Symmetry Beats Zacks Estimate – Analyst Blog

Symmetry Medical Inc. (SMA) reported first quarter fiscal 2010 earnings per share of 6 cents, beating the Zacks Consensus Estimate of 5 cents but considerably lower than the year-ago earnings of 19 cents.

Total revenues in the first quarter declined 17% year over year to $84.5 million. The decline was due to lower customer demand across all business segments.

Instruments, Implants, Cases and Other revenues declined 28%, 3%, 8% and 19% year over year to $33.4 million, $28.2 million, $17.0 million and $5.9 million, respectively, in the first quarter.

Symmetry reported a contraction in margins in the first quarter. Gross margin declined 400 basis points (bps) year over year to 20.2%. Selling, general and administrative expenses (SG&A) as a percentage of sales increased 180 bps year over year to 14.9%.

Excluding facility consolidation and severance costs, adjusted operating and net margins declined 590 bps and 440 bps year over year to 5.2% and 2.4%, respectively.

Symmetry ended the first quarter with cash and cash equivalents of roughly $10.5 million, registering a sequential decline of 26.4%. The company had an outstanding long-term debt of $89.2 million at the end of the first quarter.

Symmetry has raised its revenue and earnings per share guidance for fiscal 2010 at the lower end of the range. Total annual revenue is expected between $330 and $340 million, compared to the previous guidance of $320 to $340 million. Earnings per share should be in the range of 45 to 50 cents, versus the prior guidance of 43 to 50 cents.

Symmetry is the largest original equipment manufacturer (OEM) provider of orthopedic implants and instruments to orthopedic device manufacturers. The company has created a distinct competitive position in the orthopedic device market with its Total Solutions Approach.

Under the Total Solutions Approach, customers are provided with a broad range of products relating to orthopedic implants as well as comprehensive services and production capabilities to bring these implant systems from the drawing board to the market in a timely and cost-efficient manner.

Presently, we have a ‘Neutral’ recommendation on Symmetry.