Orbit International Corp. (NASDAQ: ORBT) today announced results
for the second quarter and six months ended June 30, 2013.
Second Quarter 2013 vs.
Second Quarter 2012
- Net sales were $6,475,000 compared to $7,509,000;
- Gross margin was 38.6% compared to 37.7%;
- Net income was $109,000 ($0.02 per diluted share) compared to
$199,000 ($0.04 per diluted share); and,
- Earnings before interest, taxes, depreciation and amortization,
and stock based compensation (EBITDA, as adjusted) was $244,000
($0.05 per diluted share) compared to $438,000 ($0.10 per diluted
share).
First Half 2013 vs. First
Half 2012
- Net sales were $12,922,000 compared to $13,671,000;
- Gross margin was 38.6% compared to 38.2%;
- Net income was $29,000 ($0.01 per diluted share) compared to a
net loss of $1,176,000 ($0.26 loss per share). The net loss for the
2012 first half included a non-recurring charge of $1,194,000 in
connection with employment contract provisions of a departing
senior officer. Excluding this charge, net income for the 2012
first half was $18,000 ($0.00 per diluted share);
- EBITDA, as adjusted, was $303,000 ($0.07 per diluted share)
compared to a loss of $755,000 ($0.16 loss per share). Excluding
the employment contract provision-related charge, EBITDA, as
adjusted for the 2012 first half was $439,000 ($0.09 per diluted
share); and,
- Backlog at June 30, 2013 was $13.6 million as compared to $14.7
million at March 31, 2013 and $19.5 million at June 30, 2012.
Mitchell Binder, President & Chief Executive Officer,
stated, "Our Company continues to operate in a difficult business
environment due to general budget uncertainty and funding
reductions related to sequestration. Our net sales for the 2013
second quarter and first half, as compared to the same periods of
2012, decreased primarily as a result of lower sales at our ICS and
TDL subsidiaries. However, due to cost cutting measures taken over
the last several quarters, our net income, exclusive of the prior
year employment contract provision-related charge, did not
materially change. Our gross margin for the 2013 second quarter and
first half slightly improved as compared to the same periods of
2012 due to a better product mix during the current quarter,
particularly at our TDL subsidiary, which commenced shipments for
its displays for a major helicopter program, and also due to lower
margin sales delivered by ICS in the prior year second
quarter."
Mr. Binder continued, "We expect our operating performance for
the second half of 2013 to improve, as compared to the first half
of the year, due to delivery schedules for our current backlog and
pending orders. Specifically:
- Our Power Group's recent orders for commercial power supplies
and COTS power supplies are scheduled for delivery in the third and
fourth quarter of 2013.
- Deliveries for our Orbit Instrument Division's $665,000 order
for keyboards to be utilized by the Federal Aviation Administration
for its air traffic control systems are scheduled to commence in
the third quarter of 2013. Although this order was substantially
less than the amount initially indicated by our customer,
principally due to budget pressures, the effort to upgrade air
traffic control towers should continue for several years and we
expect the shortfall from the current year to be layered into the
out-year awards.
- Most of the deliveries for the $1.2 million RCU order received
earlier this year should be completed in the fourth quarter of
2013, and follow-on orders to fulfill requirements for the U.S.
Navy and U.S. Army are expected before year-end.
- ICS's two prototype units for the Signal Data Converter
('SDC'), accounted for under the percentage of completion method,
originally scheduled to be delivered in the second quarter, were
shipped during the third quarter. This order is part of the $5.8
million SDC base contract received in April 2012. $4.2 million is
currently not funded with a purchase order; however, ICS expects to
be awarded a production order for a portion of these units before
2013 year-end."
David Goldman, Chief Financial Officer, noted, "Our financial
condition remains strong. At June 30, 2013, total current assets
were $19.5 million versus total current liabilities of $2.3 million
for an 8.4 to 1 current ratio. Cash, cash equivalents and
marketable securities as of June 30, 2013, aggregated approximately
$1.1 million. To offset federal and state taxes resulting from
profits, we have approximately $5 million and $6 million in
available federal and state net operating loss carryforwards,
respectively, which should enhance future cash flow. Our tangible
book value at June 30, 2013 was $3.88 per share as compared to
$3.85 at March 31, 2013. Finally, we recently amended our Credit
Agreement with our primary lender whereby the maturity date for our
$6 million committed line of credit was extended to July 1, 2015.
