ST. LOUIS, July 29, 2010 (GLOBE NEWSWIRE) -- Thermadyne Holdings Corporation (Nasdaq:THMD) today reported results for the three and six months ended June 30, 2010.

Financial Review for the Second Quarter Ended June 30, 2010

Net sales in the second quarter of 2010 were $108.6 million, an increase of 28.1% as compared to the second quarter of 2009.  Stated in local currencies, net sales increased 24% with U.S. sales increasing 23% and international sales increasing 26%.

Gross margin as a percentage of sales of 34.3% increased approximately 500 basis points for the second quarter of 2010 as compared to the prior year second quarter.  This improvement in  gross margin reflects primarily the benefits of increased leverage of labor and overhead costs arising from higher production volumes as compared to the prior year second quarter.

Selling, general and administrative (SG&A) costs were $25.1 million, or 23.1% of sales, in the second quarter of 2010 compared to $18.3 million, or 21.5% of sales, in last year's second quarter.  Approximately one-half of the increase in the SG&A costs relates to sales commissions and performance-based incentive compensation and one-half arises primarily from increased salaries and selling expenses.

Interest costs were $5.9 million and $4.9 million in the second quarter of 2010 and 2009, respectively.  The increase in interest expense of $1.0 million results from the 300 basis point increase in the effective interest rate to approximately 11.8% resulting from the increased interest rates for the Second-Lien Agreement indebtedness and the Senior Subordinated Notes as compared to the prior year second quarter.  The Senior Subordinated Notes Special Interest adjustment was 2.25% in the 2010 second quarter compared to 0.75% in the second quarter of 2009.  Effective July 1, 2010, the quarterly Special Interest adjustment was reset at 1.25% and effective October 1, 2010, it resets to 0.75% as determined based on the Company's debt-to-EBITDA leverage ratio.

During the second quarter of 2010, the Company voluntarily repaid its $25 million of borrowings and terminated the Second-Lien Credit Agreement, due in November 2012 resulting in a $1.9 million loss on early debt extinguishment associated with the repayment of this indebtedness originally issued at a discount.

For the 2010 second quarter, the income tax expense represented an effective income tax rate of 25% as compared to 32% in the prior year second quarter.  The decline in the effective tax rate for the second quarter of 2010 as compared to 2009 results primarily from a recovery of prior year's income taxes.

For the three months ended June 30, 2010, net income was $2.6 million, or $0.19 per diluted share.  Excluding the loss on early debt extinguishment, net income was $4.4 million, or $0.32 per diluted share for the three months ended June 30, 2010.  For the three months ended June 30, 2009 net income from continuing operations was $0.6 million, or $0.04 per diluted share.  The 2009 second quarter also included a gain from discontinued operations of $1.9 million, or $0.14 per share arising from the final settlement and receipt of a contingent payment due to the Company in connection with the sale in May 2007 of its South African business. For the three months ended June 30, 2009, net income was $2.5 million, or $0.18 per diluted share.

Financial Review of Continuing Operations for Six Months Ended June 30, 2010

Net sales for the six months ended June 30, 2010 were $205.2 million, an increase of 22.1% as compared with the net sales of $168.1 million in first six months of 2009. Stated in local currencies, net sales increased 17% with the U.S. markets increasing 14% and increases of 22% in markets outside the U.S.

For the six months ended June 30, 2010, gross margin was 33.9% of net sales, as compared to 27.5% of net sales for first half of 2009.  The improvement in gross margin reflects primarily the benefits of increased leverage of labor and overhead costs arising from higher production volumes as compared to the prior year.

Selling, general and administrative expenses were $46.8 million, or 22.8% of net sales, and $37.7 million, or 22.4% of net sales, for the six months ended June 30, 2010 and 2009, respectively. Approximately two-thirds of the increase in SG&A expenses during the first six months of 2010 as compared to the prior year relate to increases in performance-based commissions and bonuses and with one-third related to increased salaries and selling expenses.

Interest costs of $12.3 million increased $2.7 million during the six-month period ended June 30, 2010, as compared to the first six months of 2009.  The effective interest rate increased approximately 350 basis points during the first six months of 2010 as compared to 2009 as a result of the increased interest rates for the Second-Lien borrowings and the Senior Subordinated Notes.

For the six months ended June 30, 2010, the Company recorded income tax expense at an effective income tax rate of 28%, as compared to an income tax benefit at an effective rate of 31% for the comparable 2009 period.

For the six months ended June 30, 2010, the Company net income was $4.9 million, or $0.36 per diluted share.  Excluding the loss on early debt extinguishment, net income was $6.7 million, or $0.49 per diluted share for the six months ended June 30, 2010.  For the six months ended June 30, 2009, net income was $0.02 million which included gain from discontinued operations of $1.9 million, or $0.14 per share arising from the final settlement and receipt of a contingent payment due to the Company in connection with the sale in May 2007 of its South African businesses.

