MTCT Mtc Technologies (MM)

DAYTON, Ohio, Nov. 1 /PRNewswire-FirstCall/ -- MTC Technologies, Inc. (NASDAQ:MTCT), an industry-recognized provider of Aircraft Modernization and Sustainment, Professional Services, C4ISR, and Logistics solutions to the Department of Defense and national security agencies, today reported results for the quarter ended September 30, 2007. Raj Soin, Founder, Chairman of the Board and Chief Executive Officer, noted, "I believe that the combination of wins this quarter and our strong funded backlog bode well for future revenue growth. I am particularly pleased with the wins that the Modernization and Sustainment group recorded during the quarter." Third Quarter Results: Revenues of $114.6 million for the quarter ended September 30, 2007 reflected a $9.4 million increase over the $105.2 million recorded in the same period of 2006. The higher third quarter 2007 revenue was primarily the result of the contract deliveries under our Flexible Acquisition and Sustainment Tool (FAST) contract. Gross profit of $16.4 million for the quarter ended September 30, 2007 decreased $0.9 million over the $17.3 million recorded in the same period of 2006. Gross profit as a percentage of revenue was 14.3% compared to 16.5% in the same period of 2006. The change is attributable to decreased margins at Aerospace Integration Corporation (AIC) associated with rebuilding of that business, higher than anticipated expenses amounting to approximately $0.7 million on certain fixed price contracts and variations in overall business mix. Operating income for the quarter ended September 30, 2007 was $7.7 million, compared to $9.4 million recorded in the quarter ended September 30, 2006. This change reflects the decreased gross margin combined with a $0.8 million increase in general and administrative expenses. The increase in general and administrative expenses for the quarter ended September 30, 2007 was primarily due to increased bid and proposal costs due to increased bid activity. Net income for the quarter ended September 30, 2007 was $4.2 million, a 12.6% decrease over third quarter 2006 net income of $4.8 million. This decrease primarily reflects the decreased operating incomes, partially offset by other income. The other income relates to a negotiated purchase price adjustment determination for a previously completed acquisition. The portion of the adjustment that affected net income was $0.5 million. Fully diluted earnings per share for the third quarter of 2007 were $0.28 compared to fully diluted earnings per share of $0.31 for the third quarter of 2006. The acquisition-related adjustment increased fully diluted earnings per share by approximately $0.04 during the third quarter of 2007. EBITDA of $10.9 million was 9.5% of revenue for the quarter ended September 30, 2007, compared to the $12.0 million, or 11.4% of revenue, reported in the same period of 2006. Excluding the $0.6 million non-operating other income, adjusted EBITDA for the quarter ended September 30, 2007 was $10.3 million or 9.0% of revenue. Mark Brown, President and Chief Operating Officer of MTC noted, "The results of this quarter reflect our focus on revenue growth and are beginning to reflect the cost savings associated with the restructuring. The wins this quarter substantiate our belief that AIC will play an important role in our future growth." Year-to-date September 30, 2007 Highlights: Revenues for the nine months ended September 30, 2007 increased 5.5% to $321.7 million, an increase of $16.8 million over revenue of $304.8 million from the same period in 2006. Gross profit for the nine months ended September 30, 2007 decreased 3.1% to $48.7 million, a decrease of $1.6 million over the same period in 2006. Gross profit as a percentage of revenue for the nine months ended September 2007 and 2006 was 15.1% and 16.5%, respectively. Operating income of $20.0 million for the nine months ended September 30, 2007 decreased 29.7% from the operating income of $28.5 million recorded during the same period in 2006. The lower operating income reflected the reduction in gross profit, a $1.5 million restructuring charge recorded in the second quarter of 2007, increased bid and proposal costs and an increase in general and administrative expenses largely due to the acquisition of AIC in the second quarter of 2006. Net income for the nine months ended September 30, 2007 was $10.0 million, a $5.0 million decrease over net income of $15.0 million for the same period in 2006. Fully diluted earnings per share for the nine months ended September 30, 2007 and 2006 were $0.66 and $0.96, respectively. Fully diluted earnings per share for the nine months ended September 30, 2007 included a $0.9 million after-tax restructuring charge, which reduced earnings per share by approximately $0.06 per share as well as a $0.5 million after-tax acquisition- related adjustment, which increased earnings per share by approximately $0.04 per share. EBITDA of $28.4 million was 8.8% of revenue for the nine months September 30, 2007 compared to $35.3 million, or 11.6% of revenue, reported in the same period of 2006. Excluding the $1.5 million restructuring charge and $0.6 million of other income, adjusted EBITDA for the nine months ended September 30, 2007 was $29.3 million or 9.1% of revenue. Company Guidance: The Company provided guidance for the fourth quarter and full year 2007. Share amounts in thousands Revenue Net Income Earnings per Est. Avg. Share Share Fourth Quarter At least $105 At least $3.7 At least $0.24 - 2007 million million Basic 15,150 At least $0.24 - Diluted 15,190 Full Year At least $427 At least $13.7 At least $0.90 - 2007 million million Basic 15,165 At least $0.90 - Diluted 15,205 Third Quarter Earnings Conference Call: The Company will conduct a conference call today at 10:00 a.m. EDT to discuss its third quarter 2007 results. To obtain the dial-in number, please call our Director of Investor Relations at 937-252-9199. To access the webcast of today's call, please go to http://www.mtctechnologies.com/. Internet participants should go to the website at least 15 minutes early to register, download and install any necessary audio software. A replay of the call will remain available through the site for 15 days. MTC, delivers Warfighter solutions involving systems engineering, information technology, intelligence, and program management services primarily to the Department of Defense. Cited by Forbes as #16 of the "25 Fastest Growing Technology Companies -- 2006", by Washington Technology as 55th in revenue growth among the "Top 100" of IT Federal Prime Contractors, and ranked #14 by Aviation Week & Space Technology among the "Top Performing Small Companies," MTC, employs approximately 2,700 people in more than 40 locations. The company was founded in 1984 and is headquartered in Dayton, Ohio. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release that are not present or historical fact, such as statements regarding MTC's plans and financial performance, including the results from MTC's acquisition of Aerospace Integration Corporation are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, forward-looking statements. These risks and uncertainties include: risks related to the growth of our FAST program, including strains on resources and decreases in operating margins; federal government audits and cost adjustments; differences between authorized amounts and amounts received by us under government contracts; government customers' failure to exercise options under contracts; changes in federal government (or other applicable) procurement laws, regulations, policies and budgets; our ability to successfully reduce costs; our ability to attract and retain qualified personnel; our ability to retain contracts during re-bidding processes; pricing pressures; undertaking acquisitions that might increase our costs or liabilities or be disruptive; integration of acquisitions, including Aerospace Integration Corporation; and changes in general economic and business conditions. For more information concerning these risks and uncertainties, see the Securities and Exchange Commission filings for MTC. These statements reflect the Company's current beliefs and are based upon information currently available to it. Be advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time, and we specifically disclaim any obligation to update these statements. Selected detailed financial information follows. For further information on MTC, visit the website at http://www.mtctechnologies.com/. Selected Balance Sheet Data: (in thousands): September 30, 2007 December 31, 2006 Current assets $126,059 $121,953 Current liabilities 66,074 69,056 Working capital 59,985 52,897 Cash -- 3,342 Accounts receivable 85,330 90,630 Long-term bank debt 73,540 80,300 Stockholders' equity 187,274 178,883 Total assets 333,021 334,309 Days Sales Outstanding (DSO's) in accounts receivable at September 30, 2007 and September 30, 2006 were 80 and 76 days, respectively. Reconciliation Between Net Income, EBITDA and Adjusted EBITDA (in thousands): Three months Three months Nine months Nine months ended ended ended ended September 30, September 30, September 30, September 30, 2007 2006 2007 2006 Net income $4,227 $4,837 $10,002 $15,042 Income tax expense 2,782 3,145 6,341 9,780 Net interest expense 1,293 1,428 4,248 3,628 Depreciation and amortization 2,564 2,621 7,835 6,883 EBITDA $10,866 $12,031 $28,426 $35,333 Restructuring charge -- -- 1,452 -- Other non-operating income (593) -- (593) -- Adjusted EBITDA before restructuring charge and non-operating income $10,273 $12,031 $29,285 $35,333 EBITDA is a non-GAAP measure, which we define as earnings (net income) before interest expense, income tax expense and depreciation and amortization. EBITDA, as we define it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States, or GAAP. EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities or other income or cash flow statement data prepared in accordance with GAAP. We believe EBITDA is useful to an equity investor or analyst in evaluating our operating performance because: * it is widely used by investors and analysts in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon acquisition history, capital intensity, financing options and the method by which its assets were acquired; and * it helps investors more meaningfully evaluate and compare the results of our operations from period to period to those of other companies by removing the impact of our financing options and asset base from our operating results. Our management uses EBITDA: * as a measure of operating performance because it assists us in comparing our performance on a consistent basis as it removes the impact of our financing options and asset base from our operating results; * as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; * to assess compliance with financial ratios and covenants included in our credit facility; * in communications with lenders concerning our financial performance; and * to evaluate the viability of potential acquisitions and overall rates of return. During the third quarter of 2007 we also provided adjusted EBITDA which we define as EBITDA before restructuring charges and other non-operating income. Management believes excluding the restructuring charge and non-operating income from EBITDA is a more comparable indicator of the Company's performance from period to period and relative to its peers because these are non- recurring items which affected the income statement. MTC Technologies, Inc. Condensed Consolidated Statements of Income (Dollars in Thousands Except Per Share Data) Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 Revenue $114,621 $105,194 $321,681 $304,845 Gross profit 16,423 17,321 48,713 50,270 General and administrative expenses 7,177 6,375 22,654 17,445 Restructuring charge -- -- 1,452 -- Intangible asset amortization 1,537 1,536 4,609 4,375 Operating income 7,709 9,410 19,998 28,450 Other income 593 -- 593 -- Net interest expense 1,293 1,428 4,248 3,628 Income before income tax expense 7,009 7,982 16,343 24,822 Income tax expense 2,782 3,145 6,341 9,780 Net income $4,227 $4,837 $10,002 $15,042 Basic and diluted earnings per share: $0.28 $0.31 $0.66 $0.96 Weighted average common shares outstanding: Basic 15,145,406 15,605,610 15,165,574 15,713,958 Diluted 15,187,215 15,625,304 15,202,363 15,746,258 DATASOURCE: MTC Technologies, Inc. CONTACT: Investor Relations & Media, Dan Bigelow, Director, Investor Relations & Corporate Communications, +1-937-252-9199, ; For Other Information, Michael Gearhardt, Chief Financial Officer, +1-937-252-9199, , both of MTC Technologies, Inc. Web site: http://www.mtctechnologies.com/

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