Ballistic Recovery Systems, Inc. (Pink Sheets:BRSI), a manufacturer of
whole-airplane emergency parachute systems and a leader in the safety
apparel industry, announced today the Company has filed its 1st
and 2nd Quarter FY08 10QSB financial statements.
Consolidated BRS sales for 1st and 2nd Quarters FY08 were up 8.8% and
19.9%, respectively, for a total year to date increase in sales of 14.4%
over the same period in FY07. This includes the Company’s
ATF subsidiary which is the result of the November 2007 acquisition of
substantially all the assets of Head Lites Corp., a manufacturer of
professional-use vest equipment.
While in-depth details can be found in the actual filing, a brief
synopsis explaining key points follows:
Sales for BRS aviation products for 1st and 2nd
Quarters FY08 were up 4.1% and 3.9%, respectively, over same periods
in FY07. FY08 year to date sales are up 4.0% when compared to the same
period last year
1st Quarter FY08 net income loss was
$(180,269). 2nd Quarter FY08 net income loss
was $(385,698). YTD (through 2nd Quarter) net
income loss was $(215,698)
Total asset value YTD (through 2nd Quarter)
rose to $8,277,304 compared to FY07 for same period of $6,561,473…a
26.2% increase largely resulting from the Company’s
acquisition of Head Lites Corp.
Capital investments, primarily in new equipment, comprised
$186,000 of this total intracompany investment
While a net loss generally has a negative connotation in a firm’s
financial portfolio, further analysis shows that a substantial
investment was made by the Company to expand its facilities in Mexico
and Pinebluff, NC, in particular. “We
performed well in our quarterly sales performance versus the first and
second quarter of 2007. We continue to have operational challenges
navigating through difficult issues surrounding the consolidation of
financial reporting, particularly in the absorption of the Mexico
operations and the integration of the ATF operation" said Larry E.
Williams, CEO. He continued, “"We did see a
surge in non-aviation sales after the close of the HLC acquisition, but
those elevated levels did not continue through the rest of the first
quarter at expected levels. Second quarter sales are showing the
benefits of our diversification strategy as we see growth in both
aviation and non-aviation sales. Although a loss is never good news, we
believe that this is truly an investment and movement toward our
objective of diversification.”
The Company realized significant acquisition costs related to the
formation of its joint venture, ATF, which directly impacted financial
performance. The integration efforts and internal reporting system
limitations contributed to the delay in filing causing costs to be
heavier than originally anticipated. In addition, there were
considerable one-time “non-recurring”
expenses above the same period in FY07 totaling $323,000 associated with
the ATF JV integration and consolidation of financial statements. The
Company experienced the following one-time YTD special charges above the
same period last year:
$148,000 for financial consulting and contract labor;
$25,000 for additional Board of Director fees;
$93,000 for audit fees above historical rates;
$57,000 for additional legal fees associated with the joint venture
and SEC filings.
The Company invested an additional $131,000 above the same six month
period last year for Engineering and R&D directly associated with the
development of the future 3000 and 5000 series parachute systems for
applications such as the Diamond D-Jet and the Lancair Evolution.
According to Williams, “We have definitely
seen a better start to 2008, particularly given that the first quarter
is generally the weakest quarter of the year and the fact that we now
have our cost structure better aligned with the level of order volumes.”
The Company reported that over the last six months, management has
focused on streamlining operations and increasing efficiencies,
particularly in its Mexico operation. The Company realized $213,000 in
cost reductions in its Mexico operations from 1st
Quarter to 2nd Quarter FY08.
VP of Sales, Gary Moore added, “On the BRS
aviation front, we were encouraged by our sales performance in the first
half of the year and continue to be confident in our market position.
ATF sales, while not as strong as initially expected, are recovering and
we do see growth potential in this area.”
Commenting on the problems experienced with timely reporting, Williams
pointed out, “Simply put, the integration and
additional reporting requirements associated with a new company have
challenged us, both in terms of personnel and systems capabilities.
Through this difficult period we have focused on establishing accounting
and reporting structures which are now aligned much more robustly than
in previous years and will improve timeliness and completeness of
financial reporting both for internal decision making and external
analysis.”
The Company is encouraged by its 1st and 2nd
Quarter results, especially in the aviation arena where overall growth
in 2008 has been negative for the industry as a whole. “BRS
is prepared to quickly capitalize on future growth in this industry as
we continue to see good market acceptance”,
commented Moore. Williams added, “Our
management team has specifically prepared BRS well for a rigorous and
challenging operating environment based on the current market
conditions. The streamlining of our Mexico operation reflects the
realities of the marketplace, yet we have in place the infrastructure
for substantial surge capabilities when future orders come through,
especially in the repacks and new installations such as the Cessna 162
SkyCatcher.”
In closing, Williams added, “Overall, we are
prepared for the operating environment to remain challenging as we fully
integrate operations and we will continue to seek out ways to maximize
the profitability of all operations, even if it is in the face of a
continued depressed general aviation market."
About Ballistic Recovery Systems and Advanced Tactical Fabrication
Based in South Saint Paul, Minnesota, BRS designs, manufactures, and
distributes whole-aircraft emergency parachute systems for general
aviation and recreational aircraft. ATF (or Advanced Tactical
Fabrication), a joint venture of BRS and Head Lites Corp (HLC), is a
leader in the safety apparel industry. Ballistic Recovery Systems is a
publicly traded company (BRSI.PK). Since 1981, BRS has delivered more
than 29,000 parachute systems to aircraft owners worldwide, including
over 3,500 systems on FAA-certificated aircraft such as the Cirrus
Design SR20 and SR22 manufactured in Duluth, Minnesota. To date, BRS
parachute recovery systems have been credited with saving the lives of
213 pilots and passengers.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are often, but not always, made through the use of words such
as “anticipates,” “expects,”
“plans,” “believes,”
“intends,” and
other similar words or phrases. These statements are only predictions,
and are based on current information and expectations. Such statements
involve a number of risks and uncertainties, including market
fluctuations, pricing, procurement, manufacturing efficiencies,
operating risks, and other risks that could cause the actual results to
differ materially from those projected. For more information, review the
Company’s filings with the Securities and
Exchange Commission, particularly the Company’s
annual report on Form 10-KSB. All forward-looking statements are
qualified in their entirety by this cautionary statement, and BRS
undertakes no obligation to revise or update this press release to
reflect events or circumstances after the date hereof.
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