Update: Symmetry Medical Earnings

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 |  About: Symmetry Medical Inc. (SMA)
by: Andy Batts

Summary

Symmetry Medical reported second-quarter revenue of $101.3 million, up 2.3% year-over-year.

Adjusted EPS from continuing operations came in at $0.17.

In my original article, I said that Symmetry Surgical is expected to play a key role in improving the company's overall profitability.

The company’s decision to sell its OEM business confirms my view.

Symmetry Medical (NYSE:SMA) reported revenue for the second quarter 2014 of $101.3 million, up 2.3% from $99 million for the second quarter 2013. The growth in revenue was primarily driven by higher sales of Symmetry's OEM Solutions segment, which partially offset a revenue decline in Symmetry's Surgical segment. The company's OEM Solutions segment registered revenue of $80.9 million, a 5.5% increase from $76.7 million in the year ago period. Symmetry's Surgical segment revenue came in at $20.4 million, a year-over-year decrease of 8.7% from $22.3 million in the year ago period.

In my original article, I said that Symmetry Surgical is expected to play a key role in improving the company's overall profitability, which didn't entirely happen in the second quarter. My expectation was based on my belief that Symmetry Surgical will assume growing importance for the company's balance sheet going forward. However, things actually are moving per my expectation, since Symmetry recently announced that it will sell off its OEM Solutions business to privately held Tecomet Inc. for $450 million, which generated nearly 80% of its revenue in the second quarter.

As part of the sale, Symmetry said that it will transfer ownership of its remaining surgical instruments business to its shareholders as a newly-traded public company based in Nashville, Tenn. Symmetry Surgical, as a new company, will continue to operate independently, avoiding potential customer conflicts between the two segments. Shareholders of Symmetry Medical are expected to get one share of the new company for every four shares of Symmetry Medical stock. Symmetry Medical's CEO Thomas Sullivan said, "As a standalone company, Symmetry Surgical will be uniquely attentive to the needs of its customers across the breadth of the surgical instrument market with a distinct clinical and health economic focus without the distraction of implant or other more regulatory demanding product lines."

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.