Second Quarter 2022 Net Loss of $412,000 ($0.12 loss per diluted share) v. Net Income of $534,000 ($0.15 per diluted share) in Prior Year Period
Second Quarter 2022 EBITDA, As Adjusted, was a loss of $377,000 ($0.11 loss per diluted share) v. Earnings of $616,000 ($0.18 per diluted share) in Prior Year Period
Six Months 2022 Net Income of $54,000 ($0.02 per diluted share) v. Net Income of $2,361,000 ($0.67 per diluted share) in Prior Year Period. Prior Period Includes $1,618,000 ($0.46 per diluted share) of PPP Loan Forgiveness. Exclusive of PPP Loan Forgiveness, Prior Period Net Income was $743,000 ($0.21 per diluted share)
Six months 2022 EBITDA, As Adjusted, of $169,000 ($0.05 per diluted share) v. $2,519,000 ($0.72 per diluted share) in Prior Year Period. Exclusive of PPP Loan Forgiveness, Prior Period EBITDA, As Adjusted was $901,000 ($0.26 per diluted share)
HAUPPAUGE, N.Y., Aug. 11, 2022 (GLOBE NEWSWIRE) -- Orbit International Corp. (OTC PINK:ORBT) today announced results for the second quarter and six months ended June 30, 2022.
Second Quarter 2022 vs. Second Quarter 2021
- Net sales were $5,801,000 for each of the current and prior quarterly periods.
- Gross margin was 28.4%, as compared to 37.2%.
- Net loss was $412,000 ($0.12 loss per diluted share), as compared to a net income of $534,000 ($0.15 per diluted share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liabilities and other non-current liability, and stock-based compensation (EBITDA, as adjusted) was a loss of $377,000 ($0.11 loss per diluted share), as compared to income of $616,000 ($0.18 per diluted share).
Six Months 2022 vs. Six Months 2021
- Net sales were $12,644,000, as compared to $11,194,000.
- Gross margin was 33.4%, as compared to 34.8%.
- Net income was $54,000 ($0.02 per diluted share), as compared to net income of $2,361,000 ($0.67 per diluted share). Net Income for the prior year period includes PPP loan forgiveness of $1,618,000 ($0.46 per diluted share). Exclusive of the PPP loan forgiveness, net income for the prior year was $743,000 ($0.21 per diluted share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liabilities and other non-current liability, and stock-based compensation (EBITDA, as adjusted) was $169,000 ($0.05 per diluted share), as compared to income of $2,519,000 ($0.72 per diluted share). Prior year EBITDA, as adjusted, includes $1,618,000 of PPP loan forgiveness. Exclusive of the PPP loan forgiveness, EBITDA, as adjusted, was $901,000 ($0.26 per diluted share).
- Backlog at June 30, 2022 was $16.3 million compared to $15.3 million at March 31, 2022 and $17.8 million, inclusive of the backlog of SPS, at December 31, 2021.
