Force Protection, Inc. (NASDAQ: FRPT), a leading
survivability solutions provider, today reported financial results
for the fourth quarter and full year ended December 31, 2009.
Michael Moody, Chairman and Chief Executive Officer of Force
Protection, Inc. said, “We were pleased to end 2009 on such a
high note. Our positive performance during 2009 was a direct result
of solid execution on our strategic initiatives throughout the
organization. These efforts place us in a solid position to broaden
our business by capitalizing on strategic internal and external
growth opportunities.”
Fourth Quarter
Comparison
In the fourth quarter of 2009, the Company reported net sales of
$289.0 million versus $239.1 million in the fourth quarter of 2008.
Significantly contributing to the 21% increase in revenue was
continued strength in the Company’s modernization, spares and
sustainment business. Partially offsetting the increase in net
sales were fewer vehicle deliveries in the 2009 fourth quarter as
compared to the prior year period.
Operating income rose to $28.1 million in the 2009 fourth
quarter as compared to $13.2 million in 2008. The combination of
significant revenue growth, a higher gross margin, and lower
general and administrative expenses contributed to the
year-over-year increase. The Company noted that it is continuing
its efforts to better align its long-term cost structure with its
expected level of business activity.
Net income for the fourth quarter of 2009 increased 57% to $18.4
million, or $0.27 per share, as compared to $11.7 million, or $0.17
per share, for the fourth quarter of 2008.
Full Year
Comparison
For the year ended December 31, 2009, the Company reported net
sales of $977.1 million compared to $1.3 billion in 2008. The
Company noted that net sales in 2008 included $479.5 million of
pass-through sales (with minimal associated margins) by General
Dynamics Land Systems in connection with vehicle deliveries under
the Company’s MRAP Competitive Contract. There were no vehicle
pass-through sales by General Dynamics in 2009.
The Company noted that 2009 revenues from its modernization,
spares and sustainment business increased by $461.6 million, or
more than 180%, over 2008. In addition, the Company shipped 123
Buffalo vehicles in 2009, a record number for the program and more
than a 50% increase over 2008.
Operating income for fiscal 2009 was $43.3 million as compared
to $68.5 million in 2008. The Company noted that $19.3 million of
one-time charges recorded in the 2009 third quarter significantly
impacted the year over year results. Positively contributing to
operating income in 2009 was a 17% decrease in general and
administrative expenses associated with the Company’s previously
discussed cost reduction activities.
Net income for the twelve months ended December 31, 2009 was
$29.5 million, or $0.43 per share, compared to $46.9 million, or
$0.69 per share, in 2008.
Mr. Moody continued, “We are transforming our Company into a
full-service survivability solutions provider. This effort was
rewarded in 2009 with over $450 million in increased modernization,
spares and sustainment revenue during the year. We have expanded
our operational footprint and significantly improved our
capabilities in this business. We are continuing our product
development efforts to ensure that we are delivering the best
balance of survivability, mobility and readiness to our end-users.
We are also continuing to push forward in the area of new vehicle
development.”
The Company continues to work towards the maturation of the
Ocelot vehicle. Two Ocelot prototypes are involved in ongoing
trials with the UK MoD. Following an announcement by the British
Prime Minister over the weekend, the UK Ministry of Defence has
confirmed the launch of an Urgent Operational Requirement
procurement for a Light Protected Patrol Vehicle to replace the
Snatch Land Rover. The Ocelot has also been submitted for
evaluation for the Australian government’s Protected Mobility
Vehicle-Light program and the Company expects to pursue domestic
and other international requirements for the Ocelot in the
future.
The Company noted that on February 24, 2010, it introduced the
Joint All-Terrain Modular Mobility Asset (“JAMMA”) vehicle at the
Association of the United States Army (“AUSA”) Institute of Land
Warfare’s Winter Symposium. The JAMMA’s unique design fills a gap
in the vehicle market for a tactical wheeled solution that offers
survivability in a battlefield environment where speed, mobility
and concealment are critical to success.
Randy Hutcherson, Chief Operating Officer of Force Protection
commented, “We remain positive concerning the potential for
additional program capture due to our focus of bringing vehicles to
market that address the existing and emerging needs of the U.S.
military and our allies across the globe. We are increasing our
range of vehicles, we are enhancing our customer base, and we are
expanding our industry partnerships. The work we do in platform
development is integral to our ability to innovate, apply new
technology and stay close to our customers, and constitutes an
essential long-term growth investment.”
