SOURCE: Orbit International Corp.

Orbit International Corp.

March 05, 2015 08:45 ET

Orbit International Corp. Reports 2014 Year End Results

HAUPPAUGE, NY--(Marketwired - Mar 5, 2015) - Orbit International Corp. (OTC PINK: ORBT) today announced results for the fourth quarter and year ended December 31, 2014.

Fourth Quarter 2014 vs. Fourth Quarter 2013

  • Net sales were $3,957,000, as compared to $5,807,000.
  • Gross margin was 28.1%, as compared to 34.3%.
  • Net loss was $653,000 ($0.15 loss per share), as compared to a net loss of $2,726,000 ($0.62 loss per share).
  • Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was a loss of $542,000 ($0.12 loss per share), as compared to a loss of $178,000 ($0.04 loss per share).

Full Year 2014 vs. Full Year 2013

  • Net sales were $19,160,000, as compared to $24,838,000.
  • Gross margin was 34.5%, as compared to 37.6%.
  • Net loss was $2,001,000 ($0.46 loss per share), as compared to a net loss of $2,570,000 ($0.58 loss per share).
  • Net loss for the 2014 year includes $1,089,000 of costs associated with the consolidation of our Quakertown, PA facility into our Hauppauge, NY facility. Exclusive of these costs, net loss for the 2014 year was $912,000 ($0.21 loss per share). 
  • Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was a loss of $1,396,000 ($0.32 loss per share), as compared to earnings of $370,000 ($0.08 per diluted share).
  • Backlog at December 31, 2014 was $12.0 million as compared to $9.8 million at September 30, 2014 and $10.1 million at December 31, 2013.

Mitchell Binder, President & Chief Executive Officer, stated, "Our earnings for the quarter were adversely impacted by lower revenues at our Electronics Group which were attributable to weak bookings in the first half of 2014 which directly impacted delivery schedules in our fourth quarter. Because of difficult industry conditions, we embarked on several cost cutting initiatives since mid-2013, the most significant being our decision to close our Quakertown, PA operation at the end of 2013 and, in October 2014, to voluntarily delist our common shares from the Nasdaq Capital Market and to subsequently deregister our common stock under the Securities Exchange Act of 1934. As we stated in earlier releases, lower revenues would mitigate the impact of these cost cutting measures in 2014 and we believe that this will carry over into the first quarter of 2015."

Mr. Binder added, "However, in summary, our outlook for 2015 is much improved. Our backlog is up and our costs have been significantly reduced. Business conditions improved in the second half of 2014 and into 2015 as bookings significantly increased. We expect our revenues to improve based on our delivery schedules and coupled with our lower cost structure, we anticipate our operating leverage will lead to improved operating performance in 2015 beginning in our second quarter. Several significant contracts received since July 1, 2014 have resulted in the following:

  • Bookings in the second half of 2014 were 46.9% higher than in the first half of 2014.
  • Consolidated bookings for both our Electronics and Power Groups exceeded $6,000,000 for both the third and fourth quarters.
  • Backlog at 12/31/14 was $12.0 million v. $10.1 million at 12/31/13, an 18.2% increase year over year.
  • Consolidated bookings for the months of January 2015 and February 2015 exceeded $5.0 million and backlog is above $15.0 million at February 28, 2015.
  • We expect bookings will again exceed $6,000,000 for the first quarter of 2015."

Mr. Binder continued, "The significant increase in our bookings has improved our revenue outlook for 2015 and into 2016. Our operating performance for the fourth quarter of 2014 once again benefitted from the performance of our Power Group but was adversely affected by the results from our Electronics Group. However, it is our Electronics Group that has seen the considerable improvement in bookings since the first half of 2014 with bookings for follow-on contracts as well as new applications."

Mr. Binder added, "Our backlog at December 31, 2014 was $12.0 million compared to $9.8 million at September 30, 2014 and $8.2 million at June 30, 2014 reflecting higher backlogs at both our Electronics and Power Groups. Despite the improvement in our bookings, we remain in a very difficult industry. Our bid and proposal pipeline for follow-on opportunities is still good but we remain very cautious regarding the timing of actual awards. Consequently, we will continue to attempt to reduce our costs to maximize our operating margins." 

