BLACKWOOD, N.J., Nov. 3 /PRNewswire-FirstCall/ -- Metrologic Instruments, Inc. today announced financial results for the quarter ended September 30, 2006 with revenue from continuing operations of $53.2 million and income from continuing operations of $2.8 million or $0.12 per fully diluted share. Beginning January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payment.
As previously announced, the Company entered into a Stock Purchase Agreement with Essex Corporation on September 19, 2006 for the sale of the Company's subsidiary, Adaptive Optics Associates, Inc. ("AOA"). This transaction was completed in October 2006. The results from continuing operations exclude AOA, which is reported as a discontinued operation as discussed further below.
Financial Results and Third Quarter Highlights
Continuing Operations
- Revenue for the third quarter of 2006 increased by 15.9% to a record
$53.2 million as compared to $45.9 million in the third quarter of
2005.
- For the third quarter of 2006, gross margin was 45.3% versus 47.5% for
the third quarter 2005. Gross margin for the third quarter 2006 was
primarily impacted by continued sales to Tier-1 retailers and product
mix. Approximately $0.1 million, or 0.3%, of stock-based compensation
expense is included in gross margin for the three months ended
September 30, 2006.
- Operating expense as a percentage of revenue was 38.4% for the third
quarter of 2006 compared to 27.4% in the third quarter 2005. This
increase is primarily caused by higher selling, general and
administrative expenses which include legal expenses for ongoing
litigation, costs related to a Brazilian tax case, and transaction
costs associated with the Company's previously announced Merger
Agreement with an investor group led by Francisco Partners.
Approximately $0.8 million of stock-based compensation expense is
included in operating expenses for the three months ended September 30,
2006.
- Income from continuing operations for the third quarter of 2006 was
$2.8 million, or $0.12 per fully diluted share, as compared to $7.3
million or $0.31 per fully diluted share in the third quarter of 2005.
Included in income from continuing operations for the third quarter of
2006 was approximately $0.9 million of stock-based compensation
expense.
- The Data Capture and Collection business segment grew 15.0% to
approximately $50.6 million as compared to the third quarter of 2005,
reflecting continued strength in the channel and in reverse-vending
applications.
- On a geographic basis, sales in the EMEA (Europe, Middle East, Africa)
region increased by 38.0% to approximately $26.5 million in the third
quarter of 2006, fueled by new and follow-on orders received from Tier-
1 retailers and for reverse-vending applications. The Asia/Pacific
region grew at 12.8% to approximately $8.0 million. The Americas region
decreased by 4.7% primarily due to several large Tier-1 rollouts in the
third quarter of 2005.
Discontinued Operations
The 2006 and 2005 results from continuing operations exclude AOA, which the Company sold effective October 2, 2006 and is reported as a discontinued operation. Income from discontinued operations, net of income taxes, was $0.8 million, or $0.04 per fully diluted share for the quarter ended September 30, 2006, as compared with $0.4 million, or $0.02 per fully diluted share in 2005. Including discontinued operations, net income was $3.6 million, or $0.16 per fully diluted share in the third quarter of 2006 as compared with net income of $7.7 million, or $0.33 per fully diluted share in 2005.
Nine Months 2006 Results
Revenue from continuing operations for the first nine months of 2006 was approximately $158.1 million, an increase of 25.1% as compared to revenue of $126.4 million in the first nine months of 2005. Income from continuing operations was $10.3 million, or $0.44 per fully diluted share in 2006, as compared to $15.2 million, or $0.65 per diluted share, in 2005. Included in income from continuing operations for the nine months ended September 30, 2006 was approximately $3.4 million of stock-based compensation expense. Net income for the first nine months of 2006 was $12.4 million, or $0.53 per fully diluted share, as compared to $16.3 million or $0.70 per diluted share in the comparable period in 2005.
Conference Call
In light of the recent announcement that Metrologic has signed a definitive agreement to be acquired by a group of investors led by Francisco Partners, the Company will not host a conference call to discuss third quarter 2006 financial results. For more information on the transaction, please see our SEC filings.
About Metrologic
Metrologic Instruments, Inc. ("Metrologic" or the "Company") is a global supplier of choice for data capture and collection hardware, optical solutions, and image processing software. Metrologic has been delivering innovative, quality products that are cost effective, reliable and supported by a superior level of personal service for nearly 40 years. Metrologic products are sold worldwide through Metrologic's sales, service and distribution offices located in The Americas, EMEA and Asia/Pacific. Metrologic provides its customers not only with a great deal, but a great deal more. For more information please call 1-800-667-8400 or visit http://www.metrologic.com/.
