Breeze-Eastern Corporation (NYSE Amex: BZC) today reported
its Fiscal 2010 financial results:
- Net sales: $69,027,000, down
from $75,427,000 for Fiscal 2009.
- Operating loss: ($6,723,000),
compared with operating income of $11,353,000 last Fiscal
year.
- Net loss: ($6,043,000), or
($0.64) per diluted share, compared with prior-year net income of
$5,760,000, or $0.61 per diluted share.
- Adjusted EBITDA, as described
under “Non-GAAP Financial Measures” in this press release: negative
($4,319,000), versus positive Adjusted EBITDA of $12,712,000 for
Fiscal 2009.
The Fiscal 2010 results above include non-cash pre-tax charges
of ($12,230,000) that reduced profitability. These charges included
adjustments to estimated reserves of ($3,311,000) for inventory
obsolescence and ($8,135,000) for environmental liabilities, plus
($784,000) for estimated losses on engineering project commitments
to customers. The Fiscal 2010 results also included pre-tax costs
of ($1,539,000) for unabsorbed manufacturing overhead resulting
from the Company’s factory shutdown and relocation in March
2010.
- Excluding these amounts,
estimated net income would have been $2,324,000, or $0.25 per
diluted share, estimated operating income would have been
$7,046,000, and estimated Adjusted EBITDA would have been
$9,450,000, or 13.7% of net sales.
New orders received during Fiscal 2010 were $68,183,000,
compared with $82,123,000 last Fiscal year. The fiscal-year-end
backlog was $130,144,000, compared with $130,988,000 at the end of
Fiscal 2009. The book-to-bill ratio for Fiscal 2010 was 1.0 versus
1.1 in Fiscal 2009.
For the Fiscal 2010 fourth quarter:
- Net sales: $18,089,000, versus
$23,425,000 in the same period last Fiscal year.
- Operating loss: ($12,532,000),
compared with operating income of $3,647,000 for the same
prior-year period.
- Net loss: ($8,912,000), or
($0.95) per diluted share, versus net income of $2,382,000, or
$0.25 per diluted share in the Fiscal 2009 fourth quarter.
- Adjusted EBITDA: negative
($11,456,000), compared with positive Adjusted EBITDA of $4,037,000
in last Fiscal year’s fourth quarter.
Excluding the non-cash charges and unabsorbed overhead described
above, the estimated Fiscal 2010 fourth quarter net loss would have
been ($545,000), or ($0.06) per diluted share, estimated operating
income would have been $1,237,000, and estimated Adjusted EBITDA
would have been $2,315,000.
New orders received during the Fiscal 2010 fourth quarter were
$21,665,000, versus $23,085,000 for the same prior-year period.
Mike Harlan, President and Chief Executive Officer, said,
"Fiscal 2010 was a challenging year, with the relocation to our
more modern facility and several non-cash adjustments that severely
impacted our financial performance. In addition, we have seen a
general market slowdown, with many customers deferring purchases,
taking longer to get funding approvals, and often buying only what
they need short-term, resulting in reduced net new orders compared
with the prior year and a slight year-to-year reduction in backlog.
Despite these challenges, we continued to control spending and
reduced total operating expenses, and still had strong cash flow
which we used to continue our debt reduction and fund our new
product development. Our debt was $18.1 million at the end of
Fiscal 2010, $3.3 million lower than a year ago. Working capital
was impacted by our move, and decreased to $25.2 million at the end
of Fiscal 2010 from $32.3 million last Fiscal year, due to lower
inventories and lower accounts receivable corresponding to reduced
March shipments. Interest expense was also favorable this year by
$0.6 million, attributable to reduced debt levels and lower
interest rates.”
Outlook
Mr. Harlan concluded, “Although the global economic slowdown has
led to slower sales to some of our OEM and operator customers, we
still have a broad global customer base and our core business
remains strong. We completed the factory relocation and customer
recertification of our operations during the First Quarter of
Fiscal 2011 and have quickly come back up to full production rates.
We are making significant progress on our major product development
programs; however, we expect that our relatively-high engineering
spending will continue through Fiscal Year 2011. We are
implementing internal initiatives that we expect will improve our
responsiveness to customers, competitiveness, cost structure,
profitability, and the net financial performance of our
company.”
The Company will conduct a conference call at 10:00 AM EDT on
Friday, June 25, 2010 with the following numbers: (866) 383-7989 or
(617) 597-5328 and passcode 84206251.
Breeze-Eastern Corporation (http://www.breeze-eastern.com) is
the world’s leading designer and manufacturer of sophisticated
lifting and pulling devices for military and civilian aircraft,
including rescue hoists, winches and cargo hooks, and
weapons-lifting systems. The Company, which employs approximately
170 people at its facilities in Whippany, New Jersey, reported
sales of $69.0 million for the Fiscal year ended March 31,
2010.
