Net Income of $1 Million and Non-GAAP
Adjusted EBITDA of $2.8 Million
Tel-Instrument Electronics Corp. (“Tel”, “Tel-Instrument” or the
“Company”) (NYSE MKT:TIK), a leading designer and manufacturer of
avionics test and measurement solutions, today reported its
financial results for the fourth quarter and year ended March 31,
2016.
Highlights for Fiscal Year 2016
- Revenues increased to $24.8 million, a
36% increase versus fiscal year 2015
- Gross margin as a percentage of
revenues improved to 32.2% versus 29.9% in fiscal year 2015
- Operating income increased to $2.6
million as compared to $330,000 in fiscal year 2015
- Net Income of $1 million as compared to
a loss of $280,000 last year
- Earnings per share of $0.31 compared to
a loss of $0.09 in fiscal year 2015
- Non-GAAP Adjusted EBITDA was $2.8
million as compared to $541,000 in fiscal year 2015
- Working capital improved by $1.4
million to $4.0 million at March 31, 2016
- Continued development of key hand-held
modular communications and avionics test set products
Highlights for Fourth Quarter of Fiscal Year 2016
- Revenues decreased slightly to $6.17
million from $6.45 million in the fourth quarter last year
- Operating income declined to $481,000
as compared to $636,000 in fourth quarter of 2015
- Earnings per share of $0.09 as compared
to $0.11 in fourth quarter of 2015
- Non-GAAP Adjusted EBITDA was $532,000
as compared to $682,000 in the fourth quarter last year
- Established $500,000 line of credit
with Bank of America
Subsequent Events
- Filed a summary judgment motion to
dismiss the Aeroflex lawsuit based on lack of standing
- BCA Mezzanine Fund LLP exercised its
warrants effective April 30, 2016, representing a $935,000
liability at year-end
- Announcement of our new T-47M5 Mode 5
test set which will be available for sale later this year
- Received orders for 80 Mode 5 IFF test
sets at a value of $2.5 million including an Army Special Forces
order for 36 AN/USM-708 (“CRAFT”) units and Navy orders for the
Presidential Helicopter Program
Revenues for the fiscal year ended March 31, 2016 were $24.8
million, a 36% increase from $18.2 million for fiscal year 2015.
Gross margin for the year was $7.98 million, or 32.2% of sales, a
$2.5 million (46.8%) improvement over the prior year. The increase
in gross margin for the year was primarily due an increase in
volume and a change in product mix to include higher priced CRAFT
AN/USM-708 units. Research and development expenses increased
slightly for the year as the Company continued to invest in its new
hand-held test set for the avionics and communication test markets
as well as the new T-47M5 Mode 5 IFF test set. Net income for the
fiscal year ended March 31, 2016 was just over $1 million, or $0.31
per fully diluted share compared to a net loss of $280k or $0.09 in
the comparable period for 2015. Non-GAAP adjusted EBITDA (see
attached reconciliation) for the year was $2.8 million compared to
$540,000 in the prior year.
Revenues for the fourth quarter were $6.17 million, a modest
decline from $6.45 million for the fourth quarter of fiscal year
2015. Gross margin in the fourth quarter was 30.7% of revenues
compared to 29.5% in the same quarter last year. The gross margin
in the fourth quarter was also negatively impacted by changes in
the product mix and additional warranty costs for two military
programs, but this was partially offset by higher prices for CRAFT.
Operating income declined to $481,000 as compared to $636,000 in
the fourth quarter of fiscal year 2015. Non-GAAP adjusted EBITDA
for the fourth quarter was $532,000, compared to $682,000 for the
comparable period in 2015. On a GAAP basis, net income for the
fourth quarter was $299,000, or $0.09 per fully diluted share
compared to net income of $372,000, or $0.11 for the fourth quarter
ended March 31, 2015.
Commenting on the results, Mr. Jeffrey O’Hara, President and CEO
of Tel, stated, “We are pleased to report a solid fourth quarter
and record revenues for the 2016 fiscal year. Our improved
operating results in 2016 enhanced the Company’s liquidity
position, thereby enabling us to expand our world-wide marketing
efforts and increase our new product development efforts. Tel has
done a solid job keeping a tight rein on operating costs while
substantially increasing revenues. This will become even more
important in fiscal year 2017 with the completion of two large Navy
programs scheduled during the second quarter of the current fiscal
year. We anticipated that BCA would exercise its warrants and the
amounts are fully reserved for in our financial statements. These
warrants have been a drag on Tel’s profitability for the last
several years, and we believe that their exercise will result in a
cleaner balance sheet and more predictable financial reporting
going forward.