Accordingly, as of June 30, 2013, our line of credit is now
classified as a non-current liability."
Mr. Binder continued, "Our backlog at June 30, 2013 was $13.6
million, down slightly from the $14.7 million reported at March 31,
2013. Our bid and proposal activity remains good but the time delay
between contract proposal and actual award continues to impact
delivery schedules. Both our Power and Electronics Groups expect
orders of significant magnitude for new and repeat programs to be
booked in the next two quarters.
"We continue to believe that all the legacy business that
contributed to our good operating performance from the past two
years remains intact. In this regard, since the beginning of 2013,
we have repurchased over 93,000 of our common shares, and more than
311,000 shares since January 1, 2012."
Mr. Binder concluded, "We continue to seek out accretive
acquisitions that we hope to tuck into our existing facilities. We
remain active in this area but very selective in our approach. We
believe that our strong balance sheet will allow us to take
advantage of opportunities in our marketplace as other weaker
companies struggle with current industry conditions."
Conference Call The Company will hold a
conference call for investors today, August 8, 2013, at 11:00 a.m.
ET. Interested parties may participate in the call by dialing (201)
493-6744; please call in 10 minutes before the conference call is
scheduled to begin and ask for the Orbit International conference
call. After opening remarks, there will be a question and answer
period. The conference call will also be broadcast live over the
Internet. To listen to the live call, please go to
www.orbitintl.com and click on the Investor Relations section.
Please go to the website at least 15 minutes early to register, and
download and install any necessary audio software. If you are
unable to listen live, the conference call will be archived and can
be accessed for approximately 90 days at Orbit's website. We
suggest listeners use Microsoft Explorer as their browser.
Orbit International Corp., through its Electronics Group, is
involved in the manufacture of customized electronic components and
subsystems for military and nonmilitary government applications
through its production facilities in Hauppauge, New York, and
Quakertown, Pennsylvania; and designs and manufactures combat
systems and gun weapons systems, provides system integration and
integrated logistics support and documentation control at its
facilities in Louisville, Kentucky. The Power Group, through its
Behlman Electronics, Inc. subsidiary, manufactures and sells high
quality commercial power units, AC power sources, frequency
converters, uninterruptible power supplies and associated
analytical equipment. The Behlman COTS division designs,
manufactures and sells power units and electronic products for
measurement and display.
Certain matters discussed in this news release and oral
statements made from time to time by representatives of the Company
including, 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, 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's ability to control or predict. Important
factors that may cause actual results to differ materially and that
could impact Orbit International and the statements contained in
this news release can be found in Orbit's filings with the
Securities and Exchange Commission including quarterly reports on
Form 10-Q, current reports on Form 8-K, annual reports on Form 10-K
and its other periodic reports. For forward-looking statements in
this news release, Orbit claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Orbit assumes no obligation to
update or supplement any forward-looking statements whether as a
result of new information, future events or otherwise.
