By Jon Kamp
Of DOW JONES NEWSWIRES
Orthopedic parts-supplier Symmetry Medical Inc. (SMA) cut its 2009 guidance on Monday due to greater-than-expected customer order reductions that it expects will trigger a "significant shortfall" in sales and earnings, mainly in the fourth quarter.
Shares of the Warsaw, Ind., company plunged on the news, which follows a decrease to sales guidance in August due to a recession-induced slowdown in the orthopedics market and were recently down 25.2% to $7.15.
The company now forecasts 2009 sales between $355 million to $365 million, which is down from the range of $385 million to $405 million projected in August.
While the company maintained its earnings guidance in August due to cost-cutting measures, it lowered earnings guidance on Monday to a range of 63 cents to 68 cents per share from the prior 77 cents to 85 cents per share forecast.
Analysts surveyed by Thomson Reuters had forecast, on average, full-year earnings of 80 cents a share on sales of $391.3 million.
"Since our previous guidance announcement, and particularly in recent weeks, we have experienced greater than anticipated order reductions," said Brian Moore, Symmetry's president and chief executive, in a release. "We believe this change in order flow will result in a significant shortfall to our revenue and earnings per share, primarily in the fourth quarter."
The company, which will report third-quarter results on Nov. 5, also makes products for other health-care companies and said it saw diminished order flow in both orthopedic and non-orthopedic markets.
Symmetry provides parts to companies that make replacement hips, knees and other joints. The company's guidance cut follows quarterly reports from some big joint makers, including Zimmer Holdings Inc. (ZMH) and Stryker Corp. (SYK), which indicated glimmers of improvement for a market where growth has been stifled by patients delaying elective surgery.
Moore said customer inventory utilization have created negative implications for Symmetry in the near term, but should bode well in the future. He also said the company has seen market-share gains as customers consolidate suppliers.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com