Mr. Hutcherson continued, “In addition to fostering a culture of
innovation, we are pushing the organization to achieve increased
efficiencies in both manufacturing and our service and support
businesses. At the same time, we believe we can further improve on
our quality and deliver better performance and a higher level of
customer satisfaction.”
Financial Position and Cash
Flow
The Company’s cash and cash equivalents balance rose to $147.3
million as of December 31, 2009, from $111.0 million at December
31, 2008. Operating activity provided net cash of $49.5 million in
2009 compared with $37.0 million in 2008. Inventories as of
December 31, 2009, were $74.1 million, as compared to $88.5 million
at December 31, 2008. Accounts receivable increased slightly to
$143.5 million as of December 31, 2009, from $138.4 million at
December 31, 2008.
Mr. Moody concluded, “We believe we are well positioned to
execute successfully against our growth initiatives. We have a
solid foundation of internal competencies, we have dramatically
improved our relationships and focus on our customers, we have
expanded our geographic operations, opening up new opportunities
upon which to expand and we have a strong balance sheet. Our
emphasis will be to supplement organic growth with additional
short-to-medium term revenue and profit opportunities, building a
more profitable portfolio of linked businesses.”
Conference Call
Information
The Company will hold a conference call today at 4:30 p.m.
Eastern Time to discuss these results. The call will include
comments from Michael Moody, Chairman and Chief Executive Officer;
Charles Mathis, Chief Financial Officer; and, Randy Hutcherson,
Chief Operating Officer. While the question-and-answer session of
the call will be limited to institutional analysts and investors,
retail brokers and individual investors are invited to listen to a
live webcast. The webcast can be accessed via the home page of the
Company’s website at www.forceprotection.net. Please visit the
website at least 15 minutes prior to the call to register for the
webcast and download any necessary software. The replay of the call
will be available on the Company’s website.
About Force
Protection, Inc.
Force Protection, Inc. is a leading designer, developer and
manufacturer of survivability solutions, including blast- and
ballistic-protected wheeled vehicles currently deployed by the U.S.
military and its allies to support armed forces and security
personnel in conflict zones. The Company’s specialty vehicles,
including the Buffalo, Cougar and related variants, are designed
specifically for reconnaissance and urban operations and to protect
their occupants from landmines, hostile fire, and improvised
explosive devices (IEDs, commonly referred to as roadside bombs).
The Company also develops, manufactures, tests, delivers and
supports products and services aimed at further enhancing the
survivability of users against additional threats. In addition, the
Company provides long-term life cycle support services of its
vehicles that involve development of technical data packages,
supply of spares, field and depot maintenance activities,
assignment of highly-skilled field service representatives, and
advanced on and off-road driver and maintenance training programs.
For more information on Force Protection and its products and
services, visit www.forceprotection.net.
Safe Harbor
Statement
This press release contains forward looking statements that are
not historical facts, including statements about our beliefs and
expectations. These statements are based on beliefs and assumptions
of Force Protection’s management, and on information currently
available to management. These forward looking statements include,
among other things: the growth and demand for Force Protection’s
products and services, including its modernization, spares and
sustainment business; the anticipated long-term demand for service,
support and upgrade work to the Company’s fleet of vehicles; the
opportunities to market and the capabilities of the Ocelot and
JAMMA vehicles; the Company’s ability to develop new technologies
and products, and the effectiveness of these technologies and
products; the Company’s execution of its business strategy and
strategic transformation, including its opportunities to grow the
business; and the Company’s expected financial and operating
results, including its revenues, cash flow and gross margins, for
future periods. Forward-looking statements speak only as of the
date they are made, and the Company undertakes no obligation to
update any of them publicly in light of new information or future
events. A number of important factors could cause actual results to
differ materially from those contained in any forward-looking
statements. Examples of these factors include, but are not limited
to, ability to effectively manage the risks in the Company’s
business; the ability to develop new technologies and products and
the acceptance of these technologies and products; the ability to
obtain new orders for its vehicles and products; the other risk
factors and cautionary statements listed in the Company’s periodic
reports filed with the Securities and Exchange Commission,
including the risks set forth in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2009.
