Breeze-Eastern Corporation (NYSE Amex: BZC) today reported
that net income for its Fiscal 2010 third quarter of $1,857,000, or
$0.20 per diluted share, was 24.8% below the prior-year third
quarter of $2,470,000, or $0.26 per diluted share. Operating income
for the Fiscal 2010 third quarter of $3,446,000 was 25.2% lower
than $4,608,000 for the Fiscal third quarter last year. Net sales
of $21,168,000 in the Fiscal 2010 third quarter decreased 10.0%
from $23,527,000 in the prior-year period. Adjusted EBITDA, as
described under “Non-GAAP Financial Measures” in this press
release, for the Fiscal 2010 third quarter decreased 21.7% to
$3,872,000 from $4,946,000 in the prior-year period. New orders
received during the Fiscal 2010 third quarter were $11,915,000
compared with $17,671,000 in the Fiscal 2009 third quarter. The
Company’s book-to-bill ratio for the Fiscal 2010 third quarter was
0.6, comparing unfavorably with 0.8 in the same period last
year.
For the nine-month period ended December 27, 2009, the Company's
net income of $2,869,000, or $0.31 per diluted share, was 15.1%
below the prior-year net income of $3,378,000, or $0.36 per diluted
share. Nine-month operating income this Fiscal year was $5,728,000
compared with $7,637,000 for the comparable period last year. Net
sales for the first nine-months of Fiscal 2010 decreased to
$50,938,000 from $52,002,000 for the same period last year.
Adjusted EBITDA was $7,137,000 for the first nine-months of Fiscal
2010 versus $8,675,000 for the prior-year period. New orders
received during the first nine-months of Fiscal 2010 were
$46,518,000 compared with $59,038,000 for the first nine-months
last year. The book-to-bill ratio for the first nine months of
Fiscal 2010 was 0.9 versus 1.1 in the first nine-months of Fiscal
2009.
Mike Harlan, President and Chief Executive Officer, said, "The
economic slowdown continued to impact our markets as customer
orders slowed. This is evidenced by the book-to-bill ratio less
than one in our Fiscal third quarter, and a $4.4 million lower
backlog of $126.6 million compared with the beginning of the Fiscal
year. Also as a result of the economic slowdown, helicopter
manufacturing customers revised their priorities and stretched out
their production schedules which, in turn, resulted in delays in
these customers taking deliveries of our products. Our cargo hook
sales were less than the same quarter last year due to the shipment
of a large order in the prior-year. Our U. S. Government spare
parts sales continue to be at lower levels than historical norms,
due to the wars in the Afghanistan and Iraq driving military
funding priorities, but our commercial aircraft spare parts sales
held up comparatively well. Our overhaul and repair business and
weapons handling sales have also continued to be strong."
Mr. Harlan continued, "The lower sales volume resulted in
reduced gross profits that flowed down to reduce net income and
Adjusted EBITDA. Operating expenses were lower than last year,
reflecting cost-reduction actions implemented in the Fiscal second
quarter this year. Gross profit as a percent of sales was also
lower in the Fiscal third quarter due to an unfavorable sales
product mix from fewer spare parts sales to the U. S. Government
relative to new product sales. Our net debt at December 27, 2010
was $19.1 million, an increase of $0.4 million from the end of
Fiscal 2009. The increase was due to higher inventory levels caused
by the customer delivery delays mentioned above as well as
preparing for our relocation to a more efficient facility currently
underway. Working capital decreased to $31.0 million in the third
quarter of Fiscal 2010 from $32.3 million in the Fiscal fourth
quarter of 2009 as higher inventories were offset by lower accounts
receivable. Interest expense was also lower this quarter by $0.1
million attributable to the new Senior Credit Facility obtained in
the second quarter of Fiscal 2009 and the prevailing low interest
rates.”