“We have started to see increasing quote and contract activity
both domestically and internationally for Mode 5 test sets and we
were excited to receive our first major order for CRAFT AN/USM-708
test sets from the U.S. Special Forces. The international Mode 5
test equipment markets have also been picking up with recent
activity in both the Far East and European markets and we believe
our current product offerings, plus the new T-47M5, will be very
competitive. Tel is well positioned for this business as our CRAFT
and TS-4530A flight-line test sets have been endorsed by the U.S.
military and we have already delivered test sets into 18
international markets. The new T-47M5 product is also being offered
as a retro-fit kit for our large base of installed Mode 4 IFF test
sets. These sales should be at attractive margins as we look to
return to our traditional 50% gross margin levels within the next
18 months. We are also seeing increased market interest in our
other military and commercial test sets including our new TR-36
Nav/Com product.
“We have some exciting new products under development and
continue to work on our next generation multi-purpose hand-held
test set with the initial product currently scheduled to be
introduced in the fourth quarter of the current fiscal year. This
product will have the capabilities that address both our current
avionic test set market as well as the much larger radio test set
market. We believe that this new product family will be extremely
competitive and will help drive the long term growth of our
business. We are excited and optimistic about our near and
long-term prospects,” Mr. O’Hara concluded.
The Company encourages investors to read its full results of
operations as contained in our Annual Report on Form 10-K filed on
June 29, 2016 at www.sec.gov.
Conference Call
The Company will host a conference call and webcast today,
Wednesday, June 29, 2016 at 9:00 a.m. Eastern Time to discuss the
Company’s fiscal fourth quarter and full year results.
To access the live webcast, log onto Tel-Instrument’s website
at:
https://www.telinstrument.com/learn-about-telinstrument/investor-relations.html.
To participate in the call by phone, dial (877) 407-8035
approximately five minutes prior to the scheduled start time.
International callers please dial (201) 689-8035.
A replay of the teleconference will be available until July 29,
2016 and may be accessed by dialing (877) 660-6853. International
callers may dial (201) 612-7415. Callers should use conference ID:
13612604.
About Tel-Instrument Electronics
Corp.
Tel-Instrument is a leading designer and manufacturer of
avionics test and measurement solutions for the global commercial
air transport, general aviation, and government/military aerospace
and defense markets. Tel-Instrument provides instruments to test,
measure, calibrate, and repair a wide range of airborne navigation
and communication equipment. For further information please visit
our website at www.telinstrument.com.
This press release includes statements that are not historical
in nature and may be characterized as “forward-looking statements,”
including those related to future financial and operating results,
benefits, and synergies of the combined companies, statements
concerning the Company’s outlook, pricing trends, and forces within
the industry, the completion dates of capital projects, expected
sales growth, cost reduction strategies, and their results,
long-term goals of the Company and other statements of
expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that
are not historical facts. All predictions as to future results
contain a measure of uncertainty and, accordingly, actual results
could differ materially. Among the factors which could cause a
difference are: changes in the general economy; changes in demand
for the Company’s products or in the cost and availability of its
raw materials; the actions of its competitors; the success of our
customers; technological change; changes in employee relations;
government regulations; litigation, including its inherent
uncertainty; difficulties in plant operations and materials;
transportation, environmental matters; and other unforeseen
circumstances. A number of these factors are discussed in the
Company’s previous filings with the U.S. Securities and Exchange
Commission. The Company disclaims any intention or obligation to
update any forward-looking statements as a result of developments
occurring after the date of this press release. The safe harbor for
forward-looking statements contained in the Securities Litigation
Reform Act of 1995 (the “Act”) protects companies from liability
for their forward-looking statements if they comply with the
requirements of the Act.
TEL-INSTRUMENT ELECTRONICS
CORP.
