Breeze-Eastern Corporation (AMEX:BZC) today reported that fiscal
third quarter 2007 operating income increased 20% to $3.8 million
from $3.1 million in the prior-year period. Net income for the
third quarter of fiscal 2007 was $1.6 million compared to $0.4
million for the third quarter of fiscal 2006 or income of $.17 per
diluted share in fiscal 2007 compared to $.06 per diluted share in
fiscal 2006. Sales of $18.9 million were up 16% from $16.3 million
in the third quarter a year ago. Adjusted EBITDA, as described
under �Non-GAAP Financial Measures� in this press release, for the
third quarter of fiscal 2007 rose 16% to $4.2 million from last
year�s $3.6 million. New orders received during the third quarter
were $9.8 million compared with $27.7 million in the prior fiscal
year�s third quarter. The Company�s book-to-bill ratio for the
third quarter was 0.5, compared with 1.7 in last year�s third
quarter. The book-to-bill ratio for the first nine months of fiscal
2007 was 1.6 compared to 1.3 for the first nine months of fiscal
2006. For the nine month period ended December 31, 2006 the Company
reported an increase in operating income of 15% to $9.0 million
from $7.8 million in the prior year period. Net income increased to
$2.6 million from $0.5 million for the first nine months of last
year. Net sales increased 25% to $52.8 million from the prior
year�s $42.3 million. Adjusted EBITDA for the first nine months of
fiscal 2007 rose 14% to $10.2 million from last year�s $8.9
million. New orders received in the first nine months of fiscal
2007 increased to $83.1 million from $57.1 million for the same
period last year and included $21.5 million of orders related to
the Airbus A400M Military Transport Aircraft, which is expected to
commence shipping in calendar year 2009 and continue through 2020.
The Company�s backlog increased during the first nine months of
fiscal 2007 to $121.3 million from $91.2 million at the end of
fiscal 2006 and $49.9 million one year ago. Robert L. G. White,
Chief Executive Officer of the Company, said, �We are pleased with
our financial and operating results for the third quarter and are
continuing to commit resources to the opportunities we currently
have regarding new business. While the book-to-bill ratio of 0.5 in
the third quarter is below what we have seen in recent quarters, we
feel this is a temporary decline and believe the order rate trend
will improve over the next several quarters. Gross margin for the
third quarter was 47% compared to 41% in last year�s same quarter.
This increase in the gross margin was due to increased sales of
spare parts, which carry a higher profit margin than new equipment,
engineering services and overhaul and repair sales. The spare parts
also accounted for the increased sales. Selling, General and
Administrative (SG&A) expenses increased $1.4 million, or 40%,
from last year�s third quarter. This increase is attributable to
planned increased engineering costs related to the contract for the
Airbus A400M Military Transport Aircraft, costs related to the
implementation of the Section 404 internal control requirements of
the Sarbanes-Oxley Act of 2002 and increased spending for marketing
with these three items accounting for approximately three quarters
of the increase. Interest expense for the third quarter was down
$1.4 million from last year�s third quarter resulting from the
paydown of debt using the proceeds from the issuance of 2.5 million
shares of common stock in the fourth quarter of fiscal 2006 and the
refinancing of the remaining debt on more favorable terms in the
first quarter of fiscal 2007.� Outlook for fiscal 2007 remains
unchanged Mr. White concluded, �Our sales trend indicates that we
may be slightly higher than the previously stated target of $70.0
million for fiscal 2007, and the adjusted EBITDA should remain at
$14.0 million in spite of the additional costs associated with
compliance with the internal controls and other requirements of
Section 404 of the Sarbanes-Oxley Act. While recent comments by the
Securities and Exchange Commission have given us reason to believe
that the Section 404 rules for companies of our size will be
modified to reduce our future compliance burden, the Company will
implement compliance under existing rules. Our SG&A costs will
also continue to be higher than last year as we invest in new
programs such as the Airbus A400M Military Transport Aircraft
contract. As we have previously stated, our primary focus for the
remainder of fiscal 2007 includes the continued pursuit of new
hoist, winch, and weapons handling systems sales on a global basis
to provide a solid base upon which to build value for our
shareholders.� Breeze-Eastern Corporation
(http://www.breeze-eastern.com) is the world�s leading designer and
manufacturer of sophisticated lifting devices for military and
civilian aircraft, including rescue hoists, cargo hooks, and
weapons-lifting systems. The Company, formerly known as
TransTechnology Corporation, employs approximately 195 people at
its facility in Union, New Jersey, and reported sales from
continuing operations of $64.4 million in the fiscal year ended
March 31, 2006. Non�GAAP Financial Measures In addition to
disclosing financial results that are determined in accordance with
Generally Accepted Accounting Principles (�GAAP�), the Company also
discloses operating income (gross profit less general,
administrative and selling expenses) and Adjusted EBITDA (earnings
before interest, taxes, depreciation and amortization, interest and
other income/expense and loss on extinguishment of debt). These are
presented as supplemental measures of performance. The Company
presents Adjusted EBITDA because it considers it an important
supplemental measure of performance. Measures similar to Adjusted
EBITDA are widely used by the Company and by others in the
Company's industry to evaluate performance and price potential
acquisition candidates. The Company believes Adjusted EBITDA
facilitates operating performance comparisons from period to period
and company to company by backing out potential differences caused
by variations in capital structure (affecting relative interest
expense), tax positions (such as the impact on periods or companies
of changes in effective tax rates or net operating losses) and the
age and book depreciation of facilities and equipment (affecting
relative depreciation expense). The Company also presents Adjusted
EBITDA because it believes it is frequently used by investors and
other interested parties as a basis for evaluating performance to
formulate investment decisions. Adjusted EBITDA has limitations as
an analytical tool, and should not be considered in isolation or as
a substitute for analysis of the Company's results as reported
under GAAP. Some of the limitations of Adjusted EBITDA are that (i)
it does not reflect the Company's cash expenditures for capital
assets, (ii) it does not reflect the significant interest expense
or cash requirements necessary to service interest or principal
payments on the Company's debt, and (iii) it does not reflect
changes in, or cash requirements for, the Company's working
capital. Furthermore, other companies in the aerospace and defense
industry may calculate these measures differently than the manner
presented above. Accordingly, the Company focuses primarily on its
GAAP results and uses Adjusted EBITDA only supplementally.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS Certain statements in
this press release constitute �forward-looking statements� within
the meaning of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended (the "Acts"). Any
statements contained herein that are not statements of historical
fact are deemed to be forward-looking statements. The
forward-looking statements in this press release are based on
current beliefs, estimates and assumptions concerning the
operations, future results, and prospects of the Company. As actual
operations and results may materially differ from those assumed in
forward-looking statements, there is no assurance that
forward-looking statements will prove to be accurate.
