ORBIT INTERNATIONAL CORP. REPORTS 2021 FIRST QUARTER RESULTS
First Quarter 2021 Net Income of $1,827,000 ($0.52 per diluted share) v. $20,000 ($0.01 per diluted share) in Prior Period
First Quarter EBITDA, As Adjusted, of $1,903,000 ($0.54 per diluted share) v. $86,000 ($0.02 per diluted share) in Prior Year Period
Current Year First Quarter Includes $1,618,000 ($0.46 per diluted share) of PPP Loan Forgiveness
Exclusive of PPP Loan Forgiveness, First Quarter 2021 Net Income was $209,000 ($0.06 per diluted share) and EBITDA, As Adjusted was $285,000 ($0.08 per diluted share)
Hauppauge, New York, May 12, 2021 – Orbit International Corp. (OTC PINK:ORBT) today announced results for the first quarter ended March 31, 2021.
First Quarter 2021 vs. First Quarter 2020
• Net sales were $5,393,000, as compared to $5,852,000.
• Gross margin was 32.2%, as compared to 30.3%.
• Net income was $1,827,000 ($0.52 per diluted share), as compared to net income of $20,000 ($0.01 per diluted share). Net Income for the current period includes PPP loan forgiveness of $1,618,000 ($0.46 per diluted share). Exclusive of the PPP loan forgiveness, net income for the current year first quarter was $209,000 ($0.06 per diluted share).
• Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $1,903,000 ($0.54 per diluted share), as compared to EBITDA of $86,000 ($0.02 per diluted share). EBITDA, as adjusted, includes $1,618,000 of PPP loan forgiveness. Exclusive of the PPP loan forgiveness, EBITDA, as adjusted was $285,000 ($0.08 per diluted share).
• Backlog at March 31, 2021 was $15.8 million compared to $17.9 million at December 31, 2020.
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the three months ended March 31, 2021 was $1,827,000 compared to $20,000 for the prior comparable period. Included in our first quarter results was $1,618,000 representing the forgiveness of our loan, including accrued interest, from Peoples United Bank under the Paycheck Protection Program (“PPP”). Exclusive of the PPP loan forgiveness, our net income for the current three-month period was $209,000. Despite the reduction in sales, our improvement in net income for the current period was attributable to an increase in gross margin and a reduction in selling, general and administrative expenses due to the continued cancellation of trade shows, reduced travel and other selling costs related to the COVID-19 pandemic. Our operating performance in the prior comparable period was adversely affected by changes we made to our manufacturing operation in March 2020, which impacted our productivity. These changes 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 pandemic.”
Mr. Binder added, “Our sales for the three months ended March 31, 2021 decreased to $5,393,000 compared to $5,852,000 from the prior comparable period. This decrease in sales was attributable to a reduction in sales from our Orbit Power Group (“OPG”) due to a decrease in CAATS shipments as well as reduced shipments from its commercial division. The shipment of CAATS units during the current period completed the contract that was received by our OPG in September 2017. As previously mentioned, the CAATS units had a lower gross margin than our other products. Furthermore, the customer base of our OPG’s commercial division continues to be especially hurt by the pandemic which resulted in sales from that division to be significantly lower than sales from the prior comparable period. However, sales for our Orbit Electronics Group (“OEG”) increased from the comparable period of the prior year due to delivery schedules. Our gross margin for the three months ended March 31, 2021 increased to 32.2% compared to 30.3% in the prior year. This increase reflects a higher gross profit from our OEG due to increased sales and product mix. This increase in gross margin was partially offset by a lower gross margin from our OPG due to lower sales during the quarter, particularly from its commercial division and despite fewer shipments of CAATS units during the current period.”
Mr. Binder continued, “Our backlog at March 31, 2021 was approximately $15,842,000 compared to approximately $17,879,000 at December 31, 2020. The reduction in backlog was due to lower backlog at both of our operating segments. The reduction in the OPG backlog reflects a reduction in CAATS backlog at March 31, 2021 of approximately $620,000 as compared to the prior year end. In addition, both segments experienced delays on certain orders, which had been expected during the month of March and which are now expected to be received in the second quarter.”
David Goldman, Chief Financial Officer, noted, “At March 31, 2021, our cash and cash equivalents aggregated approximately $7.0 million and our financial condition continued to improve as evidenced by our 7.6 to 1 current ratio. Our tangible book value per share at March 31, 2021 was $5.22 which compares to $4.70 at December 31, 2020. (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 $7.5 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively.”
Mr. Binder concluded, “Because our revenues are tied to our delivery schedules specified in our contracts, it often is difficult to judge our performance on a quarterly basis. On January 29, 2021, we announced that our application for forgiveness of our PPP loan had been approved by the Small Business Administration and is currently reflected in our current financial statements. We endured a difficult period beginning in mid-March 2020 that lasted through most of the 2020 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 quarterly dividend payments. We are still dealing with the adverse consequences of this pandemic. As previously mentioned, results for our current quarter were negatively impacted by weaker revenue from certain areas of our business. Nevertheless, the receipt of the PPP loan allowed us to maintain full employment during this difficult period and barring any further adverse effects of COVID-19, we are confident that our financial condition will remain intact, our operating efficiencies will be maintained, and our gross margins will continue to improve. Our Board of Directors continues to closely monitor the situation and periodically reevaluates the possibility of recommencing our repurchase program and/or 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, 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 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.
Chief Financial Officer