Breeze-Eastern Reports Revised Sales and Adjusted EBITDA Targets
December 12 2007 - 4:27PM
Business Wire
Breeze Eastern Corporation (AMEX:BZC) reported today that the
continuing impasse in Congress on enactment of appropriations to
fund the Global War on Terror has caused the Company to revise its
fiscal 2008 Sales target from $77 million to approximately $74
million and its Adjusted EBITDA target from $15.9 million to
approximately $13.3 million, without regard to any potential
benefits related to the recently announced contract for the sale
and leaseback of the Union, NJ facility. The governmental impasse
is primarily responsible for a substantial shortfall in orders for
spare parts, a situation that was referenced in the Company's
second quarter earnings release. The Company expects that greater
than projected sales of new production will partially offset this
shortfall, but not to the level necessary to achieve the previously
stated Sales and Adjusted EBITDA targets. While acknowledging that
the governmental impasse is having a short term negative effect,
the Company believes its ability to partially offset the shortfall
through new production shipments and its continued success in
winning new programs that support its strategic plan objectives are
more indicative of favorable long term trends. Robert White,
President and CEO stated, �In our second quarter earnings release
issued on October 25, 2007, we stated that an extended delay in
certain appropriations associated with the Federal Government
defense budget would present an obstacle, especially in regards to
achieving our gross margin, and therefore would negatively impact
Adjusted EBITDA to an extent that might prove impractical for us to
overcome in achieving our original FY 2008 targets. In addition, I
emphasized in the earnings conference call on that day the
importance to us of settling the governmental defense appropriation
impasse during this quarter. So far, that has not happened. While
we remain confident that the unrealized portion of the anticipated
spare parts sales will eventually be ordered, we do not expect to
deliver them in fiscal 2008. Notwithstanding the anticipated
shortfalls in meeting our fiscal 2008 financial targets, we expect
a reduction of debt for the fiscal year of approximately $14
million, $5 million of which is expected to come from operations
and approximately $9 million of which is anticipated upon the
closing of the recently announced contract for sale and lease-back
of the Union, New Jersey facility. If the contract contingencies
are timely satisfied, it is anticipated that the sale and
lease-back will close in the Company's fiscal fourth quarter ending
March 31, 2008. The sale and lease-back of the facility is an
element of the Company�s strategic plan announced in February 2007,
and is one step in the ultimate relocation of the Company�s
facility to a new site, yet to be selected, that will be better
suited to its current and expected needs.� The Company discloses
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization, interest and other income/expense and loss on
extinguishment of debt) in addition to disclosing operating income
(gross profit less general, administrative and selling expenses)
and the Company�s financial results determined in accordance with
Generally Accepted Accounting Principles (�GAAP�). Adjusted EBITDA
and operating income 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. 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 180 people at
its facility in Union, New Jersey, and reported net sales of $73.3
million in the fiscal year ended March 31, 2007. 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,
closing on the contract for the sale of the Company�s Union, New
Jersey facility; 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, 2007, and Quarterly Report on Form 10-Q for the period ended
September 30, 2007. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information or future events.
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