Breeze-Eastern Corporation (NYSE Amex: BZC) today reported
its Fiscal 2011 third quarter financial results.
- Net sales: $19.6 million, versus $21.2
million for the Fiscal 2010 third quarter.
- Net income: $1.0 million or $0.10 per
diluted share, versus $1.9 million, or $0.20 per diluted share, in
the Fiscal 2010 third quarter.
- Adjusted EBITDA, a “Non-GAAP Financial
Measure” described in this press release: $2.3 million, versus $3.9
million in the Fiscal 2010 third quarter.
- Total debt: $13.1 million, $2.5 million
lower than three months ago, and $8.4 million lower than a year
ago.
- Bookings: $15.8 million, versus $11.9
million in the Fiscal 2010 third quarter. The book-to-bill ratio
for the Fiscal 2011 third quarter was 0.8.
For the Fiscal first nine months, the financial results
follow.
- Net sales: $51.3 million, versus $50.9
million for the Fiscal 2010 first nine months.
- Net income: $2.2 million, or $0.23 per
diluted share, versus $2.9 million, or $0.31 per diluted share, in
the Fiscal 2010 first nine months.
- Adjusted EBITDA, a “Non-GAAP Financial
Measure” described in this press release: $6.2 million, versus $7.1
million in the Fiscal 2010 first nine months.
- Bookings: $53.9 million, versus $46.5
million in the Fiscal 2010 first nine months. The book-to-bill
ratio for the Fiscal 2011 first nine months was 1.1.
Mike Harlan, President and Chief Executive Officer, said, "Our
fiscal third quarter financial performance was impacted by a
combination of factors. While our backlog has continued to be
strong, our third quarter shipments were reduced by complications
in implementing an information technology project and by supply
chain quality issues. During this quarter, we also had higher legal
costs due to the extended labor negotiations and transition costs
from ongoing information technology projects; the combination of
lower sales and higher SG&A costs resulted in lower earnings
per share and Adjusted EBITDA for our third quarter compared with
the same quarter last year. These third quarter results also made
our nine month cumulative net income and Adjusted EBITDA lower than
the same period last fiscal year. After comparatively good first
half earnings and Adjusted EBITDA, we are disappointed to have to
report these results.”
Mr. Harlan continued, “On the other hand, our bookings continue
to be higher than last year, benefiting from higher U.S. Government
spare parts orders, and our balance sheet and cash flow continue to
be strong. Inventory of $18.1 million is$7.6 million lower than
last year, and total debt of $13.1 million is $8.4 million lower
than a year ago. Our debt net of cash is now less than $10 million,
down substantially from previously being over $60 million. Our
significantly-reduced debt reflects our strong cash flow as we made
three debt principal pre-payments in the quarter."
Mr. Harlan continued, “Looking ahead, we expect strong shipments
over the final quarter of our Fiscal 2011 and continued year/year
sales growth in our Fiscal 2012, with some initial production
revenues from our new product development programs. While we will
continue to invest heavily in engineering in Fiscal 2012, we are
making significant progress on our new product development programs
in Fiscal 2011 and will complete several of these programs in
Fiscal 2012. Over the next several years, we expect these programs
to grow to more than $20 million of additional sales per year. Over
time, we expect our engineering costs to return to more traditional
levels and we expect the combination of top line growth and
SG&A reduction to support strong Adjusted EBITDA growth in the
future."
The Company will conduct a conference call at 11:00 a.m. EDT on
Thursday, February 3, 2011 with the following numbers: (866)
730-5764 or (857) 350-1588 and passcode 10200667.
Breeze-Eastern Corporation (http://www.breeze-eastern.com) is
the world’s leading designer and manufacturer of high performance
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 nine months ended December 31, 2010 is shown 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; changes in our sales strategy and
product development plans; changes in the marketplace; developments
in environmental proceedings that we are involved in; continued
services of our executive management team; status of labor
relations; competitive pricing pressures; market acceptance of our
products under development; delays in the development of products;
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, 2010, 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 Nine
Months Ended 12/31/10
12/27/09 12/31/10
12/27/09 Net sales $ 19,614 $ 21,168 $ 51,260 $
50,938 Cost of sales 12,339 13,159 31,676
31,732 Gross profit 7,275 8,009 19,584 19,206
Selling, general, and administrative expenses 5,434 4,522 14,880
13,194 Relocation expense - 14 211 203
Operating income 1,841 3,473 4,493 5,809 Interest expense
167 213 550 676 Other expense-net 31 58 176
186 Income before income taxes 1,643 3,202 3,767 4,947
Provision for income taxes 690 1,345
1,582 2,078 Net income $ 953 $ 1,857 $ 2,185 $ 2,869
Basic earnings per share: $ 0.10 $ 0.20 $ 0.23 $ 0.31 Diluted
earnings per share: $ 0.10 $ 0.20 $ 0.23 $ 0.31
Weighted average basic shares 9,429,000 9,400,000 9,409,000
9,385,000 Weighted average diluted shares 9,464,000 9,404,000
9,430,000 9,393,000
BALANCE SHEET
INFORMATION (In Thousands of Dollars)
12/31/10 3/31/10 Current assets $
42,400 $ 39,851 Fixed assets – net 8,410 9,575 Other assets
26,087 26,682 Total assets $ 76,897 $ 76,108 Current
portion of long-term debt and short term borrowings $ 822 $ 3,286
Other current liabilities 14,413 11,377 Total current
liabilities 15,235 14,663 Long-term debt 12,321 14,786 Other
non-current liabilities 18,946 18,839 Stockholders' equity
30,395 27,820 Total liabilities and stockholders' equity $
76,897 $ 76,108
Reconciliation of Reported Income
to Adjusted EBITDA (In Thousands of Dollars)
Three Months Ended Nine Months Ended 12/31/10 12/27/09
12/31/10 12/27/09 Net sales $ 19,614 $ 21,168 $
51,260 $ 50,938 Cost of sales 12,339 13,159
31,676 31,732 Gross Profit 7,275 8,009 19,584 19,206
Selling, general and administrative expenses 5,434 4,522 14,880
13,194 Relocation expense
-
14 211 203 Operating income 1,841 3,473 4,493
5,809 Add back: Depreciation and amortization 472 385 1,470
1,125 Relocation expense
-
14 211 203 Adjusted EBITDA $ 2,313 $ 3,872 $
6,174 $ 7,137
Net income $ 953 $ 1 ,857 $ 2,185 $ 2,869 Provision for income
taxes 690 1,345 1,582 2,078 Depreciation and amortization 472 385
1,470 1,125 Relocation expense
-
14 211 203 Interest expense 167 213 550 676 Other expense-net
31 58 176 186 Adjusted EBITDA $ 2,313 $
3,872 $ 6,174 $ 7,137
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