2017 Net Income of $1,797,000 ($0.47 per diluted share) v. $1,392,000 ($0.33 per diluted share) in Prior Year
Fourth Qtr. 2017 Net Income of $561,000 ($0.16 per diluted share) v. $828,000 ($0.20 per diluted share) in Prior Yr. Period
Current Year Earnings Include $250,000 ($0.07 per diluted share) Deferred Tax Benefit
Prior Year and Prior Quarter Earnings Include $300,000 ($0.07 per diluted share) Deferred Tax Benefit
Backlog at 12/31/17 at $27,884,000; up 114% over Prior Year-End Backlog
Company Repurchases 563,253 (13.5% of outstanding shares) of its common shares during 2017
Hauppauge, New York, March 8, 2018 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the fourth quarter and year ended December 31, 2017.
Fourth Quarter 2017 vs. Fourth Quarter 2016
” Net sales were $5,597,000, as compared to $5,522,000.
” Gross margin was 38.8%, as compared to 40.3%.
” Net income was $561,000 ($0.16 per diluted share), as compared to net income of $828,000 ($0.20 per diluted share). Net income for the prior year period includes $300,000 ($0.07 per diluted share) of a deferred tax benefit.
” Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $602,000 ($0.17 per diluted share), as compared to $598,000 ($0.14 per diluted share).
Full Year 2017 vs. Full Year 2016
” Net sales were $20,851,000, as compared to $20,726,000.
” Gross margin was 39.0%, as compared to 36.8%.
” Net income was $1,797,000 ($0.47 per diluted share) as compared to $1,392,000 ($0.33 per diluted share). Net income for the current and prior year periods include a deferred tax benefit of $250,000 ($0.07 per diluted share) and $300,000 ($0.07 per diluted share), respectively. (Current full year earnings per share would be $0.50 per share using fourth quarter weighted number of shares outstanding).
” Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $1,754,000 ($0.46 per diluted share), as compared to $1,334,000 ($0.31 per diluted share).
” Backlog at December 31, 2017 was $27.9 million as compared to $24.2 million at September 30, 2017 and $13.0 million at December 31, 2016.
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Once again, we had improved operating performance in 2017. Our net income for the twelve months ended December 31, 2017 increased to $1,797,000, an approximately 29% increase from the prior year. Both our current and prior year results benefitted from a reduction in the valuation allowance of our deferred tax asset due to continued confidence in our future profitability. Furthermore, our pretax income for the year increased by 46.6%. This was accomplished through slightly higher sales along with tight management of costs and operating efficiencies.”
Mr. Binder added, “Our gross margin for the full year ended December 31, 2017 improved to 39.0% compared to 36.8% in the prior year and reflected increased sales, product mix and operating efficiencies at our Electronics Group (OEG). However, despite slightly higher sales, our gross margin in the fourth quarter decreased to 38.8% from 40.3% in the comparable period of the prior year principally due to weaker margins from our Power Group (OPG). Our weaker OPG margins resulted from lower sales and larger than normal inventory write-downs at our OPG commercial division during the quarter. Gross margin for the OEG also decreased in the fourth quarter from the prior comparable period, although margins remain very strong at the segment.”
Mr. Binder further added, “Despite weak operating results in 2017, our OPG had a record year of bookings which should lead to improved operating performance in 2018. In September and November 2017, our OPG received two awards totaling $16,000,000 against an IDIQ contract totaling $21,709,300 for Common Aircraft Armament Test Sets (CAATS) for the U.S. Navy. Deliveries of CAATS units are expected to commence in the third quarter of 2018. As previously stated, gross margins on this contract will be lower than historical margins due to many aspects of production and testing being offloaded to subcontractors. However, no additional engineering or selling and administrative personnel will be needed so this contract should have a very positive impact on profitability during the delivery period.”
Mr. Binder continued, “Our backlog at December 31, 2017 was $27,884,000 compared to $13,017,000 at December 31, 2016. It should be noted that although our backlog at December 31, 2017 includes a letter subcontract totaling $568,000 received by our Electronics Group from a prime contractor for our equipment used on major military aviation programs, it does not include approximately $973,000 of the expected $1,541,000 related purchase order that was ultimately received in January 2018. Had the total purchase order been placed by year end, backlog would have been approximately $28,857,000 at December 31, 2017, an increase of approximately 121.7% compared to year end.”
Mr. Binder added, “Our OEG began 2018 with the receipt of two large purchase orders totaling $2,482,000 and its bid pipeline remains firm. We are currently in negotiations for additional significant awards that we hope to receive prior to the end of the first quarter, although timing is always an uncertainty. Aside from the $21,709,300 IDIQ contract received by our Power Group in the third quarter, our bid pipeline for our VPX products is growing. Demand for our power supplies incorporating our VPX technology appears to be accelerating as we receive an increasing number of pre-production orders. Our sales and engineering teams are working very aggressively to remain at the forefront of this technology as we continue to enter into strategic alliances with several prime contractors utilizing our technology. We are hopeful that the value of orders for these VPX products will steadily increase in 2018 as programs move to the production stage.”
David Goldman, Chief Financial Officer, noted, “Our profitability from the last three years has had a positive impact on our balance sheet and overall financial condition. At December 31, 2017, total current assets were approximately $14.7 million versus total current liabilities of approximately $1.6 million for a 9.2 to 1 current ratio. Cash, cash equivalents and marketable securities as of December 31, 2017, aggregated approximately $1.2 million. To offset future federal and state taxes resulting from profits, we have approximately $9.1 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively, which should enhance future cash flow.”
Mr. Goldman concluded, “Our tangible book value at December 31, 2017 was $3.83 as compared to $3.68 at September 30, 2017 and $3.42 at December 31, 2016. (Note that tangible book value does not include any additional value for the remaining reserved deferred tax asset). During 2017, we repurchased approximately 563,000 shares of our common stock at an average price of $4.16 per share. Most of these purchases were made in the second half of 2017. Consequently, the weighted average number of shares outstanding is significantly lower for our fourth quarter earnings per share calculation (3,590,000) as compared to the annual amount (3,844,000). Our annual earnings per share would increase from $0.47 per share to $0.50 per share using the fourth quarter weighted number of shares, which will carry over into 2018.”
Mr. Binder concluded, “We completed another successful year in 2017 with improved operating results and an ending backlog 114% higher than the prior year. We currently have no bank debt and we repurchased 563,253 shares in 2017, approximately 13.5% of the outstanding shares. We believe the recent budget passed in Washington bodes well for defense contractors for at least the next two years. Consequently, we remain very encouraged by our business outlook and believe we are well positioned for continued improved operating performance in 2018.”
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