(See Accompanying Tables)
Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
--------- --------- --------- ---------
Net sales $ 6,475 $ 7,509 $ 12,922 $ 13,671
Cost of sales 3,978 4,675 7,934 8,450
--------- --------- --------- ---------
Gross profit 2,497 2,834 4,988 5,221
Selling general and
administrative expenses 2,355 2,575 4,886 5,172
Interest expense 15 36 32 70
Costs related to non-renewal of
chief operating officer
contract - - - 1,194
Investment and other (income) (2) (4) (5) (97)
--------- --------- --------- ---------
Income (loss) before taxes 129 227 75 (1,118)
Income tax provision 20 28 46 58
--------- --------- --------- ---------
Net income (loss) $ 109 $ 199 $ 29 $ (1,176)
========= ========= ========= =========
Basic earnings (loss) per share $ 0.02 $ 0.04 $ 0.01 $ (0.26)
Diluted earnings (loss) per
share $ 0.02 $ 0.04 $ 0.01 $ (0.26)
Weighted average number of
shares outstanding:
Basic 4,425 4,577 4,456 4,609
Diluted 4,459 4,605 4,491 4,609
Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
---------- ---------- ---------- ---------
EBITDA (as adjusted)
Reconciliation
Net income (loss) $ 109 $ 199 $ 29 $ (1,176)
Interest expense 15 36 32 70
Tax expense 20 28 46 58
Depreciation and amortization 72 75 140 141
Stock based compensation 28 100 56 152
---------- ---------- ---------- ---------
EBITDA (as adjusted) (1) $ 244 $ 438 $ 303 $ (755)
========== ========== ========== =========
EBITDA (as adjusted) Per Diluted
Share Reconciliation
Net income (loss) $ 0.02 $ 0.04 $ 0.01 $ (0.25)
Interest expense 0.00 0.01 0.01 0.02
Tax expense 0.00 0.01 0.01 0.01
Depreciation and amortization 0.02 0.02 0.03 0.03
Stock based compensation 0.01 0.02 0.01 0.03
---------- ---------- ---------- ---------
EBITDA (as adjusted), per
diluted share (1) $ 0.05 $ 0.10 $ 0.07 $ (0.16)
========== ========== ========== =========
(1) The EBITDA (as adjusted) tables presented are not determined in
accordance with accounting principles generally accepted in the United
States of America. Management uses EBITDA (as adjusted) 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 (as adjusted) 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. EBITDA (as
adjusted) 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
provided by (used in) operating activities (1) 2013 2012
---------- ----------
EBITDA (as adjusted) $ 303 $ (755)
Interest expense (32) (70)
Income tax expense (46) (58)
Loss on sale of marketable securities 2 -
Bond premium amortization 6 1
Net change in operating assets and liabilities 1,226 (649)
---------- ----------
Cash flows provided by (used) in operating
activities $ 1,459 $ (1,531)
========== ==========
Orbit International Corp.
Consolidated Balance Sheets
June 30,
2013 December 31,
(unaudited) 2012
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 847,000 $ 610,000
Investments in marketable securities 254,000 251,000
Accounts receivable, less allowance for
doubtful accounts 4,186,000 5,372,000
Inventories 12,703,000 13,271,000
Costs and estimated earnings in excess of
billings on uncompleted contracts 999,000 875,000
Deferred tax asset 320,000 447,000
Other current assets 174,000 252,000
------------ ------------
Total current assets 19,483,000 21,078,000
Property and equipment, net 1,115,000 1,099,000
Goodwill 868,000 868,000
Deferred tax asset 1,929,000 1,806,000
Other assets 96,000 125,000
------------ ------------
Total assets $ 23,491,000 $ 24,976,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 25,000 $ 33,000
Note payable-bank - 3,324,000
Accounts payable 541,000 741,000
Liability associated with non-renewal of
senior officer contract 459,000 661,000
Accrued expenses 1,241,000 1,294,000
Income tax payable 23,000 2,000
Customer advances 27,000 88,000
------------ ------------
Total current liabilities 2,316,000 6,143,000
Note payable-bank 2,600,000 -
Liability associated with non-renewal of senior
officer contract, net of current portion 25,000 41,000
Long-term debt, net of current portion - 8,000
------------ ------------
Total liabilities 4,941,000 6,192,000
Stockholders' Equity
Common stock 523,000 510,000
Additional paid-in capital 22,769,000 22,726,000
Treasury stock (2,025,000) (1,700,000)
Accumulated other comprehensive gain (loss) 3,000 (3,000)
Accumulated deficit (2,720,000) (2,749,000)
------------ ------------
Stockholders' equity 18,550,000 18,784,000
------------ ------------
Total liabilities and stockholders' equity $ 23,491,000 $ 24,976,000
============ ============
CONTACT Mitchell Binder President & Chief Executive Officer
631-435-8300 Investor Relations Counsel Lena Cati 212-836-9611 The
Equity Group Inc.
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