HAUPPAUGE, N.Y., May 7, 2009 (GLOBE NEWSWIRE) -- Orbit International Corp. (Nasdaq:ORBT), an electronics manufacturer, systems integrator and software solution provider, today announced results for the first quarter ended March 31, 2009.
First Quarter 2009 vs. First Quarter 2008
* Net sales decreased 8.5% to $6,047,000 from $6,610,000; * Gross margin was 37.6% compared to 39.9%; * Net loss was $353,000, compared to net income of $11,000; * Net loss per share was $.08 compared to a breakeven 2008 first quarter; * Earnings before interest, taxes, depreciation and amortization, and stock based compensation (EBITDA, as adjusted) was a loss of $49,000 ($.01 loss per share) compared to income of $382,000 ($.08 per diluted share); * Backlog at March 31, 2009 was $14.3 million, down 9.5% from $15.8 million at December 31, 2008 and up 4.4% from $13.7 million at March 31, 2008.
Dennis Sunshine, President and Chief Executive Officer stated, "We anticipated that the operating results for the first quarter would be our weakest quarter of the year, since approximately $4,500,000 in orders for our ICS subsidiary in support of the MK119 Gun Console System were not expected to be received until late in the first quarter. Although this award has been delayed, we have been assured by the government contracting office that these orders have now been given a high priority and should be released shortly. Once this MK 119 Gun Console System order is received, we expect that most of the contract, which is accounted for under the percentage of completion method, will be delivered to our customer by year-end. Although we have always stated the Company does not have a seasonal business cycle, our operating performance for the last two years has typically been stronger in the second half of the year, and 2009 appears to be tracking towards similar results. The orders for the MK119 Gun Console system, along with additional orders expected shortly for the Company's Remote Control Units (RCUs) should significantly increase our backlog and provide for future revenue. As an example of the impact of program timing, one our prime contractors has recently requested that a Memorandum of Understanding (MOU) covering the procurement of RCUs, due to expire December 31, 2009, be amended to allow for the procurement of additional units. Once amended, the MOU will allow our customer to release additional quantities of RCUs on a timely basis, and avoid any break in our production line."
Sunshine added, "All of our other operating units exceeded our internal projections for the quarter and we continue to expect strong operating results from ICS for the year. Based upon our backlog of $14.3 million, current delivery schedules, together with anticipated business opportunities for new and retrofit programs, we continue to believe 2009 will be a year of improved operating performance. We anticipate revenue growth and even greater improvement in profitability, particularly due to the operating leverage gained through tight management of our costs."
Sunshine continued, "Over the last few quarters, we have reported that several design and prototype programs have entered or are close to entering into full production quantity requirements in 2009. The anticipated production phase of these programs will provide substantial recurring revenue potential for Orbit. These programs include the $2 million Black Hawk helicopter retrofit and display upgrade contract awarded to our Electronics Group in late December 2008, which is projected to be shipped in the second half of 2009. In addition, the design and qualification award for the CH-53E Sea Stallion helicopter upgrade program awarded in January of this year, should transition into the production phase, with $3 million in potential revenue starting later this year and continuing through 2011.
"Other contracts received, which have the potential for substantial follow-on production revenue include:
* A new order in excess of $1.4 million for RCUs for U.S. Navy and U.S. Army requirements, indicating that the RCU delay issues of 2008 are now behind us. In addition, we are currently engaged in direct negotiations with our customer for a new MOU, which includes projections of RCU requirements that could generate revenues in the range of $4.5 million to $9.0 million through 2012. Our enhanced RCU that provides the operator with critical real time Identification Friend or Foe data is now standard for most Army and Navy program requirements. * A follow-on contract in excess of $300,000 from the U.S. Naval Inventory Control Point for the manufacture of its Color Plasma Entry Panels. Since our Company previously shipped in excess of 4,000 Plasma Entry Panels, we believe that any retrofit of combat vessels would be significant. * Two new contract awards totaling approximately $950,000: a) an order of approximately $425,000 for a hot swappable DC power supply for use in a nuclear power plant control system with potential future orders in excess of $4,000,000 over the next four years; and b) an order valued at approximately $525,000 to support a new COTS power supply used on the advanced gun control system for the U.S. Navy's DDG-1000 Zumwalt Class Destroyers with potential for significant follow-on awards. * Two new prototype design and qualification contracts totaling approximately $940,000: a) a $450,000 order for a switch matrix system for ground mobile vehicle systems, with potential follow-on orders of $4,000,000 over the next four years; and b) an order of $490,000 for the design of ruggedized color displays to be used by virtually all mass transit systems nationwide, which could also grow into a significant future revenue stream for years to come."
Mitchell Binder, Chief Financial Officer, added, "Our financial condition remains strong. At March 31, 2009, total current assets were $21,137,000 versus total current liabilities of $4,267,000 for a 5.0 to 1 current ratio. With approximately $20 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."
Binder added, "Our cash and cash equivalents and marketable securities as of March 31, 2009 were approximately $4.6 million having used approximately $572,200 to repurchase shares under our $3 million treasury stock repurchase program. From August 2008 through May 1, 2009, a total of 261,693 common shares have been repurchased at an average price of $2.25 per share. Finally as a result of the loss for the quarter, offset by certain non cash charges and stock repurchases, our tangible book value at March 31, 2009 slightly decreased to $3.10 per share from $3.19 at December 31, 2008."
