Orbit International Corp. reports 2013 second quarter results
Orbit International Corp. (NASDAQ:ORBT) today announced results for the second quarter and six months ended June 30, 2013.
Second Quarter 2013 vs. Second Quarter 2012
• Net sales were $6,475,000 compared to $7,509,000;
• Gross margin was 38.6% compared to 37.7%;
• Net income was $109,000 ($0.02 per diluted share) compared to $199,000 ($0.04 per diluted share); and,
• Earnings before interest, taxes, depreciation and amortization, and stock based compensation (EBITDA, as adjusted) was $244,000 ($0.05 per diluted share) compared to $438,000 ($0.10 per diluted share).
First Half 2013 vs. First Half 2012
• Net sales were $12,922,000 compared to $13,671,000;
• Gross margin was 38.6% compared to 38.2%;
• Net income was $29,000 ($0.01 per diluted share) compared to a net loss of $1,176,000 ($0.26 loss per share). The net loss for the 2012 first half included a non-recurring charge of $1,194,000 in connection with employment contract provisions of a departing senior officer. Excluding this charge, net income for the 2012 first half was $18,000 ($0.00 per diluted share);
• EBITDA, as adjusted, was $303,000 ($0.07 per diluted share) compared to a loss of $755,000 ($0.16 loss per share). Excluding the employment contract provision-related charge, EBITDA, as adjusted for the 2012 first half was $439,000 ($0.09 per diluted share); and,
• Backlog at June 30, 2013 was $13.6 million as compared to $14.7 million at March 31, 2013 and $19.5 million at June 30, 2012.
Mitchell Binder, President & Chief Executive Officer, stated, “Our Company continues to operate in a difficult business environment due to general budget uncertainty and funding reductions related to sequestration. Our net sales for the 2013 second quarter and first half, as compared to the same periods of 2012, decreased primarily as a result of lower sales at our ICS and TDL subsidiaries. However, due to cost cutting measures taken over the last several quarters, our net income, exclusive of the prior year employment contract provision-related charge, did not materially change. Our gross margin for the 2013 second quarter and first half slightly improved as compared to the same periods of 2012 due to a better product mix during the current quarter, particularly at our TDL subsidiary, which commenced shipments for its displays for a major helicopter program, and also due to lower margin sales delivered by ICS in the prior year second quarter.”
Mr. Binder continued, “We expect our operating performance for the second half of 2013 to improve, as compared to the first half of the year, due to delivery schedules for our current backlog and pending orders.
- Our Power Group’s recent orders for commercial power supplies and COTS power supplies are scheduled for delivery in the third and fourth quarter of 2013.
- Deliveries for our Orbit Instrument Division’s $665,000 order for keyboards to be utilized by the Federal Aviation Administration for its air traffic control systems are scheduled to commence in the third quarter of 2013. Although this order was substantially less than the amount initially indicated by our customer, principally due to budget pressures, the effort to upgrade air traffic control towers should continue for several years and we expect the shortfall from the current year to be layered into the out-year awards.
- Most of the deliveries for the $1.2 million RCU order received earlier this year should be completed in the fourth quarter of 2013, and follow-on orders to fulfill requirements for the U.S. Navy and U.S. Army are expected before year-end.
- ICS’s two prototype units for the Signal Data Converter (“SDC”), accounted for under the percentage of completion method, originally scheduled to be delivered in the second quarter, were shipped during the third quarter. This order is part of the $5.8 million SDC base contract received in April 2012. $4.2 million is currently not funded with a purchase order; however, ICS expects to be awarded a production order for a portion of these units before 2013 year-end.”
David Goldman, Chief Financial Officer, noted, “Our financial condition remains strong. At June 30, 2013, total current assets were $19.5 million versus total current liabilities of $2.3 million for an 8.4 to 1 current ratio. Cash, cash equivalents and marketable securities as of June 30, 2013, aggregated approximately $1.1 million. To offset federal and state taxes resulting from profits, we have approximately $5 million and $6 million in available federal and state net operating loss carryforwards, respectively, which should enhance future cash flow. Our tangible book value at June 30, 2013 was $3.88 per share as compared to $3.85 at March 31, 2013. Finally, we recently amended our Credit Agreement with our primary lender whereby the maturity date for our $6 million committed line of credit was extended to July 1, 2015. Accordingly, as of June 30, 2013, our line of credit is now classified as a non-current liability.”
Mr. Binder continued, “Our backlog at June 30, 2013 was $13.6 million, down slightly from the $14.7 million reported at March 31, 2013. Our bid and proposal activity remains good but the time delay between contract proposal and actual award continues to impact delivery schedules. Both our Power and Electronics Groups expect orders of significant magnitude for new and repeat programs to be booked in the next two quarters.
“We continue to believe that all the legacy business that contributed to our good operating performance from the past two years remains intact. In this regard, since the beginning of 2013, we have repurchased over 93,000 of our common shares, and more than 311,000 shares since January 1, 2012.”
Mr. Binder concluded, “We continue to seek out accretive acquisitions that we hope to tuck into our existing facilities. We remain active in this area but very selective in our approach. We believe that our strong balance sheet will allow us to take advantage of opportunities in our marketplace as other weaker companies struggle with current industry conditions.”
The Company will hold a conference call for investors today, August 8, 2013, at 11:00 a.m. ET. Interested parties may participate in the call by dialing (201) 493-6744; please call in 10 minutes before the conference call is scheduled to begin and ask for the Orbit International conference call. After opening remarks, there will be a question and answer period. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to www.orbitintl.com and click on the Investor Relations section. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at Orbit’s website. We suggest listeners use Microsoft Explorer as their browser.
Orbit International Corp., through its Electronics Group, is involved in the manufacture of customized electronic components and subsystems for military and nonmilitary government applications through its production facilities in Hauppauge, New York, and Quakertown, Pennsylvania; and designs and manufactures combat systems and gun weapons systems, provides system integration and integrated logistics support and documentation control at its facilities in Louisville, Kentucky. The Power Group, through its Behlman Electronics, Inc. subsidiary, manufactures and sells high quality commercial power units, AC power sources, frequency converters, uninterruptible power supplies and associated analytical equipment. The Behlman COTS division designs, manufactures and sells power units and electronic products for measurement and display.
Certain matters discussed in this news release and oral statements made from time to time by representatives of the Company including, statements regarding our expectations of Orbit’s operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although Orbit believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond Orbit International's ability to control or predict. Important factors that may cause actual results to differ materially and that could impact Orbit International and the statements contained in this news release can be found in Orbit's filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q, current reports on Form 8-K, annual reports on Form 10-K and its other periodic reports. For forward-looking statements in this news release, Orbit claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Orbit assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.
(See Accompanying Tables)
CONTACT Mitchell Binder, President & Chief Executive Officer, 631-435-8300
or Investor Relations Counsel, Lena Cati, 212-836-9611, The Equity Group Inc.
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