LANCASTER, Pa., Dec. 10 /PRNewswire-FirstCall/ -- Herley Industries, Inc. today reported financial results for its First Quarter of Fiscal Year 2010.
Net sales for the first quarter of fiscal 2010 were $47.7 million compared to $35.3 million for the first quarter of fiscal 2009. Income from continuing operations was $3.6 million, or $.26 per diluted share, compared to a loss from continuing operations of $.9 million, or $(.07) per diluted share, last year. The loss from discontinued operations last year of $.5 million, or $(.03) per diluted share, resulted from the sale of the ICI business in November 2008. Net income for the first quarter was $3.6 million, or $.26 per diluted share, compared to a net loss of $1.3 million, or $(.10) per diluted share, last year.
The Company's EBITDA for the first quarter of 2010 was $6.9 million compared to $1.1 million last year. The Company's Adjusted EBITDA for the first quarter of 2010 was $7.4 million compared to $1.7 million last year. Adjusted EBITDA is defined as operating income plus the impact of foreign exchange transactions, excluding interest, taxes, depreciation and amortization, and litigation costs.
The Company reported a revenue increase of $12.4 million in the first quarter of fiscal 2010 compared to last year. The 35% increase was primarily related to increased deliveries under major production programs. In addition, an increase of approximately $2.0 million in sales was due to the inclusion of three months of Eyal's revenues in the first quarter of fiscal 2010 compared to the inclusion of two months of its revenues for the comparable prior quarter. Gross profit in the quarter was $13.3 million (27.9% gross profit margin) compared to $6.6 million (18.7% gross profit margin) last year, an increase of $6.7 million. The increase in gross profit and gross profit margin during fiscal 2010 was principally a result of leveraging our fixed costs on the sales increase as well as anticipated improvements in margins related to manufacturing efficiencies and a favorable program mix.
Selling and administrative ("S&A") expenses for the first quarter were $7.7 million, or 16.1% of sales, compared to $7.3 million, or 20.7% of sales, last year. The $.4 million increase in S&A expenses was primarily attributable to an increase of approximately $.9 million in commissions and related sales expenses associated with the increase in sales and approximately $.2 million due to the inclusion of a full quarter of Eyal's expenses since its acquisition in last year's first quarter, partially offset by approximately $.7 million related to cost reductions, including payroll-related expenses.
The Company reported operating income during the first quarter of fiscal 2010 of $5.1 million compared to an operating loss of $.7 million last year. The prior-year quarter included a gain on the sale of certain assets of approximately $.6 million.
At November 1, 2009, the Company's balance sheet is strong, with total cash and cash equivalents of $13.8 million, working capital of $90.8 million and long-term debt, exclusive of settlement commitments, of $20.2 million. Capital expenditures were $1.4 million for the first quarter of fiscal 2010 compared to $2.0 million last year.
Richard F. Poirier, Chief Executive Officer and President, commented, "We are very pleased by the results of this quarter. We maintain a strong backlog, and are continuing to realize the benefits of transitioning from development to full production on major programs. We are also looking to expand into new programs, and continue to concentrate on strengthening relationships with our customers."
Richard Poirier, Chief Executive Officer and President, will host a conference call on December 11, 2009 at 10:00 a.m. Eastern Time to discuss the financial results for the First Quarter of Fiscal Year 2010, which ended November 1, 2009. To join the conference call, dial 1 (888) 425-4188, referencing Conference ID #42650178.
A taped replay of the call will be available on December 11, 2009 at 11:00 a.m. through December 18, 2009 at 11:59 p.m. Eastern Time. To listen to the replay, dial: 1 (800) 642-1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID #42650178.
In addition, the conference call will be broadcast live over the Internet and can be accessed through the following URL: http://www.videonewswire.com/event.asp?id=64188. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software.
Herley Industries, Inc. is a leader in the design, development and manufacture of microwave technology solutions for the defense, aerospace and medical industries worldwide. Based in Lancaster, PA, Herley has seven manufacturing locations and approximately 1,000 employees. Additional information about the Company can be found on the Internet at http://www.herley.com/
Safe Harbor Statement - Except for the historical information contained herein, this release may contain forward-looking statements. Such statements are inherently subject to risks and uncertainties. Forward-looking statements involve various important assumptions, risks, uncertainties and other factors which could cause our actual results to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this discussion can be identified by words such as "anticipate," "believe," "could," "estimate," "expect," "plan," "intend," "may," "should" or the negative of these terms or similar expressions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievement. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors including but not limited to, competitive factors and pricing pressures, changes in legal and regulatory requirements, cancellation or deferral of customer orders, technological change or difficulties, difficulties in the timely development of new products, difficulties in manufacturing, commercialization and trade difficulties and current economic conditions, including the potential for significant changes in US defense spending under the new Administration which could affect future funding of programs and allocations within the budget to various programs as well as the factors set forth in this report and in our public filings with the Securities and Exchange Commission.
