Second Quarter Net Income $74,000 ($.02 per share) v. $331,000 in Prior Year Quarter ($.08 per share)
Backlog at 6/30/16 up 34% from Year-End
Hauppauge, New York, August 4, 2016 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the second quarter and six months ended June 30, 2016.
Second Quarter 2016 vs. Second Quarter 2015
- Net sales were $4,919,000, as compared to $5,181,000.
- Gross margin was 33.6%, as compared to 39.2%.
- Net income was $74,000 ($0.02 per diluted share), as compared to net income of $331,000 ($0.08 per diluted share).
- Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was $117,000 ($0.03 per diluted share), as compared to earnings of $441,000 ($0.10 per diluted share).
First Half 2016 vs. First Half 2015
- Net sales were $9,720,000, as compared to $9,395,000.
- Gross margin was 35.0%, as compared to 36.3%.
- Net income was $109,000 ($0.03 per diluted share), as compared to net income of $5,000 ($0.00 per diluted share).
- Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was $229,000 ($0.05 per diluted share), as compared to earnings of $226,000 ($0.05 per diluted share).
- Backlog at June 30, 2016 was $14.9 million ($0.8 million unfunded) compared to $13.2 million at June 30, 2015. Backlog at December 31, 2015 was $11.1 million.
Mitchell Binder, President & Chief Executive Officer, stated, “Our operating results for the second quarter reflected small profitability as our revenue level slightly improved from the first quarter but did not attain the level where we can greatly benefit from our operating leverage. In addition, our quarter over quarter comparative was adversely affected by a low gross margin reported for the current quarter, primarily due to product mix and in particular, a very low gross margin incurred on a large shipment made during the quarter that completed a contract. However, our backlog remains comparatively high and our delivery schedules indicate that our revenue levels should further improve in the third and fourth quarters, highlighted by the expected shipment of a large COTS product by our Power Group. We also expect our product mix will lead to improved gross margins.”
Mr. Binder added, “Our backlog at June 30, 2016 was $14.9 million compared to $11.1 million at December 31, 2015, a 34.3% increase. Our Electronics Group received several significant contracts in the first half of 2016 which resulted in total bookings in excess of $10.6 million for the segment through June 30, 2016 (approximately $0.8 million remains unfunded by one customer until final negotiations are completed). Furthermore, the bid pipeline also remains strong as several additional large awards are expected during the third quarter although timing is always an uncertainty. Consequently, we expect revenue levels will improve as delivery schedules are met from our increased backlog.”
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 we have made great progress on the engineering of additional products utilizing our VPX technology which has resulted in several new alliances with prime contractors on new military programs. We have received several pre-production orders which we hope will be converted into full production awards once evaluation is completed. However, because we anticipate that evaluation of these pre-production awards will take time, we do not expect a rebound in our Power Group bookings until 2017.”
David Goldman, Chief Financial Officer, noted, “Our financial condition remains strong. At June 30, 2016, total current assets were approximately $16.3 million versus total current liabilities of approximately $2.0 million for an 8.3 to 1 current ratio. Cash, cash equivalents and marketable securities as of June 30, 2016, aggregated approximately $1.8 million. To offset future federal and state taxes resulting from profits, we have approximately $10 million and $3 million in available federal and New York State net operating loss carryforwards, respectively, which should enhance future cash flow.”
Mr. Goldman added, “During the quarter, we paid down $100,000 of our debt which brought the balance owed under our line of credit to $1.18 million at June 30, 2016. In addition, we were in compliance with our financial covenants at June 30, 2016. Our tangible book value at June 30, 2016 was $3.12 as compared to $3.11 at March 31, 2016 and $3.10 at December 31, 2015 (this does not include any value for the potential deferred tax asset from our operating loss carryforwards that could offset future taxable income). ”
Mr. Goldman concluded, “During the six months ended June 30, 2016, we purchased approximately 67,000 shares (approximately $225,000) of our common stock. In addition, during the current year quarter, we retired approximately 122,000 shares of treasury stock.”
Mr. Binder concluded, “We are coming off a nice turnaround in financial performance in 2015 and our outlook for 2016 remains encouraging. We continue to carefully manage our costs, particularly, our selling, general and administrative expenses, and we believe we have the Company well positioned for improved operating margins once our revenue levels increase in the second half 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