Annual Net Income of $7.0 million compared to 2008 net loss of $4.1 million including $9.9 million in impairment charges
Annual EBITDA of $19.2 million compared to 2008 EBITDA loss of $10.7 million including $9.9 million in impairment charges
WASHINGTON, N.C., March 3, 2010 (GLOBE NEWSWIRE) -- Flanders Corporation (OTCQX:FLDR) reported financial results for the fourth quarter and year ended December 31, 2009.
Harry Smith, Flanders Corporation's Chairman, president and CEO, said: "2009 was a great year for Flanders, demonstrating the effects of changes made by our management team in 2007 and 2008. Although sluggish new construction and other factors related to the worldwide economy had their impact, we posted solid year-over-year improvement, including increased net sales. We continue to execute on our plans to increase efficiencies and reduce costs, through further consolidation of our manufacturing footprint and reductions in headcount driven by the automation of our manufacturing processes. Product innovation continues to be a focus as we understand the importance of bringing new products to the marketplace has never been greater."
Fourth Quarter 2009 Financial Summary
Revenue for the fourth quarter of 2009 was $55.2 million, compared to $49.8 million in the fourth quarter 2008. Net Income for the fourth quarter 2009 was $1.0 million, or $0.04 per share, as compared to a net loss of $14.3 million, or $0.56 per share in 2008 which included $9.9 million in impairment charges. EBITDA for the fourth quarter of 2009 was $4.3 million as compared to an EBITDA loss of $19.9 million in the fourth quarter 2008.
Management uses some measures not in accordance with generally accepted accounting principles (GAAP) to evaluate the results of the company's operations and believes earnings before interest, taxes, extraordinary items, depreciation and amortization (EBITDA) provides a useful measure of operations.
Full Year 2009 Financial Summary
Revenue for the year ended 2009 was $222.4 million, compared to $217.3 million in 2008. Gross margin was 19% in 2009 as compared to 12% in 2008 which included $4.3 million in inventory write downs in 2008. Operating expenses in 2009 were $31.3 million compared to a 2008 total of $47.3 million, which included $2.4 million in goodwill impairment and a $3.2 million charge for the loss on impaired fixed assets. Net income for 2009 was $7.0 million or $0.27 per share, as compared to a net loss in 2008 of $4.1 million, or $0.16 per share, which included $9.9 million in impairment charges. EBITDA for the year ended 2009 was $19.2 million, compared to an EBITDA loss of $10.7 million in 2008.
Flanders' Chief Financial Officer, John Oakley said: "In this very challenging environment, we improved virtually every metric in our balance sheet and reduced our debt during the fourth quarter of 2009. Our sales increase over the fourth quarter of 2008 shows the Company's ability to perform in the face of a difficult business environment and continued pricing pressure. We reaffirm our revenue expectations for 2010 as between $255 million and $270 million."
Conference Call
President and CEO, Harry Smith and CFO John Oakley are scheduled to conduct a conference call at 11:00 a.m. ET on Mar. 3, 2010 to review these results in more detail. To access the call from within the U.S., please dial 866-425-6192, and international callers can access the call by dialing 973-409-9253 approximately 10 minutes prior to the start of the conference call. The conference ID will be 59856116. A telephone replay will be available until midnight Eastern Time on April 3rd by dialing 800-642-1687 or 706-645-9291 and entering pass code 59856116.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this press release other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things: statements and assumptions relating to future growth, as well as management's short-term and long-term performance goals; statements regarding anticipated order patterns from our customers or the anticipated economic conditions of the industries and markets that we serve; statements related to the performance of the U.S. and other economies generally; statements relating to the anticipated effects on results of operations or financial condition from recent and expected developments or events; statements relating to the Flanders' business and growth strategies; and any other statements or assumptions that are not historical facts. Flanders believes that its expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause Flanders' actual results, performance or achievements, or industry results, to differ materially from the Flanders' expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the Flanders' past results of operations do not necessarily indicate its future results. These and other uncertainties are discussed in the "Risk Factors'' section of the Company's 2009 Form 10-K, which we expect to file on or before March 15, 2010. The future results of Flanders may fluctuate as a result of these and other risk factors detailed from time to time in the company's filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release. Except as otherwise required by applicable laws, Flanders undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this press release, including projected sales and profit levels for any business segment in any given quarter, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.
