net income (loss) before net interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to give effect to certain non-cash items and other adjustments, all of which are defined in the indentures governing our debt. The adjustments include adjustments for restructuring charges and related plant closure costs, stock compensation charges, severance and relocation costs, executive recruiting costs, currency gains and losses, gains and losses on derivative instruments, gains and losses resulting from the disposal of property and equipment, certain non-income based taxes, losses on debt extinguishment, discontinued operations and management fees.

We believe that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide as additional information for investors. We consider it an important supplemental measure of our performance and we believe that both are frequently used by securities analysts, investors and other interested parties in the evaluation of high yield issuers.