EBITDA, as adjusted table, which accounts for non-recurring charges during the current and prior year quarters and six month periods:
| Three months ended | Six months ended | ||||||||||
| June 30, | June 30, | ||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||
| EBITDA, as adjusted | $ | (377,000 | ) | $ | 616,000 | $ | 169,000 | $ | 2,519,000 | ||
| Acquisition costs | - | - | 98,000 | - | |||||||
| Charge to Cost of Sales under Fair Value Accounting | 74,000 | - | 168,000 | - | |||||||
| PPP Loan forgiveness | - | - | - | (1,618,000 | ) | ||||||
| Total | $ | (303,000 | ) | $ | 616,000 | $ | 435,000 | $ | 901,000 | ||
| Per diluted share | $ | (0.09 | ) | $ | 0.18 | $ | 0.13 | $ | 0.26 | ||
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Based on delivery schedules, we expected second quarter results to be our weakest of 2022. In addition, some of our scheduled deliveries were delayed to the third and subsequent quarters and certain one-time unanticipated expenses were incurred by our newly acquired Simulator Product Solutions LLC (“SPS”) subsidiary. Also, gross margins from SPS were weaker than expected due to higher labor costs during the quarter. Our net income for the six months ended June 30, 2022, was $54,000 compared to $2,361,000 for the prior comparable period. Included in our current six month period results is the adverse effect of both $98,000 of one-time costs related to the acquisition of SPS and a $168,000 charge to SPS’ cost of sales due to the increase recorded to its work-in-process and finished goods acquired beginning inventory under Fair Value Accounting (“FVA”). Included in our prior year results is $1,618,000 representing the forgiveness of our loan, including accrued interest under the Paycheck Protection Program (“PPP”). Exclusive of the one-time acquisition costs and the charge to cost of sales under FVA and the PPP loan forgiveness, our net income for the six months ended June 30, 2022 was $320,000 ($0.09 per diluted share) compared to $743,000 ($0.21 per diluted share) in the comparable period of the prior year. EBITDA, as adjusted, for the six months ended June 30, 2022, exclusive of the one-time acquisition costs and charge to cost of sales under FVA, was $435,000 ($0.13 per diluted share).”
Mr. Binder added, “Our sales for the six months ended June 30, 2022, increased to $12,644,000 compared to $11,194,000 from the prior comparable period. This increase in sales was primarily attributable to sales from SPS, which is part of our Orbit Electronics Group (“OEG”). Our sales for the three months ended June 30, 2022 were $5,801,000, which was approximately equal to sales of $5,801,000 from the prior comparable period despite the inclusion of sales from SPS in the current three month period. Both periods were adversely affected by lower sales recorded by both our OEG (exclusive of SPS) and our Orbit Power Group (“OPG”).”
Mr. Binder further added, “Our gross margin for the six months ended June 30, 2022, exclusive of adjustments to SPS’ work in process and finished goods under FVA, decreased slightly to 34.7% compared to 34.8% in the prior comparable period. Notwithstanding this slight decrease in gross margin during the first half of 2022, our OEG reported increased gross margin attributable to certain engineering deliverables (which had some associated costs that were expensed in prior periods), as well as a more profitable product mix. Our gross margin at our OPG decreased from the prior comparable period due to a decrease in sales. Selling, general and administrative expenses for the quarter increased from the prior year comparable period, primarily due to the addition of expenses from SPS and higher corporate costs. Selling expenses at SPS included the hiring during the second quarter of two highly experienced sales personnel who are expected to make a material impact to bookings beginning in the fourth quarter of 2022 and beyond. Exclusive of SPS and corporate costs, selling, general and administrative expenses increased due to higher selling expenses and wage inflation.”
Mr. Binder continued, “Backlog at June 30, 2022, was approximately $16,300,000 compared to approximately $17,800,000 at December 31, 2021, both inclusive of the backlog of SPS. The reduction in backlog was due to a lower backlog at our OEG. Backlog at June 30, 2022 for our OPG did not materially change from year-end. The reduction in OEG backlog was expected as some follow-on orders were pushed back by our customers into the second half of 2022, primarily due to funding delays from the Department of Defense (“DoD”). These funding delays were principally the result of work restrictions related to the pandemic and a shifting of prioritization of certain contract awards from the DoD. Although timing is an uncertainty, we expect these purchase orders to eventually be received.”
David Goldman, Chief Financial Officer, noted, “At June 30, 2022, our cash and cash equivalents aggregated approximately $4.7 million and our financial condition remains solid as evidenced by our 4.2 to 1 current ratio. In addition, we are in the process of increasing the amount available under our line of credit with our primary lender to $6,000,000 from $4,000,000, which should be completed during the current quarter. Our book value per share at June 30, 2022 was $5.86 which compares to $6.00 at March 31, 2022 and $5.88 at December 31, 2021. (Note: 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 $6.4 million and $0.5 million in available federal and New York State net operating loss carryforwards, respectively.”
