ST. LOUIS, April 27, 2010 (GLOBE NEWSWIRE) -- Thermadyne Holdings Corporation (Nasdaq:THMD) today reported results for the three months ended March 31, 2010.
| OVERVIEW | |||
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Three Months Ended March 31 |
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| ($millions, except EPS) | 2010 | 2009 | Incr/(Decr) |
| Sales | $96.6 | $83.3 | 16% |
| Net Income | $2.3 | ($2.5) | $4.8 |
| Earnings (Loss) Per Share | $0.17 | ($0.18) | $0.35 |
| Net Cash From Operating Activities | $18.6 | $3.0 | $15.6 |
| Operating EBITDA, as Adjusted | $13.2 | $3.6 | $9.6 |
| Total Debt, Net of Cash | $185.0 | $219.2 | ($34.2) |
Financial Review
Net sales in the first quarter of 2010 were $96.6 million, an increase of 16% as compared to the first quarter of 2009. Excluding the impact of foreign currency translations, net sales increased 10% with international sales increasing 17% and U.S. sales increasing 5%.
Gross margin in the first quarter of 2010 increased to 33.5% of net sales as compared to 25.6% of net sales in the prior year first quarter. The improved gross margin in the first quarter of 2010 reflects the combined benefits of reduced costs for raw materials, cost savings from previously implemented staffing and operational restructurings, and the efficiencies from increased production volumes. The gross margin for the first quarter of 2010 represents a 200 basis point improvement over the gross margin, excluding LIFO, reported in the fourth quarter of 2009.
Selling, general and administrative costs were $21.8 million, or 22.5% of sales, in the first quarter of 2010 compared to $19.4 million, or 23.3% of sales, in the first quarter of 2009.
Interest costs were $6.3 million and $4.6 million in the first quarter of 2010 and 2009, respectively. The increase of $1.7 million results from the increased rates for the Second-Lien Agreement indebtedness and the Senior Subordinated Notes. The Senior Subordinated Notes Special Interest adjustment was 2.25% in the 2010 first quarter compared to 0.25% in the first quarter of 2009 and the Second-Lien indebtedness interest rate increased as a result of the refinancing in August 2009.
Net Income (Loss)
For the first quarter of 2010, the Company earned net income of $2.3 million, or $0.17 per diluted share, compared to the net loss of $2.5 million, or $0.18 loss per diluted share incurred during the first quarter of 2009.
Cash Flows From Operating Activities and Liquidity
Cash flow from operating activities provided $18.6 million of cash in the first quarter of 2010, and $3.0 million in the first quarter of 2009. The cash provided from operating activities in 2010 includes the benefit of the early payments of supplier invoices and customer rebates during the fourth quarter of 2009. These early payments reduced cash usage requirements approximately $14 million in the first quarter of 2010.
As of March 31, 2010, the Company had combined cash and availability under its revolver of $72 million.
Operating EBITDA, As Adjusted,
In the first quarter of 2010, operating EBITDA, as adjusted, was $13.2 million, 13.7% of net sales, compared to $3.6 million, 4.3% of net sales, in the first quarter of 2009. For the fourth quarter of 2009, operating EBITDA, as adjusted, was $10.1 million, 11.2% of net sales.
Outlook for 2010
Paul Melnuk, Thermadyne's Chairman stated, "We are encouraged by the increasing pace of our sales during the quarter. The daily sales pace for the month of March was 10% greater than the average daily sales during the quarter due to increased demand in the U.S. market. This has continued through April suggesting that we may be in the early stages of recovery from the depressed levels of 2009."
"I am pleased with the effectiveness of our operations response to the recent increase in volumes to maintain service levels for our customers. Higher volumes also provide increased utilization of our fixed costs contributing to improving margins. The improving economic outlook is pushing higher the costs of copper, steel, and brass. As a result, we will be increasing our selling prices in selected markets," added Mr. Melnuk.
"We believe that our focus on working capital management will aid in maximizing cash flows. This improving working capital efficiency combined with positive cash flow generation and the strong liquidity position enabled us to repay $14 million of Second Lien indebtedness during April 2010. We expect to further reduce debt over the course of the year provided the business trends we have seen year-to-date continue," concluded Mr. Melnuk.
