Symmetry Medical Inc. (SMA)
Q2 2010 Earnings Conference Call
August 5, 2010 8:00 AM ET
Carol Ruth – IR, The Ruth Group
Brian Moore – President and CEO
Fred Hite – SVP and CFO
Matt Miksic – Piper Jaffray
James Sidoti – Sidoti & Co.
Michael Matson – Wells Fargo Securities
Previous Statements by SMA
» Symmetry Medical Q1 2010 Earnings Call Transcript
» Symmetry Medical Q4 2008 Earnings Call Transcript
» Symmetry Medical, Inc., Q3 2008 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the second quarter 2010 Symmetry Medical Inc earnings conference call. My name is Josh and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions)
At this time, I will turn the call over to Carol Ruth from the Ruth Group. Carol, you may proceed.
Welcome to the Symmetry Medical second quarter conference call. Joining us on the call are Brian Moore, the President and Chief Executive Officer and Fred Hite, Senior Vice President and Chief Financial Officer.
Statements in this conference call regarding Symmetry Medical business which are not historical facts may be forward-looking statements that involve risks and uncertainties within the Safe Harbor provision 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, will, should, expect, believe, anticipate, plan, estimate, intend and similar words indicating possible future expectations, events or actions.
Such predicative statements are not guarantees of future performance and actual results and outcome could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to, the loss of one or more customers, the development of new products or product innovation by our competitors, product liability, changes in management, changes in conditions affecting the economy, orthopedic device manufacturers, or the medical device industry in general and changes in government regulation of medical devices and third party reimbursement practices.
We refer you to the risks in the forward-looking statements sections of 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 website at www.sec.gov.
Before turning the call over to President and Chief Executive Officer, Brian Moore, I’d like to emphasize Symmetry Medical’s policy of not commenting or discussing individual customers or programs, Brian?
Thank you, Carol and thank you everyone for joining us on our second quarter 2010 investor conference call. We’re pleased to report another quarter of sequential revenue growth and continued improvements in operational efficiency which has led to solid bottom line results.
During the first half of the year, we have seen a stabilization of the business environment in core orthopedic and medical device markets and we remain optimistic that this will continue to create positive traction for Symmetry in the second half of the year. Particularly following revenues in the first and second quarter exceeding our expectations. Accordingly we are increasing our full-year revenue guidance to a range of $340 million to $350 million, up from a range of $330 million to $340 million.
As Fred will discuss a component a component to this increase is related to and expected benefit from foreign exchange rates during the second half of the year which will have a positive impact on our topline results but will not translate through to the bottom line. As a result we are reaffirming our full-year EPS guidance of a range $0.45 to $0.50.
Now turning to the quarter, total revenue was up 5% over the first quarter of 2010, with sequential growth in instruments, cases, implants up 80% excluding foreign exchange. We also are being making excellent progress with several new areas of business where we are investing resources to drive revenues and expand our diversification.
This includes our recently launched spine division, our new product development efforts and our direct instruments sales through SSI. We’ve improved the financial performance at our Sheffield facility and expanded Malaysian operations. Sheffield continues to improve its profitability and including July it has achieved six consecutive months of profitability.
We are pleased with the ongoing results in Sheffield and we expect this trend to continue as we improve the operational efficiency even further. Internationally, we are focused on the Asian Pacific region where the orthopedic industry is robust and we continue to expand our local marketing presence and manufacturing capabilities aggressively.
We are on track to achieve a significant increase in silos from our Malaysian facility in 2010. During Q2, our Malaysian facility shifted first full production order of a Class III medical implant to a major Japanese OEM customer. Our total solutions program including the development and production of the implant plus associated instruments and cases.
The shipment comprised fully finished sterile packed implants with mark-to-market instrument sets that supported the product launch in Japan. Our Japanese OEM customer recently received regulatory approval to market this product in China and we will continue to supply them with products for both markets. This was a key project for our Malaysian operation and its success demonstrates the full breadth of capabilities our operation can provide.
This relationship marks a new development in the region and underscores Symmetry’s strength in providing a high level of quality and regulatory control and validate the experience and expertise of our operations can offer in regional OEMs. Last quarter we added an experienced and dedicated General Manager to our spine business where we have a presence, that’s a good opportunity to replicate our success in other areas of orthopedics.