SOURCE: Cyalume Technologies Holdings Inc.

Cyalume Technologies Holdings Inc.

August 14, 2015 18:03 ET

Cyalume Technologies Holdings, Inc. Reports Continued Strong Improvement in Second Quarter 2015 Financial Results

FORT LAUDERDALE, FL--(Marketwired - Aug 14, 2015) - Cyalume Technologies Holdings, Inc. (OTCQB: CYLU) ("the Company" or "Cyalume") today reported its financial results for the second quarter ended June 30, 2015.

             
             
$ in thousands   3 Months Ended     Change  
  6/30/15     6/30/14    
Revenues   $ 9,916     $ 8,887     11.6 %
Gross profit   $ 4,590     $ 3,551     29.3 %
Gross margin     46.3 %     40.0 %   630 bps  
Net income   $ 2,053     $ 3,272     -37.3 %
Net income (loss) excluding "other non-operating income" *   $ 657     $ (823 )   NM***  
Adjusted EBITDA **   $ 2,267     $ 835     171.5 %
                       
                       

* A reconciliation of net income (loss) excluding "other non-operating income" to GAAP net income is contained later in this release.
** The Company views Adjusted EBITDA as an important measure in its analysis of the Company's business because it presents a view of the Company's performance on an ongoing basis without regard to capital structure, capital investment cycles and corresponding ages of related assets among comparable companies. A more detailed description of Adjusted EBITDA and a reconciliation to GAAP net income (loss) is contained later in this release.
*** NM - Not meaningful

Cyalume's President & CEO, Zivi Nedivi noted, "Continuing to build on a solid Q1 2015, gross profit for the second quarter of 2015 benefited from a favorable sales mix of higher margin products, in addition to a notable increase in overall revenues, as compared to the prior year. Revenues benefited by the start-up of a new M1110 training ammunition sales contract. We are extremely pleased with these results and expect to demonstrate a continuance of this improvement trend in the coming quarters."

Dale Baker, Chief Operating Officer, stated, "Our continued focus on controlling costs and improving manufacturing efficiencies again contributed to the improved profitability for the quarter. Cost reduction, in both production and administrative areas, remains a high priority."

About Cyalume Technologies Holdings, Inc.
Cyalume designs and manufactures non-pyrotechnic tactical products and training solutions for the world's militaries and law enforcement agencies, as well as for certain safety markets. Cyalume is the exclusive supplier to the U.S. and NATO-country militaries for all of their chemical light needs and operates manufacturing facilities in the U.S. and France. Through its subsidiary Cyalume Specialty Products, Cyalume also manufactures specialty chemical components for various markets.

Forward-Looking Statements
This press release includes forward-looking statements, including statements concerning anticipated future financial results. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company and which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the effect of regional and global economic and industrial market conditions including our expectations concerning their impact on the markets we serve; the effect of conditions in the financial and credit markets and their impact on the Company and our customers and suppliers; the impact of the Company's cost reduction initiatives; the Company's ability to execute its business plan to meet its sales, operating income, cash flow and capital expenditure guidance; the impact on the Company's gross profit margins as a result of changes in product mix; the Company's vulnerability to industry conditions and competition; the effect of any interruption in the Company's supply of raw materials or a substantial increase in the price of raw materials; ongoing capital expenditures and investment in research and development; compliance with any changes in government regulations and environmental and health and safety laws; the effect on the Company's international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, difficulty in accounts receivable collection and potentially adverse tax consequences; the effect of foreign currency exchange rates as the Company's non-U.S. sales continue to increase; reliance for a significant portion of the Company's total revenues on a limited number of large organizations and the continuity of business relationships with major customers; the loss of key personnel; the nature and extent of military operations being conducted by customers.

Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Cyalume's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

The footnotes and other disclosures contained in the Company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and other periodic filings are an integral part of its financial statements and should be read in conjunction with any review of its financial statements.