Use of Non-GAAP Measures
Our discussions of operations include reference to "Operating EBITDA, as adjusted." While a non-GAAP measure, management believes this measure enhances the reader's understanding of underlying and continuing operating results in the periods presented. The Company defines "Operating EBITDA" as earnings before interest, taxes, depreciation, amortization, LIFO adjustments, stock-based compensation expense, minority interest, post-retirement benefit expense in excess of cash payments and the nonrecurring items of severance accruals and restructuring costs. The presentation of "Operating EBITDA, as adjusted" facilitates the reader's ability to compare current period results to other periods by isolating certain unusual items of income or expense, such as those detailed in an attached schedule. Operating EBITDA, as adjusted, for certain unusual items is reflective of management measurements which focus on operating spending levels and efficiencies and less on the non-cash and unusual items believed to be nonrecurring. Additionally, non-GAAP measures such as Operating EBITDA and Operating EBITDA, as adjusted, are commonly used to value the business by investors and lenders.
A schedule is attached which reconciles Net Income (Loss) as shown in the Consolidated Statements of Operations to Operating EBITDA and Operating EBITDA, as adjusted.
Non-GAAP measurements such as "Operating EBITDA" and "Operating EBITDA, as adjusted" are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. Use of Operating EBITDA and Operating EBITDA, as adjusted, has material limitations, and therefore management provides reconciliation for the reader, of Operating EBITDA and Operating EBITDA, as adjusted, to Net Income.
The financial statement information presented in accordance with generally-accepted accounting principles (GAAP) and the non-GAAP measure have not been reviewed by an independent, registered public accounting firm.
Conference Call
Thermadyne will hold a teleconference on April 28, 2010 at 11:00 a.m. Eastern.
To participate via telephone, please dial:
- U.S. and Canada: 1-800-779-8416
- International 1-312-470-0177
- Participant Passcode: THERMADYNE
- (Conference ID 7302581)
Those wishing to participate are asked to dial in ten minutes before the conference begins. For those unable to participate in the live conference call, a recording of the conference will be available from April 28, 2010 at 12:00 noon Eastern until May 5, 2010 at 12:59 p.m. Eastern by dialing 1-888-562-2937 (Domestic/Canada) and 1-203-369-3751 (International). Enter conference ID Passcode of 3031 to listen to the recording.
About Thermadyne
Thermadyne, headquartered in St. Louis, Missouri, is a leading global manufacturer and marketer of metal cutting and welding products and accessories under a variety of leading premium brand names including Victor®, Tweco® / Arcair®, Thermal Dynamics®, Thermal Arc®, Stoody®, TurboTorch®, Firepower® and Cigweld®. Its common shares trade on the NASDAQ under the symbol THMD. For more information about Thermadyne, its products and services, visit the Company's web site at www.Thermadyne.com.
Cautionary Statement Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and involve a number of risks and uncertainties. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company's operating results. These risks and factors are set forth in documents the Company files with the Securities and Exchange Commission, specifically in the Company's most recent Annual Report on Form 10-K and other reports it files from time to time.
| THERMADYNE HOLDINGS CORPORATION | ||||
| FINANCIAL HIGHLIGHTS | ||||
| (In thousands, except per share data) | ||||
| UNAUDITED | ||||
| Schedule 1 | ||||
| Condensed Consolidated Statements of Operations | ||||
| Three Months Ended March 31, | ||||
| 2010 | % of Sales | 2009 | % of Sales | |
| Net sales | $ 96,617 | 100.0% | $ 83,311 | 100.0% |
| Cost of goods sold | 64,232 | 66.5% | 61,951 | 74.4% |
| Gross margin | 32,385 | 33.5% | 21,360 | 25.6% |
