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03/10/08
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16052 Swingley Ridge Road
Suite 300
Chesterfield, MO 63017
Phone: 636-728-3000
Fax: 636-728-3010
www.thermadyne.com
Estimated Market Cap
133,681,900 as of Mar 7, 2008
Outstanding Shares
13,368,190 as of Nov 5, 2007
Number of Share Holders of Record
207 as of Mar 31, 2005
Exchange: NASDAQ
Transfer Agent:
Computershare Investor Services LLC,
P.O. Box 43010
(150 Royall St. (Mail Stop 45-02-80))
Canton, MA 02021)
Providence, RI 02940-3010
In 2001 the Company filed petition under Chapter XI of the Federal Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Missouri. Plan of Reorganization effective 5-23-03: no stockholders equity; pre-petition senior secured lenders to receive cash, up to approx. 94.5% of Com (New), cash proceeds realized from a subscription offering, $180 million in Senior Debt Notes, and Series C Warrs exercisable for addt'l shs of Com (New), in exchange for approx. $365 million in debt and outstanding letters of credit; Holders of Thermadyne Manufacturing LLC 9 7/8% Notes to receive 3.53382 shs Com (New), 5.58937 Series A Warrs, and 3.38164 Series B Warrs per $1,000 prin amt; Holders of 10 3/4% Notes & 12 1/2% Notes to receive nothing
Security Notes issued=5-03 Pursuant to reorganization out of Chapter XI bankruptcy. Pre-petition senior secured lenders to receive cash, up to approx. 94.5% of Com (New), cash proceeds realized from a subscription offering, $180 million in Senior Debt Notes, and Series C Warrs exercisable for addt'l shs of Com (New), in exchange for approx. $365 million in debt and outstanding letters of credit. Holders of Thermodyne Manufacturing LLC 9 7/8% Senior Sub Notes to receive 3.53382 shs Com (New), 5.58937 Class A Warrs, and 3.38164 Class B Warrs for every 1,000 prin amt held
King Capital Investment Group
http://kingcapital.tripod.com
Update
Net sales in the first quarter of 2008 increased 12.7% to $130.8 million, compared to the 2007 first quarter. Excluding the impact of foreign currency translations, net sales increased 7.9%. International sales increased 23.6% (11.2% in local currency) led by the Asia Pacific region with a 13.7% increase on a local currency basis. Sales of all product lines increased with demand continuing to be particularly strong for the Company's new Cutmaster manual plasma cutting units and specialty hard facing products. Sales of both the Company's plasma cutting and filler metal product lines increased approximately 20%.
Gross margin in the first quarter of 2008 was 32.3% of net sales, compared to 32.6% of net sales in the prior-year first-quarter period. The decline from the prior-year's first quarter was due to the ongoing effects of commodity cost increases over the twelve-month time period. This result was better than the gross margin of 31.2% the Company recorded for the year 2007, and reflects a continuation of the longer-term progress the Company is making to control costs.
Paul D. Melnuk, Thermadyne's Chairman and Chief Executive Officer commented: "The better-than-expected sales growth is attributable to our improved customer service, more effective new product introductions and strong market demand. Gross margins also continued to build on the improving trend that began in 2007. Our continuous improvement (TCP) process cost savings, the benefits of more effective procurement practices and the value from operating leverage in the 2008 first-quarter period largely offset the double-digit material inflation that occurred across most commodities we purchase. Further, the April 1, 2008 price increase will help offset the trend of rising commodity prices in the second quarter and beyond."
Selling, general and administrative costs were $27.5 million, or 21.0% of sales, in the first quarter of 2008, compared to $26.0 million, or 22.4% of sales, in last year's first quarter. New product launches and expanded new product development activities, as well as expansion of the international sales and global operations capabilities, contributed to the 2008 first quarter increase in expenses, compared to the 2007 first quarter.
