Published:
Spectrum Control Reports Second Quarter Profit
FAIRVIEW, Pa., July 2 /PRNewswire-FirstCall/ --
FlashResults
Spectrum Control, Inc. (SPEC)
(Numbers in Thousands, Except Per Share Data)
2nd quarter ended 2nd quarter ended
5/31/2008 YTD 5/31/2007 YTD
Sales $32,574 $63,728 33,558 66,445
Net Income 2,176 3,965 2,750 4,869
Average Shares 13,358 13,500 13,798 13,694
EPS $0.16 $0.29 $0.20 $0.36
Spectrum Control, Inc. (Nasdaq: SPEC), a leading designer and manufacturer
of electronic control products and systems, today reported results for the
second quarter ended May 31, 2008.
For the second quarter of fiscal 2008, the Company reported net income of
$2.2 million or 16 cents per share on sales of $32.6 million, compared to net
income of $2.8 million or 21 cents per share (20 cents diluted) on sales of
$33.6 million for the same period last year. For the first half of fiscal
2008, the Company had net income of $4.0 million or 30 cents per share (29
cents diluted) on sales of $63.7 million. For the comparable period of 2007,
the Company had net income of $4.9 million or 37 cents per share (36 cents
diluted) on sales of $66.4 million.
Dick Southworth, the Company's President and Chief Executive Officer,
commented, "Total customer orders received in the current quarter were a
record $42.4 million, an increase of $10.8 million or 34% from the first
quarter of fiscal 2008 and $7.0 million or 20% from the same period a year
ago. Military and defense markets were particularly strong. Major orders
received in the second quarter included applications for secure
communications, various land and amphibious combat systems, and munitions
systems. With this strong order rate, our sales order backlog grew to $58.3
million as of May 31, 2008, up $10.3 million from the end of last fiscal year.
A significant portion of our recent orders, however, are not required to be
shipped to customers until later this year or early into fiscal 2009. As a
result, our shipments and profitability for the current quarter fell slightly
below our previous expectations. With our record second quarter order rate and
strong sales order backlog, we have maintained our production capacity and
infrastructure to enable us to respond quickly and efficiently to expected
increases in business levels. Accordingly, we believe our Company is
strategically positioned for long-term dynamic growth and enhanced shareholder
value."
Business Segment Discussion
Our operations are conducted in four reportable segments: signal and power
integrity components; microwave components and systems; power management
systems; and sensors and controls.
Our Signal and Power Integrity Components Business designs and
manufactures a broad range of products including low pass electromagnetic
interference ("EMI") filters, filter plates, filtered connectors, specialty
ceramic components, power entry modules, power line filters, antennas, and
various value-added assemblies. These products are used in numerous industries
including military and defense, communications equipment, medical and
industrial instrumentation, and commercial aerospace.
Our Microwave Components and Systems Business designs and manufactures
microwave filters, amplifiers, frequency mixers, oscillators, synthesizers,
multiple channel filter banks, and related products and integrated assemblies.
These components and systems are predominantly used in various military and
defense applications including secure communications, smart weapons and
munitions, countermeasures for improvised explosive devices, radar systems,
and military aircraft.
Early in fiscal 2008, customer orders for certain military/defense
programs were delayed and demand throughout portions of our telecom equipment
markets was soft. These market conditions contributed to lower shipment
volumes during the current quarter for our signal and power components, as
well as our microwave products. However, overall market conditions have
recently improved, as reflected in our second quarter order rates.
Shipments of our signal and power integrity components were $13.7 million
in the current quarter, down $1.1 million from the second quarter of last
year. Sales of our microwave components and systems amounted to $10.4 million
in the second quarter of fiscal 2008, down $1.4 million from the same period a
year ago. In the current quarter, customer orders received for signal and
power integrity components totaled $ 19.6 million, up $6.8 million or 53% from
the first quarter of this year and $3.1 million or 19% from the comparable
period of fiscal 2007. Customer orders received for our microwave products
were $13.5 million in the current quarter, an increase of $5.5 million or 68%
from the first quarter of this year and $1.9 million or 17% from the same
period last year.