| Selling, general and administrative expenses | 21,767 | 22.5% | 19,442 | 23.3% |
| Amortization of intangibles | 677 | 0.7% | 671 | 0.8% |
| Operating income | 9,941 | 10.3% | 1,247 | 1.5% |
| Other income (expenses): | ||||
| Interest | (6,336) | (6.6)% | (4,633) | (5.6)% |
| Amortization of deferred financing costs | (264) | (0.3)% | (236) | (0.3)% |
| Income (loss) before income tax provision | 3,341 | 3.5% | (3,622) | (4.3)% |
| Income tax provision (benefit) | 1,045 | 1.1% | (1,126) | (1.4)% |
| Net income (loss) | $ 2,296 | 2.4% | $ (2,496) | (3.0)% |
| Basic and Diluted net income (loss) per share | $ 0.17 | $ (0.18) | ||
| THERMADYNE HOLDINGS CORPORATION | ||
| FINANCIAL HIGHLIGHTS | ||
| (In thousands) | ||
| UNAUDITED | ||
| Schedule 2 | ||
| Condensed Consolidated Cash Flow Data | ||
| Three Months Ended | ||
| March 31, 2010 | March 31, 2009 | |
| Cash flows from continuing operations | ||
| Cash flows from operating activities: | ||
| Net income (loss) | $ 2,296 | $ (2,496) |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| Depreciation and amortization | 3,467 | 3,002 |
| Deferred income taxes | (513) | (1,270) |
| Net Periodic post-retirement benefits | (35) | 4 |
| 5,215 | (760) | |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (5,571) | 10,850 |
| Inventories | (885) | 12,155 |
| Prepaids | 1,687 | 528 |
| Accounts payable | 19,575 | (8,341) |
| Accrued and other liabilities | 2,088 | (7,505) |
| Accrued interest | (4,233) | (3,688) |
| Accrued taxes | 1,230 | (132) |
| Other long-term liabilities | (475) | (108) |
| 13,416 | 3,759 | |
| Net cash provided by (used in) operating activities | 18,631 | 2,999 |
| Cash flows from investing activities: | ||
| Capital expenditures | (1,636) | (2,238) |
| Other, net | (81) | (55) |
| Net cash provided by (used in) investing activities | (1,717) | (2,293) |
| Cash flows from financing activities: | ||
| Borrowings under Working Capital Facility | -- | 8,923 |
| Repayments of Working Capital Facility | (9,643) | (7,193) |
| Borrowings under Second-Lien Facility and other | -- | 75 |
| Repayments of Second-Lien Facility and other | (72) | (518) |
| Termination payment from derivative counterparty | -- | 2,157 |
| Other, net | 72 | (531) |
| Net cash provided by (used in) financing activities | (9,643) | 2,913 |
| Effect of exchange rate changes on cash and cash equivalents | 195 | (288) |
| Net cash provided by (used in) continuing operations | $ 7,466 | $ 3,331 |
| Net cash provided by (used in) discontinued operation | $ -- | $ 314 |
| Total increase (decrease) in cash and cash equivalents | $ 7,466 | $ 3,645 |
| Total cash and cash equivalents beginning of period (including cash of discontinued operations) | 14,886 | 12,501 |
| Total cash and cash equivalents end of period (including cash of discontinued operations) | $ 22,352 | $ 16,146 |
| THERMADYNE HOLDINGS CORPORATION | ||
| FINANCIAL HIGHLIGHTS | ||
| (In thousands) | ||
| Schedule 3 | ||
|
March 31, 2010 |
December 31, 2009 |
|
| UNAUDITED | ||
| ASSETS | ||
| Cash and cash equivalents | $ 22,352 | $ 14,886 |
| Accounts receivable, net | 62,248 | 56,589 |
| Inventories | 75,540 | 74,381 |
| Prepaid expenses and other | 7,753 | 9,255 |
| Deferred tax assets | 3,008 | 3,008 |
| Total current assets | 170,901 | 158,119 |
| Property, plant and equipment, net | 46,493 | 46,687 |
| Goodwill | 187,880 | 187,818 |
| Intangibles, net | 57,855 | 58,451 |
| Other assets | 3,606 | 3,870 |
| Total assets | $ 466,735 | $ 454,945 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Working capital facility | $ -- | $ 9,643 |
| Current maturities of long-term obligations | 17,089 | 8,915 |
| Accounts payable | 29,727 | 9,598 |
| Accrued and other liabilities | 25,391 | 23,119 |
| Accrued interest | 3,375 | 7,608 |
| Income taxes payable | 1,938 | 705 |
| Deferred tax liabilities | 2,793 | 2,793 |
| Total current liabilities | 80,313 | 62,381 |
| Long-term obligations, less current maturities | 190,235 | 198,466 |
| Deferred tax liabilities | 52,384 | 52,835 |
| Other long-term liabilities | 13,106 | 13,471 |
