Aeroflex Announces First Quarter Fiscal 2013 Results Business Wire PLAINVIEW, N.Y. -- November 08, 2012 Aeroflex Holding Corp. ("Aeroflex") (NYSE:ARX), a leading global provider of high performance microelectronic components, and test and measurement equipment, today announced its financial results for the first quarter of fiscal 2013, which ended September 30, 2012. For the first quarter of fiscal 2013: *Net sales were $141.2 million compared to $154.9 million in the first quarter of fiscal 2012. *Operating loss was $(5.5) million and net loss was $(14.1) million, or $(0.17) per share, compared to operating income of $0.5 million and a net loss of $(5.0) million, or $(0.06) per share, in the first quarter of fiscal 2012. *On a Non-GAAP basis, operating income was $14.5 million, net income was $3.2 million, or $0.04 per share, and Adjusted EBITDA was $19.4 million compared to operating income of $20.9 million, net income of $8.3 million, or $0.10 per share, and Adjusted EBITDA of $25.7 million, in the first quarter of fiscal 2012. “Compared to our expectations, I am pleased with the performance of both AMS and ATS this quarter,” said Len Borow, Chief Executive Officer of Aeroflex. “Our AMS business has continued its consistent execution despite the challenging economic and political environment we are operating within. After our initial reorganization efforts this summer, our ATS business has begun to perform according to our expectation. We had a strong book-to-bill this quarter of over one-to-one led by ATS. We also generated sufficient cash that allowed us repay $25 million of debt this quarter. We look forward to continuing our recent success as we move throughout our fiscal year.” The following tables present selected financial information for the three months ended September 30, 2012 and 2011 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). The 32% Non-GAAP effective tax rate in the fiscal 2013 period and 34% in the fiscal 2012 period result from Aeroflex’s geographic mix of Non-GAAP pre-tax income. These rates were applied to Aeroflex’s Non-GAAP pre-tax income for the three month periods ended September 30, 2012 and 2011, respectively. A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release. Selected GAAP Results (In thousands, except percentages and per share data) Three Months Ended September 30, 2012 2011 Net sales $ 141,153 $ 154,884 Gross profit 68,899 78,519 Gross margin 48.8 % 50.7 % Operating income (loss) (5,529 ) 538 Net loss $ (14,139 ) $ (5,042 ) Net loss per common share: Basic and diluted $ (0.17 ) $ (0.06 ) Weighted average number of common shares outstanding: Basic and diluted 84,836 84,789 Selected Non-GAAP Results (In thousands, except percentages and per share data) Three Months Ended September 30, 2012 2011 Net sales $ 141,153 $ 154,884 Gross profit 69,094 78,509 Gross margin 48.9 % 50.7 % Operating income 14,547 20,941 Net income $ 3,214 $ 8,299 Net income per common share: Basic $ 0.04 $ 0.10 Diluted $ 0.04 $ 0.10 Weighted average number of common shares outstanding: Basic 84,836 84,789 Diluted 84,861 84,789 Adjusted EBITDA $ 19,440 $ 25,711 Business Outlook For the fiscal second quarter ending December 31, 2012, Aeroflex expects net sales to be between $147 million and $155 million, GAAP net loss to be between $(7) million and $(4) million, Adjusted EBITDA to be between $22 million and $26 million, GAAP net loss per share to be between $(0.09) and $(0.04), and Non-GAAP net income per share to be between $0.06 and $0.09. The range of expected GAAP and Non-GAAP net income per share for the fiscal second quarter was calculated using GAAP and Non-GAAP effective tax rates of 14% and 32%, respectively. Non-GAAP Presentation This press release contains Non-GAAP financial measures that are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures: (i) are not based on any comprehensive set of accounting rules or principles; and (ii) have limitations in that they do not reflect all of the amounts associated with Aeroflex's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate Aeroflex's results of operations in conjunction with the corresponding GAAP measures. Aeroflex believes that the presentation of Non-GAAP financial measures, when shown in conjunction with the corresponding GAAP measures, provides useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations because they exclude certain non-cash charges or items that management does not believe are reflective of its ongoing operating results when assessing the performance of its business. Aeroflex believes that these Non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among its peer companies. However, its peer companies may calculate similar Non-GAAP financial measures differently than Aeroflex, limiting the information’s usefulness as comparative measures. Webcast and Conference Call Information Aeroflex will host a live webcast and conference call at 8:15 a.m. eastern standard time on Thursday, November 8^th during which management will discuss the financial results. To participate in the live webcast, please visit the events page of the website located at http://ir.aeroflex.com. Please plan to join five to ten minutes before the start of the webcast to facilitate a timely connection. If you are unable to participate and