Arotech Corporation Reports Results for the Third Quarter and

Arotech Corporation Reports Results for the Third Quarter and First
Nine Months, 2012 
Net Income From Continuing Operations in Third Quarter of $433K, or
$0.03 per Share; Revenues, Operating Income, Net Income and Margins
All up 
ANN ARBOR, MI -- (Marketwire) -- 11/07/12 --  Arotech Corporation
(NASDAQ: ARTX), a provider of quality defense and security products
for the military, law enforcement and homeland security markets,
today reported results for the quarter and nine months ended
September 30, 2012. 
Third Quarter Results 
Revenues from continuing operations for the third quarter reached
$21.4 million, compared to $21.1 million for the corresponding period
in 2011, an increase of 1.4% over the same period last year. 
Gross profit from continuing operations for the quarter was $5.0
million, or 23.1% of revenues, compared to $4.1 million, or 19.5% of
revenues, for the corresponding period last year, a 3.6 point
increase in the gross margin percentage. 
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) from continuing operations for the quarter was $1.4 million,
compared to $288,000 for the corresponding period of 2011. Arotech
believes that information concerning EBITDA enhances overall
understanding of its current financial performance. Arotech computes
EBITDA, which is a non-GAAP financial measure, as reflected in the
table below. 
The Company's net income from continuing operations for the third
quarter was $433,000, or $0.03 per share, versus a net loss of
$(977,000), or $(0.07) per share, for the corresponding period last
year. 
The Company's net income from all operations, including discontinued
operations, for the third quarter was $498,000, or $0.03 per share,
versus a net loss of $(1.5 million), or $(0.11) per share, for the
corresponding period last year. 
"We are extremely pleased with the results of this quarter," declared
Arotech Chairman and CEO Robert S. Ehrlich. "On every measure of
performance -- revenues, margins, EBITDA and net income -- we met the
goals we had set for ourselves, and improved both year-over-year and
quarter-over-quarter," continued Ehrlich. "We anticipate that we will
continue to perform well in the fourth quarter, and that we will
bring a strong backlog into 2013," concluded Ehr
lich. 
First Nine Months Results 
Revenues from continuing operations for the first nine months of 2012
reached $57.9 million, compared to $44.2 million for the
corresponding period last year, an increase of 31.1% over the same
period last year. 
Gross profit from continuing operations for the first nine months of
2012 was $12.6 million, or 21.8% of revenues, compared to $11.1
million, or 25.2% of revenues, for the corresponding period last
year, a 3.4 point decrease in the gross margin percentage. 
Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization
(EBITDA) from continuing operations for the first nine months of 2012
was $1.8 million, compared to a loss of $(256,000) for the
corresponding period last year. Arotech believes that information
concerning EBITDA enhances overall understanding of its current
financial performance. Arotech computes EBITDA, which is a non-GAAP
financial measure, as reflected in the table below. 
The Company's net loss from continuing operations for the first nine
months of 2012 was $(2.0 million), or $(0.12) per share, versus a net
loss of $(3.4 million), or $(0.25) per share, for the corresponding
period last year. 
The Company's net loss from all operations, including discontinued
operations, for the first nine months of 2012 was $(3.5 million), or
$(0.22) per share, versus a net loss of $(6.2 million), or $(0.45)
per share, for the corresponding period last year. 
Backlog 
Backlog of orders totaled approximately $90.0 million as of September
