Strong Operating Cash Flow; Year-to-date EPS Up 6% from a Year Ago
FAIRVIEW, Pa., Sept. 24 /PRNewswire-FirstCall/ -- Spectrum Control,
Inc. (NASDAQ:SPEC), a leading designer and manufacturer of custom
electronic products and systems, today reported results for the
third quarter and nine month period ended August 31, 2009. For the
third quarter of fiscal 2009, the Company reported net income of
$2.0 million or 16 cents per diluted share on sales of $31.5
million, compared to net income of $2.4 million or 18 cents per
diluted share on sales of $33.1 million for the same period last
year. For the first nine months of fiscal 2009, the Company had net
income of $6.4 million or 50 cents per diluted share on sales of
$98.2 million. For the comparable period of 2008, the Company had
net income of $6.3 million or 47 cents per diluted share on sales
of $96.9 million. Dick Southworth, the Company's President and
Chief Executive Officer, commented, "Despite the global recession's
ongoing impact on virtually all of our commercial markets, we
continue to generate positive operating results and year-to-date
growth in sales and earnings. Our fundamental strategy of serving
both the commercial and military markets is serving us well, with
our strong military and defense business offsetting the persistent
softness for substantially all commercial product applications.
Current quarter sales and profitability were slightly below our
previous expectations, reflecting changes in the timing of certain
customer orders and related shipments. This quarterly impact,
however, does not have any affect on our longer term business
outlook. We continue to believe that we are strategically
positioned for dynamic growth and enhanced shareholder value, as
applications for our products in military and defense remain strong
and the commercial markets finally begin to rebound." Financial
Highlights Cash Flow Our cash flow continues to be strong, with
record levels of net cash being generated by operating activities.
During the current quarter, net cash provided by operating
activities was $5.7 million. With this current quarter cash flow,
net operating cash generated for the first nine months of fiscal
2009 grew to a record $13.8 million. Our cash flow continues to
benefit from our focused reductions in working capital
requirements. With changing business levels and improved turnover
rates, accounts receivable and inventories decreased by
approximately $3.9 million during the nine month period ended
August 31, 2009. During fiscal 2009, this positive cash flow has
enabled us to repay $10.0 million of short-term bank debt (
reducing our outstanding line of credit borrowings to zero ), as
well as fully funding all of our year-to-date capital expenditures
of $2.9 million. Approximately $1.6 million of these capital
expenditures were made in our microwave components and systems
business to support manufacturing expansion and improvements needed
for growing production requirements. Customer Orders Total customer
orders received in the third quarter of fiscal 2009 amounted to
$32.4 million, an increase of $1.3 million or 4% from the same
period of last year. With our third quarter performance, aggregate
year-to-date customer orders increased to $100.0 million. These
customer order levels generated positive book-to-bill ratios of
1.03 to 1.00 for the third quarter of fiscal 2009 and 1.02 to 1.00
for the nine months ended August 31, 2009. Shipments Demand for our
products in military/defense applications remains strong. Shipments
to military/defense customers were $19.2 million or 61% of our
total consolidated sales in the current quarter, compared to $15.8
million or 48% for the same period a year ago. For the first nine
months of this fiscal year, our consolidated net sales increased by
$1.4 million, with sales of our microwave products increasing
significantly. In the first nine months of fiscal 2009, excluding
the impact of the SatCon Electronics acquisition, sales of our
microwave products increased by $3.4 million or 11% from a year
ago. This increase was driven by numerous military/defense programs
including applications in secure communications, radar systems, and
countermeasures for improvised explosive devices. Financial
Position At August 31, 2009, our ratio of current assets to current
liabilities was over 6.00 to 1.00, our stockholders' equity was
$110.9 million for a book value of $8.76 per share, and our total
borrowed funds were less than $1.0 million. We believe our current
financial position provides a solid foundation upon which to build
our future growth. Insurance Recoveries Earlier in fiscal 2009, one
of our manufacturing facilities sustained wind damage to its roof
which, in turn, resulted in water damage to certain machinery,
equipment, and leasehold improvements. In a separate incident,
another of our manufacturing facilities sustained a small fire,
destroying certain assets. During the third quarter ended August
31, 2009, all related insurance claims were settled and we received
aggregate insurance proceeds of $1.3 million. As a result, we
recorded a net gain of $528,000 ($346,000 net of tax) in the
current quarter representing the excess of insurance recoveries
over the carrying value of the assets destroyed and related costs
incurred. Current Business Outlook Mr. Southworth added, "As
announced earlier this month, we have received a $9.1 million
contract for integrated microwave assemblies used in upgrades of
fielded RCIED (Radio Controlled Improvised Explosive Devices)
Jammer Systems. This contract, which we originally expected to
receive earlier in fiscal 2009, was temporarily delayed as a result
of a protest filed by a competitor of our customer. With this
protest having been denied, product shipments under this contract
are now expected to commence in December 2009 and continue through
the second quarter of 2011. Based on the timing of these shipments,
along with our current assessment of business conditions and
overall customer demand, we expect our fiscal 2009 fourth quarter