 
 
Cyalume Technologies Holdings, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except shares and per share information)
 
                         
    Three     Three     Six     Six  
    Months Ended     Months Ended     Months Ended     Months Ended  
    June 30, 2015     June 30, 2014     June 30, 2015     June 30, 2014  
Revenues   $ 9,916     $ 8,887     $ 16,858     $ 16,156  
Cost of revenues     5,326       5,336       9,130       9,728  
Gross profit     4,590       3,551       7,728       6,428  
                                 
Other expenses (income):                                
  Sales and marketing     562       911       1,108       1,865  
  General and administrative     1,912       1,554       3,486       3,473  
  Research and development     287       379       599       754  
  Interest expense, net     857       524       1,360       1,037  
  Interest expense - related party     37       117       100       223  
  Amortization of intangible assets     238       497       477       993  
  Legal Settlement     (1,381 )     0       (1,381 )     0  
  Change in warrant liability fair value     (15 )     (4,095 )     5       (5,042 )
  Other expenses, net     6       291       (131 )     352  
Total other expenses, net     2,503       178       5,623       3,655  
                                 
Income before income taxes     2,087       3,373       2,105       2,773  
Provision for income taxes     34       101       119       175  
Net income     2,053       3,272       1,986       2,598  
                                 
Other comprehensive (loss) income, net of tax:                                
  Foreign currency translation adjustments     73       (44 )     (268 )     (52 )
Other comprehensive income (loss)     73       (44 )     (268 )     (52 )
Comprehensive income   $ 2,126     $ 3,228     $ 1,718     $ 2,546  
                                 
Net income   $ 2,053     $ 3,272     $ 1,986     $ 2,598  
  Series A convertible preferred stock dividends     (141 )     (125 )     (276 )     (245 )
  Series C preferred stock dividends     (65 )     0       (127 )     0  
Net income available to common stockholders   $ 1,847     $ 3,147     $ 1,583     $ 2,353  
                                 
Earnings per common share:                                
  Basic   $ 0.09     $ 0.15     $ 0.07     $ 0.11  
  Diluted   $ 0.02     $ 0.10     $ 0.02     $ 0.08  
Weighted average shares to compute net earnings per common share:                                
  Basic     21,400,244       21,362,564       21,400,244       21,184,567  
  Diluted     100,479,954       32,153,976       100,370,051       29,322,654  
                                   
                                   
Cyalume Technologies Holdings, Inc.
 Condensed Consolidated Balance Sheets
(in thousands, except shares and per share information)
 
             
Assets   June 30,
2015
    December 31,
2014
 
Current assets:                
  Cash   $ 1,073     $ 2,358  
  Accounts receivable, net of allowance for doubtful accounts of $21 and $22, respectively     4,554       3,622  
  Inventories, net     8,168       7,826  
  Income taxes refundable     130       0  
  Prepaid expenses and other current assets     1,184       648  
Total current assets     15,109       14,454  
                 
  Property, plant and equipment, net     6,869       7,120  
  Goodwill     7,992       7,992  
  Other intangible assets, net     6,111       6,591  
  Debt issue costs, noncurrent     880       0  
  Other noncurrent assets     0       18  
Total assets   $ 36,961     $ 36,175  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
  Line of credit   $ 3,000     $ 2,050  
  Current portion of notes payable     598       5,775  
  Accounts payable     2,230       2,144  
  Accrued expenses     2,223       2,690  
  Deferred revenue and deferred rent     166       181  
  Income taxes payable     400       644  
  Capital lease obligation     0       7  
  Warrants liability     30       25  
  Legal obligation     1,400       0  
Total current liabilities     10,047       13,516  
                 
  Notes payable, net of current portion     16,598       10,214  
  Note payable due to related parties     0       2,100  
  Deferred income taxes     376       430  
  Legal obligation     0       2,781  
  Other noncurrent liabilities     280       282  
Total liabilities     27,301       29,323  
                 
