Pacific Aerospace & Electronics, Inc. Announces Record Second Quarter Sales, Reduced Income From Operations and a Non-Recurring Charge to Earnings
WENATCHEE, Wash., Jan. 7 /PRNewswire/ -- Pacific Aerospace & Electronics, Inc. (Nasdaq: PCTH; PCTHW) has announced record quarterly sales for its second quarter ended November 30, 1998. Net sales increased 146% to $30.5 million for the quarter, compared to $12.4 million for the same quarter last year. Earnings before interest, taxes, depreciation and amortization (''EBITDA''), prior to a $1.6 million inventory adjustment discussed below, were approximately $4.2 million for the second quarter, compared to $1.6 million for the same quarter last year. At the same time, net income for the second quarter ended November 30, 1998 was a loss of $2.6 million, compared to income of $0.8 million for the same period last year. Details of the Company's reported results for both the second quarter and six months are shown in the financial information included in this release.
The significant increase in net sales is primarily attributable to the $16.1 million revenue contribution from Aeromet International for the second quarter. Aeromet was acquired in late July 1998 and provides high quality components and assemblies to most of the major aerospace and defense companies in Europe. As previously reported, the Company experienced a $642,000 operating loss during the first quarter at its Electronic Specialty Corporation (''ESC'') subsidiary. The comparable operating loss during the second quarter was reduced to $342,000. In addition, the Company recognized a $1.6 million non-recurring charge in the second quarter related to discontinuation of an unprofitable product line at ESC and the associated writedown of impaired inventory related to that product line. The following table reflects selected second quarter financial information as reported, as well as adjusted for the non-recurring charge for impaired inventory.
Second quarter selected financial results:
Q2 1999 Q2 1998
(In thousands except per share data)
Net Sales $30,477 $12,427
EBITDA 2,648 1,636
EBITDA excluding impaired inventory charge 4,248 1,636
Income from Operations 467 1,192
Income from Operations excluding
impaired inventory 2,067 1,192
Net Income (loss) (2,575) 830
Net Income (loss) excluding
impaired inventory (975) 830
EPS (diluted) $(0.15) $ 0.07
EPS (diluted) excluding impaired inventory $(0.06) $ 0.07
Net sales for the six-month period ended November 30, 1998 increased 105% to $49.6 million, compared to $24.2 million for the same period last year. $20.6 million of the increase was contributed by Aeromet International, the Company's UK-based subsidiary, acquired in late July 1998. EBITDA prior to non-recurring adjustments was $6.3 million for the six-month period, compared to $3.0 million for the same period last year. Net income for the six-month period was a loss of $7.0 million, compared to income of $1.6 million for the same period last year. The following table reflects selected financial information as reported, as well as adjusted for the non-recurring impaired inventory charge in the second quarter, and the previously reported non-recurring charges for ESC and Orca made in the first quarter of fiscal 1999.
Year-to-date selected financial results:
YTD 1999 YTD 1998
(In thousands except per share data)
Net Sales $49,655 $24,203
EBITDA 4,676 3,021
EBITDA excluding non-recurring charges 6,276 3,021
Income from Operations 1,365 2,169
Income from Operations
excluding non-recurring charges 2,965 2,169
Net Income (loss) (6,986) 1,640
Net Income (loss) excluding
non-recurring charges (977) 1,640
EPS (diluted) $ (0.43) $ 0.14
EPS (diluted) excluding non-recurring
charges $ (0.06) $ 0.14
''Exclusive of the non-recurring charges we have recorded during our first two quarters this year, our earnings shortfall in comparison to last year is primarily attributable to additional interest expense on the financing for the acquisition of Aeromet and the operational difficulties we encountered with ESC,'' said Nick Gerde, Vice President Finance & CFO. ''The revenue base, backlog and product offerings available when we acquired ESC in March 1998 were significantly lower than we expected, and our operational focus has been to adjust the scope of operations to fit the achievable revenue base. We have reduced the operating losses significantly during the second quarter with the goal of achieving break-even operations at ESC in the third quarter. We are also exploring potential remedies under provisions of the purchase agreement for ESC.''