For information at Herley, contact: Peg Guzzetti Tel: (717) 397-2777 Investor Relations http://www.herley.com/ HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) November 1, 2009 August 2, (Unaudited) 2009 ----------- ---- ASSETS Current Assets: Cash and cash equivalents $13,832 $14,820 Trade accounts receivable, net 30,015 28,687 Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 6,226 10,396 Inventories, net 57,471 57,804 Deferred income taxes 18,171 19,380 Other current assets 3,770 2,816 Total Current Assets 129,485 133,903 Property, plant and equipment, net 32,877 32,872 Goodwill 43,722 43,722 Intangibles, net 9,167 9,619 Deferred income taxes 7,616 7,571 Other assets 550 598 --- --- Total Assets $223,417 $228,285 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $1,386 $1,595 Current portion of employment settlement agreements 1,284 7,400 Current portion of litigation settlements 971 954 Accounts payable and accrued expenses 22,366 26,447 Billings in excess of costs incurred and income recognized on uncompleted contracts 101 261 Accrual for contract losses 2,290 3,440 Advance payments on contracts 10,256 12,698 ------ ------ Total Current Liabilities 38,654 52,795 Long-term debt, net of current portion 18,807 12,246 Long-term portion of employment settlement agreements 2,469 2,827 Other long-term liabilities 8,190 8,361 Total Liabilities 68,120 76,229 ------ ------ Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 13,689,024 at November 1, 2009 and 13,719,926 at August 2, 2009 1,369 1,372 Additional paid-in capital 102,799 103,113 Retained earnings 51,433 47,882 Accumulated other comprehensive loss (304) (311) ---- ---- Total Shareholders' Equity 155,297 152,056 ------- ------- Total Liabilities and Shareholders' Equity $223,417 $228,285 ======== ======== HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data) Thirteen weeks ended -------------------- November November 1, 2, 2009 2008 ---- ---- Net sales $47,679 $35,344 ------- ------- Cost and expenses: Cost of products sold 34,392 28,741 Selling and administrative expenses 7,681 7,323 Gain on sale of assets - (618) Litigation costs 540 558 --- --- 42,613 36,004 Operating income (loss) 5,066 (660) ----- ---- Other (expense) income: Interest income 11 18 Interest expense (165) (223) Foreign exchange transaction losses (42) (360) --- ---- (196) (565) ---- ---- Income (loss) from continuing operations before income taxes 4,870 (1,225) Provision (benefit) for income taxes 1,319 (342) ----- ---- Income (loss) from continuing operations 3,551 (883) ----- ---- Discontinued operations: Loss from operations of discontinued subsidiary - (734) Benefit for income taxes - (278) --- ---- Loss from discontinued operations - (456) --- ---- Net income (loss) $3,551 $(1,339) ====== ======= Earnings (loss) per common share - Basic Income (loss) from continuing operations $.26 $(.07) Loss from discontinued operations - (.03) --- ---- Net income (loss) - basic $.26 $(.10) ==== ===== Basic weighted average shares 13,704 13,525 ====== ====== Earnings (loss) per common share - Diluted Income (loss) from continuing operations $.26 $(.07) Loss from discontinued operations - (.03) --- ---- Net income (loss) - diluted $.26 $(.10) ==== ===== Diluted weighted average shares 13,878 13,525 ====== ====== HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Thirteen weeks ended -------------------- November November 1, 2, 2009 2008 ---- ---- Cash flows from operating activities: Net income (loss) $3,551 $(1,339) ------ ------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,845 2,148 Gain on sale of fixed assets - (618) Impairment of goodwill of discontinued subsidiary - 1,000 Stock-based compensation costs 124 148 Excess tax benefit from exercises of stock options - (19) Imputed interest on employment and litigation settlement liabilities 45 96 Foreign exchange transaction losses - 360 Inventory valuation reserve charges 299 400 Warranty reserve charges 542 343 Deferred tax provision (benefit) 1,162 (620) Changes in operating assets and liabilities: Cash of discontinued subsidiary - (712) Trade accounts receivable (1,304) 896 Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 4,158 4,786 Inventories, net 35 (375) Other current assets (952) (180) Accounts payable and accrued expenses (4,639) (4,093) Billings in excess of costs incurred and income recognized on uncompleted contracts (158) 252 Accrual for contract losses (1,150) (55) Litigation settlement payments (2,000) - Employment settlement payments (6,502) (330) Advance payments on contracts (443) (117) Other, net (124) (850) ---- ---- Total adjustments (9,062) 2,460 ------ ----- Net cash (used in) provided by operating activities (5,511) 1,121 ------ ----- Cash flows from investing activities: Acquisition of business, net of cash acquired - (30,010) Capital expenditures (1,398) (2,044) ------ ------ Net cash used in investing activities (1,398) (32,054) ------ ------- Cash flows from financing activities: Borrowings under bank line of credit 7,000 20,000 Borrowings - term loan - 10,000 Proceeds from exercise of stock options - 38 Excess tax benefit from exercises of stock options - 19 Payments of long-term debt (642) (441) Payments under bank line of credit - (1,000) Purchase of treasury stock (441) - ---- --- Net cash provided by financing activities 5,917 28,616 ----- ------ Effect of exchange rate changes on cash 4 (81) --- --- Net decrease in cash and cash equivalents (988) (2,398) Cash and cash equivalents at beginning of period 14,820 14,347 ------ ------ Cash and cash equivalents at end of period $13,832 $11,949 ======= ======= HERLEY INDUSTRIES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES EBITDA AND ADJUSTED EBITDA (Unaudited)
The following is a reconciliation of operating income, which is a GAAP measure of our operating results, to EBITDA and Adjusted EBITDA. Management believes that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide additional information about the Company's results. EBITDA and Adjusted EBITDA are not presentations made in accordance with GAAP, are not measures of financial performance or condition, liquidity or profitability of the Company, and should not be considered as an alternative to (1) net income, operating income or any other performance measures determined in accordance with GAAP or (2) operating cash flows determined in accordance with GAAP. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, capital expenditures and debt service requirements.
For the Thirteen Weeks Ended =========== November November (in thousands) 1, 2, -------- -------- 2009 2008 ---- ---- Operating income (loss) - as reported $5,066 $(660) Depreciation and amortization 1,845 2,148 Foreign exchange transaction losses (42) (360) === ==== EBITDA 6,869 1,128 Litigation costs 540 558 --- --- Adjusted EBITDA $7,409 $1,686 ====== ======
Herley Industries, Inc.
CONTACT: Peg Guzzetti, Investor Relations, +1-717-397-2777
Web Site: http://www.herley.com/
