Symmetry Medical Inc. (SMA) reported fiscal second-quarter EPS of 25 cents, considerably higher than the year-ago profit of 17 cents per share and ahead of the Zacks Consensus Estimate of 21 cents per share.
 
Net revenues
 
Net revenues for the quarter declined roughly 8% year over year to $101.0 million. The decline was primarily due to an unfavorable foreign exchange (FX) and weaknesses in the orthopedic industry. The current economic turbulence has resulted in people delaying elective procedures. Excluding FX, net revenues declined roughly 3% year over year. Net revenues in terms of product segments are as follows:
 
Instruments: $46.9 million (increasing 4% year over year)
Implants: $29.9 million (declining 4% year over year)
Cases: $18.9 million (declining 19% year over year)
Other: $5.3 million (declining 48% year over year)
 
Margins
 
Gross margin for the quarter increased 150 basis points year over year to 26.5%. Growth can be primarily attributed to improvements in the company’s Sheffield operating unit due to the company’s several cost reductions and efficiency improvements activities.
 
Selling, general and administrative (SG&A) expenses as a percentage of sales declined 50 basis points year over year to 13.1%. The decline was primarily due to the elimination of professional fees that were associated with the Sheffield investigation in the year-ago quarter. A higher gross margin coupled with lower SG&A expenses as a percentage of sales resulted in a higher operating margin. Operating margin increased 200 basis points year over year to 13.4%. Net margin increased 330 basis points year over year to 8.9%.
 
Outlook
 
Management lowered its sales guidance for the full year on the back of poor second quarter sales figure and a weak economic outlook for the rest of the year. For 2009, it expects total revenues in the range of $385 million to $405 million, lower than its previous estimate of $405 million to $420 million. However, management has reaffirmed its earnings per share guidance in the range of 77 cents to 85 cents.
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