Our Sensors and Controls Business designs and manufactures rotary and
linear precision sensors, temperature sensing probes, thermistors, resistance
detector sensors, and related assemblies. Shipments of our sensors and
controls amounted to $5.6 million in the second quarter of fiscal 2008, up
$446,000 or 9% from the same period a year ago. Customer orders for these
products totaled $6.9 million in the current quarter, up $1.2 million or 21%
from the second quarter of last year. In particular, demand for our custom
position sensors (which are used in numerous applications including robotic
surgical equipment, commercial weather instruments, and military aircraft and
vehicles) continues to increase.
Our Power Management Systems Business designs and manufactures power
distribution units, breaker and fuse interface panels, custom power outlet
strips, and our Smart Start power management systems. Shipments of our power
management systems increased by $1.1 million or 57%, with shipments of $2.9
million in the current quarter and $1.9 million in the comparable period last
year. Customer orders for these systems amounted to $2.4 million in the second
quarter of fiscal 2008, an increase of 42% from a year ago. Demand for these
products was particularly strong in applications for servers, data storage,
optical networking equipment, voice-over-internet protocol ("VoIP") equipment,
switching gear, and various defense-related systems.
Stock Buyback
During the second quarter of fiscal 2008, we continued our stock buyback
program, with our Board of Directors authorizing an additional $5.0 million to
be used for stock repurchases. Of this additional authorization, $1.7 million
was expended in the second quarter of fiscal 2008 to acquire approximately
199,000 shares of the Company's Common Stock. In accordance with the terms of
our stock buyback program, acquired shares are purchased in the open market or
through privately negotiated transactions at prevailing market prices. Funding
for these repurchases comes from available cash reserves or borrowings under
our revolving line of credit facilities. The amount and timing of future share
repurchases will be based on our ongoing assessment of the Company's capital
structure, liquidity, and the market price of the Company's Common Stock. From
the inception of our stock buyback program through May 31, 2008, we have
repurchased a total of 1.1 million shares at an aggregate cost of $7.7
million, as part of our Board's aggregate authorization of $11.0 million. The
repurchased shares are held as treasury stock.
Current Business Outlook
Mr. Southworth added, "With some uncertainty in the U.S. economic and
political environment, and ever-shortening lead times within our commercial
markets, developing short-term business forecasts has become increasingly
difficult. Based upon our existing sales order backlog, recent customer order
trends, and the forecasted requirements for certain major customers and
programs, we currently expect shipments of $32.5 to $34.0 million for our
third quarter ending August 31, 2008. If this sales level is achieved, we
anticipate generating earnings of 16 to 19 cents per share for the third
quarter of fiscal 2008. On a longer-term basis, we will continue to build a
diversified platform of products, while strengthening our status as a key
supplier to all of our major customers. As we broaden our product portfolio
and participation in a wide variety of markets, we will lessen the impact from
a sustained weakness in any particular market sector. As our sales volumes
increase, we will be able to leverage our manufacturing overhead to enhance
operating margins and overall profitability More than ever, we believe this
business strategy will deliver long-term shareholder value during all market
cycles."
Forward-Looking Information
This press release contains statements that are forward-looking statements
within the meaning of the Private Securities Reform Act of 1995. These
statements are based on current expectations, estimates and projections about
the Company's business based, in part, on assumptions made by management.
These statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements due to numerous factors and
risks discussed from time to time in the Company's Securities and Exchange
Commission filings and reports. In addition, such statements could be affected
by general industry and market conditions and growth rates, and general
domestic and international economic conditions. Such forward-looking
statements speak only as of the date on which they are made and the Company
does not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
Simultaneous Webcast and Teleconference Replay
Spectrum Control, Inc. will host a teleconference to discuss its second
quarter results on Wednesday, July 2, 2008, at 4:45 p.m., Eastern Time.
Internet users will be able to access a simultaneous webcast of the
teleconference at www.spectrumcontrol.com or www.vcall.com. A taped replay of
the call will be available through July 3, 2008, at 877-660-6853, access
account 286, conference 288650, or for 30 days over the Internet at the
Company's website.