About Flanders
Flanders is a leading air filtration products manufacturer. Flanders' products are utilized by many industries, including those associated with commercial and residential heating, ventilation and air conditioning systems, semiconductor manufacturing, ultra-pure materials, biotechnology, pharmaceuticals, synthetics, nuclear power and nuclear materials processing.
For further information on Flanders and its products, visit its web site at http://www.flanderscorp.com/ or contact John Oakley at 252-946-8081.
| FLANDERS CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| December 31, | ||
| (In thousands) | ||
| ASSETS | 2009 | 2008 |
| Current assets | ||
| Cash and cash equivalents | $260 | $404 |
| Receivables: | ||
| Trade, less allowance for doubtful accounts: $2,172 in 2009 and $3,683 in 2008 | 33,159 | 37,682 |
| Other | 407 | 280 |
| Inventories | 29,415 | 31,549 |
| Deferred taxes | 2,566 | 4,285 |
| Other current assets | 8,134 | 14,762 |
| Total current assets | 73,941 | 88,962 |
| Property and equipment, net | 71,263 | 57,156 |
| Intangible assets, net | 280 | 295 |
| Notes Receivable and Other assets | 17,511 | 14,604 |
| $162,995 | $161,017 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Current maturities of long-term debt and capital lease obligations | $1,051 | $1,307 |
| Accounts payable | 19,353 | 22,795 |
| Accrued expenses | 13,334 | 13,517 |
| Other current liabilities | 497 | 6,179 |
| Total current liabilities | 34,235 | 43,798 |
| Long-term capital lease obligations, less current maturities | 150 | 554 |
| Long-term debt, less current maturities | 33,662 | 29,611 |
| Long-term liabilities, other | 3,086 | 4,286 |
| Deferred taxes | 158 | 0 |
| Commitments and contingencies | ||
| Stockholders' equity | ||
| Preferred stock, $.001 par value, 10,000 shares authorized; none issued | – | |
| Common stock, $.001 par value; 50,000 shares authorized; issued and outstanding: 26,133 and 25,524 as of December 31, 2009 and 2008, respectively | 26 | 26 |
| Additional paid-in capital | 88,902 | 87,253 |
| Accumulated other comprehensive loss | (908) | (1,231) |
| Retained (deficit) earnings | 3,684 | (3,280) |
| 91,704 | 82,768 | |
| $162,995 | $161,017 | |
| FLANDERS CORPORATION AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Three Months and Twelve Months Ended December 31, | ||||
| (In thousands, except per share data) | ||||
| (unaudited) | ||||
| Three Months Ended | Twelve Months Ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| Net sales | $ 55,206 | $ 49,794 | $ 222,380 | $ 217,328 |
| Cost of goods sold | 45,477 | 51,272 | 179,167 | 190,768 |
| Gross profit | 9,729 | (1,478) | 43,213 | 26,560 |
| Operating expenses | 7,211 | 19,280 | 31,339 | 47,287 |
| Operating income | 2,518 | (20,758) | 11,874 | (20,727) |
| Nonoperating income (expense): | ||||
| Other income, net | 164 | (1,034) | 1,517 | 3,598 |
| Interest expense | (987) | (471) | (1,863) | (2,094) |
| (823) | (1,505) | (346) | 1,504 | |
| Earnings before income taxes and extraordinary item | 1,695 | (22,263) | 11,528 | (19,223) |
| Provision for income taxes | 738 | (7,276) | 4,564 | (6,060) |
| Income before extraordinary item | 957 | (14,987) | 6,964 | (13,163) |
| Extraordinary gain on Fire (net of taxes) | -- | 695 | -- | 9,030 |
| Net earnings | $ 957 | $ (14,292) | $ 6,964 | $ (4,133) |
| Income before extraordinary item Basic earnings per share | $ 0.04 | $ (0.59) | $ 0.27 | $ (0.51) |
| Extraordinary item | -- | 0.03 | -- | 0.35 |
| Net earnings per share | $ 0.04 | $ (0.56) | $ 0.27 | $ (0.16) |
| Income before extraordinary item Diluted earnings per share | $ 0.04 | $ (0.59) | $ 0.27 | $ (0.51) |
| Extraordinary item | -- | 0.03 | -- | 0.35 |
| Net earnings per share | $ 0.04 | $ (0.56) | $ 0.27 | $ (0.16) |
| Weighted average common shares outstanding | ||||
| Basic | 26,132 | 25,602 | 25,779 | 25,693 |
| Diluted | 26,136 | 25,602 | 25,795 | 25,693 |
| FLANDERS CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Year Ended December 31, | ||
| (In thousands) | ||
