Breeze-Eastern Corporation (AMEX:BZC) today reported that net
income for the 2009 fiscal second quarter was $0.1 million versus
$0.8 million in the prior-year period, or $.02 per diluted share
compared to $.09 per diluted share in the prior-year period. During
the second quarter of fiscal 2009 the Company refinanced its debt
and recorded a pretax charge of $0.6 million relating to the
write-off of unamortized debt origination fees and prepayment
penalties. Without these charges income would have been $0.05 per
diluted share for the fiscal 2009 second quarter. Operating income
for the second quarter of fiscal 2009 was $1.2 million compared to
$2.3 million for the second quarter of fiscal 2008. Sales of $14.5
million in the fiscal second quarter of 2009 declined from $17.2
million for the same period in the prior year. Adjusted EBITDA, as
described under �Non-GAAP Financial Measures� in this press
release, for the second quarter of fiscal 2009 was $1.6 million
versus $2.6 million in the prior year period. New orders received
during the 2009 fiscal second quarter were $18.4 million compared
to $27.6 million in the prior fiscal year�s second quarter. The
Company�s book-to-bill ratio for the fiscal 2009 second quarter was
1.3 compared with 1.6 in last year�s fiscal second quarter and 1.1
for the full fiscal year 2008. For the six month period ended
September 28, 2008 the Company reported net income of $0.9 million
versus $1.4 million for the same period last year or income of $.10
per diluted share in the first half of fiscal 2009 compared to $.15
per diluted share for the same period in fiscal 2008. Operating
income for the first six months of fiscal 2009 was $3.0 million
versus $4.3 million for the same period in fiscal 2008. Sales for
the first six months of fiscal 2009 declined to $28.5 million from
$33.5 million for the same period last year. Adjusted EBITDA was
$3.7 million for the first six months of fiscal 2009 versus $4.9
million for the same period last year. New orders received during
the first six months of fiscal 2009 were $41.4 million compared to
$35.8 million for the same period in fiscal 2008. The book-to-bill
ratio for the first six months of fiscal 2009 was 1.5 versus 1.1 in
the in the first six months of fiscal 2008. Robert L. G. White,
President and Chief Executive Officer of the Company, said, �The
book to bill ratios of 1.3 and 1.5 for the second quarter of fiscal
2009 and the first six months of fiscal 2009, respectively, are a
positive sign that our business is sustaining its growth in booking
new orders. The backlog as of September 28, 2008 was at a record
level of $137.2 million compared to $124.3 million at the end of
fiscal 2008 representing a 10% increase. The challenge has been to
book orders that can be shipped in fiscal 2009. However, based on
currently available information relative to our customers�
schedules, we are confident that the order pattern necessary to
achieve our previously disclosed fiscal 2009 target of a sales
increase in the range of 2% to 5% will develop. In recent years,
our revenues in the second half of the fiscal year have generally
exceeded revenues in the first half and we expect this trend to
continue in fiscal 2009 with favorable sales and net income
comparisons in the second half. Mr. White continued, �The gross
margin of 42% for the first six months of fiscal 2009 versus 41%
for the same period last year reflects a significant improvement in
manufacturing performance which has offset somewhat the volume
decreases in new production and spares. The demand for spare parts
remained weak, down $1.5 million in sales compared to the fiscal
2008 second quarter. We believe that the decreased demand is due
primarily to the delay in fully funding the war effort in Iraq and
Afghanistan. This delay is the single biggest factor impacting the
shift in our product mix. While we remain confident that the
unrealized portion of the spare parts sales will eventually be
ordered, it is not clear at this time when that will occur. Our
general, administrative and selling expenses for the first six
months of fiscal 2009 were $0.5 million less than the same period
in fiscal 2008. This reduction was primarily due to lower
non-recurring engineering expenditures and one time costs in the
second quarter of fiscal 2008 associated with a threatened proxy
contest offset somewhat by higher internal research and development
costs related to new product development. We will continue to
prudently review our spending to identify areas to control and
