ORBIT INTERNATIONAL CORP. REPORTS 2019 YEAR END RESULTS
2019 Net Income of $463,000 ($0.13 per diluted share) v. $2,225,000 ($0.62 per diluted share) in Prior Year
Fourth Qtr. 2019 Net Loss of $216,000 ($0.06 loss per diluted share) v. Net Income of $472,000 ($0.13 per diluted share) in Prior Yr. Period
Current Full Year Earnings Include $131,000 ($0.04 per diluted share) in Acquisition Costs Related to Q-Vio Acquisition
Prior Full Year Earnings Include $573,000 ($0.16 per diluted share) Deferred Tax Benefit
Backlog at 12/31/19 at $20,834,000
Company Repurchased 45,949 of its Common Shares at an Average Price of $5.74 Per Share Since Beginning of Q4 2019
Hauppauge, New York, March 13, 2020 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the fourth quarter and year ended December 31, 2019.
Fourth Quarter 2019 vs. Fourth Quarter 2018
- Net sales were $6,480,000, as compared to $7,948,000.
- Gross margin was 25.1%, as compared to 25.5%.
- Net loss was $216,000 ($0.06 loss per diluted share), as compared to net income of $472,000 ($0.13 per diluted share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was a loss of $144,000 ($0.04 loss per diluted share), as compared to earnings of $514,000 ($0.14 per diluted share).
Full Year 2019 vs. Full Year 2018
- Net sales were $25,983,000, as compared to $24,658,000.
- Gross margin was 28.2%, as compared to 33.0%.
- Net income was $463,000 ($0.13 per diluted share) as compared to $2,225,000 ($0.62 per diluted share). Net income for the current year includes acquisition costs of $131,000 ($0.04 per diluted share) and the prior year period includes a deferred tax benefit of $573,000 ($0.16 per diluted share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $665,000 ($0.19 per diluted share), as compared to $1,847,000 ($0.51 per diluted share).
- Backlog at December 31, 2019 was $20.8 million as compared to $20.5 million at September 30, 2019 and $20.6 million at December 31, 2018.
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the year ended December 31, 2019 was $463,000 compared to $2,225,000 for the prior comparable period. Our net income for the current period was adversely affected by $131,000 of one-time charges in connection with our acquisition of Q-Vio, Corp. (“Q-Vio”) in August 2019, including the closing of their facility in San Diego, CA and the integration of their operation into our facility in Hauppauge, NY. 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. Exclusive of these items, net income for the year ended December 31, 2019 was $594,000 compared to $1,652,000 for the prior comparable year.
Mr. Binder added, “Our year end results were also adversely affected by an operating loss in the fourth quarter which was attributable to lower sales from our OEG during the second half of the year, exclusive of Q-Vio, and to an interruption in the shipment of CAATS units which affected gross margins at our OPG for the quarter. Furthermore, we incurred additional selling, general and administrative expenses during the quarter due to increased selling costs from our OEG, the addition of two sales personnel from Q-Vio and integration costs incurred at Q-Vio to help support the meeting of delivery schedules to customers that had been delayed due to the closing of their facility.”
Mr. Binder added, “Our sales for the year ended December 31, 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 fourth quarter continued its decrease from the second quarter due to delivery schedules and a request from a large customer to accelerate deliveries on one of its products during that prior second quarter. Despite higher sales, our gross margin for the year ended December 31, 2019 decreased to 28.2% compared to 33.0% 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. In addition, as previously mentioned, CAATS shipments were interrupted during the quarter which also affected gross margin at our OPG segment. Furthermore, third and fourth quarter gross margins decreased from the second quarter because of lower 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 December 31, 2019 was approximately $20,834,000 compared to approximately $20,566,000 at December 31, 2018. Our backlog at December 31, 2019 includes approximately $1,547,000 of backlog from our new Q-Vio subsidiary. Exclusive of Q-Vio, the decrease in the backlog from the prior year-end was principally due to a lower backlog of CAATS units for our OPG which, as previously mentioned, have a lower gross margin than our other products.”
David Goldman, Chief Financial Officer, noted, “At December 31, 2019, our cash and cash equivalents aggregated approximately $3.6 million and our financial condition remained strong as evidenced by our 5.6 to 1 current ratio. Our tangible book value per share at December 31, 2019 was $4.57 and if the contingent liability relating to the Q-Vio acquisition is excluded, tangible book value per share would be $4.69. This compares to $4.65 at September 30, 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 $7.6 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively.”
Mr. Binder added, “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. Although the results from the second half of our year were relatively weak, this was primarily attributable to lower sales from our OEG which has been the strength of our Company over the past several years. However, we are encouraged by the significant orders that were received by our OEG during the current first quarter, which should improve our delivery schedules in the latter part of 2020 and throughout 2021. In addition, the acquisition of Q-Vio is expected to result in increased sales at our OEG and allow us to take advantage of our operating leverage.”
Mr. Binder concluded, “Shipments of CAATS units have recommenced near the end of the first quarter and will continue throughout 2020. Aside from the CAATS shipments, business at our OPG segment continues to improve with increased bookings and sales of our VPX and commercial products. Sales of CAATS units in 2020 will constitute a lower percentage of our overall sales, which should result in improved margins for our OPG during the coming year. In addition to our higher backlog at year-end, we have continued our momentum of solid bookings in the first quarter of 2020 and, as previously noted, we believe our gross margins will improve in 2020 and return to historical levels in 2021. Consequently, we are confident that our Company is well positioned for improved operating performance in 2020. We purchased 45,949 shares of our common stock since the beginning of the fourth quarter of 2019 and will continue to make additional opportunistic purchases.”
Orbit International Corp., through its Electronics Group, including its recently acquired Q-Vio subsidiary, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial 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.
David Goldman Chief Financial Officer 631-435-8300