Cash Flows From Operating Activities and Liquidity

Operating activities provided $10.2 million of cash in the second quarter of 2010 with $6.7 million from operational income and $3.5 million through reduced investments in working capital.  For the six months ended June 30, 2010, operating activities provided $28.8 million of cash with $11.9 million from operational income and $16.9 million from reductions of working capital, including the benefits of the early payment of supplier invoices and customer rebates during 2009.  These early payments reduced cash usage requirements approximately $16 million in 2010.  Since the beginning of the year, working capital efficiency has improved with inventory turn-over improving 8% and the collection of customer receivables improving 5%, as measured by days sales outstanding.

As of June 30, 2010, combined cash and availability under the Company's Working Capital Facility was $52.8 million.

Operating EBITDA, As Adjusted

In the second quarter of 2010, operating EBITDA, as adjusted, was $14.7 million, 13.5% of net sales, compared to $7.4 million, 8.7% of net sales, from continuing operations in the second quarter of 2009.

Outlook for 2010

Paul Melnuk, Thermadyne Chairman commented, "Customer demand increased late in the first quarter in the U.S. market and continued through the second quarter of 2010. Demand in our Asia Pacific region has remained very strong throughout this period. Our new EDGE gas regulator has experienced strong demand since its introduction in the U.S. market late in 2009 and our plasma automation product line continues to penetrate both the U.S. domestic and international markets."

"Our operations team has responded well in managing the supply chain and our production, to meet this increased level of demand.  The higher volumes have improved our margins through increased utilization of our cost structure," added Melnuk.

"As we look to the second half of the year, we are optimistic that demand in our Asia Pacific region will remain strong, while demand in several of our other markets, including the U.S., is more uncertain. We are actively managing our sales and marketing, customer service and new product development activities to drive higher sales throughout all of our markets, while continuing to focus on cost efficiencies that will enable us to produce superior profits and increasing cash flows. We continue to strengthen our balance sheet, improve our cost structure and profitability, and introduce new products across all our markets. We expect these trends to continue," concluded Mr. Melnuk.

Use of Non-GAAP Measures

Our discussions of operations include reference to "Operating EBITDA, as adjusted."  While a non-GAAP measure, management believes this measure enhances the reader's understanding of underlying and continuing operating results in the periods presented.  The Company defines "Operating EBITDA" as earnings before interest, taxes, depreciation, amortization, LIFO adjustments, stock-based compensation expense, minority interest, post-retirement benefit expense in excess of cash payments and the nonrecurring items of severance accruals and restructuring costs and losses on debt extinguishments.  The presentation of "Operating EBITDA, as adjusted" facilitates the reader's ability to compare current period results to other periods by isolating certain unusual items of income or expense, such as those detailed in an attached schedule.  Operating EBITDA, as adjusted, for certain unusual items is reflective of management measurements which focus on operating spending levels and efficiencies and less on the non-cash and unusual items believed to be nonrecurring.  Additionally, non-GAAP measures such as Operating EBITDA and Operating EBITDA, as adjusted, are commonly used to value the business by investors and lenders.

A schedule is attached which reconciles Net Income (Loss) as shown in the Consolidated Statements of Operations to Operating EBITDA and Operating EBITDA, as adjusted.

Non-GAAP measurements such as "Operating EBITDA" and "Operating EBITDA, as adjusted" are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.  Use of Operating EBITDA and Operating EBITDA, as adjusted, has material limitations, and therefore management provides reconciliation for the reader, of Operating EBITDA and Operating EBITDA, as adjusted, to Net Income.

The financial statement information presented in accordance with generally-accepted accounting principles (GAAP) and the non-GAAP measure have not been reviewed by an independent, registered public accounting firm.

Conference Call

Thermadyne will hold a teleconference on July 30, 2010 at 11:00 a.m. Eastern.

To participate via telephone, please dial:

Those wishing to participate are asked to dial in ten minutes before the conference begins.  For those unable to participate in the live conference call, a recording of the conference will be available from July 30, 2010 at 12:59 p.m. Eastern until August 6, 2010 at 1:59 a.m. Eastern by dialing U.S. and Canada (866) 475-8044; International 1-203-369-1517.  Enter passcode 3031 to listen to the recording.

About Thermadyne

Thermadyne, headquartered in St. Louis, Missouri, is a leading global manufacturer and marketer of metal cutting and welding products and accessories under a variety of leading premium brand names including Victor®, Tweco® / Arcair®, Thermal Dynamics®, Thermal Arc®, Stoody®, TurboTorch®, Firepower® and Cigweld®.  Its common shares trade on the NASDAQ under the symbol THMD.  For more information about Thermadyne, its products and services, visit the Company's web site at www.Thermadyne.com.

The Thermadyne Holdings Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4937

Cautionary Statement Regarding Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements reflect management's current expectations and involve a number of risks and uncertainties.  Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company's operating results.  These risks and factors are set forth in documents the Company files with the Securities and Exchange Commission, specifically in the Company's most recent Annual Report on Form 10-K and other reports it files from time to time.