Forward-looking statements are subject to the safe harbors created
in the Acts. Any number of factors could affect future operations
and results, including, without limitation, competition from other
companies; changes in applicable laws, rules and regulations
affecting the Company in the locations in which it conducts its
business; the availability of equity and/or debt financing in the
amounts and on the terms necessary to support the Company�s future
business; interest rate trends; determination by the Company to
dispose of or acquire additional assets; general industry and
economic conditions; events impacting the U.S. and world financial
markets and economies; and those specific risks that are discussed
in the Company�s previously filed Annual Report on Form 10-K for
the fiscal year ended March 31, 2006 and Quarterly Report on Form
10-Q for the period ended October 1, 2006 . The Company undertakes
no obligation to update publicly any forward-looking statements,
whether as a result of new information or future events.
BREEZE-EASTERN CORPORATION STATEMENTS OF CONSOLIDATED OPERATIONS
(In Thousands of Dollars Except Share Data) � Three Months Ended
Nine Months Ended 12/31/06� 12/25/05� 12/31/06� 12/25/05� � Net
sales $ 18,894� $ 16,315� $ 52,818� $ 42,294� Cost of sales �
10,079� � 9,562� � 29,404� � 24,458� Gross profit 8,815� 6,753�
23,414� 17,836� � General, administrative and selling expenses
5,050� 3,616� 14,385� 10,002� Interest expense 1,000� 2,444� 3,286�
7,000� Other expense-net 62� 69� 141� 50� Loss on extinguishment of
debt � -� � -� � 1,331� � -� Income before income taxes 2,703� 624�
4,271� 784� Provision for income taxes � 1,081� � 237� � � 1,708� �
� 298� � Net income $ 1,622� $ 387� $ 2,563� $ 486� � Basic
earnings per share: Net income $ 0.17� $ 0.06� $ 0.28� $ 0.07�
Diluted earnings per share: Net income $ 0.17� $ 0.06� $ 0.27� $
0.07� � Weighted average basic shares 9,275,000� 6,726,000�
9,252,000� 6,706,000� Weighted average diluted shares 9,383,000�
6,760,000� 9,353,000� 6,734,000� BALANCE SHEET INFORMATION � �
12/31/06� 3/31/06� � Current assets $ 39,457� $ 38,369� Property,
plant and equipment � net 4,901� 4,810� Other assets � 36,240� �
38,766� Total assets $ 80,598� $ 81,945� � Current portion of
long-term debt and short term borrowings $ 8,025� $ 4,562� Other
current liabilities � 12,187� � 16,707� Total current liabilities
20,212� 21,269� Long-term debt 35,514� 39,415� Other non-current
liabilities 9,396� 8,933� Stockholders' equity � 15,476� � 12,328�
Total liabilities and stockholders' equity $ 80,598� $ 81,945�
Reconciliation of Reported Income to Adjusted EBITDA � Three Months
Ended Nine Months Ended 12/31/06� 12/25/05� 12/31/06� 12/25/05� �
Net sales $ 18,894� $ 16,315� $ 52,818� $ 42,294� Cost of sales �
10,079� � 9,562� � 29,404� � 24,458� Gross Profit 8,815� 6,753�
23,414� 17,836� � General, administrative and selling expenses �
5,050� � 3,616� � 14,385� � 10,002� � Operating income 3,765�
3,137� 9,029� 7,834� � Add back: depreciation and amortization �
434� � 486� � 1,132� � 1,080� � Adjusted EBITDA $ 4,199� $ 3,623� $
10,161� $ 8,914� � Net income $ 1,622� $ 387� $ 2,563� $ 486�
Provision for income taxes 1,081� 237� 1,708� 298� Depreciation and
amortization 434� 486� 1,132� 1,080� Interest expense 1,000� 2,444�
3,286� 7,000� Other expense-net 62� 69� 141� 50� Loss on
extinguishment of debt � -� � -� � 1,331� � -� Adjusted EBITDA $
4,199� $ 3,623� $ 10,161� $ 8,914�
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