reduce these costs where practicable. As mentioned above, we
completed a refinancing of our bank debt. The refinancing and lower
debt levels are expected to save us in excess of $1.0 million in
interest expense in fiscal 2009 compared to fiscal 2008. Our debt,
net of cash on hand, at the end of the second quarter of fiscal
2009 was $22.7 million, an increase of $2.3 million from the end of
the first fiscal quarter of 2009. The increase was primarily driven
by an interim requirement to utilize the revolving credit facility
to build up inventory to meet the shipping schedule in the last
half of the fiscal year. At $28.5 million, working capital was
essentially flat in the second quarter of fiscal 2009 compared to
the first quarter of fiscal 2009. While we expect to be reporting a
provision for income taxes on a GAAP basis in the low 40% range for
fiscal 2009, the actual taxes to be paid will be below 10% as we
expect to continue to utilize our net operating loss carry-forwards
to offset the reported tax expense.� Outlook Mr. White concluded,
�Our products are used in literally every developed country in the
world. As such, the current turmoil in the financial markets could
eventually impact our operations. Notwithstanding that, funding for
programs in which we are involved continue to receive the necessary
financial resources. As I noted earlier, our backlog is at a record
level and we expect to realize the benefits of this in the last
half of fiscal 2009 and beyond. The fundamentals of our company are
strong and we remain confident that our fiscal 2009 sales will be
2% to 5% higher than fiscal 2008, and that our overall cost and
expense structure will remain relatively consistent between the two
years.� 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, which employs approximately 184 people at its facility in
Union, New Jersey, reported sales of $76.0 million in the fiscal
year ended March 31, 2008. 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; interest rate trends; a decrease in the United States
government defense spending, changes in spending allocation or the
termination, postponement, or failure to fund one or more
significant contracts by the United States government;
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, 2008
and Quarterly Report on Form 10-Q for the period ended June 29,
2008. 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 Six Months Ended 9/28/08 � 9/30/07 9/28/08 �
9/30/07 � Net sales $ 14,507 $ 17,240 $ 28,475 $ 33,495 Cost of
sales � 8,637 � 10,006 � 16,583 � 19,844 Gross profit 5,870 7,234
11,892 13,651 � General, administrative and selling expenses 4,636
4,953 8,863 9,355 Interest expense 385 892 824 1,824 Other
expense-net 51 55 88 69 Loss on extinguishment of debt � 551 � - �
551 � - Income before income taxes 247 1,334 1,566 2,403 Provision
for income taxes � 104 � 533 � � 658 � � 961 � Net income $ 143 $
801 $ 908 $ 1,442 � Basic earnings per share: Net income $ 0.02 $
0.09 $ 0.10 $ 0.16 Diluted earnings per share: Net income $ 0.02 $
0.09 $ 0.10 $ 0.15 � Weighted average basic shares 9,348,000
9,312,000 9,344,000 9,299,000 Weighted average diluted shares
9,413,000 9,406,000 9,411,000 9,391,000 BALANCE SHEET INFORMATION �
� 9/28/08 3/31/08 � Current assets $ 48,576 $ 47,791 Property,
plant and equipment � net 4,071 3,833 Other assets � 24,903 �
24,566 Total assets $ 77,550 $ 76,190 � Current portion of
long-term debt and short term borrowings � $ 5,686 $ 5,977 Other
current liabilities � 14,389 � 13,270 Total current liabilities
20,075 19,247 Long-term debt 19,714 19,849 Other non-current
liabilities 9,631 10,202 Stockholders' equity � 28,130 � 26,892
Total liabilities and stockholders' equity $ 77,550 $ 76,190
Reconciliation of Reported Income to Adjusted EBITDA � � Three
Months Ended Six Months Ended 9/28/08 � 9/30/07 9/28/08 � 9/30/07 �
Net sales $ 14,507 $ 17,240 $ 28,475 $ 33,495 Cost of sales � 8,637
� 10,006 � 16,583 � 19,844 Gross Profit 5,870 7,234 11,892 13,651 �
General, administrative and selling expenses � 4,636 � 4,953 �
8,863 � 9,355 � Operating income 1,234 2,281 3,029 4,296 � Add
back: depreciation and amortization � 372 � 298 � 700 � 590 �
Adjusted EBITDA $ 1,606 $ 2,579 $ 3,729 $ 4,886 � Net income $ 143
$ 801 $ 908 $ 1,442 Provision for income taxes 104 533 658 961
Depreciation and amortization 372 298 700 590 Interest expense 385
892 824 1,824 Other expense-net 51 55 88 69 Loss on extinguishment
of debt � 551 � - � 551 � - Adjusted EBITDA $ 1,606 $ 2,579 $ 3,729
$ 4,886
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