Breeze-Eastern Corporation (NYSE Amex: BZC) today reported
that net income for the 2010 fiscal second quarter was $654
thousand or $.07 per diluted share versus $462 thousand or $.05 per
diluted share in the prior year period, reflecting an increase in
net income of 42%, after excluding a pretax charge of $551 thousand
in the fiscal second quarter of 2009 relating to the refinancing of
the Company’s debt. Operating income for the second quarter of
fiscal 2010 increased 17% to $1.4 million from $1.2 million for the
prior year period. Sales of $16.4 million in the second fiscal
quarter of 2010 represented an increase of 13% compared to the
$14.5 million in the prior year period. Adjusted EBITDA, as
described under “Non-GAAP Financial Measures” in this press
release, for the second quarter of fiscal 2010 increased 16% to
$1.9 million from $1.6 million in the prior year period. New orders
received during the 2010 fiscal second quarter were $19.0 million
compared to $18.4 million in the 2009 fiscal second quarter. The
Company’s book-to-bill ratio for the fiscal 2010 second quarter was
1.2 compared with 1.3 for last year’s fiscal second quarter.
For the six month period ended September 27, 2009, the Company
reported net income of $1.0 million or $.11 per diluted share
versus $1.2 million or $.13 per diluted share for the first six
months of fiscal 2009, excluding the pretax charge of $551 thousand
relating to the refinancing of the Company’s debt in the prior year
period. Operating income for the first six months of fiscal 2010
was $2.5 million versus $3.0 million for the first six months of
fiscal 2009. Sales for the first six months of fiscal 2010
increased to $29.8 million from $28.5 million for the same period
last year. Adjusted EBITDA was $3.3 million for the first six
months of fiscal 2010 versus $3.7 million for the prior year
period. New orders received during the first six months of fiscal
2010 were $34.6 million compared to $41.4 million for the prior
year period. The book-to-bill ratio for the first six months of
fiscal 2010 was 1.2 versus 1.5 in the first six months of fiscal
2009.
Robert L. G. White, President and Chief Executive Officer of the
Company, said, “The book-to-bill ratio of 1.2 for the second
quarter and first six months of fiscal 2010 is a positive sign that
our business is sustaining its growth in booking new orders.
However, we continue to experience delays in receiving customer
orders that we expected to process and ship in the first six months
of fiscal 2010. The increase in operating income and Adjusted
EBITDA for the second fiscal quarter of 2010 was attributable
primarily to increased sales volume as the gross margin was 36% for
the quarter versus 40% for the same period in fiscal 2009.
Unfavorable performance mix in the cost of new production in the
hoist and winch operating segment as well as shipment of products
with some downward pricing revisions to meet certain competitive
market situations were contributing factors in the decrease in
gross margins. We expect to experience this margin compression
again in the fiscal third quarter with a return to more normalized
margins in the fiscal fourth quarter.”
Mr. White continued, “For the second quarter of fiscal 2010, our
general, administrative and selling expenses decreased slightly
compared to the second quarter of fiscal 2009. Our debt, net of
cash on hand at September 27, 2009, was $20.7 million, an increase
of $2.0 million from the end of fiscal 2009. The increase was due
to a build up of inventory levels due to the order delays mentioned
above as well as preparation for the relocation to the new facility
scheduled for the fiscal fourth quarter. Working capital decreased
to $31.8 million in the second quarter of fiscal 2010 from $32.3
million in the fiscal fourth quarter of 2009. The Company also
experienced a decrease in interest expense of $0.2 million in the
2010 fiscal second quarter versus the same period last year, which
was attributable to the placement of a new senior credit facility
during the second quarter of fiscal 2009 and lower debt levels. The
backlog of $135.8 million at the end of the second fiscal quarter
of 2010 reflects an increase of $4.8 million from $131.0 million at
the end of fiscal 2009 as we continue to have a book-to-bill ratio
in excess of 1.0.”