Outlook
Mr. Harlan concluded, “As mentioned earlier, we are experiencing
an industry slowdown reflected in customers' production delays that
also postpone our product shipments; it is encouraging that these
orders have been pushed out, not cancelled or lost. We have begun
our relocation to Whippany, New Jersey and expect to complete the
physical move by the end of our Fiscal fourth quarter, assuming
there are no delays in receiving the necessary local permit
approvals. We have carefully planned this transition and
communicated with our customers to meet their needs and avoid
interrupting their operations. The economic slowdown and the
temporary reduction in shipments due to our relocation in the
Fiscal fourth quarter will result in Fiscal 2010 sales being 8-12%
lower than Fiscal 2009; total net income and Adjusted EBITDA for
Fiscal 2010 will be correspondingly lower. However, we believe this
will be a good bookings quarter and still expect to finish Fiscal
2010 with a book-to-bill ratio greater than 1. We expect to
complete the transition and re-certification of our operations
during the first quarter of Fiscal 2011 and are looking forward to
full operations in our more efficient facility and improving the
performance and profitability of our company.”
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, winches and cargo hooks, and weapons-lifting
systems. The Company, which employs approximately 180 people at its
facilities in Whippany and 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 September 27, 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 Nine Months
Ended 12/27/09 12/28/08
12/27/09 12/28/08 Net sales
$ 21,168 $ 23,527 $ 50,938 $ 52,002 Cost of sales
13,159 14,175
31,732 30,758 Gross profit 8,009
9,352 19,206 21,244 Selling, general, and administrative
expenses 4,549 4,744 13,275 13,607 Relocation expense
14 - 203
- Operating income 3,446 4,608 5,728 7,637
Interest expense 186 305 595 1,129 Other expense-net 58 45
186 133 Loss on debt extinguishment
-
- - 551 Income
before income taxes 3,202 4,258 4,947 5,824 Provision for
income taxes
1,345 1,788
2,078 2,446 Net income
$ 1,857 $ 2,470
$ 2,869 $ 3,378
Basic earnings per share:
$ 0.20
$ 0.26 $ 0.31
$ 0.36 Diluted earnings per share:
$ 0.20 $ 0.26
$ 0.31 $ 0.36
Weighted average basic shares 9,400,000 9,365,000
9,385,000 9,351,000 Weighted average diluted shares 9,404,000
9,398,000 9,393,000 9,407,000
BALANCE SHEET
INFORMATION
(In Thousands of Dollars Except
Share Data)
12/27/09 3/31/09
Current assets $ 50,329 $ 49,905 Fixed assets – net 8,252 3,859
Other assets
22,044 22,941
Total assets
$ 80,625 $
76,705 Current portion of long-term debt
and short term borrowings
$ 5,986 $ 3,286 Other current liabilities
13,333 14,297 Total current
liabilities 19,319 17,583 Long-term debt 15,607 18,071 Other
non-current liabilities 9,113 7,724 Stockholders' equity
36,586 33,327 Total liabilities
and stockholders' equity
$ 80,625
$ 76,705
Reconciliation of Reported
Income to Adjusted EBITDA
(In Thousands of Dollars Except
Share Data)
Three Months Ended Nine Months Ended 12/27/09
12/28/08 12/27/09 12/28/08 Net sales $ 21,168 $
23,527 $ 50,938 $ 52,002 Cost of sales
13,159
14,175 31,732
30,758 Gross Profit 8,009 9,352 19,206 21,244
Selling, general and administrative expenses 4,549 4,744 13,275
13,607 Relocation expense
14
- 203 -
Operating income 3,446 4,608 5,728 7,637 Add back:
Depreciation and amortization 412 338 1,206 1,038 Relocation
expense
14 -
203 - Adjusted EBITDA
$ 3,872 $ 4,946
$ 7,137 $ 8,675
Net income $ 1,857 $ 2,470 $ 2,869 $ 3,378 Provision for income
taxes 1,345 1,788 2,078 2,446 Depreciation and amortization 412 338
1,206 1,038 Relocation expense 14 - 203 - Interest expense 186 305
595 1,129 Other expense-net 58 45 186 133 Loss on debt
extinguishment
- -
- 551 Adjusted EBITDA
$ 3,872 $ 4,946
$ 7,137 $ 8,675
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