David Goldman, Chief Financial Officer, noted, "Our financial condition remains strong. At December 31, 2014, total current assets were approximately $15.6 million versus total current liabilities of approximately $3.3 million for a 4.7 to 1 current ratio. Cash, cash equivalents and marketable securities as of December 31, 2014, aggregated approximately $2.4 million. To offset future federal and New York State taxes resulting from profits, we have approximately $11 million and $4 million in available federal and New York State net operating loss carryforwards, respectively, which should enhance future cash flow. Due to our weak operating results in the fourth quarter, at December 31, 2014 we were not in compliance with one of our financial covenants under our credit agreement with our primary lender. However, we are currently negotiating with our primary lender and we expect that this covenant will be waived for December 31, 2014 and our existing line of credit will be extended as well."

Mr. Goldman added, "During the quarter, we continued to pay down our debt. In addition, since January 1, 2012, we have repurchased in excess of 368,000 shares of our stock in the marketplace at an average price of $3.55 per share. Our tangible book value at December 31, 2014 was $2.89 as compared to $3.04 at September 30, 2014 and $3.32 per share at December 31, 2013 (this does not include any value for the potential deferred tax asset from our operating loss carryforwards that could offset future taxable income)."

Mr. Binder concluded, "Along with our pipeline of follow-on opportunities on existing programs, we continue to bid our new VPX technology into various programs. In a growing number of cases our products have been approved on certain platforms, many of which are awaiting funding. To date, our contract awards have been limited, but we remain encouraged that these new technologies will layer onto our existing business. Our VPXtra power supplies, GUI driven health monitors as well as backplanes and related items can be found on our web portal -- vmevpx.com."

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 facility in Hauppauge, New York. Orbit's Power Group, also located in Hauppauge, NY, designs and manufactures a wide array of power products including AC power supplies, frequency converters, inverters, uninterruptible power supplies, VME/VPX power supplies as well as various COTS power sources. The Company also has a sales office in Newbury Park, CA and a facility in Louisville, KY dedicated to the design and manufacture of gun weapons systems as well as VME/VPX solutions including backplanes, health monitors, air transport racks and components.

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 reports posted with the OTC Disclosure and News service as well as Orbit's prior 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.

   
Orbit International Corp.  
Consolidated Statements of Income  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months Ended
December 31,
    Year Ended
December 31,
 
    (unaudited)     (unaudited)     (audited)  
    2014     2013     2014     2013  
                                 
Net sales   $ 3,957     $ 5,807     $ 19,160     $ 24,838  
                                 
Cost of sales     2,846       3,818       12,549       15,495  
                                 
Gross profit     1,111       1,989       6,611       9,343  
                                 
Selling general and administrative expenses    
1,757
     
2,450
     
8,575
     
9,569
 
Interest expense     10       13       41       59  
                                 
Investment and other (income) expense     (22 )     (11 )     (36 )     (22 )
                                 
Loss before taxes     (634 )     (463 )     (1,969 )     (263 )
                                 
Income tax provision     19       2,263       32       2,307  
                                 
Net loss   $ (653 )   $ (2,726 )   $ (2,001 )   $ (2,570 )
                                 
                                 
Basic loss per share   $ (0.15 )   $ (0.62 )   $ (0.46 )   $ (0.58 )
                                 
Diluted loss per share   $ (0.15 )   $ (0.62 )   $ (0.46 )   $ (0.58 )
                                 
Weighted average number of shares outstanding:                                
  Basic     4,382       4,416       4,384       4,453  
  Diluted     4,382       4,416       4,384       4,453  
                                 
   
Orbit International Corp.  
Consolidated Statements of Income  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2014     2013     2014     2013  
                                 