Series C preferred stock, $0.001 par value; 1,000,000 shares authorized; 1,000 shares issued and outstanding     2,230       2,103  
Series D convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 10 shares issued and outstanding     830       0  
Series A convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 123,097 shares issued and outstanding     4,840       4,564  
Stockholders' equity:                
  Series B convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 1,000 shares issued and outstanding     1,401       1,401  
  Common stock, $0.001 par value; 150,000,000 shares authorized; 21,400,244 shares issued and outstanding     21       21  
  Additional paid-in capital     102,871       103,014  
  Accumulated deficit     (101,604 )     (103,590 )
  Accumulated other comprehensive loss     (929 )     (661 )
Total stockholders' equity     1,760       185  
Total liabilities and stockholders' equity   $ 36,961     $ 36,175  
                 
                 

Adjusted EBITDA (a Non-GAAP Financial Measure)

Cyalume defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation, amortization, non-cash stock-based compensation, foreign currency gains or losses and certain other income or expense items. Management uses Adjusted EBITDA for establishing internal budgets, goals and certain performance bonuses. Internal financial reports, including those provided to the Board of Directors, focus on Adjusted EBITDA. Since Adjusted EBITDA is not necessarily an indicator of overall cash flows of Cyalume, management reviews capital budgets and cash flow forecasts in parallel with Adjusted EBITDA analysis. Because Adjusted EBITDA eliminates interest expense, income taxes and depreciation, amortization, non-cash stock-based compensation, foreign currency gains or losses and one-time income or expense items, Cyalume considers this financial measure an important indicator of Cyalume's liquidity, operational strength and performance. Investors may find Adjusted EBITDA useful as it illustrates underlying operating trends in Cyalume's business. In addition, components of Adjusted EBITDA are a key component in the determination of Cyalume's compliance with certain covenants under its credit agreements. Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, cash flows, or other consolidated income or cash flow data presented in accordance with GAAP or as a measure of our liquidity or financial condition. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as discussed may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of Adjusted EBITDA to net loss for the periods presented.

 
 
Cyalume Technologies Holdings, Inc.
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)
 
             
    For the Three     For the Three  
    Months Ended     Months Ended  
    June 30,     June 30,  
    2015     2014  
                 
Net Income   $ 2,053     $ 3,272  
                 
Adjustments to arrive at EBITDA:                
  Interest expense, net     894       641  
  Provision for (benefit from) income taxes     34       101  
  Depreciation     310       376  
  Amortization     238       497  
                 
                 
EBITDA     3,529       4,887  
                 
Adjustments to arrive at Adjusted EBITDA:                
Stock based compensation     113       54  
Foreign currency loss (gain)     21       (11 )
Gain on legal settlement reduction     (1,381 )     0  
Change in warrant liability fair value     (15 )     (4,095 )
Adjusted EBITDA   $ 2,267     $ 835  
                 
                 

Net income (loss) excluding "other non-operating income" (a Non-GAAP Financial Measure)

Cyalume believes the Non-GAAP Financial Measure of Net Income (Loss) excluding "other non-operating income" to be meaningful as it serves to exclude two significant non-cash, non-operating line items which may otherwise obscure financial results from actual Company operations.

The following table sets forth a reconciliation of net income (loss) excluding "other non-operating income" to net income for the periods presented.

 
 
Cyalume Technologies Holdings, Inc.
Reconciliation of Net Income to Net Income (Loss) excluding "other non-operating income"
(in thousands)
 
             
    For the Three     For the Three  
    Months Ended     Months Ended  
    June 30,     June 30,  
    2015     2014  
                 
Net Income   $ 2,053     $ 3,272  
                 
Legal Settlement     (1,381 )     0  
Change in warrant liability fair value     (15 )     (4,095 )
Net income (loss) excluding "other non-operating income"   $ 657     $ (823 )
                 
                 

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