Other Income and Expense Items in the First Quarter of 2008
Interest costs of $5.3 million were $1.7 million less than the prior-year's first quarter. The average indebtedness was 11% less than in the prior-year's first quarter and the effective interest rate declined 170 basis points. This decline in the effective interest rate reflects the combined benefit of the lower Libor rates which impact approximately 40% of the Company's total debt and the reduced interest rate grids for the Working Capital and the Second Lien Facilities, as a result of the amendments to the Agreements in June 2007. The effective interest rate in the first quarter of 2008 includes the 1.25% Special Interest payment adjustment applicable to the Company's $175 million Senior Subordinated Notes. This interest payment adjustment declined to 0.75% effective April 1, 2008, as a result of the Company's reduced leverage ratio.
For the 2008 first quarter, the effective income tax rate was 44% due to the inclusion of certain foreign earnings without the recognition of the related benefit of foreign tax credits that are carried forward. In the prior-year first quarter, the effective income tax rate was 64% also as a result of the inclusion of certain foreign earnings without the recognition of the related benefit of foreign tax credits that are carried forward. Due to the use of net operating loss carryovers available to offset U.S. taxable income, the Company estimates it will pay income taxes in 2008 at the rate of approximately 22%.
Net Income (Loss)
For the first quarter of 2008, net income from continuing operations was $4.7 million, or $0.35 per diluted share. In comparison, for the first quarter of 2007 net income from continuing operations was $1.3 million, or $0.10 per diluted share. Included in net income in the 2008 first quarter were losses from discontinued operations of $0.2 million, or $0.01 net loss per diluted share. This compares to income of $0.1 million, or $0.01 net income per diluted share, in the 2007 first quarter. For the first quarter of 2008, net income was $4.5 million, or $0.34 per diluted share, compared to a net income of $1.4 million, or $0.11 net income per diluted share, in the 2007 first quarter.
Cash Flows From Operating Activities and Liquidity
Operating activities of the Company provided $2.9 million of cash in the first quarter of 2008, while in the first quarter of 2007, the Company used $20.3 million for operating activities. The first quarter is traditionally a period of high cash requirements for accounts receivable and inventory builds. The significantly improved cash flows during the first quarter of 2008 are due to improvement in all components of working capital management. In particular, inventories declined $11 million from the prior-year quarter despite the growth in the business. Inventory turns improved to 3.9 times per year versus 3.1 times in the prior-year first quarter. During the quarter, the Company repaid $7 million of the Second Lien Facility to satisfy the "Excess Cash Flow" requirement of the Senior Subordinated Notes Indenture. As of March 31, 2008, the Company had combined cash and availability under its revolver of $67 million.
Operating EBITDA, As Adjusted
In the first quarter of 2008, Operating EBITDA from continuing operations improved 18% to $17.7 million, or 13.5% of net sales, compared to $15.0 million, or 12.9% of net sales, in the first quarter of 2007. Including our discontinued operations for the first quarter of 2008, Operating EBITDA, as adjusted, was $17.5 million.
Outlook for 2008
Mr. Melnuk stated: "In the first quarter of 2008, sales, profitability and cash flow comparisons all improved, building on the momentum realized throughout 2007. Our efforts to achieve better performance levels in production, customer service and new product introductions are generating positive customer feedback and contributing to the improved results. The broad-based global demand for our products is continuing to drive sales in the second quarter and we anticipate total Company sales growth of 8-10% in the quarter over last year's second-quarter levels. From what we can determine, the growth in demand is a result of major infrastructure spending, particularly in mining, energy, agriculture, transportation and defense.
"We are pleased with the many positive comments we have received from our customers relating to our level of service. In an effort to further enhance this high level of service, we are striving to instill a customer-focused mindset throughout the Company. In addition to our ongoing emphasis on improved customer service, we are beginning to work on a number of longer-term initiatives to build our core brand and product strength further. Specifically, we are expanding our international sales capabilities to help pursue the growth opportunities in several markets, and are working on a number of product innovations and redesigns that offer very promising market potential. These strategies, combined with our efforts in cost reduction, working capital efficiency and debt reduction, should contribute to both near-term and-longer term profitability and cash flow growth, enhancing value for our shareholders," commented 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.
http://www.primenewswire.com/newsroom/news.html?d=141984
