Colfax Reports Third Quarter 2012 Results

FULTON, Md., Oct. 25, 2012

Third Quarter of 2012 (all comparisons versus the third quarter of 2011)

• After $14.5 million of pre-tax year-one acquisition-related amortization expense, net income of $4.0 million (4 cents per share); adjusted net income (as defined below) of $40.7 million (33 cents per share), which includes a non-cash 3 cents per share gain related to a discrete deferred tax benefit recorded
• Net sales of $954.4 million, organic sales increase (as defined below) of 5.1% from third quarter 2011 proforma net sales (includes the comparable period sales for the operations acquired in the Charter acquisition)
• Operating income of $51.7 million; adjusted operating income (as defined below) of $85.3 million
• Third quarter gas- and fluid-handling orders of $443.8 million, an organic order increase (as defined below) of 4.0%
• Gas- and fluid-handling backlog of $1.4 billion at period end

Nine Months Ended September 28, 2012 (all comparisons versus the nine months ended September 30, 2011)

• After pre-tax expenses of $62.6 million of year-one acquisition-related amortization expense and $43.6 million of Charter acquisition-related expense, a net loss of $98.0 million ($1.09 per share); adjusted net income (as defined below) of $109.3 million (92 cents per share)
• Net sales of $2.9 billion, an increase of 3.5% from the nine months ended September 30, 2011 proforma net sales (includes the comparable period sales for the operations acquired in the Charter acquisition); organic sales increase (as defined below) of 8.2%
• Operating income of $87.8 million; adjusted operating income (as defined below) of $245.9 million 
• Gas- and fluid-handling orders of $1.5 billion, an increase of 3.5%; organic order increase (as defined below) of 3.1%

Adjusted net income, adjusted net income per share, adjusted operating income, organic sales growth and organic order growth are not financial measures calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP"). See below for a description of the measures' usefulness and a reconciliation of these measures to their most directly comparable GAAP financial measures.

Steve Simms, President and Chief Executive Officer, stated, "We are very pleased with the strong growth in our long cycle gas- and fluid-handling business, which increased revenues by 14.6% organically in comparison to the proforma 2011 third quarter. Volumes in our shorter cycle fabrication technology business were negatively impacted by the challenging global economic environment. However, despite the volume declines, we achieved improvement in adjusted operating margins through improved product pricing, aggressive SG&A restructuring, global sourcing and plant consolidations."   

Non-GAAP Financial Measures and Other Adjustments

Colfax has provided in this press release financial information that has not been prepared in accordance with GAAP. These non-GAAP financial measures are adjusted net income, adjusted net income per share, adjusted operating income, organic sales growth and organic order growth. Adjusted net income, adjusted net income per share and adjusted operating income exclude asbestos coverage litigation expense, restructuring and other related charges, charges related to the Charter acquisition and fair value adjustments related to the ESAB and Howden inventory and backlog amortization expense to the extent they impact the periods presented. The effective tax rates used to calculate adjusted net income and adjusted net income per share are 25.3% and 29.0% for the third quarter and nine months ended September 28, 2012, respectively, and 31% for both the third quarter and nine months ended September 30, 2011. Proforma organic sales growth and proforma organic order growth represent the proforma comparison of the change in existing businesses that includes the operations acquired in the Charter Acquisition for the comparable prior period (which excludes the results of operations acquired in the Charter Acquisition for the first 12 days of each year to date reporting period) excluding the impact due to acquisitions made by Colfax and Charter and foreign currency fluctuations. These non-GAAP financial measures assist Colfax in comparing its operating performance on a consistent basis because, among other things, they remove the impact of asbestos coverage litigation, costs related to the Charter acquisition and foreign currency fluctuations outside the control of its operating management team.