30, 2012, as compared to $89.1 million at September 30, 2011 and
$87.3 million as of June 30, 2012. 
Cash Position at Quarter End 
As of September 30, 2012, the Company had $758,000 in cash and
$94,000 in restricted collateral deposits, as compared to December
31, 2011, when the Company had $2.3 million in cash and $1.7 million
in restricted collateral deposits. 
The Company also had $289,000 in unused bank lines of credit with its
main bank as of September 30, 2012, under a $10.0 million credit
facility under its FAAC subsidiary, which is secured by the Company's
assets and the assets of the Company's other domestic subsidiaries
and guaranteed by the Company and its other domestic subsidiaries, at
a rate of LIBOR plus 375 basis points. This credit facility expires
May 2013. There was $289,000 of available credit on this line as of
September 30, 2012, based on the borrowing base calculations. 
The Company had trade receivables of $10.0 million as of September
30, 2012, compared to $11.9 million as of December 31, 2011. The
Company had a current ratio (current assets/current liabilities) of
1.33 as of September 30, 2012 and 1.36 as of December 31, 2011. 
Conference Call 
The Company will host a conference call Tuesday, November 13, 2012 at
9:00 a.m. EST. Those wishing to access the conference call should
dial 1-877-407-0778 (U.S.) or 1-201-689-8565 (international) a few
minutes before the 9:00 a.m. EST start time. A replay of the
conference call will be available starting Tuesday, November 13, 2012
at 10:30 a.m. EST until Tuesday, November 20, 2012 at 11:59 p.m. The
replay telephone number is 1-877-660-6853 (U.S.) and 1-201-612-7415
(international). The replay ID pass code for both the call and the
replay is 403549.  
About Arotech Corporation 
Arotech Corporation is a leading provider of quality defense and
security products for the military, law enforcement and homeland
security markets, including multimedia interactive
simulators/trainers and advanced zinc-air and lithium batteries and
chargers. Arotech operates through two major business divisions:
Training and Simulation, and Battery and Power Systems.  
Arotech is incorporated in Delaware, with corporate offices in Ann
Arbor, Michigan and research, development and production subsidiaries
in Alabama, Michigan and Israel. 
Except for the historical information herein, the matters discussed
in this news release include forward-looking statements, as defined
in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements reflect management's current knowledge,
assumptions, judgment and expectations regarding future performance
or events. Although management believes that the expectations
reflected in such statements are reasonable, readers are cautioned
not to place undue reliance on these forward-looking statements, as
they are subject to various risks and uncertainties that may cause
actual results to vary materially. These risks and uncertainties
include, but are not limited to, risks relating to: product and
technology development; the uncertainty of the market for Arotech's
products; changing economic conditions; delay, cancellation or
non-renewal, in whole or in part, of contracts or of purchase orders;
Arotech's ability to remain listed on the Nasdaq Stock Market in
accordance with the Nasdaq's $1.00 minimum bid price and other
continued listing standards; and other risk factors detailed in
Arotech's most recent Annual Report on Form 10-K for the fiscal year
ended December 31, 2011 and other filings with the Securities and
Exchange Commission. Arotech assumes no obligation to update the
information in this release. Reference to the Company's website above
does not constitute incorporation of any of the
 information thereon
into this press release.  
TABLES TO FOLLOW 


