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Orbit International Corp. Reports 2008 Second Quarter Results Aug 7, 2008 8:45:00 AM Copyright Business Wire 2008
HAUPPAUGE, N.Y.--(BUSINESS WIRE)--
Second Quarter 2008 vs. Second Quarter 2007
-- Net sales were $5,873,000 compared to $6,154,000;
-- Gross margin was 39.7% compared to 44.1%;
-- Net loss was $306,000 compared to net income of $502,000;
-- Net loss per share was $.07 compared to earnings per diluted
share of $.11;
-- Earnings before interest, taxes, depreciation and
amortization, and stock based compensation (EBITDA, as
adjusted) was $30,000 ($.01 per share) compared to $781,000
($.17 per diluted share);
-- Backlog at June 30, 2008 decreased by 9.5% to $15.3 million
compared to $16.9 million in the prior year but increased by
11.4% over the backlog reported at March 31, 2008.
First Half 2008 vs. First Half 2007
-- Net sales increased slightly to $12,483,000 from $12,374,000;
-- Gross margin was 39.8% compared to 44.1%;
-- Net loss was $295,000 compared to net income of $1,050,000;
-- Net loss per share was $.07 compared to earnings per diluted
share of $.23;
-- EBITDA, as adjusted decreased to $412,000 ($.09 per share)
compared to $1,623,000 ($.35 per diluted share).
As the Company announced last week, it was verbally advised by its customer to provide support for the immediate development of several modifications to its Remote Control Units (RCU) that are currently under contract. The Company's Orbit Instrument Division is actively working together with its customer and the U.S. Army to provide "out of scope" enhanced solutions that would extend the operational life of the RCU. This new request shifted the delivery date of the RCUs, originally scheduled for the second quarter to a later, yet undetermined date resulting in lower than expected second quarter revenues and profitability. As a result, the Company amended its 2008 guidance last week, since it cannot predict with certainty when its customer or the U.S. Army will complete all RCU operational and environmental testing. The Company can report with certainty that once the "out of scope" testing is completed, its customer and the U.S. Army will require a revised milestone schedule requiring expedited deliveries of all units under contract. The Company also reported that two of its contracts with deliverable hardware and software, approximating $600,000, that were delayed in the first quarter of 2008 at the customer's request, continue to be held by the Company until further instructions are provided from the customer. Shipment of these units is expected by year end. Dennis Sunshine, President and Chief Executive Officer stated, "It is unfortunate that several unforeseen enhanced modification requests that were totally beyond our control, have had a significant impact on the delivery of completed units that were available for shipment during the second quarter. We believe shipments will commence as we complete the enhanced modifications and once the customer and the U.S. Army complete their testing. Most importantly, there continues to be great demand for these units and the RCUs will continue to be a significant source of revenue in the foreseeable future for the Orbit Instrument Division." Sunshine continued, "The Company's backlog of RCUs approximating $2,100,000 at June 30, 2008 are fully assembled, tested and available to ship but will require those enhanced modifications prior to shipment. The Company expects additional purchase orders from its customer totaling approximately $2,600,000 under its previously negotiated Long Term Agreement (LTA) signed in September 2007. The Company is also completing negotiations for a new LTA with its customer that will provide for additional requirements for several RCU configurations, under which shipments would begin in 2009 and continue through 2011. Depending on quantity requirements, the new LTA would represent between approximately $4,500,000 and $9,000,000 of additional revenues for the Company." Sunshine continued, "We are pleased to report that with the exception of the Orbit Instrument Division, all other operating units were profitable during the quarter. Sunshine concluded, "Shipment delays including that which adversely affected our second quarter results, are an industry-wide challenge. We have faced such issues in the past but due to the magnitude of the RCU shipments and the timing of the notification from our customer, the significant decrease in revenues could not be avoided. Despite this delay, demand for the RCU continues to be strong, our fundamental business remains intact, our positive long-term outlook remains unchanged and we are confident we will return to profitability in the second half of 2008 which will continue into 2009." 2008 Guidance Mitchell Binder, Chief Financial Officer stated, "As we stated in our announcement last week, since we cannot predict with certainty when our customer will complete all RCU operational and environmental testing, and due to possible delay in the receipt of expected contracts for the Orbit Instrument Division and Tulip subsidiary, we amended guidance for 2008. For 2008, we expect net sales of between $29,500,000 and $30,500,000, EBITDA, as adjusted, of between $2,600,000 and $3,000,000, net income in the range of $1,300,000 to $1,700,000 and earnings per diluted share in the range of $.27 to $.35." He added, "Despite our operating loss for the quarter, our EBITDA, as adjusted, was positive for the quarter. Our financial condition remains strong. At June 30, 2008, total current assets were $22,382,000 versus total current liabilities of $5,035,000 for a 4.5 to 1 current ratio. With approximately $21 million and $7 million in federal and state net operating loss carryforwards, respectively, we should continue to shield profits from federal and New York State taxes and enhance