Arotech Corporation Reports Record Revenues for its Results of the Fourth Quarter and Full Year 2012

  Arotech Corporation Reports Record Revenues for its Results of the Fourth
                          Quarter and Full Year 2012

Record Q4 revenue up 23% year-over-year

PR Newswire

ANN ARBOR, Mich., March 18, 2013

ANN ARBOR, Mich., March 18, 2013 /PRNewswire/ --Arotech Corporation
(NasdaqGM: ARTX), a provider of quality defense and security products for the
military, law enforcement and security markets, today reported results for the
quarter and full year ended December 31, 2012.

Full Year Results

Revenues from continuing operations for 2012 were $80.1 million, compared to
$62.1 million for 2011, an increase of 29%.

Gross profit from continuing operations for 2012 was $17.9 million, or 22% of
revenues, compared to $16.2 million, or 26% of revenues, for 2011, a four
point decrease in the gross margin percentage. The reason for the decrease was
due to some high revenue projects with a large component of lower margin
hardware included, which were delivered in 2012.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) from continuing operations for the year was $2.6 million,
compared to $1.7 million for the corresponding period last year, an
improvement of 53%. Arotech believes that information concerning Adjusted
EBITDA enhances overall understanding of its current financial performance.
Arotech computes Adjusted EBITDA, which is a non-GAAP financial measure, as
reflected in the table below.

The Company reported an operating loss from continuing operations for 2012 of
$(861,000), compared to an operating loss from continuing operations of $(3.1)
million in 2011.

The Company's net loss from continuing operations for 2012 improved to $(2.0)
million, or $(0.14) per share, compared to a net loss from continuing
operations of $(5.0) million, or $(0.35) per share, for 2011.

The Company's net loss from all operations, including discontinued operations,
for 2012 was $(3.2) million, or $(0.22) per share, compared to a net loss from
all operations, including discontinued operations, of $(12.3) million, or
$(0.82) per share, for 2011.

Fourth Quarter Results

Revenues from continuing operations for the fourth quarter reached $22.1
million, compared to $18.0 million for the corresponding period in 2011, an
increase of 23%.

Gross profit from continuing operations for the fourth quarter was $5.3
million, or 24% of revenues, compared to $5.1 million, or 28% of revenues, for
the corresponding period in 2011, a four point decrease in the gross margin
percentage.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) from continuing operations for the quarter was $872,000,
compared to $2.0 million for the corresponding period of 2011, an decline of
45%. Arotech believes that information concerning Adjusted EBITDA enhances
overall understanding of its current financial performance. Arotech computes
Adjusted EBITDA, which is a non-GAAP financial measure, as reflected in the
table below.

The Company reported operating income from continuing operations for the
fourth quarter of $17,000, compared to an operating loss from continuing
operations of $(60,000) for the corresponding period in 2011.

The Company's net loss from continuing operations for the fourth quarter of
2012 was $(72,000), or $0.00 per share, compared to a net loss from continuing
operations of $(1.6) million, or $(0.11) per share, for the corresponding
period in 2011.

The Company's net income from all operations, including discontinued
operations, for the fourth quarter of 2012 was $256,000, or $0.02 per share,
compared to a net loss from all operations, including discontinued operations,
of $(5.3) million, or $(0.37) per share, for the corresponding period in 2011.

Backlog

Backlog of orders from continuing operations totaled approximately $87.7
million as of December 31, 2012 compared to $81.9 million as of December 31,
2011.

Cash Position at Year End

As of December 31, 2012, the Company had $1.6 million in cash and $186,000 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 had trade receivables of $9.6 million as of December 31, 2012,
compared to $11.9 million as of December 31, 2011. The Company had a current
ratio (current assets/current liabilities) of 1.37, up from the December 31,
2011 current ratio of 1.36.

The Company ended 2012 with $9.8 million in short-term bank debt and $1.9
million in long-term debt outstanding for continuing operations, as compared
to 2011 when the Company had $6.6 million in short-term bank debt and $1.0
million in long-term debt outstanding.

As previously announced, in February 2013, Fifth-Third Bank in Eastern
Michigan increased its credit line to the Company from $10 to $15 million and
extended the expiration of the credit line to May 31, 2015.

"We are enormously encouraged by our achievements in 2012 and in the
turnaround we have experienced in the second half of the year," said Arotech
Chairman and CEO Robert S. Ehrlich. "Our business continues to grow. Our
activities in the simulation arena remain strong, stable, profitable and cash
generating while batteries are performing well, with significant potential to
become an additional growth engine in the coming quarters."