Outlook
Mr. White concluded, “As we have previously disclosed, over the
past six months we have seen indications of a slowdown in our
industry due to, among others, a resetting of customer procurement
priorities, resulting in delays in shipment of certain of our
products. We are experiencing these delays despite increasing bid
and proposal activity. For example, we have received communications
from the Airbus program team indicating that shipments relating to
the Airbus A400M military transport aircraft are likely to commence
in calendar 2012 rather than the contractually scheduled
commencement date of late calendar 2009. This is not expected to
have a material effect on the anticipated operating results for
fiscal 2010. In addition, our relocation to the Whippany, N.J.
site, which we had previously expected to complete in the fiscal
third quarter, is now scheduled to take place in the fiscal fourth
quarter. This delay is due to the requirements of the permitting
process at the new location. Although we expect the shipment levels
in the last half of fiscal 2010 to continue the pattern shown in
recent years of being substantially higher than those in the first
half, the delay in receiving certain specific orders coupled with
the rescheduling of our relocation to the fiscal fourth quarter
will negatively impact our full fiscal 2010 operating results. At
this point we expect the sales and Adjusted EBITDA for fiscal 2010
to be lower than the fiscal 2009 levels. Our targeted debt
reduction for fiscal 2010 is in the area of $3 million to $4
million. As I mentioned above, the book-to-bill ratio for the first
six months of fiscal 2010 is in excess of 1.0 and we expect it to
be above 1.0 for the rest of the year. A book-to-bill ratio in
excess of 1.0 is potentially indicative of the outlook for
continued overall growth in our sales.”
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 180 people at its facility in
Union, New Jersey, reported sales of $75.4 million in the fiscal
year ended March 31, 2009.
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, gain on sale of
facility and loss on extinguishment of debt, and relocation
expense). 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 or other
customers; 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, 2009 and quarterly report on Form 10-Q for the period
ended June 28, 2009.
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 9/27/09 9/28/08
9/27/09 9/28/08 Net sales $ 16,408 $ 14,507 $ 29,770
$ 28,475 Cost of sales
10,445
8,637 18,573
16,583 Gross profit 5,963 5,870 11,197 11,892
General, administrative and selling expenses 4,516 4,636 8,726
8,863 Relocation expense 51 - 189 - Interest expense 201 385 409
824 Other expense-net 67 51 128 88 Loss on extinguishment of debt
- 551 -
551 Income before income taxes 1,128 247 1,745
1,566 Provision for income taxes
474
104
733
658
Net income
$ 654 $
143 $ 1,012 $
908 Basic earnings per share: Net income
$ 0.07 $ 0.02
$ 0.11 $ 0.10
Diluted earnings per share: Net income
$
0.07 $ 0.02 $
0.11 $ 0.10 Weighted
average basic shares 9,389,000 9,348,000 9,377,000 9,344,000
Weighted average diluted shares 9,394,000 9,413,000 9,388,000
9,411,000
BALANCE SHEET
INFORMATION
9/27/09 3/31/09 Current assets $ 50,717 $
49,905 Property – net 5,374 3,859 Other assets
22,559 22,941 Total assets
$ 78,650 $
76,705 Current portion of long-term debt
and short term borrowings
$ 5,686 $ 3,286 Other current liabilities
13,213 14,297 Total current
liabilities 18,899 17,583 Long-term debt 16,429 18,071 Other
non-current liabilities 8,628 7,724 Stockholders' equity
34,694 33,327 Total liabilities
and stockholders' equity
$ 78,650
$ 76,705
Reconciliation of Reported
Income to Adjusted EBITDA
Three Months Ended Six Months Ended 9/27/09 9/28/08
9/27/09 9/28/08 Net sales $ 16,408 $ 14,507 $ 29,770
$ 28,475 Cost of sales
10,445
8,637 18,573
16,583 Gross Profit 5,963 5,870 11,197 11,892
General, administrative and selling expenses
4,516 4,636
8,726 8,863 Operating
income 1,447 1,234 2,471 3,029 Add back: depreciation and
amortization
409 372
794 700 Adjusted EBITDA
$ 1,856 $ 1,606
$ 3,265 $ 3,729
Net income $ 654 $ 143 $ 1,012 $ 908 Provision for income
taxes 474 104 733 658 Depreciation and amortization 409 372 794 700
Relocation expense 51 - 189 - Interest expense 201 385 409 824
Other expense-net 67 51 128 88 Loss on extinguishment of debt
- 551 -
551 Adjusted EBITDA
$
1,856 $ 1,606 $
3,265 $ 3,729
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