future cash flow. Additionally, at June 30, 2008, we had approximately $5.3 million in cash, cash equivalents and marketable securities." Conference Call The Company will hold a conference call for investors today, August 7, 2008, at 11:00 a.m. EDT. Interested parties may participate in the call by dialing 706-679-3204; please call in 10 minutes before the conference call is scheduled to begin and ask for the Certain matters discussed in this news release and oral statements made from time to time by representatives of the Company including, but not limited to, statements regarding any acquisition proposal and whether such proposal or a strategic alternative thereto may be considered or consummated; statements regarding our expectations of Orbit's operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results including all guidance amounts, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although Orbit believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond
Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Six Months Ended
Ended June 30,
June 30,
2008 2007 2008 2007
------- ------- -------- --------
Net sales $5,873 $6,154 $12,483 $12,374
Cost of sales 3,543 3,438 7,518 6,913
------- ------- -------- --------
Gross profit 2,330 2,716 4,965 5,461
Selling general and administrative
expenses 2,631 2,238 5,249 4,459
Interest expense 80 87 182 182
Investment and other income (82) (126) (178) (255)
------- ------- -------- --------
Net income (loss) before taxes (299) 517 (288) 1,075
Income tax provision 7 15 7 25
------- ------- -------- --------
Net income (loss) $ (306) $ 502 $ (295) $ 1,050
======= ======= ======== ========
Basic earnings (loss) per share $(0.07) $ 0.12 $ (0.07) $ 0.24
Diluted earnings (loss) per share $(0.07) $ 0.11 $ (0.07) $ 0.23
Weighted average number of shares
outstanding:
Basic 4,508 4,312 4,504 4,309
Diluted 4,508 4,652 4,504 4,645
Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
------- ----- ------- ------
EBITDA Reconciliation (as adjusted)
-----------------------------------------
Net income (loss) $ (306) $ 502 $ (295) $1,050
Interest expense 80 87 182 182
Tax expense 7 15 7 25
Depreciation and amortization 198 139 424 278
Stock based compensation 51 38 94 88
------- ----- ------- ------
EBITDA (1) $ 30 $ 781 $ 412 $1,623
======= ===== ======= ======
Adjusted EBITDA Per Diluted Share
Reconciliation
-----------------------------------------
Net income (loss) $(0.07) $0.11 $(0.07) $ 0.23
Interest expense 0.02 0.02 0.04 0.04
Tax expense 0.00 0.00 0.00 0.00
Depreciation and amortization 0.05 0.03 0.10 0.06
Stock based compensation 0.01 0.01 0.02 0.02
------- ----- ------- ------
EBITDA per diluted share (1) $ 0.01 $0.17 $ 0.09 $ 0.35
======= ===== ======= ======
(1) The EBITDA tables (as adjusted) presented are not determined in accordance with accounting principles generally accepted in the United States of America. Management uses adjusted EBITDA to evaluate the operating performance of its business. It is also used, at times, by some investors, securities analysts and others to evaluate companies and make informed business decisions. EBITDA is also a useful indicator of the income generated to service debt. EBITDA (as adjusted) is not a complete measure of an entity's profitability because it does not include costs and expenses for interest, depreciation and amortization, income taxes and stock based compensation. Adjusted EBITDA as presented herein may not be comparable to similarly named measures reported by other companies.
Six Months
Ended
June 30,
Reconciliation of EBITDA, as adjusted,
to cash flows from operating activities (1) 2008 2007
--------------------------------------------------- ------ -------
EBITDA (as adjusted) $ 412 $1,623
Interest expense (182) (182)
Tax expense (7) (25)
Bond amortization 8 8
Bad debt expense 0 12
Write-down of (gain on) marketable securities 0 (15)
Deferred income (232) (42)
Net change in operating assets and liabilities (770) (1510)
------ -------
Cash flows used in operating activities $(771) $ (131)
Orbit International Corp.
Consolidated Balance Sheets
June 30, December 31,
2008 2007
------------ ------------
ASSETS (unaudited) (audited)
Current assets
Cash and cash equivalents $ 2,171,000 $ 3,576,000
Investments in marketable securities 3,102,000 3,997,000
Accounts receivable, less allowance for
doubtful accounts 3,561,000 4,561,000
Inventories 11,750,000 10,453,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 644,000 136,000
Deferred tax asset 987,000 1,025,000
Other current assets 167,000 331,000
------------ ------------
Total current assets 22,382,000 24,079,000
Property and equipment, net 637,000 691,000
Goodwill 9,732,000 9,634,000
Intangible assets, net 2,645,000 2,969,000
Deferred tax asset 1,833,000 1,678,000
Other assets 632,000 634,000
------------ ------------
Total assets $37,861,000 $39,685,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term obligations $ 1,777,000 $ 1,777,000
Notes payable 100,000 699,000
Accounts payable 1,205,000 1,384,000
Income taxes payable 7,000 162,000
Accrued expenses 1,227,000 1,395,000
Customer advances 576,000 163,000
Deferred income 143,000 332,000
------------ ------------
Total current liabilities 5,035,000 5,912,000
Deferred tax liability 715,000 595,000
Deferred income 299,000 342,000
Long-term obligations, net of current
maturities 5,918,000 6,753,000
------------ ------------
Total liabilities 11,967,000 13,602,000
Stockholders' Equity
Common stock 475,000 472,000
Additional paid-in capital 20,860,000 20,766,000
Accumulated other comprehensive loss (24,000) (33,000)
Retained earnings 4,583,000 4,878,000
------------ ------------
Stockholders' equity 25,894,000 26,083,000
------------ ------------
Total liabilities and stockholders'
equity $37,861,000 $39,685,000
============ ============
Source:
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