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 Adjusted EBITDA (earnings
before interest, taxes, depreciation and amortization, other
income/expense, loss on debt extinguishment, and relocation
expense). 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
valuation. 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.
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. A reconciliation of Adjusted EBITDA to
net income, the most directly comparable GAAP measure, for the
three and twelve months ended March 31, 2010 in the tables
below.
INFORMATION ABOUT FORWARD-LOOKING
STATEMENTS
This news release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, regarding our future operating performance, financial
results, events, trends and plans. All statements in this news
release other than statements of historical facts are
forward-looking statements. Forward-looking statements involve
numerous risks and uncertainties. We have attempted to identify any
forward-looking statements by using words such as “anticipates,”
“believes,” “could,” “expects,” “intends,” “may,” “should” and
other similar expressions. Although we believe that the
expectations reflected in all of our forward-looking statements are
reasonable, we can give no assurance that such expectations will
prove to be correct. Such statements are not guarantees of future
performance or events and are subject to known and unknown risks
and uncertainties that could cause our actual results, events or
financial positions to differ materially from those included within
the forward-looking statements. Such factors include, but are not
limited to 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 us 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 disclosed in our Annual
Report on Form 10-K for the fiscal year ended March 31, 2009,
Quarterly Report on Form 10-Q for the period ended December 31,
2009, and other filings with the Securities and Exchange
Commission. We undertake 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 Twelve Months
Ended 3/31/10
3/31/09 3/31/10
3/31/09 Net sales $ 18,089 $ 23,425 $ 69,027 $
75,427 Cost of sales
16,644
14,579 48,376
45,337 Gross profit 1,445 8,846 20,651 30,090
Selling, general, and administrative expenses 13,363 5,199 26,557
18,737 Relocation expense
614
- 817 -
Operating income (loss) (12,532 ) 3,647 (6,723 ) 11,353
Interest expense 215 264 891 1,462 Other expense-net 272 98 458 231
Loss on debt extinguishment
-
- - 551
Income (loss) before income taxes (13,019 ) 3,285 (8,072 ) 9,109
Provision (benefit)for income taxes
(4,107 ) 903
(2,029 ) 3,349 Net
income (loss)
$ ( 8,912 )
$ 2,382 $
(6,043 ) $
5,760 Basic earnings (loss) per share:
$ (0.95 ) $
0.25 $ ( 0.64 )
$ 0.62 Diluted earnings (loss) per share:
$ (0.95 ) $
0.25 $ ( 0.64 )
$ 0.61 Weighted average
basic shares 9,398,000 9,365,000 9,388,000 9,355,000 Weighted
average diluted shares 9,398,000 9,379,000 9,388,000 9,400,000
BALANCE SHEET
INFORMATION
(In Thousands of Dollars Except
Share Data)
3/31/10 3/31/09
Current assets $ 39,851 $ 49,905 Fixed assets – net 9,575
3,859 Other assets
26,682
22,941 Total assets
$ 76,108
$ 76,705 Current portion of
long-term debt
and short term borrowings
$ 3,286 $ 3,286 Other current liabilities
11,377 14,297 Total current
liabilities 14,663 17,583 Long-term debt 14,786 18,071 Other
non-current liabilities 18,839 7,724 Stockholders' equity
27,820 33,327 Total liabilities
and stockholders' equity
$ 76,108
$ 76,705
Reconciliation of Reported
Income (Loss) to Adjusted EBITDA
(In Thousands of Dollars Except
Share Data)
Three Months Ended Twelve Months Ended 3/31/10
3/31/09 3/31/10 3/31/09 Net sales $ 18,089 $ 23,425 $
69,027 $ 75,427 Cost of sales
16,644
14,579 48,376
45,337 Gross profit 1,445 8,846 20,651 30,090
Selling, general and administrative expenses 13,363 5,199 26,557
18,737 Relocation expense
614
- 817 -
Operating income (loss) (12,532 ) 3,647 (6,723 ) 11,353 Add
back: Depreciation and amortization 462 390 1,587 1,359 Relocation
expense
614 -
817 - Adjusted EBITDA
$ ( 11,456 ) $
4,037 $ (4,319
) $ 12,712
Net income (loss) $ (8,912 ) $ 2,382 $ (6,043 ) $ 5,760 Provision
(benefit) for income taxes (4,107 ) 903 (2,029 ) 3,349 Depreciation
and amortization 462 390 1,587 1,359 Relocation expense 614 - 817 -
Interest expense 215 264 891 1,462 Other expense-net 272 98 458 231
Loss on debt extinguishment
-
- - 551
Adjusted EBITDA
$ (11,456 )
$ 4,037 $
(4,319 ) $
12,712
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