 
                                                                            
                            AROTECH CORPORATION                             
             CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)              
                     (U.S. Dollars, except share data)                      
                                                                            
                             Nine months ended        Three months ended    
                               September 30,             September 30,      
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
Revenues                 $57,915,901  $44,170,119  $21,435,063  $21,137,932 
                         -----------  -----------  -----------  ----------- 
                                                                            
Cost of revenues,                                                           
 exclusive of                                                               
 amortization of                                                            
 intangibles              45,307,654   33,043,351   16,475,160   17,019,125 
Research and development                                                    
 expenses                  1,657,056    1,290,656      610,095      435,707 
Selling and marketing                                                       
 expenses                  3,868,531    3,654,211    1,255,337    1,251,978 
General and                                                                 
 administrative expenses   7,066,080    7,744,637    2,064,695    2,780,788 
Amortization of                                                             
 intangible assets and                                                      
 capitalized software        893,743    1,432,507      292,438      477,884 
                         -----------  -----------  -----------  ----------- 
Total operating costs                                                       
 and expenses             58,793,064   47,165,362   20,697,725   21,965,482 
                         -----------  -----------  -----------  ----------- 
Operating income (loss)     (877,163)  (2,995,243)     737,338     (827,550)
                         -----------  -----------  -----------  ----------- 
Other income                   9,894       36,086        9,141        3,587 
Financial expenses, net     (565,301)    (162,873)    (186,301)    (152,768)
                         -----------  -----------  -----------  ----------- 
Total other income                                                          
 (expense)                  (555,407)    (126,787)    (177,160)    (149,181)
                         -----------  -----------  -----------  ----------- 
Income (loss) from                                                          
 continuing operations                                                      
 before income tax                                                          
 expense                  (1,432,570)  (3,122,030)     560,178     (976,731)
                         -----------  -----------  -----------  ----------- 
Income tax expense           524,091      281,335      126,937           89 
                         -----------  -----------  -----------  ----------- 
Income (loss) from                                                          
 continuing operations    (1,956,661)  (3,403,365)     433,241     (976,820)
Income (loss) from                                                          
 discontinued                                                               
 operations, net of                                                         
 income tax               (1,506,353)  (2,837,061)      64,848     (549,022)
                         -----------  -----------  -----------  ----------- 
Net income (loss)         (3,463,014)  (6,240,426)     498,089   (1,525,842)
                         -----------  -----------  -----------  ----------- 
Other comprehensive                                                         
 income, net of income                                                      
 tax                                                                        
Foreign currency                                                            
 translation adjustment     (189,414)    (474,631)     (17,903)    (796,578)
                         -----------  -----------  -----------  ----------- 
Comprehensive income                                                        
 (loss)                  $(3,652,428) $(6,715,057) $   480,186  $(2,322,420)
                         ===========  ===========  ===========  =========== 
Basic net income/loss                                                       
 per share - continuing                                                     
 operations              $     (0.13) $     (0.25) $      0.03  $     (0.07)
Basic net income/loss                                                       
 per share -                                                                
 discontinued operations $     (0.10) $     (0.20) $      0.00  $     (0.04)
                         -----------  -----------  -----------  ----------- 
Basic net income/loss                                                       
 per share               $     (0.23) $     (0.45) $      0.03  $     (0.11)
                         ===========  ===========  ===========  =========== 
Diluted net income/loss                                                     
 per share - continuing                                                     
 operations              $     (0.12) $     (0.25) $      0.03  $     (0.07)
Diluted net income/loss                                                     
 per share -                                                                
 discontinued operations $     (0.10) $     (0.20) $      0.00  $     (0.04)
                         -----------  -----------  -----------  ----------- 
Diluted net income/loss                                                     
 per share               $     (0.22) $     (0.45) $      0.03  $     (0.11)
                         ===========  ===========  ===========  =========== 
Weighted average number                                                     
 of shares used in                                                          
 computing basic net                                                        
 income/loss per share    15,308,724   13,922,270   15,336,947   14,216,701 
                         ===========  ===========  ===========  =========== 
Weighted average number                                                     
 of shares used in                                                          
 computing diluted net                                                      
 income/loss per share    15,911,464   13,922,270   15,939,687   14,216,701 
                         ===========  ===========  ===========  =========== 

 
Reconciliation of Non-GAAP 
Financial Measure - Continuing Operations  
To supplement Arotech's consolidated financial statements presented
in accordance with U.S. GAAP, Arotech uses a non-GAAP measure,
Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization
(EBITDA). This non-GAAP measure is provided to enhance overall
understanding of Arotech's current financial performance and its
progress towards GAAP profitability. Reconciliation of EBITDA to the
nearest GAAP measure follows:  


 
                                                                            
                              Nine months ended        Three months ended   
                                September 30,            September 30,      
                          ------------------------  ----------------------- 
                              2012         2011         2012        2011    
                          -----------  -----------  ----------- ----------- 
Net Income (loss)                                                           
 continuing (GAAP                                                           
 measure)                 $(1,956,661) $(3,403,365) $   433,241 $  (976,820)
Add back:                                                                   
Financial (income)                                                          
 expense - including                                                        
 interest                     565,301      162,873      186,301     152,768 
Income tax expenses                                                         
 (benefit)                    524,091      281,335      126,937          89 
Depreciation and                                                            
 amortization expense       1,726,573    2,250,146      571,865     759,155 
Other adjustments*            912,978      452,902       61,555     352,484 
                          -----------  -----------  ----------- ----------- 
Total adjusted EBITDA     $ 1,772,282  $  (256,109) $ 1,379,899 $   287,676 
                          ===========  ===========  =========== =========== 
                                                                            
* Includes stock compensation expense, adjustments to allowances, one-time  
transaction expenses and other non-cash expenses.                           

  
CONTACT:
Victor Allgeier
TTC Group
(646) 290-6400
vic@ttcominc.com 
 
 
Press spacebar to pause and continue. Press esc to stop.