Mr. Binder concluded, “Because our revenues are tied to delivery schedules specified in our contracts, it is often difficult to judge our performance on a quarterly basis. We completed a solid year of operating results in 2021 due to improved gross margins, and as a result of tight controls on our overall operating costs. We followed a very firm first quarter of operating results with weaker than expected second quarter results, as previously noted, and we remain confident in the future of our newly acquired SPS operation. During the second quarter of 2021, based on our improved outlook for our business regarding the COVID-19 pandemic and stability of our financial condition, our Board of Directors authorized the Company to recommence our share repurchase program and in March 2022, our Board of Directors authorized the Company to recommence our quarterly dividend program. Through August 10, 2022, we have purchased approximately 96,247 shares under the program. We remain confident in the operating performance of our legacy businesses as we move through 2022, although the timing of contract awards and supply chain issues remain a concern and could impact the timing of deliveries. Our operating team continues to work on potential solutions whenever receipt of components is delayed.”
In January 2022, Orbit International Corp. announced that its newly formed subsidiary, SPS, had completed its previously announced acquisition of the assets and business of Panel Products, Inc. (“Panel”), a Carson, CA based company founded by Nabil Radi in 1999. The transaction valued Panel at approximately $6,500,000, subject to adjustment, with $4,000,000 of the purchase price paid in cash at closing, an aggregate of up to $1,200,000 in performance related payments payable at the end of 2022 and 2023, and the issuance to Panel of a 19.9% ownership interest in SPS.
Orbit International Corp., through its Electronics Group, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial applications through its production facilities in Hauppauge, NY and Carson, CA. 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, VME/VPX power supplies as well as various COTS power sources.
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)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net sales | $ | 5,801 | $ | 5,801 | $ | 12,644 | $ | 11,194 | ||||||
| Cost of sales | 4,151 | 3,642 | 8,424 | 7,301 | ||||||||||
| Gross profit | 1,650 | 2,159 | 4,220 | 3,893 | ||||||||||
| Selling general and administrative | 2,143 | 1,586 | 4,197 | 3,078 | ||||||||||
| expenses | ||||||||||||||
| Acquisition costs | - | - | 98 | - | ||||||||||
| PPP loan forgiveness | - | - | - | (1,618 | ) | |||||||||
| Other (income) expense, net | (99 | ) | 17 | (168 | ) | 37 | ||||||||
| (Loss) income before income taxes | (394 | ) | 556 | 93 | 2,396 | |||||||||
| Income tax provision | 18 | 22 | 39 | 35 | ||||||||||
| Net (loss) income | $ | (412 | ) | $ | 534 | $ | 54 | $ | 2,361 | |||||
| Basic (loss) earnings per share | $ | (0.12 | ) | $ | 0.15 | $ | 0.02 | $ | 0.67 | |||||
| Diluted (loss) earnings per share | $ | (0.12 | ) | $ | 0.15 | $ | 0.02 | $ | 0.67 | |||||
| Weighted average number of shares outstanding: | ||||||||||||||
| Basic | 3,442 | 3,498 | 3,444 | 3,505 | ||||||||||
| Diluted | 3,442 | 3,498 | 3,448 | 3,505 | ||||||||||
Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| EBITDA (as adjusted) Reconciliation | |||||||||||||
| Net (loss) income | $ | (412 | ) | $ | 534 | $ | 54 | $ | 2,361 | ||||