would like to hear a replay of the call, an audio replay of the webcast will be available on the Aeroflex website or can be accessed telephonically for domestic callers at (888) 286-8010 or internationally at (617) 801-6888 with pass code 26598014. About Aeroflex Aeroflex Holding Corp. is a leading global provider of high performance microelectronic components, and test and measurement equipment used by companies in the space, avionics, defense, commercial wireless communications, medical and other markets. Forward-looking Statements All statements other than statements of historical fact included in this press release regarding Aeroflex’s business strategy, financial results and plans and objectives of its management for future operations are forward-looking statements. When used in this press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to Aeroflex or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Aeroflex’s management, as well as assumptions made by and information currently available to its management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, adverse developments in the global economy; changes in government spending; dependence on growth in customers’ businesses; the ability to remain competitive in the markets Aeroflex serves; the inability to continue to develop, manufacture and market innovative, customized products and services that meet customer requirements for performance and reliability; any failure of suppliers to provide raw materials and/or properly functioning component parts; the inability to meet covenants contained in debt agreements; the termination of key contracts, including technology license agreements, or loss of key customers; the inability to protect intellectual property; the failure to comply with regulations such as International Traffic in Arms Regulations and any changes in regulations; the failure to realize anticipated benefits from completed acquisitions, divestitures or restructurings, or the possibility that such acquisitions, divestitures or restructurings could adversely affect Aeroflex; the loss of key employees; exposure to foreign currency exchange rate risks; and terrorist acts or acts of war. Such statements reflect the current views of management with respect to the future and are subject to these and other risks, uncertainties and assumptions. Aeroflex does not undertake any obligation to update such forward-looking statements. Any projections in this release are based on limited information currently available to Aeroflex, which is subject to change. Although any such projections and the factors influencing them will likely change, Aeroflex will not necessarily update the information, since Aeroflex will only provide guidance at certain points during the year. Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended September 30, 2012 2011 Net sales $ 141,153 $ 154,884 Cost of sales 72,254 76,365 Gross profit 68,899 78,519 Operating expenses: Selling, general and administrative costs 35,703 37,131 Research and development costs 20,878 24,275 Amortization of acquired intangibles 14,580 15,736 Restructuring charges 3,267 436 Change in fair value of acquisition - 403 contingent consideration liability Total operating expenses 74,428 77,981 Operating income (loss) (5,529 ) 538 Other income (expense): Interest expense (10,078 ) (8,574 ) Write-off of deferred financing costs (597 ) - Other income (expense), net (289 ) (295 ) Total other income (expense), net (10,964 ) (8,869 ) Income (loss) before income taxes (16,493 ) (8,331 ) Provision (benefit) for income taxes (2,354 ) (3,289 ) Net income (loss) $ (14,139 ) $ (5,042 ) Net income (loss) per common share: Basic and diluted $ (0.17 ) $ (0.06 ) Weighted average number of common shares outstanding: Basic and diluted 84,836 84,789 Aeroflex Holding Corp. and Subsidiaries Selected Segment Data (In thousands, except percentages) Three Months Ended September 30, 2012 2011 Net sales: Microelectronic solutions ("AMS") $ 74,450 $ 81,805 Test solutions ("ATS") 66,703 73,079 Total net sales $ 141,153 $ 154,884 Gross profit: - AMS $ 36,449 $ 41,022 - ATS 32,450 37,497 Total gross profit $ 68,899 $ 78,519 Gross Margin: - AMS 49.0 % 50.1 % - ATS 48.6 % 51.3 % Total gross margin 48.8 % 50.7 % Aeroflex Holding Corp. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (In thousands, except share and per share data) September 30, June 30, 2012 2012 Assets Current assets: Cash and cash equivalents $ 45,235 $ 41,324 Accounts receivable, less allowance for 113,547 146,597 doubtful accounts of $1,527 and $981 Inventories 158,318 158,090 Deferred income taxes 29,825 33,315 Income taxes receivable 5,076 4,935 Prepaid expenses and other current assets 12,984 11,942 Total current assets 364,985 396,203 Property, plant and equipment, net of accumulated depreciation of $107,813 and 102,341 101,632 $102,310 Deferred financing costs, net 14,569 15,720 Other assets 32,334 34,955 Intangible assets with definite lives, net 108,057 119,476 Intangible assets with indefinite lives 114,206 113,461 Goodwill 410,124 408,361 Total assets $ 1,146,616 $ 1,189,808 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 25,144 $ 26,822 Advance payments by customers and deferred 21,660 23,433 revenue Income taxes payable 417 593 Accrued payroll expenses 