| Total shareholders' equity | 130,697 | 127,792 |
| Total liabilities and shareholders' equity | $ 466,735 | $ 454,945 |
| Long-term Obligations |
March 31, 2010 |
December 31, 2009 |
| Working Capital Facility | $ -- | $ 9,643 |
| Second-Lien Facility | 25,000 | 25,000 |
| Issuance discount on Second-Lien Facility | (1,562) | (1,703) |
|
Senior Subordinated Notes, due February 1, 2014, 9 1/4% interest payable semiannually on February 1 and August 1 |
172,327 | 172,327 |
| Capital leases and other | 11,559 | 11,757 |
| 207,324 | 217,024 | |
| Current maturities and working capital facility | (17,089) | (18,558) |
| $ 190,235 | $ 198,466 | |
| THERMADYNE HOLDINGS CORPORATION | |||||
| FINANCIAL HIGHLIGHTS | |||||
| (In thousands) | |||||
| UNAUDITED | |||||
| Schedule 4 | |||||
| Working Capital Efficiency Information | |||||
| 2010 | 2009 | ||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |
| Accounts receivable, net | $ 62,248 | $ 56,589 | $ 57,018 | $ 56,287 | $ 60,457 |
| Inventories | 75,540 | 74,381 | 77,476 | 83,170 | 89,493 |
| Accounts payable | (29,727) | (9,598) | (21,596) | (21,365) | (22,182) |
| $ 108,061 | $ 121,372 | $ 112,898 | $ 118,092 | $ 127,768 | |
| % Annualized Sales | 28.0% | 33.7% | 31.5% | 34.8% | 38.3% |
| DSO | 58.0 | 56.6 | 57.3 | 59.7 | 65.3 |
| Inventory Turns | 3.40 | 3.30 | 3.13 | 2.88 | 2.77 |
| DPO | 41.7 | 14.1 | 32.0 | 32.1 | 32.2 |
| Calculation Notes | |||||
| % Annualized Sales = Net amount compared to annualized quarterly sales | |||||
| DSO = Accounts receivable compared to related quarterly sales multiplied by 90 | |||||
| Inventory Turns = Quarterly cost of sales annualized divided by inventory | |||||
| DPO = Accounts payable compared to related quarterly cost of sales multiplied by 90 | |||||
| THERMADYNE HOLDINGS CORPORATION | ||
| FINANCIAL HIGHLIGHTS | ||
| (In millions) | ||
| Schedule 5 | ||
| Reconciliations of Net Income (Loss) to Operating EBITDA (1) and Operating EBITDA, as adjusted (1) | ||
| Three Months Ended March 31, | ||
| 2010 | 2009 | |
| Net income (loss) from continuing operations | $ 2.3 | $ (2.5) |
| Plus: | ||
| Depreciation and amortization including deferred financing fees | 3.4 | 3.0 |
| Interest expense, net | 6.2 | 4.6 |
| Provision for income taxes | 1.0 | (1.1) |
| EBITDA (1) | $ 12.9 | $ 4.0 |
| Net periodic postretirement cash payments in excess of benefits | (0.2) | -- |
| LIFO | 0.1 | (1.0) |
| Severance accrual | 0.3 | 1.3 |
| Stock compensation expense | 0.1 | (0.7) |
| Operating EBITDA, as adjusted (1) | $ 13.2 | $ 3.6 |
| Percentage of Net Sales | 13.7% | 4.3% |
| (1) A Non-GAAP measure | ||
| THERMADYNE HOLDINGS CORPORATION | |||||
| NET INCOME AND OTHER INFORMATION - TRAILING FIVE QUARTERS | |||||
| (In thousands) | |||||
| UNAUDITED | |||||
| Schedule 6 | |||||
| 2010 | 2009 | ||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |
| Net sales | $ 96,617 | $ 90,038 | $ 89,501 | $ 84,805 | $ 83,311 |
| Gross Margin % of Sales | 33.5% | 31.9% | 32.2% | 29.4% | 25.6% |
| SGA % of Sales | 22.5% | 24.4% | 24.3% | 21.5% | 23.3% |
| Net income (loss) from continuing operations | 2,296 | (681) | 3,726 | 582 | (2,496) |
| Income (loss) from discontinued operations, net of tax | -- | -- | 1,118 | 1,933 | -- |
| Net income (loss) | $ 2,296 | $ (681) | $ 4,844 | $ 2,515 | $ (2,496) |
| Diluted net income (loss) per share : | |||||
| Continuing operations | $ 0.17 | $ (0.05) | $ 0.27 | $ 0.04 | $ (0.18) |
| Discontinued operations | -- | -- | 0.08 | 0.14 | -- |
| Net income (loss) | $ 0.17 | $ (0.05) | $ 0.35 | $ 0.18 | $ (0.18) |
| Other Information: | |||||
| Gross Margin, excluding LIFO, % of Sales | 33.6% | 31.6% | 30.2% | 28.0% | 24.4% |
| Operating EBITDA, as adjusted | $ 13,200 | $ 10,100 | $ 9,000 | $ 7,400 | $ 3,600 |
| % of Sales | 13.7% | 11.2% | 10.1% | 8.7% | 4.3% |
| Cash Flows: | |||||
| Net cash provided by/(used in) operating activities | $ 18,631 | $ (8,894) | $ 9,046 | $ 18,932 | $ 2,999 |
| Capital expenditures | 1,636 | 3,069 | 653 | 1,735 | 2,238 |
| Free Cash Flow | $ 16,995 | $ (11,963) | $ 8,393 | $ 17,197 | $ 761 |