Continued Mr. Ehrlich, "Looking ahead and based on our current backlog, we
expect 2013 to be another good year for Arotech. As such, we reiterate the
guidance issued a few weeks ago which calls for full year revenues growing to
between $85 and 87 million and full year EBITDA increasing to between $2.9 and
3.4 million, which is 20% growth at the midpoint. Our business platform in
2013 is much improved over previous years and we look forward to continuing to
unleash our potential in the quarters and years ahead."

Conference Call

The Company will host a conference call tomorrow, Tuesday, March 19, 2013 at
9:00 a.m. EDT. Those wishing to access the conference call should dial
1-888-281-1167 (U.S.) or +1-347-293-1926 (international) a few minutes before
the 9:00 a.m. EDT start time. A replay of the conference call will be
available starting Tuesday, March 19, 2013 at 12:30 p.m. EDT until Monday,
March 25, 2013 at 11:59 p.m.

The replay telephone number is 1-888-782-4291 (U.S.).

About Arotech Corporation

Arotech Corporation is a leading provider of quality defense and security
products for the military, law enforcement and homeland security markets.
Arotech provides multimedia interactive simulators/trainers and advanced
zinc-air and lithium batteries and chargers. Arotech operates through two
major business divisions: Training and Simulation, and Batteries 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.

Investor Relations Contacts:

Ehud Helft & Kenny Green

CCG Investor Relations

Tel: 1 646 201 9246

arotech@gkir.com

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 (including as a result of budgetary cuts
resulting from automatic sequestration under the Budget Control Act of 2011);
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.



CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(U.S. Dollars, except share data)

                      Year ended December 31,      Three months ended December
                                                   31,
                      2012         2011            2012           2011
Revenues              $           $  62,135,578  $             $ 
                      80,050,434                   22,134,533     17,965,459
Cost of revenues,
exclusive of          62,141,038   45,950,930      16,833,384     12,907,579
amortization of
intangibles
Research and          2,043,718    1,401,868       386,662        111,212
development expenses
Selling and marketing 5,487,910    5,254,891       1,619,379      1,600,680
expenses
General and
administrative        10,052,765   10,677,855      2,986,685      2,933,218
expenses
Amortization of
intangible assets and 1,185,539    1,905,097       291,796        472,590
capitalized software
Total operating costs 80,910,970   65,190,641      22,117,906     18,025,279
and expenses
Operating income      (860,536)    (3,055,063)     16,627         (59,820)
(loss)
Other income          (8,284)      (43,852)        1,610          (7,766)
Allowance for legal   –            12,333          –              12,333
settlements, net
Financial expenses,   547,986      331,006         (17,315)       168,133
net
Total other (income)  539,702      299,487         (15,705)       172,700
expense
Income (loss) from
continuing operations
before income tax     (1,400,238)  (3,354,550)     32,332         (232,520)

 expense
Income tax expense    628,156      1,608,611       104,065        1,327,276
Loss from continuing  (2,028,394)  (4,963,161)     (71,733)       (1,559,796)
operations
Income (loss) from
discontinued
operations, net of    (1,178,242)  (6,563,844)     328,111        (3,726,783)
income

 tax
Net income (loss)     (3,206,636)  (11,527,005)    256,378        (5,286,579)
Other comprehensive
income, net of income
tax
Foreign currency
translation           54,596       (769,515)       244,010        (294,884)
adjustment
Comprehensive income  $           $ (12,296,520)  $           $ 
(loss)                (3,152,040)                  500,388       (5,581,463)
Basic and diluted net
income/loss per share $       $          $        $     
– continuing          (0.14)       (0.35)          0.00           (0.11)

 operations
Basic and diluted net
income/loss per share $       $          $        $     
– discontinued        (0.08)       (0.47)          0.02           (0.26)

 operations
Basic and diluted net $       $          $        $     
income/loss per share (0.22)       (0.82)          0.02           (0.37)
Weighted average
number of shares used
in computing
                      14,713,583   14,011,566      14,736,633     14,276,542
 basic and diluted
net income/loss per
share



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:



                       Year ended December 31,     Three months ended December
                                                   31,
                       2012          2011          2012          2011
Net loss continuing    $(2,028,394)  $(4,963,161)  $(71,733)     $(1,559,796)
(GAAP measure)
Add back:
Financial (income)
expense – including    547,986       331,006       (17,315)      168,133
interest
Income tax expenses    628,156       1,608,611     104,065       1,327,276
Depreciation and       2,272,717     3,009,040     546,144       758,894
amortization expense
Other adjustments^*    1,223,788     1,709,440     310,810       1,256,538
Total adjusted EBITDA  $2,644,253    $1,694,936    $871,971      1,951,045

^* Includes stock compensation expense, adjustments to allowances, one-time
transaction expenses and other non-cash expenses.

SOURCE Arotech Corporation
 
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