SOURCE: Cyalume Technologies Holdings Inc.

Cyalume Technologies Holdings Inc.

May 21, 2015 09:00 ET

Cyalume Technologies Holdings, Inc. Reports Significant Improvement in First Quarter 2015 Financial Results

FORT LAUDERDALE, FL--(Marketwired - May 21, 2015) - Cyalume Technologies Holdings, Inc. (OTCQB: CYLU) ("the Company" or "Cyalume") today reported its financial results for the first quarter ended March 31, 2015.

$ in thousands   3 Months Ended        
(except per share data)   3/31/15     3/31/14     Change  
Revenues   $ 6,942     $ 7,269     -4.5 %
Gross profit   $ 3,138     $ 2,877     9.1 %
Gross margin     45.2 %     39.6 %   560 bps  
Net income (loss)   $ (67 )   $ (674 )   NM*  
Adjusted EBITDA **   $ 1,128     $ 211     434.6 %

* NM - Not meaningful 
** 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.

Cyalume's President & CEO, Zivi Nedivi, noted, "Gross profit for the first quarter of 2015 benefited from favorable sales mix of higher margin products, despite the slight decline in overall revenues, as compared to the first quarter of last year. We are extremely pleased to report improvement in adjusted EBITDA as compared to the same period of 2014, and we expect this trend to continue in the coming quarters."

Dale Baker, Chief Operating Officer, stated, "The improvement in adjusted EBITDA was also achieved through lower costs as a result of cost saving initiatives and improvement in manufacturing efficiency. For 2015 as a whole, we anticipate top and bottom line growth driven by the ramp-up of M1110 ammunition sales starting in the second quarter, and growth in our specialty chemical business which is focusing on medical and pharmaceutical products and initiatives."

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)  
    For the Three     For the Three  
    Months Ended     Months Ended  
    March 31, 2015     March 31, 2014  
Revenues   $ 6,942     $ 7,269  
Cost of revenues     3,804       4,392  
Gross profit     3,138       2,877  
Other expenses (income):                
  Sales and marketing     546       954  
  General and administrative     1,574       1,919  
  Research and development     312       375  
  Interest expense, net     503       513  
  Interest expense - related party     63       106  
  Amortization of intangible assets     239       496  
  Change in warrant liability fair value     20       (947 )
  Other (income) expenses, net     (137 )     61  
Total other expenses, net     3,120       3,477  
Income (loss) before income taxes     18       (600 )
Provision for income taxes     85       74  
Net loss     (67 )     (674 )
Other comprehensive loss, net of tax:                
  Foreign currency translation adjustments     (341 )     (8 )
Other comprehensive loss     (341 )     (8 )
Comprehensive loss   $ (408 )   $ (682 )
Net loss   $ (67 )   $ (674 )
  Series A convertible preferred stock dividends     (135 )     (120 )
  Series C preferred stock dividends     (62 )     0  
Loss available to common stockholders - basic and diluted   $ (264 )   $ (794 )
Loss per common share:                
  Basic and diluted     (0.01 )     (0.04 )
Weighted average shares used to compute net loss per common share:                
  Basic and diluted     21,400,244       21,004,592  
Cyalume Technologies Holdings, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands, except shares and per share information)  
    March 31,
    December 31,
Current assets:            
  Cash   $ 1,343     $ 2,358  
  Accounts receivable, net of allowance for doubtful accounts of $22     3,508       3,622  
  Inventories, net     8,506       7,826  
  Prepaid expenses and other current assets     813       648  
Total current assets     14,170       14,454  
  Property, plant and equipment, net     6,955       7,120  
  Goodwill     7,992       7,992  
  Other intangible assets, net     6,294       6,591  
  Other noncurrent assets     32       18  
Total assets   $ 35,443     $ 36,175  
Liabilities and Stockholders' (Deficit) Equity                
Current liabilities:                
  Line of credit   $ 900     $ 2,050  
  Current portion of notes payable     982       5,775  
  Accounts payable     3,021       2,144  
  Accrued expenses     2,777       2,690  
  Deferred revenue and deferred rent     187       181  
  Income taxes payable     710       644  
  Capital lease obligation     3       7  
  Warrant liability     45       25  
Total current liabilities     8,625       13,516  
  Notes payable, net of current portion     14,749       10,214  
  Note payable due to related parties     2,100       2,100  
  Deferred income taxes     368       430  
  Asset retirement obligation     206       204  
  Legal obligation     2,781       2,781  
  Other noncurrent liabilities     69       78  
Total liabilities     28,898       29,323  
Commitments and contingencies                
  Series C preferred stock, $0.001 par value; 1,000,000 shares authorized; 1,000 shares issued and outstanding     2,165       2,103  
  Series A convertible preferred stock, $0.001 par value; 1,000,000 shares authorized; 123,077 shares issued and outstanding     4,699       4,564  
Stockholders' (deficit) 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 issued and outstanding     21       21  
  Additional paid-in capital     102,918       103,014  
  Accumulated deficit     (103,657 )     (103,590 )
  Accumulated other comprehensive loss     (1,002 )     (661 )
Total stockholders' (deficit) equity     (319 )     185  
Total liabilities and stockholders' (deficit) equity   $ 35,443     $ 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  
    March 31,     March 31,  
    2015     2014  
Net Income (loss)   $ (67 )   $ (674 )
Adjustments to arrive at EBITDA:                
  Interest expense, net     566       619  
  Provision for (benefit from) income taxes     85       74  
  Depreciation     305       374  
  Amortization     239       496  
EBITDA     1,128       889  
Adjustments to arrive at Adjusted EBITDA:                
Stock based compensation     101       208  
Foreign currency loss (gain)     (121 )     11  
Non-cash change in fair values (1)     20       (897 )
Adjusted EBITDA   $ 1,128     $ 211  
(1) Prior year non-cash change in fair values relates primary to stock warrants.  

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