ORBIT INTERNATIONAL CORP. REPORTS 2020 YEAR END RESULTS

 

2020 Net Income of $641,000 ($0.18 per diluted share) v. $463,000 ($0.13 per diluted share) in Prior Year

Fourth Qtr. 2020 Net Income of $153,000 ($0.04 per diluted share) v. Net Loss of $216,000 ($0.06 loss per diluted share) in Prior Yr. Period

2020 EBITDA, As Adjusted was $921,000 ($0.26 per diluted share) v. $665,000 ($0.19 per diluted share) in Prior Year

Fourth Qtr. 2020 EBITDA, As Adjusted was $236,000 ($0.07 per diluted share) v. loss of $144,000 ($0.04 loss per diluted share) in Prior Year Period

Hauppauge, New York, March 11, 2021 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 vs. Fourth Quarter 2019

  • Net sales were $6,420,000, as compared to $6,480,000.
  • Gross margin was 27.5%, as compared to 25.1%.
  • Net income was $153,000 ($0.04 per diluted share), as compared to a net loss of $216,000 ($0.06 loss per diluted share).
  • Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $236,000 ($0.07 per diluted share), as compared to a loss of $144,000 ($0.04 loss per diluted share).

Full Year 2020 vs. Full Year 2019

  • Net sales were $6,420,000, as compared to $6,480,000.
  • Gross margin was 27.5%, as compared to 25.1%.
  • Net income was $153,000 ($0.04 per diluted share), as compared to a net loss of $216,000 ($0.06 loss per diluted share).
  • Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $236,000 ($0.07 per diluted share), as compared to a loss of $144,000 ($0.04 loss per diluted share).

Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the year ended December 31, 2020 was $641,000 compared to $463,000 for the prior comparable period. Despite the improvement in net income, earnings for the current year were adversely affected by a $396,000 second quarter loss because of changes we made to our manufacturing operation. These changes, which adversely affected our productivity, were made to comply with the PAUSE executive order by the Governor of New York State to safeguard the health and safety of employees during the COVID-19 pandemic. During the following two quarters, our manufacturing operation returned to normal working hours, which improved our operating efficiencies. In addition, our net income was positively affected by a reduction in selling, general and administrative expenses because of the cancellation of trade shows, reduced travel and other selling costs related to the pandemic. Our net income for the prior year 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 Q-Vio’s facility in San Diego, CA and the integration of its operation into our facility in Hauppauge, NY.

Mr. Binder added, “Our sales for the year ended December 31, 2020 did not materially change from the prior year period. However, our sales for our Orbit Electronics Group (“OEG”) increased by 24.5% from the comparable period of the prior year. The increased sales is primarily because our 2020 results reflect a full year of operations at our Q-Vio subsidiary as compared to our 2019 results, which reflect Q-Vio’s operations only from the period beginning with its acquisition in August 2019. The increase in sales from our OEG was offset by a reduction is sales from our Orbit Power Group (“OPG”), which was due to a significant reduction in CAATS shipments from the prior year. Exclusive of CAATS units, sales of all other power supplies, particularly our VPX and other COTS power supplies, increased in 2020. Our gross margin for the year ended December 31, 2020 decreased to 27.4% compared to 28.2% in the prior year. This decrease reflects a lower gross profit from our OEG due to increased sales from Q-Vio during 2020. These sales included two significant shipments that were manufactured by our vendor in China and included a tariff, a portion of which was absorbed by our customer. This reduction in gross margin was partially offset by a higher gross margin from our OPG due to fewer shipments of CAATS units during 2020, which have a lower gross margin than our other products. Furthermore, our gross margin was also adversely affected by the reduced operating inefficiencies in our manufacturing facility, particularly in the second quarter of the current year, due to the COVID-19 pandemic.”

Mr. Binder added, “On May 5, 2020, we announced that we closed on a $1,606,000 loan from Peoples United Bank under the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”). Under the terms of the CARES Act, PPP loan recipients could apply for and be granted forgiveness for all or a portion of such loans based on the use of such loan proceeds for payment of payroll costs, mortgage interest, rent and utilities. On January 29, 2021, we announced that our application for forgiveness had been approved by the Small Business Administration. However, we are still dealing with the adverse consequences of this pandemic. As previously mentioned, we have made several changes throughout our organization to deal with the health and safety of our employees and productivity suffered as a result. In addition, bookings and revenue for certain areas of our business continue to be negatively impacted. Despite these challenges, we are extremely grateful for the efforts of our employees as well as their resilience under difficult conditions that enabled us to remain open for business and fulfill the needs of our customers. The PPP loan enabled us to preserve our workforce with full employment during this entire period and mitigate the adverse financial impact resulting from the inefficiencies created by the pandemic.”

David Goldman, Chief Financial Officer, noted, “At December 31, 2020, our cash and cash equivalents aggregated approximately $7.5 million and our financial condition continued to be strong as evidenced by our 5.7 to 1 current ratio. Our tangible book value per share at December 31, 2020 was $4.70 which compares to $4.65 at September 30, 2020 and $4.57 at December 31, 2019. (Note: tangible book value per share does not include any additional value for our remaining reserved deferred tax asset or the forgiveness of our PPP loan, which will be recognized in our financial statements for the three month period ending March 31, 2021). To offset future federal and state taxes resulting from profits, we have approximately $7.7 million and $0.7 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. We endured a difficult period beginning in mid-March that lasted through most of the second quarter. During that timeframe, when it became evident that the pandemic was going to affect our business, our Board of Directors decided to suspend our share repurchase program as well as our future quarterly dividend payments. Despite improved operating results in the third and fourth quarter, it remains difficult to predict the full extent of what the short and long-term impact on our business will be. We remain concerned about any unforeseen events related to this pandemic, its effect on our operating efficiencies as well as bookings and revenue in areas of our business that continue to be adversely affected. Nevertheless, with the receipt of the PPP loan and barring any further adverse effects of COVID-19, we are confident that our financial condition will remain intact and our operating efficiencies will be maintained. Our Board of Directors will continue to closely monitor the situation and periodically reevaluate the possibility of recommencing our repurchase program and cash dividend payments to our shareholders.”

Orbit International Corp., through its Electronics Group, 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, VME/VPX power supplies as well as various COTS power sources.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The Company was classified as an essential business by New York State and therefore was exempt from the state’s mandate that all non-essential businesses close their business locations until further notice. In addition, as a member of the Defense Industrial Base (“DIB”), the Company is mandated by the Secretary of Defense to continue to provide the essential products and services required to meet national security commitments to the Federal Government and the U.S. Military. The Company remains open while following guidance from the Centers for Disease Control (“CDC”) to best protect our employees. At this time, the length and severity of the COVID-19 pandemic is still unknown.

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.

CONTACT
David Goldman
Chief Financial Officer
631-435-8300

(See Accompanying Tables)