sales to be in the range of $32.5 to $33.5 million with earnings of
$0.16 to $0.18 per share. Beyond the fourth quarter of fiscal 2009,
we remain very optimistic about the future of our Company, as we
continue to develop innovative new products and seek to consummate
strategic business acquisitions." Forward-Looking Information This
press release contains statements that are forward-looking
statements within the meaning of the Private Securities Reform Act
of 1995. These statements are based on current expectations,
estimates and projections about the Company's business based, in
part, on assumptions made by management. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward-looking statements due to numerous
factors and risks discussed from time to time in the Company's
Securities and Exchange Commission filings and reports. In
addition, such statements could be affected by general industry and
market conditions and growth rates, and general domestic and
international economic conditions. Such forward-looking statements
speak only as of the date on which they are made and the Company
does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
release. Simultaneous Webcast and Teleconference Replay Spectrum
Control, Inc. will host a teleconference to discuss its third
quarter fiscal 2009 results on Thursday, September 24, 2009, at
4:45 p.m., Eastern Time. Internet users will be able to access a
simultaneous webcast of the teleconference at
http://www.spectrumcontrol.com/ or http://www.vcall.com/. A taped
replay of the call will be available through September 25, 2009, at
877-660-6853, access account 286, conference 331377, or for 30 days
over the Internet at the Company's website. About Spectrum Control
Spectrum Control, Inc. is a leader in the design, development and
manufacture of custom electronic products and systems for the
defense, aerospace, communications, and medical industries
worldwide. For more information about Spectrum Control and its
products, please visit the Company's website at
http://www.spectrumcontrol.com/. Tables follow Spectrum Control,
Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) (Dollar Amounts in Thousands) August 31, November 30,
2009 2008 ---- ---- Assets Current assets Cash and cash equivalents
$8,019 $5,397 Accounts receivable, net 20,988 24,043 Inventories,
net 29,995 30,638 Deferred income taxes 1,684 1,684 Prepaid
expenses and other current assets 2,178 2,307 ----- ----- Total
current assets 62,864 64,069 Property, plant and equipment, net
25,559 27,250 Other assets Goodwill 36,811 36,811 Other 5,861 6,654
----- ----- Total assets $131,095 $134,784 ======== ========
Liabilities and Stockholders' Equity Current liabilities Short-term
debt $ - $10,000 Accounts payable 5,040 6,541 Income taxes payable
14 36 Accrued liabilities 4,468 4,415 Current portion of long-term
debt 487 487 --- --- Total current liabilities 10,009 21,479
Long-term debt 455 545 Other liabilities 856 978 Deferred income
taxes 8,881 8,491 Stockholders' equity 110,894 103,291 -------
------- Total liabilities and stockholders' equity $131,095
$134,784 ======== ======== Spectrum Control, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited) (Amounts in
Thousands, Except Per Share Data) For the For the Three Months
Ended Nine Months Ended August 31, August 31, ------------------
----------------- 2009 2008 2009 2008 ------ ------ ------ ------
Net sales $31,477 $33,124 $98,217 $96,852 Cost of products sold
23,728 24,532 73,262 73,329 ------ ------ ------ ------ Gross
margin 7,749 8,592 24,955 23,523 Selling, general and
administrative expense 4,589 4,933 14,920 13,815 ------ ------
------ ------ Income from operations 3,160 3,659 10,035 9,708 Other
income (expense): Interest expense (43) (105) (206) (244) Other
income and expense, net 2 16 40 272 ------ ------ ------ ------
(41) (89) (166) 28 ------ ------ ------ ------ Income before
provision for income taxes 3,119 3,570 9,869 9,736 Provision for
income taxes 1,078 1,216 3,454 3,417 ------ ------ ------ ------
Net income $2,041 $2,354 $6,415 $6,319 ====== ====== ====== ======
Earnings per common share: Basic $0.16 $0.18 $0.51 $0.48 ======
====== ====== ====== Diluted $0.16 $0.18 $0.50 $0.47 ====== ======
====== ====== Average number of common shares outstanding: Basic
12,613 12,980 12,585 13,192 ====== ====== ====== ====== Diluted
12,844 13,058 12,705 13,352 ====== ====== ====== ====== Spectrum
Control, Inc. and Subsidiaries Selected Financial Data (Unaudited)
For the For the Three Months Ended Nine Months Ended August 31,
August 31, ------------------ ----------------- 2009 2008 2009 2008
------ ----- ----- ----- Selected Financial Data, as a Percentage
of Net Sales: Net sales 100.0% 100.0% 100.0% 100.0% Cost of
products sold 75.4 74.1 74.6 75.7 ------ ------ ------ ------ Gross
margin 24.6 25.9 25.4 24.3 Selling, general and administrative
expense 14.6 14.9 15.2 14.3 ------ ------ ------ ------ Income from
operations 10.0 11.0 10.2 10.0 Other income (expense): Interest
expense (0.1) (0.3) (0.2) (0.3) Other income and expense, net - - -
0.3 ------ ------ ------ ------ Income before provision for income
taxes 9.9 10.7 10.0 10.0 Provision for income taxes 3.4 3.6 3.5 3.5
------ ------ ------ ------ Net income 6.5% 7.1% 6.5% 6.5% ======
====== ====== ====== Selected Operating Segment Data: ( Dollar
Amounts in Thousands ) Advanced specialty products: Customer orders
received $11,141 $11,962 $37,854 $44,301 Net sales 10,305 13,225
31,124 40,040 Microwave components and systems: Customer orders
received 15,229 11,891 43,530 33,482 Net sales 14,495 11,483 44,737
32,230 Power management systems: Customer orders received 2,742
1,641 6,231 7,812 Net sales 2,173 2,341 7,014 7,731 Sensors and
controls: Customer orders received 3,308 5,577 12,342 19,543 Net
sales 4,504 6,075 15,342 16,851 DATASOURCE: Spectrum Control, Inc.
CONTACT: Investor Relations, John P. Freeman, Senior Vice President
and Chief Financial Officer, Spectrum Control, Inc.,
+1-814-474-4310 Web Site: http://www.spectrumcontrol.com/
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