| Income tax expense | 18 | 22 | 39 | 35 | |||||||||
| Depreciation and amortization | 100 | 26 | 201 | 53 | |||||||||
| Fair value adj-contingent liabilities & other non-current liability | (94 | ) | 18 | (162 | ) | 40 | |||||||
| Stock-based compensation | 11 | 16 | 37 | 30 | |||||||||
| EBITDA (as adjusted) (1) | $ | (377 | ) | $ | 616 | $ | 169 | $ | 2,519 | ||||
| EBITDA (as adjusted) Per Diluted Share Reconciliation | |||||||||||||
| Net (loss) income | $ | (0.12 | ) | $ | 0.15 | $ | 0.02 | $ | 0.67 | ||||
| Income tax expense | 0.01 | 0.01 | 0.01 | 0.01 | |||||||||
| Depreciation and amortization | 0.03 | 0.01 | 0.06 | 0.02 | |||||||||
| Fair value adj-contingent liabilities & other non-current liability | (0.03 | ) | 0.01 | (0.05 | ) | 0.01 | |||||||
| Stock-based compensation | 0.00 | 0.00 | 0.01 | 0.01 | |||||||||
| EBITDA (as adjusted), per diluted share (1) | $ | (0.11 | ) | $ | 0.18 | $ | 0.05 | $ | 0.72 | ||||
| (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, fair value adj.-contingent liabilities and other non-current liability 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) | 2022 | 2021 | ||||||
| EBITDA (as adjusted) | $ | 169 | $ | 2,519 | ||||
| Income tax expense | (39 | ) | (35 | ) | ||||
| Fair value adj-contingent liabilities and other non-current liability | 162 | (40 | ) | |||||
| Stock-based compensation | (11 | ) | (30 | ) | ||||
| Gain on forgiveness of PPP loan | - | (1,618 | ) | |||||
| Net change in operating assets and liabilities | (358 | ) | (1,179 | ) | ||||
| Cash flows provided by (used in) operating activities | $ | (77 | ) | $ | (383 | ) | ||
Orbit International Corp.
Consolidated Balance Sheets
| June 30, 2022 (unaudited) | December 31, 2021 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 4,651,000 | $ | 9,215,000 | ||
| Accounts receivable, less allowance for doubtful accounts | 2,419,000 | 2,438,000 | ||||
| Inventories | 11,060,000 | 8,540,000 | ||||
| Contract assets | 716,000 | 648,000 | ||||
| Other current assets | 557,000 | 416,000 | ||||
| Total current assets | 19,403,000 | 21,257,000 | ||||
| Property and equipment, net | 545,000 | 265,000 | ||||
| Right of use assets, operating leases | 2,917,000 | 3,013,000 | ||||
| Goodwill | 2,263,000 | 901,000 | ||||
| Intangible assets, net Deferred tax asset | 3,678,000 545,000 | - 545,000 | ||||
| Other assets | 39,000 | 30,000 | ||||
| Total assets | $ | 29,390,000 | $ | 26,011,000 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 698,000 | $ | 504,000 | ||
| Accrued expenses | 849,000 | 1,014,000 | ||||
| Dividend payable | 35,000 | - | ||||
| Note payable | 14,000 | - | ||||
| Lease liabilities, operating leases Contingent liabilities Other current liability | 556,000 659,000 1,164,000 | 473,000 96,000 - | ||||
| Customer advances | 683,000 | 866,000 | ||||
| Total current liabilities | 4,658,000 | 2,953,000 | ||||
| Note payable, net of current portion | 20,000 | - | ||||
| Other non-current liability | 1,644,000 | - | ||||
| Contingent liabilities, net of current portion Lease liabilities, operating leases | 476,000 2,423,000 | 208,000 2,596,000 | ||||
| Total liabilities | 9,221,000 | 5,757,000 | ||||
| Stockholders’ Equity | ||||||
| Common stock | 352,000 | 351,000 | ||||
| Additional paid-in capital | 17,134,000 | 17,109,000 | ||||
| Treasury stock | (480,000 | ) | (384,000 | ) | ||
| Retained earnings | 3,163,000 | 3,178,000 | ||||
| Stockholders’ equity | 20,169,000 | 20,254,000 | ||||
| Total liabilities and stockholders’ equity | $ | 29,390,000 | $ | 26,011,000 | ||