''The challenges that we have encountered at ESC, combined with our aggressive investment to become a globally marketed, world-class manufacturer, have created a temporary shortfall versus expectations,'' remarked Don Wright, President & CEO. ''However, our balance sheet and cash position remain strong, our strategic and competitive fundamentals remain sound, and we believe the Company's long-term prospects are excellent. Through aggressive sales and marketing activities, we are achieving results with our new business concentration and diversification initiative, and our relationships with our customers are strong. We now manufacture components and assemblies in both Europe and the United States, and we have parts on virtually every new commercial airliner built. Our customer base has expanded to over 600, with direct sales to any one customer not accounting for more than 13% of total sales. Pacific Aerospace's management has the resolve and determination to work through these short-term challenges, while we focus on sustained growth and exceptional financial performance for our shareholders. Also, as previously announced, we are working with our investment banking firm, BancBoston Robertson Stephens, to explore the best ways to enhance shareholder value and fully realize the value of our Company.''
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Quarter Ended Six Months Ended
November 30, November 30,
1998 1997 1998 1997
Net Sales $30,477 $12,427 $49,655 $24,203
Cost of Sales 25,655 9,084 40,159 17,876
Gross Profit 4,822 3,343 9,496 6,327
Operating Expenses 4,355 2,151 8,131 4,158
Income from Operations 467 1,192 1,365 2,169
Other Income and Expense, net (2,742) (155) (10,306) (260)
Net Income Before Taxes (2,275) 1,037 (8,941) 1,909
Provision for Income Taxes (300) (207) 1,955 (269)
Net Income (Loss) (2,575) 830 (6,986) 1,640
Net Income (Loss) Per Share
Basic $(0.15) $0.07 $(0.43) $0.14
Diluted (0.15) .07 (0.43) 0.14
Shares used in Computation
Of Net Income (Loss) Per Share
Basic 16,731 11,903 16,073 11,814
Diluted 16,731 11,903 16,073 11,814
EBITDA $2,648 $1,636 $4,676 $3,021
EBITDA Per Share $ 0.16 $ 0.14 $ 0.29 $ 0.26
Consolidated Balance Sheets
(In Thousands)
November 30, May 31,
1998 1998
(Unaudited) (Audited)
ASSETS
Cash $16,392 $11,461
Accounts & Notes Receivable 21,327 9,375
Inventories 27,065 16,184
Other Current Assets 1,968 658
Total Current Assets 66,752 37,678
Property, Plant & Equipment, net 46,283 26,335
Patents, Intangibles & Other 54,344 14,567
Total Assets $167,379 $78,580
LIABILITIES And STOCKHOLDERS' EQUITY
Accounts Payable $12,303 $6,748
Other Current Liabilities 9,263 5,33
Total Current Liabilities 21,566 12,079
Long-Term Debt, net 80,884 9,059
Net Capital Leases, Deferrals & Other 2,055 1,300
Total Liabilities 82,939 10,359
Common Stock 19,000 15,000
Additional Paid-in Capital 70,781 57,830
Accumulated other comprehensive income 326 (436)
Accumulated Deficit (8,252) (1,267)
Total Stockholders' Equity 62,874 56,142
Total Liabilities & Equity $167,379 $78,580
Pacific Aerospace & Electronics, Inc. is a diversified, international manufacturing company that develops, manufactures and markets high-performance electronics and metal components and assemblies for the aerospace, defense, electronics and transportation industries. The Company's primary businesses are organized into three operational and marketing units. The Electronics Group develops, manufactures and sells a broad range of precision components, filtering devices, electronic assemblies, and explosively bonded materials designed to operate with a high degree of reliability in harsh environments such as the ocean, space and the human body. The Aerospace Group provides machined and cast aluminum and metal parts and component assemblies for commercial and military aircraft, heavy trucking and automotive uses, primarily in the United States. The Aeromet Group provides magnesium and aluminum precision cast parts and formed titanium and aluminum sheet products to the aerospace, defense and motorsport industries, primarily in Europe.
The Company's common stock trades on the NASDAQ National Market System under the symbol ''PCTH,'' and its warrants trade under the symbol ''PCTHW''.
Forward-looking statements in this release concerning trends or anticipated operating results are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties related to the Company's operations. These risks and uncertainties include, but are not limited to, competitive factors (including the possibility of increased competition or technological development, competitors, and price pressures); legal factors (such as limited protection of the Company's proprietary technology and changes in government regulation); and the Company's dependence on key personnel and significant customers.
SOURCE: Pacific Aerospace & Electronics, Inc. |