18,970 18,635 Accrued expenses and other current liabilities 36,654 37,559 Total current liabilities 102,845 107,042 Long-term debt 616,375 641,375 Deferred income taxes 88,186 94,022 Other long-term liabilities 20,386 20,592 Total liabilities 827,792 863,031 Stockholders' equity: Preferred stock, par value $.01 per share; 50,000,000 shares authorized, no shares issued - - and outstanding Common stock, par value $.01 per share; 300,000,000 shares authorized, 84,851,868 and 848 848 84,845,687 shares issued and outstanding Additional paid-in capital 648,801 648,092 Accumulated other comprehensive income (loss) (33,999 ) (39,476 ) Accumulated deficit (296,826 ) (282,687 ) Total stockholders' equity 318,824 326,777 Total liabilities and stockholders' equity $ 1,146,616 $ 1,189,808 Aeroflex Holding Corp. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Three Months Ended September 30, 2012 2011 Cash flows from operating activities: Net income (loss) $ (14,139 ) $ (5,042 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 20,123 20,974 Change in fair value of acquisition - 403 contingent consideration liability Write-off of deferred financing costs 597 - Deferred income taxes (2,629 ) 394 Share-based compensation 636 600 Amortization of deferred financing costs 554 502 Other, net 511 426 Change in operating assets and liabilities: Decrease (increase) in accounts receivable 33,023 23,582 Decrease (increase) in inventories 94 (10,774 ) Decrease (increase) in prepaid expenses and (1,438 ) (2,249 ) other assets Increase (decrease) in accounts payable, (5,338 ) (29,985 ) accrued expenses and other liabilities Net cash provided by (used in) operating 31,994 (1,169 ) activities Cash flows from investing activities: Capital expenditures (4,087 ) (4,713 ) Other, net 248 4 Net cash provided by (used in) investing (3,839 ) (4,709 ) activities Cash flows from financing activities: Debt repayments (25,000 ) (1,812 ) Deferred financing costs - (82 ) Other, net (21 ) - Net cash provided by (used in) financing (25,021 ) (1,894 ) activities Effect of exchange rate changes on cash and 777 (1,020 ) cash equivalents Net increase (decrease) in cash and cash 3,911 (8,792 ) equivalents Cash and cash equivalents at beginning of 41,324 66,278 period Cash and cash equivalents at end of period $ 45,235 $ 57,486 Aeroflex Holding Corp. and Subsidiaries Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income (In thousands) Three Months Ended September 30, 2012 2011 Operating income (loss) -GAAP $ (5,529 ) $ 538 Amortization of acquired intangibles 14,580 15,736 Impact of purchase accounting adjustments 42 70 Change in fair value of acquisition contingent consideration liability - 403 Restructuring costs and related pro forma savings (a) 3,702 3,002 Share-based compensation 636 600 Other adjustments 1,116 592 Operating income - non-GAAP $ 14,547 $ 20,941 Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (In thousands) Three Months Ended September 30, 2012 2011 Net income (loss) -GAAP $ (14,139 ) $ (5,042 ) Amortization of acquired intangibles 14,580 15,736 Impact of purchase accounting adjustments 42 70 Change in fair value of acquisition contingent - 403 consideration liability Restructuring costs and related pro forma savings 3,702 3,002 (a) Share-based compensation 636 600 Write-off of deferred financing costs 597 - Amortization of deferred financing costs 554 502 Other adjustments 1,116 592 Tax impact of adjustments (3,874 ) (7,564 ) Net income -non-GAAP $ 3,214 $ 8,299 Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (In thousands) Three Months Ended September 30, 2012 2011 Net income (loss) -GAAP $ (14,139 ) $ (5,042 ) Interest expense 10,078 8,574 Provision (benefit) for (2,354 ) (3,289 ) income taxes Depreciation and 20,123 20,974 amortization EBITDA 13,708 21,217 Restructuring costs and related pro forma 3,702 3,002 savings (a) Share-based 636 600 compensation Change in fair value of acquisition contingent - 403 consideration liability Write-off of deferred 597 - financing costs Other defined items (b) 797 489 Adjusted EBITDA $ 19,440 $ 25,711 ^(a) Primarily reflects costs associated with the reorganization of our European operations and consolidation of certain of our U.S. component facilities. Pro forma savings reflect the costs that we estimate would have been eliminated during the fiscal year in which a restructuring occurred had the restructuring occurred as of the first day of that fiscal year.Pro forma savings were estimated to be $434,000 and $2.6 million for the three months ended September 30, 2012 and 2011, respectively.The pro forma savings of $2.6 million for the three months ended September 30, 2011 were not reflected in our Adjusted EBITDA as reported in our September 30, 2011 report on Form 10-Q as they relate to restructuring activities recorded throughout fiscal 2012. ^(b) Reflects other adjustments required in calculating our debt covenant compliance.These otherdefined items include legal fees related to litigation and business acquisition and divestiture costs. Contact: Aeroflex Holding Corp. Andrew Kaminsky, 516-752-6401 firstname.lastname@example.org
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Aeroflex Announces First Quarter Fiscal 2013 Results
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