SUNRISE, FL, Nov. 14 /PRNewswire-FirstCall/ -- Protective Products of America, Inc. (PPA:TO), a leading manufacturer and distributor of advanced products in ballistics protection today announced third quarter 2008 results. Furthermore, the Company reported that the results of operations from its Delaware-based ceramic armor manufacturing business were accounted for as discontinued operations.
Revenues from continuing operations for the quarter ended September 30, 2008 were $16.6 million, a decrease of 36% versus $26.0 million in the prior year's quarter. Gross margin from continuing operations for the quarter ended September 30, 2008 decreased to 23.6% versus 33.9% in the comparable quarter a year ago. The net loss from continuing operations for the 2008 third quarter was reported as ($1.8) million, or ($0.14) per share; this compares with net income from continuing operations of $1.8 million or $0.18 per share in the comparable quarter of the prior year.
Steve Giordanella, Chief Executive Officer, commented, "We are working to create significant operating improvements, particularly with regard to expanded margins and better capacity utilization in our North Carolina facility. While this past quarter reflects what we view as a temporary lull in orders, we are building incremental capacity in our Florida facility to address the continued strong need for soft armor and carriers for ballistic armor. We believe that our MTV performance positions us well for the soon to be announced awards under what is expected to be a very significant multi-year program for the IOTV."
SG&A expenses from continuing operations for the third quarter were $4.0 million, representing a cost reduction of 17.5% as compared to $4.7 million incurred during the comparable period of the prior year. As a percentage of sales, SG&A expenses in the quarter rose to 24.2% compared to 18.2% for the comparable period of the prior year as a result of deleveraging on the year-over-year revenue reduction.
Mr. Giordanella continued, "After a thorough strategic review of our business, we have made the decision to close our Newark, Delaware operations and to focus our efforts and capital on our soft armor business. At the same time, we have a significant ability to finish ceramic armor through the integration of soft ballistic material while outsourcing the production of ceramic plates. We believe that this is the best path to drive significantly improved results and to deliver incremental value to our customers and our shareholders."
The Company reported a net loss from discontinued operations from the third quarter of ($6.5) million, or ($0.47) per share, as compared with net income from discontinued operations of ($2.0) million or ($0.20) per share in the comparable period a year ago. The Company indicated that it would seek a sale of impaired manufacturing assets associated with its Delaware operations and that it would use cash generated to repay indebtedness.
Mr. Giordanella concluded, "While our third quarter results clearly reflect the transitional nature of our operating infrastructure and the shift in our business focus, we believe that we are appropriately preparing our business to leverage its best opportunities. We have a strong track record and relationship with our customers, a focused and capable team of managers and employees, and a clear vision for the future of our company."
Unaudited Results of Operations
The unaudited results of operations for the quarters ended September 30, 2008 and September 30, 2007 are summarized in the table below. The Corporation's unaudited results of operations have not been reviewed by its external auditors.
------------------------------------------------------------------------- Three Month Period Ended September 30, (in thousands of United States dollars) 2008 2007 ------------------------------------------------------------------------- Sales revenue $16,567 $26,029 Gross margin 3,901 8,821 Gross margin percentage 23.6% 33.9% Net (loss) income from continuing operations (1,844) 1,844 Net loss from discontinued operations (6,512) (2,034) ------------------------------------------------------------------------- Net (loss) income ($8,356) ($190) Net (loss) income from continuing operations per basic and diluted share ($0.14) $0.18 Net loss from discontinued operations per basic and diluted share ($0.47) ($0.20) ------------------------------------------------------------------------- Net (loss) income per basic and diluted share ($0.61) ($0.02) EBITDA(1) from continuing operations ($648) $3,804 Adjusted EBITDA(2) from continuing operations ($130) $4,162 ------------------------------------------------------------------------- (1) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations. EBITDA does not have a standardized meaning prescribed by GAAP and is unlikely to be comparable to similar measures presented by other entities. (2) Adjusted EBITDA is EBITDA before non-recurring and certain non-cash charges. Management believes that this non-GAAP measure provides a better assessment of the Corporation's operations on a continuous basis by eliminating certain non-cash charges and charges that are non-recurring.
The unaudited consolidated balance sheets are presented as of September 30, 2008 with comparative figures as of December 31, 2007, are summarized below:
------------------------------------------------------------------------- (in thousands of United States dollars) September 30, December 31, 2008 2007 ------------------------------------------------------------------------- Total Assets 69,619 107,593 Total Debt 19,875 24,821 Total Liabilities 34,788 49,919 Shareholders' Equity 34,831 57,674 ------------------------------------------------------------------------- About Protective Products of America, Inc.
Protective Products of America, Inc. ("PPA"), formerly known as Ceramic Protection Corporation, is headquartered in Sunrise, Florida, with manufacturing facilities in Sunrise, Florida and Granite Falls, North Carolina. The Company, together with its subsidiaries, is engaged in the design, manufacture and marketing of advanced products used to provide ballistic protection for personnel and vehicles in the military and law enforcement markets. The Company's product portfolio includes concealable soft body armor products for law enforcement and the Modular Tactical Vest ("MTV"), a ballistic system for military personnel.
Management is of the opinion that the Company is an acknowledged industry leader in the design and manufacture of high performance and high quality products used for ballistic protection. Protective Products International Corp, a wholly owned subsidiary of PPA, is an ISO 9001:2000 certified manufacturer. Furthermore, PPA is one of a very few companies capable of providing customers with an integrated personnel armoring system of ceramic plates, soft ballistic material and vests for law enforcement and the military.
Safe Harbor Language
This release may contain forward looking statements including expectations of future sales, cash flow, and earnings. These statements are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ from those anticipated. These risks include, but are not limited to, uncertainties associated with the defense industry, commodity prices, exchange rate fluctuations, and risks resulting from potential delays, appeals or changes related to government orders in the defense sector.
PPA depends on reliable supplies of high quality source materials used in the manufacture of armor products, including aramid fabrics and polyethylene materials, and works actively with key suppliers to ensure that requirements and demands for these materials are anticipated and properly met. The foregoing is not exhaustive and other risks are detailed from time to time in other disclosure filings of PPA. Should one or more of these risks or uncertainties materialize, or should stated assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The reader is also referred to other uncertainties and risks discussed in detail in the MD&A section of the Company's December 31, 2007 Annual Report dated March 31, 2008, and the Company's Annual Information Form dated March 31, 2008. These documents are available on SEDAR (http://www.sedar.com/).
In light of certain sensitive aspects in regard to customers and products, PPA may choose not to disclose all information related to the purchasers of its products, such as government agencies, countries or other end-users. Products manufactured for export in the United States must first be approved for export by the appropriate U.S. government agencies. Other armor sales may be made to recognized domestic agencies such as the military and those involved in local, provincial, or national law enforcement and homeland security matters.