Consolidated Balance Sheets
ASSETS
March 31, 2016 March 31, 2015 Current
assets: Cash $ 972,633 $ 185,932
Accounts receivable, net of allowance for
doubtful accounts of $7,500 and $24,975,
respectively
1,454,361 1,625,171 Inventories, net 4,679,032 4,032,074 Prepaid
expenses and other current assets 128,071 286,431 Deferred tax
asset 578,507 1,064,395
Total current assets
7,812,604 7,194,003 Equipment and leasehold improvements,
net 193,518 270,792 Deferred tax asset – non-current 2,065,126
2,377,583 Other assets 36,871 41,109 Total
assets $ 10,108,119 $ 9,883,487
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Current
portion of long-term debt $ 418,255 $ 387,839 Capital lease
obligations – current portion 10,232 16,758 Accounts payable
1,686,469 2,811,781 Deferred revenues – current portion 48,766
18,609 Federal and state taxes payable 53,623 - Accrued expenses -
vacation pay, payroll and payroll withholdings 836,589 594,114
Accrued expenses - related parties 213,344 170,348 Accrued expenses
– other 501,687 595,437 Total current liabilities
3,768,965 4,594,886 Subordinated notes payable – related
parties 25,000 250,000 Capital lease obligations – long-term 20,524
4,561 Long-term debt, net of debt discount 304,560 708,604 Warrant
liability 1,136,203 518,962 Deferred revenues – long-term 172,703
133,650 Other long-term liabilities 7,800 33,000
Total liabilities 5,435,755 6,243,663
Commitments and contingencies Stockholders’ equity
Common stock, 4,000,000 shares authorized,
par value $.10 per share, 3,255,887 and 3,256,887
shares issued and outstanding, respectively
325,586 325,686 Additional paid-in capital 8,074,655 8,046,168
Accumulated deficit (3,727,877 ) (4,732,030 )
Total stockholders’ equity 4,672,364 3,639,824
Total liabilities and stockholders’ equity $ 10,108,119 $ 9,883,487
TEL-INSTRUMENT ELECTRONICS
CORP.
Consolidated Statements of Operations
For the years ended March 31, 2016
2015 Net sales $ 24,804,825 $ 18,195,972
Cost of sales 16,819,235 12,755,280
Gross margin 7,985,590 5,440,692 Operating
expenses: Selling, general and administrative 3,367,544 3,149,031
Engineering, research and development 2,038,126
1,961,275 Total operating expenses 5,405,670
5,110,306 Income from operations 2,579,920 330,386
Other income (expense): Amortization of debt discount - (75,308 )
Amortization of deferred financing costs (5,429 ) (69,165 ) Change
in fair value of common stock warrants (617,241 ) (164,653 ) Loss
on extinguishment of debt - (188,102 ) Interest expense (58,133 )
(145,658 ) Interest expense - related parties (42,996 )
(47,312 ) Total other expense (723,799 )
(690,198 ) Income (loss) before income taxes
1,856,121 (359,812 ) Provision (benefit) for income taxes
851,968 (79,372 ) Net income (loss) $
1,004,153 $ (280,440 ) Basic income (loss) per common
share $ 0.31 $ (0.09 ) Diluted income (loss) per common share $
0.31 $ (0.09 ) Weighted average number of shares outstanding
Basic 3,256,887 3,253,992 Diluted 3,261,153
3,253,992
TEL-INSTRUMENT
ELECTRONICS CORP.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL INFORMATION
(Unaudited)
Three Months
Ended
March 31,
2016
Three Months
Ended
March 31,
2015
Year
Ended
March 31,
2016
Year
Ended
March 31,
2015
Net income (loss) $ 299,035 $ 372,704 $
1,004,153 $
(280,440)
Income tax provision (benefit) 239,152 131,939 851,968
(79,372)
Depreciation and amortization 42,375 42,454 164,774 177,291
Amortization of debt discount - - - 75,308 Loss on extinguishment
of debt - - - 188,102 Amortization of deferred financing costs
1,357 1,357 5,429 69,165 Change on fair value of common stock
warrants
(80,338)
95,903 617,241 164,653 Interest, net 21,973 33,966 101,129 192,970
Non-cash stock-based compensation
8,731
3,275
32,277
33,008
Non-GAAP Adjusted EBITDA $
532,285
$
681,598 $
2,776,971 $
540,685
The term EBITDA consists of net income (loss) plus interest,
taxes, depreciation and amortization, amortization of debt discount
and deferred financing charges, change in fair value of warrants,
non-cash interest, and non-cash stock-based compensation. EBITDA is
not a measure of financial performance under generally accepted
accounting principles, and should not be considered in isolation
from, or as a substitute for net income or cash flow measures
prepared in accordance with generally accepted accounting
principles, or as a measure of profitability or liquidity.
Additionally, EBITDA may not be comparable to other similarly
titled measures of other companies. The Company has included EBITDA
as a supplemental disclosure because its management believes that
EBITDA provides useful information regarding our ability to service
debt, and to fund capital expenditures, and provides investors a
helpful measure for analyzing its operating performance. The table
above sets forth a reconciliation of EBITDA to net income (loss),
which is the most directly comparable measure of financial
performance, calculated under generally accepted accounting
principles.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160629005323/en/
Tel-Instrument Electronics Corp.Joseph P. Macaluso,
201-933-1600orInstitutional Marketing Services (IMS)John Nesbett /
Jennifer Belodeau, 203-972-9200jnesbett@institutionalms.com
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