EBITDA (as adjusted) Reconciliation                                
Net loss   $ (653 )   $ (2,726 )   $ (2,001 )   $ (2,570 )
Interest expense     10       13       41       59  
Tax expense     19       2,263       32       2,307  
Depreciation and amortization     68       245       440       463  
Stock based compensation     14       27       92       111  
EBITDA (as adjusted) (1)   $ (542 )   $ (178 )   $ (1,396 )   $ 370  
                                 
EBITDA (as adjusted) Per Diluted Share Reconciliation                                
Net loss   $ (0.15 )   $ (0.62 )   $ (0.46 )   $ (0.58 )
Interest expense     0.00       0.00       0.01       0.01  
Tax expense     0.01       0.51       0.01       0.52  
Depreciation and amortization     0.02       0.06       0.10       0.10  
Stock based compensation     0.00       0.01       0.02       0.03  
EBITDA (as adjusted), per diluted share (1)   $ (0.12 )   $ (0.04 )   $ (0.32 )   $ 0.08  
                                 

(1) The EBITDA (as adjusted) tables presented are not determined in accordance with accounting principles generally accepted in the United States of America. Management uses EBITDA (as adjusted) to evaluate the operating performance of its business. It is also used, at times, by some investors, securities analysts and others to evaluate companies and make informed business decisions. EBITDA (as adjusted) is also a useful indicator of the income generated to service debt. EBITDA (as adjusted) is not a complete measure of an entity's profitability because it does not include costs and expenses for interest, depreciation and amortization, income taxes and stock based compensation. EBITDA (as adjusted) as presented herein may not be comparable to similarly named measures reported by other companies.

       
    Year Ended
December 31,
 
Reconciliation of EBITDA (as adjusted)
to cash flows provided by operating activities (1)
 
2014
   
2013
 
                 
EBITDA (as adjusted)   $ (1,396 )   $ 370  
Interest expense     (41 )     (59 )
Income tax expense     (32 )     (55 )
Gain on sale of marketable securities     (5 )     (7 )
Gain on sale of fixed assets     (16 )     -  
Loss on disposal of property and equipment     11       -  
Bond amortization     (3 )     10  
Net change in operating assets and liabilities     1,732       3,726  
Cash flows provided by operating activities   $ 250     $ 3,985  
                 
   
Orbit International Corp.  
Consolidated Balance Sheets  
   
  December 31, 2014   December 31, 2013  
    (unaudited)        
ASSETS            
Current assets:            
  Cash and cash equivalents $ 2,139,000   $ 2,562,000  
  Investments in marketable securities   284,000     243,000  
  Accounts receivable, less allowance for doubtful accounts   1,891,000     2,981,000  
  Inventories   11,089,000     11,803,000  
  Income tax receivable   2,000     -  
  Other current assets   220,000     264,000  
             
    Total current assets   15,625,000     17,853,000  
             
Property and equipment, net   641,000     975,000  
Goodwill   868,000     868,000  
Other assets   40,000     35,000  
             
    Total assets $ 17,174,000   $ 19,731,000  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
  Note payable-bank   1,725,000     2,100,000  
  Accounts payable   503,000     510,000  
  Liability associated with non-renewal of senior officer contract   4,000     36,000  
  Accrued expenses   898,000     1,149,000  
  Income tax payable   -     25,000  
  Customer advances   190,000     17,000  
             
    Total current liabilities   3,320,000     3,837,000  
             
Liability associated with non-renewal of senior officer contract, net of current portion   -     4,000  
Other liabilities   37,000     -  
             
    Total liabilities   3,357,000     3,841,000  
             
Stockholders' Equity            
  Common stock   522,000     523,000  
  Additional paid-in capital   22,848,000     22,824,000  
  Treasury stock   (2,225,000 )   (2,133,000 )
  Accumulated other comprehensive loss   (8,000 )   (5,000 )
  Accumulated deficit   (7,320,000 )   (5,319,000 )
             
    Stockholders' equity   13,817,000     15,890,000  
             
    Total liabilities and stockholders' equity $ 17,174,000   $ 19,731,000  
             

Contact Information

  • CONTACT
    Mitchell Binder
    President & Chief Executive Officer
    631-435-8300