| 2009 | 2008 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net Earnings (Loss) | $6,964 | ($4,133) |
| Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | ||
| Depreciation and amortization | 5,778 | 6,396 |
| Provision for doubtful accounts and notes | 2,095 | 3,532 |
| Goodwill impairment | 0 | 2,442 |
| (Gain) Loss on sale of property and equipment | (364) | 3,441 |
| Compensation expense | 46 | 1,426 |
| Tax impact of stock options exercised | (1,604) | 0 |
| Extraordinary (Gain) Loss | 0 | (9,030) |
| Proceeds from insurance claims | 1,135 | 17,479 |
| (Gain) Loss on sale of subsidiaries | 0 | (1,616) |
| Write down of notes receivable | 0 | 694 |
| Deferred taxes | 1,704 | (5,866) |
| Change in working capital components: | ||
| Receivables | (10,420) | (6,826) |
| Inventories | 2,135 | 12,874 |
| Other current assets and income tax receivable | 5,946 | (4,085) |
| Increase in other assets | (143) | 0 |
| Accounts payable | (3,443) | (6,579) |
| Accrued expenses | 10,366 | 3,529 |
| Other Current Liabilities | (5,682) | 300 |
| Long Term Liabilities Other | (603) | 125 |
| Income taxes, net | 0 | 0 |
| Net cash provided by operating activities | $13,910 | $14,103 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Disposal of subsidiary and deconsolidation of VIE, net of cash disposed | $0 | $(11) |
| Purchase of property and equipment | (15,019) | (14,445) |
| Proceeds from sale of property and equipment | 259 | 3,457 |
| Proceeds from insurance claim on building and equipment | 466 | 0 |
| Decrease in other assets and collections on notes receivable | 1,390 | 1,776 |
| Net cash provided by (used) in investing activities | $(12,904) | $(9,223) |
| FLANDERS CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS — Continued | ||
| Years Ended December 31, | ||
| (In thousands) | ||
| 2009 | 2008 | |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Net proceeds from (payments on) revolving credit agreement | $407 | $(1,272) |
| Principal payments on long-term borrowings | (3,095) | (2,224) |
| Purchase and retirement of common stock | 0 | (1,534) |
| Proceeds from sale of common stock | 0 | 56 |
| Payment of debt issuance costs | (66) | 0 |
| Tax impact of stock options exercised | 1,604 | 0 |
| Net cash used in financing activities | $(1,150) | $(4,974) |
| Net decrease in cash and cash equivalents | $(144) | $(94) |
| CASH AND CASH EQUIVALENTS | ||
| Beginning of year | $404 | $498 |
| End of year | $260 | $404 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
| Interest paid, net of $759 and $45 interest capitalized to property and equipment for 2009 and 2008, respectively: | $1,633 | $2,108 |
| Income taxes paid | $877 | $964 |
| Tax impact of Stock Options | $0 | $0 |
| SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
| Cashless exercise of common stock (net) | $(2,500) | $(370) |
| Accounts receivable in exchange for notes receivable | $2,421 | $677 |
| Sale of equipment or building for note receivable | $1,279 | $913 |
| Offset of accrued expenses against trade accounts receivable | $10,549 | $13,678 |
| Offset of accrued expenses against other receivables | $0 | $900 |
| Purchase of building for debt | $6,080 | $2,619 |
| ACQUISITION/DISPOSAL OF COMPANIES | ||
| Working Capital surplus acquired/disposed, net of cash and cash equivalents received | $0 | $1,425 |
| Fair value of other assets acquired/(disposed), principally property and equipment | $0 | $(8,637) |
| Goodwill acquired/(disposed) | $0 | $(589) |
| Minority interest | $0 | $(141) |
| FLANDERS CORPORATION AND SUBSIDIARIES | ||||
| RECONCILIATION OF NET EARNINGS TO EBITDA | ||||
| (In thousands) | ||||
| (unaudited) | ||||
| Three months ended | Twelve months ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| Net Earnings | $957 | $(14,292) | $6,964 | $(4,133) |
| Extraordinary items | 0 | (695) | 0 | (9,030) |
| Interest | 987 | 471 | 1,863 | 2,094 |
| Taxes | 739 | (7,276) | 4,564 | (6,060) |
| Depreciation and amortization | 1,628 | 1,912 | 5,778 | 6,396 |
| EBITDA | $4,311 | $(19,880) | $19,169 | $(10,733) |