Force Protection, Inc. and Subsidiaries
Consolidated Statements of Operations (In Thousands,
Except Per Share Data)
Three
Months Ended Twelve Months Ended December 31,
December 31, 2009 2008
2009 2008
(Unaudited) Net sales $ 289,037 $ 239,058 $ 977,051 $
1,326,331 Cost of sales 236,692 201,856
835,555 1,149,670 Gross profit 52,345
37,202 141,496 176,661 General and administrative expenses 17,833
19,983 78,052 93,950 Research and development expenses 6,364
4,054 20,100 14,259
Operating income 28,148 13,165 43,344 68,452 Other income,
net 588 52 645 1,463 Interest expense, net (22 ) (107
) (101 ) (332 ) Income before income tax expense
28,714 13,110 43,888 69,583 Income tax expense (10,290 )
(1,402 ) (14,428 ) (22,664 ) Net income $
18,424 $ 11,708 $ 29,460 $ 46,919
Earnings per common
share:
Basic $ 0.27 $ 0.17 $ 0.43 $ 0.69
Diluted $ 0.27 $ 0.17 $ 0.43 $ 0.69
Weighted average common shares outstanding: Basic
68,532 68,330 68,450
68,314 Diluted 69,261 68,420
69,066 68,393
Force
Protection, Inc. and Subsidiaries Consolidated Balance
Sheets (In Thousands, Except Share Data)
As of December 31, 2009
2008 Assets Current assets: Cash and
cash equivalents $ 147,254 $ 111,001
Accounts receivable, net of
allowance for doubtful accounts of nonein 2009 and 2008
143,480 138,449 Inventories 74,075 88,502 Deferred income tax
assets 16,235 15,572 Income taxes receivable 1,352 - Other current
assets 3,031 2,417 Total current assets 385,427
355,941 Property and equipment, net 58,918 61,429 Investment in
unconsolidated joint venture 2,541 - Intangible assets, net
202 654
Total assets $ 447,088 $ 418,024
Liabilities and Shareholders’ Equity Current
liabilities: Accounts payable $ 86,588 $ 47,115 Due to United
States government 25,965 39,015 Advance payments on contracts 1,164
29,504 Other current liabilities 21,044 20,783 Total
current liabilities 134,761 136,417 Deferred income tax liabilities
1,236 3,141 Other long-term liabilities - 139
135,997 139,697 Commitments and contingencies
Shareholders’ equity:
Common stock, $.001 par value;
300,000,000 shares authorized; issuedand outstanding 69,786,419 in
2009 and 68,349,162 in 2008
70 68 Additional paid-in capital 260,112 256,939 Accumulated other
comprehensive income 129 - Retained earnings 50,780
21,320 Total shareholders’ equity 311,091 278,327
Total liabilities and shareholders’ equity $ 447,088 $
418,024
Force Protection, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (In Thousands)
For the year ended December 31,
2009 2008 Cash flows from operating
activities: Net income $ 29,460 $ 46,919
Adjustments to reconcile net
income to net cash provided by(used in) operating activities –
Depreciation and amortization 13,969 12,761 Deferred income tax
(benefit) provision (2,639) 3,058 Income tax effect realized from
stock transactions (206) 537 Stock-based compensation 2,886 270
Allowance for doubtful accounts - (323) Provision for asset
impairment 748 4,947 Provision for inventory 20,700 12,269 Warranty
reserve (407) 1,546 Reserve for loss on firm purchase commitments -
148 Loss on disposal of property and equipment 155 61 Equity in
earnings of unconsolidated joint venture (159) -
(Increase) decrease in assets
–
Accounts receivable (44,277) (19,332) Inventories (6,273) 39,868
Advances to subcontractor - 25,106 Prepaid income taxes (1,352)
6,565 Other current assets (613) 6,064 Increase (decrease) in
liabilities – Accounts payable 38,799 (94,872) Advance payments on
contracts (11) (27,048) Due to United States government (2,133)
20,046 Other current liabilities 874 (1,559) Total adjustments
20,061 (9,888)
Net cash provided by operating activities
49,521 37,031
Cash flows from investing activities:
Purchases of marketable securities (9,985) - Proceeds from maturity
of marketable securities 9,985 - Capital expenditures (11,235)
(16,318) Investment in unconsolidated joint venture (2,149) -
Net cash used in investing activities (13,384) (16,318)
Cash flows from financing activities: Proceeds from issuance
of common stock 80 46 Income tax effect realized from stock
transactions 206 (537) Net decrease in other long-term liabilities
(139) (218)
Net cash provided by (used in) financing
activities 147 (709)
Effect of foreign currency rate
changes on cash (31) -
Increase in cash and cash
equivalents 36,253 20,004
Cash and cash equivalents at
beginning of year 111,001 90,997
Cash and cash equivalents
at end of period $ 147,254 $ 111,001
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