Colfax Fourth Quarter 2011 Under Earnings Estimates

Gas- and fluid-handling technology company Colfax Corporation (NYSE: CFX) released financial results this morning but posted earnings results that surprised investors and analysts.

Colfax reported a 6.7 percent increase in net sales to $177.79 million for the fourth quarter 2011 compared to $166.65 million in the same period of 2010. The average analyst estimate for sales was $189.73 million. For the full year Colfax had $693.4 million in net sales a 27.9 percent increase.

Earnings were impacted negatively, coming in well below estimates and turning into a loss for the fourth quarter. The net loss of $16.1 million or $-0.37 cents per share was down from the $8.7 million net income posted in the fourth quarter 2010. Nine analysts had expected an average of $0.45 cents per share in net income.

The Fulton-based company in Baltimore metro said the loss was due to a pre-tax charge of $25.3 million for the $2.4 billion acquisition of Charter International. For the full year net income was $4.6 million or $0.10 cents per basic and diluted share.

"We made significant progress on our strategic priorities during 2011 and have reduced our cost base in fluid handling as we enter 2012. We also announced the closing of the acquisition of Charter International plc on January 13th, which is a transformational acquisition for Colfax that has increased our scale, added a new growth platform and created a truly global industry leader. We have made several critical additions to our leadership team at ESAB which will be instrumental in our efforts to rebuild this business to achieve a sustained level of excellence. We believe that we can generate in excess of $100 million of savings from these businesses over the next three years, as this organization is operating way below its collective capability. These are still early days and we are being careful not to initiate more cost reduction projects than can be comfortably assimilated. Our view of the potential for these businesses has increased based on what we have seen so far. We continue to expect significant accretion and double digit return on invested capital within three to five years." said Clay Kiefaber, President and Chief Executive Officer

Colfax Corporation (NYSE: CFX) shares were down over seven percent or $2.48 in pre-market trading.

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