Third Quarter Net Income $455,000 ($.11 per share) v. $314,000 ($.07 per share) in Prior Year Quarter
Backlog at 9/30/16 up 21% from Year-End
Company Repurchases 107,279 Shares Year-to-Date
Line of Credit Extended through August 2018
Hauppauge, New York, November 10, 2016 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the third quarter and nine months ended September 30, 2016.
Third Quarter 2016 vs. Third Quarter 2015
- Net sales were $5,484,000, as compared to $5,217,000.
- Gross margin was 36.6%, as compared to 37.5%.
- Net income was $455,000 ($0.11 per share), as compared to net income of $314,000 ($0.07 per share).
- Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was $507,000 ($0.12 per share), as compared to $372,000 ($0.09 per share).
Nine Months 2016 vs. Nine Months 2015
- Net sales were $15,204,000, as compared to $14,612,000.
- Gross margin was 35.6%, as compared to 36.7%.
- Net income was $564,000 ($0.13 per share), as compared to net income of $319,000 ($0.07 per share).
- Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was $736,000 ($0.17 per share), as compared to $598,000 ($0.14 per share).
- Backlog at September 30, 2016 was $13.4 million as compared to $14.9 million ($0.8 million unfunded) at June 30, 2016 and $10.3 million at September 30, 2015.
Mitchell Binder, President & Chief Executive Officer, stated, “Our revenue for the third quarter improved from the first half of the year which resulted in stronger operating performance due to the significant operating leverage inherent in our business. The increase in revenue was due to improved sales from both our Electronics and Power Groups. Our gross margins slightly decreased from the prior year due to product mix and to additional costs incurred related to qualification efforts on contracts for new programs that were received during the current year. These costs are not expected to be incurred as follow-on orders are received for these products in the future.”
Mr. Binder added, “Our backlog at September 30, 2016 was $13.4 million compared to $11.1 million at December 31, 2015, a 20.9% increase. Our Electronics Group received several contracts in the third quarter which continued the significant momentum of orders that have been received by this segment in 2016. Furthermore, the bid pipeline also remains strong as several additional large awards are expected during the fourth quarter although timing is always an uncertainty.”
Mr. Binder continued, “Our Power Group continues to struggle with the loss of business from the oil and gas industry and the reduction in demand for power supplies for test and measurement due to a nationwide reduction in capital expenditures. However, our third quarter saw an improvement in commercial bookings and we have made further advances on the engineering of additional products utilizing our VPX technology, which has resulted in several new alliances with prime contractors on new military programs. Furthermore, these same prime contractors have followed up with more business opportunities as the VPX market begins to expand. We have received several pre-production orders which we hope will be converted into full production awards once evaluation is completed early in 2017.”
David Goldman, Chief Financial Officer, noted, “Our profitability from the last six quarters has had a significantly positive impact on our balance sheet and overall financial condition. At September 30, 2016, total current assets were approximately $16.5 million versus total current liabilities of approximately $1.9 million for a 8.5 to 1 current ratio. Cash, cash equivalents and marketable securities as of September 30, 2016, aggregated approximately $2.6 million. To offset future federal and state taxes resulting from profits, we have approximately $10 million and $0.8 million in available federal and New York State net operating loss carryforwards, respectively, which should enhance future cash flow.”
Mr. Goldman added, “In October 2016, we amended our Credit Agreement with our primary lender whereby the maturity date for our committed line of credit was extended to August 1, 2018. During the quarter, we paid down $155,000 of our debt, which brought the balance owed under our line of credit to $1.025 million at September 30, 2016. We were in compliance with our financial covenants at September 30, 2016.”
Mr. Goldman concluded, “Our tangible book value at September 30, 2016 was $3.23 as compared to $3.12 at June 30, 2016 and $3.10 at December 31, 2015. (Note this does not include any value for the potential deferred tax asset from our operating loss carryforwards that could offset future taxable income). During the nine months ended September 30, 2016, we purchased approximately 101,000 shares (approximately $350,000) of our common stock. Also, during the current year, we retired approximately 260,000 shares of treasury stock from prior repurchases.”
Mr. Binder concluded, “We are coming off a nice turnaround in financial performance in 2015 and our net income for the nine months ended September 30, 2016 increased 77% over the prior comparable period. We continue to carefully manage our costs, particularly, our selling, general and administrative expenses, and we believe we have the Company well positioned for good operating performance for the remainder of 2016. We will also continue to use our operating cash flow to further reduce our debt and to repurchase our shares.”
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.
President & Chief Executive Officer