Forward-Looking Statements
Forward-looking statements contained in this release are highly dependent upon a variety of important factors which could cause actual results to differ materially from those reflected in such forward-looking statements. Specifically, the factors that could cause actual results to differ from expectations include: the timing, introduction and market acceptance of Metrologic's new products; foreign currency fluctuations with the US dollar; pricing pressures; competitive factors; sales cycles of Metrologic's products; Metrologic's ability to control manufacturing and operating costs as well as product and revenue mix which affect future profitability; the effect of current and pending legislation on Metrologic's effective annual tax rate; technological changes in the data capture industry, including the adoption of imaging-based and RFID technologies; availability of patent protection for Metrologic's vision-based technologies, and other products; the results of litigation; general economic conditions; and the potential impact of terrorism, international hostilities and natural disasters. When used in this release and documents referenced, the words "believes," "expects," "may," "should," "seeks," or "anticipates," and similar expressions as they relate to Metrologic or its management are intended to identify such forward-looking statements. We undertake no obligation to correct or update any forward- looking statements, whether as a result of new information, future events or otherwise. For additional factors, please see Metrologic's reports filed with the Securities and Exchange Commission.
Metrologic Instruments, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited)
2006 2005 2006 2005
---- ---- ---- ----
Sales $53,195 $45,907 $158,083 $126,350
Cost of sales 29,106 24,079 89,763 66,033
-------------------- ---------------------
Gross profit 24,089 21,828 68,320 60,317
Selling, general and
administrative
expenses 17,533 10,563 46,147 32,402
Research and development
expenses 2,902 2,003 7,563 5,750
-------------------- ---------------------
Operating income 3,654 9,262 14,610 22,165
Net interest income 443 123 689 257
Other income/(expense) (62) 2,019 423 1,271
-------------------- ---------------------
Income from continuing
operations before
income taxes 4,035 11,404 15,722 23,693
Income tax expense
continuing operations 1,272 4,087 5,382 8,532
-------------------- ---------------------
Income from continuing
operations 2,763 7,317 10,340 15,161
Income from discontinued
operation, net of taxes 820 383 2,013 1,093
-------------------- ---------------------
Net income $3,583 $7,700 $12,353 $16,254
==================== =====================
Basic earnings per share:
Continuing operations $0.12 $0.33 $0.46 $0.69
Discontinued operation $0.04 $0.02 $0.09 $0.05
-------------------- ---------------------
$0.16 $0.35 $0.55 $0.74
==================== =====================
Diluted earnings per share:
Continuing operations $0.12 $0.31 $0.44 $0.65
Discontinued operation $0.04 $0.02 $0.09 $0.05
-------------------- ---------------------
$0.16 $0.33 $0.53 $0.70
==================== =====================
Weighted average number
of common shares
outstanding:
Basic 22,455 22,202 22,518 22,082
Diluted 22,991 23,103 23,144 23,101
Note: In September 2006, the Company announced the sale of its wholly
owned subsidiary, Adaptive Optics Associates, Inc. The Condensed
Consolidated Statements of Operations for the current and prior periods
have been reclassified to reflect the results from this business as a
discontinued operation.
Metrologic Instruments, Inc.
Condensed Consolidated Balance Sheets
(all amounts in thousands)
September 30, December 31,
2006 2005*
----- -----
(Unaudited)
Cash and cash equivalents $44,809 $49,463
Marketable securities 27,732 24,475
Accounts receivable, net 46,093 48,462
Inventories, net 36,188 29,364
Other current assets 4,227 6,400
Assets of discontinued operation held for sale 24,398 -
-------- --------
Total current assets 183,447 158,164
Property, plant and equipment, net 18,325 20,402
Goodwill and other intangibles, net 32,103 43,103
Other assets 1,642 4,513
-------- --------
Total assets $235,517 $226,182
======== ========
Accounts payable and accrued expenses $31,509 $46,709
Current portion of debt 15,974 18,433
Deferred contract revenue 211 739
Liabilities on discontinued operation held
for sale 4,250 -
-------- --------
Total current liabilities 51,944 65,881
Debt 3 3
Other liabilities 2,049 8
Total shareholders' equity 181,521 160,290
-------- --------
Total liabilities and shareholders' equity $235,517 $226,182
======== ========
*Certain prior period amounts have been reclassified to conform to the
current period presentation
Supplemental Sales Data
Three Months Ended
September 30,
% %
2006 2005 Total Growth
----- ----- ----- ------
By Geography
The Americas $18,670 $19,588 35.1% (4.7%)
EMEA 26,477 19,185 49.8% 38.0%
Asia/Pacific 8,048 7,134 15.1% 12.8%
------- ------- ------
$53,195 $45,907 100.0% 15.9%
By Business Segment
Data Capture and Collection $50,553 $43,962 95.0% 15.0%
Industrial Automation 2,642 1,945 5.0% 35.8%
------- ------- ------
$53,195 $45,907 100.0% 15.9%
Nine Months Ended
September 30,
% %
2006 2005 Total Growth
---- ---- ----- ------
By Geography
The Americas $54,314 $50,342 34.4% 7.9%
EMEA 83,302 57,438 52.7% 45.0%
Asia/Pacific 20,467 18,570 12.9% 10.2%
-------- -------- ------
$158,083 $126,350 100.0% 25.1%
By Business Segment
Data Capture and
Collection $151,881 $119,618 96.1% 27.0%
Industrial Automation 6,202 6,732 3.9% (7.9%)
-------- -------- ------
$158,083 $126,350 100.0% 25.1%
