SOURCE: Qualmark Corp.

March 12, 2008 08:17 ET

Qualmark Corporation Reports Fourth Quarter and Fiscal Year 2007 Financial Results

DENVER, CO--(Marketwire - March 12, 2008) - Qualmark Corporation (OTCBB: QMRK), a world leader in designing, manufacturing and marketing HALT (Highly Accelerated Life Testing), HASS (Highly Accelerated Stress Screening) and electrodynamic systems, today announced financial results for the fiscal quarter and year ended December 31, 2007.

Review of Operating Results

Revenue for the quarter ended December 31, 2007 was $4,480,000 as compared to $4,302,000 for the comparable period in 2006. In accordance with U.S. generally accepted accounting principles (GAAP), net loss for the quarter ended December 31, 2007 was $506,000 or $0.06 per diluted share as compared to net income of $429,000 or $0.05 per diluted share for the comparable period in 2006. Included in the quarter ended December 31, 2007 net loss was a write off of $537,000 of obsolete inventory, a $447,000 impairment write down of goodwill and a $491,000 credit for deferred tax assets, primarily related to the current year's net operating loss carry forward. Included in the quarter ended December 31, 2006 net income was a credit of $135,000 for deferred tax assets.

For the year ended December 31, 2007, revenue was $14,477,000 as compared to $16,427,000 for the prior year. Net loss for the year was $583,000 or $0.07 per diluted share as compared to a net income of 1,151,000 or $0.11 per diluted share for the prior year.

Andrew Drenick, Qualmark's new CEO and President, stated, "We are very pleased to report our fourth quarter sales and operating results which included record revenue of just under $4.5 million and a sequential increase in revenue of 65% compared to our third quarter revenue. This revenue jump was accomplished with a rebound in orders in our HALT/HASS business as well as continued growth from Ling Electronics, our electrodynamic business."

"Our fourth quarter financial and operating results included the write off of obsolete inventory, which had an impact on our gross profit margins, and the write down of goodwill, which affected our operating, pretax and net loss. The fourth quarter also included a $600,000 private placement capital raise that strengthened our balance sheet and enabled us to expand on our product development and customer support activities," concluded Mr. Drenick.

QualMark's quarterly conference call to discuss fourth quarter 2007 results will be held today, March 12, 2008 at 11:00 a.m. Eastern Time.

To participate via conference call dial 1-888-318-6430 no later than 10:50 a.m. EDT. The leader name is Andrew Drenick. The Qualmark security code to access this earnings call is QUALMARK.

                       Quarter Ended                   Year Ended
                        December 31                   December 31
                     2007           2006          2007           2006
               ---------------  ------------  -------------  -------------
HALT/HASS
 segment
 revenue       $     3,263,000  $  3,481,000  $  10,734,000  $  13,366,000
Electrodynamic
 segment
 revenue             1,217,000       821,000      3,743,000      3,061,000
               ---------------  ------------  -------------  -------------
Total revenue        4,480,000     4,302,000     14,477,000     16,427,000
               ---------------  ------------  -------------  -------------
Gross profit         1,052,000     1,862,000      5,136,000      6,958,000
Gross profit
 margin               (1) 23.5%         43.3%      (1) 35.5%          42.4%
               ---------------  ------------  -------------  -------------
(Loss) income
 from
 operations       (2) (915,000)      393,000   (2) (829,000)     1,379,000
Pretax (loss)
 income               (994,000)      308,000     (1,139,000)     1,060,000
               ===============  ============  =============  =============
Net (loss)
 income        (3)  $ (506,000) (4) $429,000  (3)$ (583,000) (4)$1,151,000
               ===============  ============  =============  =============

(1)Includes $537,000 for a write off of obsolete inventory
(2)Includes $447,000 for the write down of goodwill
(3)Includes $491,000 for a deferred tax benefit
(4)Includes $135,000 for a deferred tax benefit

Earnings Per Share:
Basic:
Net (loss)
 income        $      (506,000) $    429,000  $    (583,000) $   1,151,000
Preferred stock
 dividends                  --            --             --       (156,000)
Accretion of
 redeemable
 preferred stock            --            --             --       (183,000)
               ---------------  ------------  -------------  -------------
Net (loss) income
 available to
 common
 shareholders  $      (506,000) $    429,000  $    (583,000) $     812,000
               ===============  ============  =============  =============

Basic (loss)
 earnings per
 share                  ($0.06) $       0.05         ($0.07) $        0.14
               ===============  ============  =============  =============
Basic weighted
 average shares
 outstanding         8,969,000     8,776,000      8,846,000      5,981,000
               ===============  ============  =============  =============

Diluted:
Net (loss)
 income        $      (506,000) $    429,000  $    (583,000) $   1,151,000
Interest
 expense from
 convertible
 debt                       --        14,000             --         75,000
               ---------------  ------------  -------------  -------------
Net (loss)
 income
 available to
 common
 shareholders
 - Diluted     $      (506,000) $    443,000  $    (583,000) $   1,226,000
               ===============  ============  =============  =============

Diluted (loss)
 earnings per
 share                  ($0.06) $       0.05         ($0.07) $        0.11
               ===============  ============  =============  =============
Diluted weighted
 average shares
 outstanding         8,969,000     9,427,000      8,846,000     10,758,000
               ===============  ============  =============  =============

Qualmark Corporation, headquartered in Denver, Colorado, is the leader in designing, marketing, and manufacturing accelerated life-testing systems (HALT and HASS) providing the world's largest corporations with solutions that improve product reliability and allow them to get to market faster. The Company has installed more than 600 of its proprietary testing systems in 35 countries. The Company operates and partners with ten testing facilities worldwide.

The Company also offers electrodynamic vibration solutions through its subsidiary, Ling Electronics.

Ling Electronics, headquartered in West Haven, Connecticut, is the leader in supplying electrodynamic systems, components, and service to the worldwide vibration test equipment market.

The statements included in this press release concerning predictions of economic performance and management's plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, factors detailed in the Company's Securities and Exchange Commission filings; downturns in the Company's primary markets; variability of order flow, future economic conditions; competitive products and pricing; new product development; disruptions in the Company's operations from acts of God or extended maintenance; transportation difficulties; or the delivery of product under existing contracts and other factors.

Contact Information

  • Contact:
    Qualmark Corporation
    Anthony Scalese
    CFO
    303-254-8800
    Internet: www.qualmark.com

    Investor Relations
    Andrew Barwicki
    516-662-9461