About Spectrum Control
Spectrum Control, Inc. designs and manufacturers a wide range of
components and systems used to condition, regulate, transmit, receive, or
govern electronic performance. The Company's largest individual markets are
military/defense and communications equipment, with applications in secure
communications, smart weapons and munitions, countermeasures for improvised
explosive devices, missile defense systems, wireless base stations, broadband
switching gear, and global positioning systems. For more information about
Spectrum Control and its products, please visit the Company's website at
www.spectrumcontrol.com.
Spectrum Control, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollar Amounts in Thousands)
May 31, November 30,
2008 2007
Assets
Current assets
Cash and cash equivalents $8,169 $5,183
Accounts receivable 23,537 25,461
Inventories 26,703 25,458
Deferred income taxes 1,332 1,332
Prepaid expenses and other current assets 2,560 911
Total current assets 62,301 58,345
Property, plant and equipment, net 25,564 26,177
Noncurrent assets
Goodwill 35,669 35,669
Other 6,001 6,728
Total assets $129,535 $126,919
Liabilities and Stockholders' Equity
Current liabilities
Short-term debt $7,000 $2,000
Accounts payable 6,019 6,764
Income taxes payable 39 1,391
Accrued liabilities 3,924 4,813
Current portion of long-term debt 100 100
Total current liabilities 17,082 15,068
Long-term debt 951 1,031
Other liabilities 1,027 1,370
Deferred income taxes 7,766 7,582
Stockholders' equity 102,709 101,868
Total liabilities and
stockholders' equity $129,535 $126,919
Spectrum Control, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
May 31, May 31,
2008 2007 2008 2007
Net sales $32,574 $33,558 $63,728 $66,445
Cost of products sold 24,494 24,425 48,797 49,510
Gross margin 8,080 9,133 14,931 16,935
Selling, general and administrative
expense 4,671 4,639 8,882 9,076
Income from operations 3,409 4,494 6,049 7,859
Other income (expense)
Interest expense (97) (159) (139) (326)
Other income and expense, net 15 31 256 196
(82) (128) 117 (130)
Income before provision
for income taxes 3,327 4,366 6,166 7,729
Provision for income taxes 1,151 1,616 2,201 2,860
Net income $2,176 $2,750 $3,965 $4,869
Earnings per common share:
Basic $0.16 $0.21 $0.30 $0.37
Diluted $0.16 $0.20 $0.29 $0.36
Average number of common
shares outstanding:
Basic 13,234 13,364 13,298 13,298
Diluted 13,358 13,798 13,500 13,694
Spectrum Control, Inc. and Subsidiaries
Selected Financial Data
(Unaudited)
Three Months Ended Six Months Ended
May 31, May 31,
Selected Financial Data, 2008 2007 2008 2007
as a Percentage of Net Sales:
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 75.2 72.8 76.6 74.5
Gross margin 24.8 27.2 23.4 25.5
Selling, general and
administrative expense 14.3 13.8 13.9 13.7
Income from operations 10.5 13.4 9.5 11.8
Other income (expense)
Interest expense (0.3) (0.5) (0.2) (0.5)
Other income and expense,
net - 0.1 0.4 0.3
Income before provision
for income taxes 10.2 13.0 9.7 11.6
Provision for income taxes 3.5 4.8 3.5 4.3
Net income 6.7% 8.2% 6.2% 7.3%
Selected Operating Segment Data:
(Dollar Amounts in Thousands)
Signal and power integrity
components:
Customer orders
received $19,568 $16,442 $32,339 $29,808
Net sales 13,665 14,790 26,815 30,054
Microwave components and
systems:
Customer orders
received 13,548 11,604 21,591 24,385
Net sales 10,355 11,727 20,747 22,813
Power management systems:
Customer orders received 2,434 1,714 6,171 3,796
Net sales 2,942 1,875 5,390 3,433
Sensors and controls:
Customer orders received 6,889 5,675 13,966 11,476
Net sales 5,612 5,166 10,776 10,145
SOURCE Spectrum Control, Inc.
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Copyright © 2009, NewsBlaze,
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