First Quarter 2020 Net Income of $20,000 ($0.01 per diluted share) v. $70,000 ($0.02 per diluted share) in Prior Period

First Quarter EBITDA, As Adjusted, of $86,000 ($0.02 per diluted share) v. $121,000 ($0.03 per diluted share) in Prior Year Period

HAUPPAUGE, N.Y., June 11, 2020 (GLOBE NEWSWIRE) -- Orbit International Corp. (OTC PINK:ORBT) today announced results for the first quarter ended March 31, 2020.

First Quarter 2020 vs. First Quarter 2019

• Net sales were $5,852,000, as compared to $6,492,000.
• Gross margin was 30.3%, as compared to 26.0%.
• Net income was $20,000 ($0.01 per diluted share), as compared to a net income of $70,000 ($0.02 per diluted share).
• Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $86,000 ($0.02 per diluted share), as compared to EBITDA of $121,000 ($0.03 per diluted share).
• Backlog at March 31, 2020 was $21.9 million compared to $20.8 million at December 31, 2019.

Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the three months ended March 31, 2020 was $20,000 compared to $70,000 for the prior comparable period. Our lower net income for the current period was affected by lower sales from our Orbit Power Group (“OPG”), which was slightly offset by higher sales from our Orbit Electronics Group (“OEG”).  Our gross margin improved in the current period compared to the prior period because prior year sales included in excess of $2,000,000 in additional CAATS sales which have a lower gross profit than our other products.  Despite the increase in gross margin, this improvement was expected to be greater but was adversely affected by changes we made in our manufacturing operation in March 2020. These changes were made to comply with the New York State on PAUSE executive order issued by the Governor of New York State and to safeguard the health and safety of our employees during the COVID-19 pandemic while continuing to meet our performance obligations as a member of the Defense Industrial Base. The most significant of these changes in operations was the implementation of split shifts which had the effect of reducing hours worked by our manufacturing employees. In addition, most of our salaried employees were required to work from home. As a result, productivity has been affected throughout our organization.  This PAUSE executive order has continued into the second quarter and we expect our gross margins to be affected as well. However, we expect our efficiencies to improve beginning in the third quarter of 2020 barring any unforeseen circumstances related to the pandemic.” 

Mr. Binder added, “The decrease in sales from our OPG was due to a decrease in shipments of CAATS units in the current year first quarter compared to the first quarter of 2019.  This was due to a previously reported interruption of shipments that began in the fourth quarter of 2019.  Shipments did recommence in the first quarter and will continue through the end of 2020.  As previously mentioned, CAATS shipments have a lower gross margin than our other products.  The increase in sales from our OEG was primarily attributable to sales from our Q-Vio, Corp. subsidiary (“Q-Vio”), which was acquired in August 2019.  Exclusive of Q-Vio, sales for the OEG did not materially change from the prior comparable period.”  

Mr. Binder continued, “On May 5, 2020, we announced that we closed on a $1,606,000 loan (“Loan”) from Peoples United Bank under the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”). Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of such loans based on the use of such loan proceeds for payment of payroll costs, mortgage interest, rent and utilities.  As previously mentioned, we have made several changes throughout our organization to deal with the health and safety of our employees and productivity has suffered as a result.  In addition, we continue to deal with issues from our supply chain which has impacted customer deliveries. Furthermore, bookings and revenue have been impacted, particularly from our OPG’s commercial division whose customer base has been especially hurt by the pandemic. Q-Vio is also experiencing delays for most of its commercial and industrial opportunities.  Despite these challenges, the PPP Loan has enabled us to preserve our workforce with full employment and will hopefully mitigate the inefficiencies created by the pandemic.”

Mr. Binder continued, “Our backlog at March 31, 2020 was approximately $21,924,000 compared to approximately $20,834,000 at December 31, 2019. Our backlog at March 31, 2020 and December 2019 includes approximately $956,000 and $1,547,000, respectively, of backlog from our new Q-Vio subsidiary. Exclusive of Q-Vio’s backlog at March 31, 2020 and December 31, 2019, our backlog was approximately 8.7% higher at March 31, 2020 as compared to the prior year-end, despite a lower backlog of CAATS units.”

David Goldman, Chief Financial Officer, noted, “At March 31, 2020, our cash and cash equivalents aggregated approximately $2.8 million, a decrease of $801,000 as compared to the cash balance at year-end. This decrease was primarily the result of an increase to inventory in order to meet customer delivery schedules during the remainder of 2020. Our tangible book value per share at March 31, 2020 was $4.52 which compares to $4.57 at December 31, 2019 (Note: tangible book value per share does not include any additional value for our remaining reserved deferred tax asset.) To offset future federal and state taxes resulting from profits, we have approximately $8.4 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively.”

Mr. Binder concluded, “Because our revenue is tied to the delivery schedules specified in our contracts, it often is difficult to judge our performance on a quarterly basis.  Like many of the companies throughout the world, the COVID-19 pandemic will make 2020 a very challenging year for our Company. During the first quarter and prior to the time that it became evident that the pandemic was going to adversely impact our business, we purchased 31,594 shares of our common stock at an average price of $5.54 per share and we declared our regular quarterly dividend of $0.01 per share and a special dividend of $0.04 per share.  During the beginning of the second quarter, our Board of Directors decided to suspend our share repurchase program as well as our future quarterly cash dividend payments.  It remains very difficult to assess the full extent of the pandemic’s short and long-term impact on our business.  However, with the receipt of the PPP Loan, we are optimistic that our financial condition will be preserved so that when some sense of normalcy returns, which we hope will be the third quarter, our efficiencies will be restored and our operating performance will improve.” 

Orbit International Corp., through its Electronics Group including its new Q-Vio subsidiary, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial applications through its production facility in Hauppauge, New York.  Orbit’s Power Group, also located in Hauppauge, NY, designs and manufactures a wide array of power products including AC power supplies, frequency converters, inverters, uninterruptible power supplies, VME/VPX power supplies as well as various COTS power sources.  The Company also has a sales office in Bradenton, FL.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The Company was classified as an essential business by New York State and therefore was exempt from the state’s mandate that all non-essential businesses close their business locations until further notice. In addition, as a member of the Defense Industrial Base (“DIB”), the Company is mandated by the Secretary of Defense to continue working its normal schedule. The Company remains open while following guidance from the Centers for Disease Control (“CDC”) to best protect our employees. At this time, the length and severity of the COVID-19 pandemic is still unknown.

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 reports posted with the OTC Disclosure and News service. 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.

CONTACT
David Goldman
Chief Financial Officer
631-435-8300                                      

(See Accompanying Tables)

Orbit International Corp.
Consolidated Statements of Operations
 (in thousands, except per share data)

Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

(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. 

Orbit International Corp.
Consolidated Balance Sheets