Colfax Reports Preliminary Q3 Results

RICHMOND, Va., Nov. 3 -- Colfax Corporation (NYSE: CFX) , a global leader in fluid-handling solutions for critical applications, today announced preliminary financial results for the third quarter ended October 2, 2009. The preliminary results do not reflect any potential adjustments from the favorable asbestos ruling on October 14, 2009 for the Company's Warren Pumps subsidiary. The Company expects additional information related to this matter to become available prior to filing its third quarter Form 10-Q with the SEC on or before November 16, 2009. Any adjustments that result from the Company's evaluation of this information will be reflected in the Company's financial statements included in its third quarter Form 10-Q.

On a year-over-year basis, highlights for the quarter and the first nine months of 2009 include:

Third quarter of 2009 (all comparisons versus the third quarter of 2008)

-- Net income of $1.8 million (4 cents per share - basic and diluted)including restructuring and other related charges of $9.6 million; adjusted net income (as defined below) of $10.0 million (23 cents per share), a decrease of 17.6% including negative currency effects of 1 cent per share
-- Net sales of $128.5 million, a decrease of 16.2%; organic sales decline (as defined below) of 12.0%
-- Operating income of $3.7 million; adjusted operating income (as defined below) of $16.5 million, a decrease of 18.7% including negative currency effects of $0.8 million
-- EBITDA (as defined below) of $7.4 million; adjusted EBITDA (as defined below) of $20.2 million, a decrease of 15.9% including negative currency effects of $1.0 million
-- Third quarter orders of $124.3 million, a decrease of 28.5%; organic order decline (as defined below) of 25.5%
-- Backlog of $298.0 million at period end

Year-to-date 2009 (all comparisons versus the first nine months of 2008)

-- Net income of $13.0 million (30 cents per share - basic and diluted) including restructuring and other related charges of $10.8 million; adjusted net income (as defined below) of $28.9 million (67 cents per share), a decrease of 20.2% including negative currency effects of 10 cents per share
-- Net sales of $394.1 million, a decrease of 11.6%; organic sales decline (as defined below) of 2.5%
-- Operating income of $23.8 million; adjusted operating income (as defined below) of $47.9 million, a decrease of 23.0% including negative currency effects of $6.4 million
-- EBITDA (as defined below) of $34.4 million; adjusted EBITDA (as defined below) of $58.5 million, a decrease of 20.4% including negative currency effects of $7.2 million
-- Orders for the nine month period of $349.2 million, a decrease of 35.7%; organic order decline (as defined below) of 29.9%

Adjusted net income, adjusted net income per share, adjusted operating income, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline) 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 preliminary GAAP financial measures.

"We are pleased with our performance in this challenging environment," said John Young, president and CEO of Colfax Corporation. "While overall sales were down, our Navy and power generation businesses showed good growth over last year's third quarter. On a sequential basis, our organic orders were up 15% driven by increases in the commercial marine, Navy, power generation and general industrial markets. Backlog is also up slightly since the end of the second quarter. We're continuing to streamline our operations and reduce our cost structure. We've made significant progress on our cost reduction initiatives and have reduced headcount by about 15%. We expect to realize savings of approximately $16 million in 2009 or about $22 million on an annualized basis. The benefits of our efforts are evident in our margins. Our gross profit margin was up 40 basis points and we maintained our adjusted EBITDA margin despite 16% lower sales than last year."

He added, "We're encouraged by the recent improvement in our order book but we are continuing to have push-outs of project deliveries. Given the uncertain economic environment, we remain cautious on our outlook. Our strong balance sheet provides us the flexibility to weather current conditions while pursuing acquisitions and organic growth initiatives. Our strategy remains unchanged - we're focused on providing unmatched expert solutions to our global customer base while aligning capacity to meet demand. We're well positioned to enhance profitability and our competitive position as conditions improve."

"Based on variable project timing and estimated mix, we've lowered our projected sales and adjusted eps ranges for 2009. We now expect sales to be down organically 8% to 10% and expect adjusted eps to be $.88 to $.94."

Non-GAAP Financial Measures

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, EBITDA, adjusted EBITDA, organic sales growth (decline) and organic order growth (decline). Adjusted net income, adjusted net income per share, adjusted operating income and adjusted EBITDA exclude asbestos liability and defense costs (income) and asbestos coverage litigation expenses, certain legacy legal charges, certain due diligence costs, restructuring and other related charges as well as one time initial public offering-related costs to the extent they impact the periods presented. Adjusted net income also reflects interest expense as if the initial public offering (IPO) had occurred at the beginning of 2007 and presents income taxes at an effective tax rate of 32% in 2009 and 34% in 2008. Adjusted net income per share in 2008 assumes the 44,006,026 shares outstanding at the closing of the IPO to be outstanding since January 1, 2007. Projected adjusted net income per share excludes actual and estimated restructuring and other related charges, asbestos coverage litigation expenses and asbestos liability and defense costs. Organic sales growth (decline) and organic order growth (decline) exclude the impact of acquisitions and foreign exchange rate 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 changes in our capital structure and asset base, non-recurring items such as IPO-related costs, legacy asbestos issues (except in the case of EBITDA) and items outside the control of its operating management team.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to preliminary GAAP results has been provided in the financial tables included in this press release.

Conference Call and Webcast

Colfax will host a conference call to provide details about its results and business strategy on Tuesday, November 3 at 8:00 a.m. ET. The call will be open to the public through 877-718-5106 or 719-325-4871 and webcast via Colfax's website at http://www.colfaxcorp.com/ under the "Investor Relations" section. Access to a supplemental slide presentation can also be found at the Colfax website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call.

About Colfax Corporation

Colfax Corporation is a global leader in critical fluid-handling products and technologies. Through its global operating subsidiaries, Colfax manufactures positive displacement industrial pumps and valves used in oil & gas, power generation, commercial marine, global naval and general industrial markets. Colfax's operating subsidiaries supply products under the well-known brands Allweiler, Fairmount Automation, Houttuin, Imo, LSC, Portland Valve, Tushaco, Warren and Zenith. Colfax is traded on the NYSE under the ticker "CFX." Additional information about Colfax is available at www.colfaxcorp.com.