Binder concluded, "We continue to believe that the current trading price of our stock does not adequately reflect the present value of our Company nor the significance of several potential growth opportunities. Consequently, we intend to continue to purchase shares under our program subject to market conditions and at times when we deem it appropriate."
Sunshine noted, "We are very excited about the number of new customers that have selected our Company as the source for critical design and development program requirements. Our timely prototype and qualified solutions have the potential to significantly impact internal growth for all of our business segments. Our Tulip subsidiary, located in Quakertown, PA., has been experiencing strong internal growth with new displays for new and retrofit program awards. As a result of their continued growth, we have recently signed a new lease for a larger Tulip operating facility that has the capacity to handle significant program quantity requirements without any production schedule interruptions."
Sunshine concluded, "Both our Power and Electronics Groups are well positioned to capture new business opportunities in a number of specific markets that have been targeted by the current administration. Secretary of Defense Gates' most recent Future Combat Readiness assessment has outlined a number of ground and air mobile programs that we are currently working on. Many of these program opportunities have been specifically identified as being critical for future military engagements abroad. Management believes the Company will further benefit and receive follow-on awards from our expanded base of prime global defense electronics contractors, as the modernization and critical refurbishment of existing military equipment continues to be a top priority of the current administration. Finally, management continues to explore a number of strategic and financial alternatives that would enhance shareholder value, including the priority of synergistic acquisitions and/or the potential sale of the Company."
Conference Call
The Company will hold a conference call for investors today, May 7, 2009, at 11:00 a.m. ET. 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 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. 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. 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 military 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, 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, 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 and its registration statement on Form S-3 containing a final prospectus dated January 11, 2006. 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.
Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 31,
(unaudited)
2009 2008
----------- -----------
Net sales $ 6,047 $ 6,610
Cost of sales 3,773 3,975
----------- -----------
Gross profit 2,274 2,635
Selling general and administrative
expenses 2,601 2,618
Interest expense 46 102
Investment and other (income) (20) (96)
----------- -----------
Net (loss) income before taxes (353) 11
Income taxes -- --
----------- -----------
Net (loss) income $ (353) $ 11
=========== ===========
Basic (loss) earnings per share $ (0.08) $ 0.00
Diluted (loss) earnings per share $ (0.08) $ 0.00
Weighted average number of shares
outstanding:
Basic 4,267 4,527
Diluted 4,267 4,807
Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2009 2008
----------- -----------
EBITDA Reconciliation (as adjusted)
-----------------------------------
Net (loss) income $ (353) $ 11
Interest expense 46 102
Income tax expense -- --
Depreciation and amortization 179 226
Stock based compensation 79 43
----------- -----------
EBITDA (1) $ (49) $ 382
=========== ===========
Adjusted EBITDA Per Basic and Diluted
Share Reconciliation
-------------------------------------
Net (loss) income $ (0.08) $ 0.00
Interest expense 0.01 0.02
Income tax expense -- --
Depreciation and amortization 0.04 0.05
Stock based compensation 0.02 0.01
----------- -----------
EBITDA per basic and diluted share (1) $ (0.01) $ 0.08
=========== ===========
(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.
Reconciliation of EBITDA, as adjusted, Three Months Ended
to cash flows from operating March 31,
activities (1) 2009 2008
-------------------------------------- ----------- -----------
EBITDA (as adjusted) $ (49) $ 382
Interest expense (46) (102)
Income tax expense 0 0
Bond amortization 3 3
Write-down of marketable securities 39 0
Deferred income (22) (21)
Net change in operating assets and
liabilities 2,447 (1,202)
----------- -----------
Cash flows from operating activities $ 2,372 $ (940)
Orbit International Corp.
Consolidated Balance Sheets
March 31, December 31,
2009 2008(2)
----------- -----------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 3,724,000 $ 2,080,000
Investments in marketable securities 846,000 1,127,000
Accounts receivable, less allowance
for doubtful accounts 3,267,000 6,333,000
Inventories 11,939,000 11,536,000
Deferred tax asset 1,200,000 850,000
Other current assets 161,000 198,000
----------- -----------
Total current assets 21,137,000 22,124,000
Property and equipment, net 677,000 655,000
Intangible assets, net 2,222,000 2,346,000
Goodwill 2,909,000 2,909,000
Deferred tax asset 974,000 1,322,000
Other assets 643,000 644,000
----------- -----------
Total assets $28,562,000 $30,000,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term
obligations $ 1,707,000 $ 1,777,000
Notes payable-bank 2,000 399,000
Accounts payable 1,395,000 1,499,000
Income taxes payable 6,000 6,000
Accrued expenses 1,025,000 1,185,000
Customer advances 47,000 37,000
Deferred income 85,000 85,000
----------- -----------
Total current liabilities 4,267,000 4,988,000
Deferred income 235,000 257,000
Long-term obligations 4,655,000 5,029,000
----------- -----------
Total liabilities 9,157,000 10,274,000
Stockholders' Equity
Common stock 486,000 477,000
Additional paid-in capital 21,102,000 21,032,000
Treasury stock (572,000) (529,000)
Accumulated other comprehensive loss (129,000) (125,000)
Accumulated deficit (1,482,000) (1,129,000)
----------- -----------
Stockholders' equity 19,405,000 19,726,000
----------- -----------
Total liabilities and
stockholders' equity $28,562,000 $30,000,000
=========== ===========
(2) The balance sheet at December 31, 2008 has been derived from
the audited financial statements at that date but does not
include all the information and footnotes required by accounting
principles generally accepted in the United States of America
for complete financial statements.