Orbit International Corp. Reports 2019 Second Quarter Results
Second Qtr. 2019 Net Income of $584,000 ($0.16 per diluted share) v. $744,000 ($0.21 per diluted share) in Prior Year Period
Six Months 2019 Net Income of $654,000 ($0.18 per diluted share) v. $1,165,000 ($0.32 per diluted share) in Prior Year Period
Both Second Quarter and Six-Month Prior Year Periods Include a $573,000 ($0.16 per diluted share) Deferred Tax Benefit Resulting From Refundable AMT Credit Under New Tax Law
Second Quarter EBITDA, As Adjusted of $630,000 ($0.18 per diluted share) v. $227,000 ($0.06 per diluted share) in Prior Year Period
Hauppauge, New York, August 8, 2019 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the second quarter and six months ended June 30, 2019.
Second Quarter 2019 vs. Second Quarter 2018
• Net sales were $6,911,000, as compared to $5,032,000.
• Gross margin was 32.4%, as compared to 35.3%.
• Net income was $584,000 ($0.16 per diluted share), as compared to net income of $744,000 ($0.21 per diluted share).
• Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $630,000 ($0.18 per diluted share), as compared to EBITDA of $227,000 ($0.06 per diluted share).
First Half 2019 vs. First Half 2018
• Net sales were $13,403,000, as compared to $10,381,000.
• Gross margin was 29.3%, as compared to 37.8%.
• Net income was $654,000 ($0.18 per diluted share), as compared to net income of $1,165,000 ($0.32 per diluted share).
• Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $751,000 ($0.21 per diluted share), as compared to EBITDA of $693,000 ($0.19 per diluted share).
• Backlog at June 30, 2019 was $19.5 million as compared to $17.9 million at March 31, 2019 and $20.6 at December 31, 2018.
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the six months ended June 30, 2019 was $654,000 compared to $1,165,000 for the prior comparable period. Our net income for the prior period was positively impacted by a $573,000 deferred tax benefit resulting from a refund of our AMT credit pursuant to the Tax Cuts and Jobs Act of 2017. Income before taxes for the six months ended June 30, 2019 was $684,000 compared to $616,000, an increase of 11.0% over the prior comparable period. Net income for the current second quarter significantly improved from our first quarter results due to increased revenues from our Orbit Electronics Group (OEG) and a lower percentage of CAATS sales overall which improved our gross margins as costs remained under control.”
Mr. Binder added, “Our sales for the six months ended June 30, 2019 increased from the comparable period of the prior year due to our OPG’s increased shipments of CAATS units. Sales from our OEG for the second quarter improved from the first quarter due to delivery schedules and a request from a large customer to accelerate deliveries on one of its products. Despite higher sales, our gross margin for the six months ended June 30, 2019 decreased to 29.3% compared to 37.8% in the prior year. This decrease was expected due to the shipment of a high percentage of CAATS units which have a lower gross margin than our other products. However, second quarter gross margins were improved from the first quarter because of higher revenues from our OEG which historically have higher gross margins that increase further during periods of higher sales due to our operating leverage.”
Mr. Binder continued, “Our backlog at June 30, 2019 was approximately $19,545,000 compared to approximately $20,566,000 at December 31, 2018. The decrease in the backlog from the prior year-end was principally due to shipments by our OPG of CAATS units during the first half of 2019. However, as previously reported, we recorded bookings in excess of $8,500,000 during the second quarter of 2019 which was highlighted by approximately $4,500,000 in additional CAATS orders and a $950,000 order for a switch panel received by our OEG. Furthermore, we expect an additional award against the CAATS IDIQ contract during the fourth quarter of 2019, although the timing of such award is an uncertainty.”
Binder added, “Our OEG has maintained its momentum of strong bookings during the first half of 2019 and is working with several of its customers on certain new and follow-on opportunities which we expect will be received in the second half. Our OPG had solid bookings on pre-production awards for its VPX products in July 2019 and opportunities utilizing our VPX technology continue to expand. In addition, during the second quarter, the OPG received its third award in less than twelve months for its power supply used for oil and gas exploration.”
David Goldman, Chief Financial Officer, noted, “At June 30, 2019, our cash and cash equivalents increased from the first quarter to approximately $3.6 million and our financial condition remained strong as evidenced by our 6.7 to 1 current ratio. We expect our cash position in the second half of this year to be positively impacted by our operating results, changes in working capital (in particular, cash receipts relating to our contract assets account) and the expected 2018 tax return refund of approximately 50% of our AMT credit.”
Mr. Goldman concluded, “Our tangible book value per share at June 30, 2019 was $4.66 as compared to $4.50 at March 31, 2019 and $4.52 at December 31, 2018. (Note-tangible book value per share does not include any additional value for our remaining reserved deferred tax asset.) To offset future federal and state taxes resulting from profits, we have approximately $7.9 million and $0.6 million in available federal and New York State net operating loss carryforwards, respectively.”
Mr. Binder concluded, “Because our revenue is tied to the delivery schedules specified in our contracts, it often is difficult to judge our performance on a quarterly basis. However, we are pleased that, as anticipated, our second quarter results significantly improved from our first quarter performance. Our backlog still remains strong and deliveries of the CAATS units will continue through the third and fourth quarters and into 2020. We expect these deliveries will sustain revenue levels at our OPG (albeit at a lower gross margin). We are expecting continued solid operating performance from our OEG, and our OPG is striving to sustain the continued growth of our VPX technology and to capture new opportunities for our COTS power supplies. Our financial condition remains strong; we have repurchased 55,008 shares since the beginning of the fourth quarter of 2018 and 14.7% of our shares since January 1, 2017. As a result of our continued confidence in our business outlook, as previously announced, our Board of Directors has authorized management to purchase up to $850,000 of our common stock, subject to market conditions.”
Orbit International Corp., through its Electronics Group, is involved in the development and manufacture of custom electronic device and subsystem solutions 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 Bradenton, FL.
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. 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