API Technologies Reports Fiscal First Quarter Results

ORLANDO, Fla., Oct. 17, 2011 /PRNewswire/ -- API Technologies Corp. (NASDAQ: ATNY) ("API" or the "Company"), a provider of electronic systems, subsystems, RF, and secure solutions for the defense, aerospace, and commercial industries, today announced results for its fiscal first quarter ended August 31, 2011. These results include a full quarter of Spectrum Control, acquired June 1, 2011.

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• Realized revenue of $69.2 million, up from $29.1 million in the prior-year period
• Generated adjusted EBITDA of $8.1 million as compared to $2.9 million in the previous year.  Before corporate overhead, adjusted EBITDA for the Company's operating segments was $10.1 million compared to $3.5 million last year.  
• Implemented over $13 million of cost reductions that are being realized
• Ended the quarter with a backlog of approximately $150 million  

"The successful integration of recently-acquired business units has enabled us to significantly reduce API's cost structure while bidding on a large number of new contracts which will strengthen the Company in the quarters ahead," said Bel Lazar, President and Chief Operating Officer of API Technologies.  "Despite the continued U.S. government budgetary constraints, our core defense and military business is stable with an increasing backlog of orders, and we have seen organic growth across other core end markets – particularly in the commercial aerospace, industrial, and medical fields.  Our unique electronic solutions are critical to highly-engineered applications in these areas, and we are beginning to take advantage of cross-selling opportunities now that SenDEC and Spectrum Control have been fully integrated.  We remain focused on driving growth, margin expansion, and cash flow and believe our product mix and proprietary solutions position us well heading into 2012."

API Technologies reported revenue of $69.2 million for the fiscal first quarter ending August 31, 2011, as compared to $29.1 million for the same period in the prior year, primarily due to the acquisitions of Spectrum Control and SenDEC. Gross profit was $16.6 million compared to $6.9 million in the previous year's fiscal first quarter; gross margin was 24.0% for the period ended August 31, 2011, versus 23.8% in the comparable period last year.  Adjusted EBITDA was $8.1 million for the quarter as compared to $2.9 million in the first quarter of last year.  Adjusted EBITDA for the Company's operating segments before corporate overhead was $10.1 million, as compared to $3.5 million in the first quarter of last year.

API Technologies posted net income of $10.4 million for the quarter ending August 31, 2011, as compared to net income of $0.8 million in the first quarter of last year. The increase in net income for the quarter ended August 31, 2011 relates to the recovery of $13.5 million in deferred income taxes, partially offset by higher interest and amortization charges due to the Spectrum Control acquisition.  At the end of the quarter, the Company had $16.2 million of cash and cash equivalents and $172.3 million of debt obligations outstanding.

"API has already implemented over $13 million in cost saving initiatives – well ahead of what was originally anticipated – with benefits expected to be realized in the next few quarters," added Brian Kahn, Chairman and Chief Executive Officer.  "We have been pleased by how quickly new and existing commercial customers have reacted to API's enhanced capabilities, evidenced by the fact that our revenue with clients outside the U.S. Department of Defense grew 10% sequentially from last quarter on a pro forma basis and represented nearly 50% of sales.  In addition, our overall defense-related operations have proven to be resilient despite API's combined CREW programs accounting for just $3 million of revenue this quarter, compared to over $30 million in last year's first quarter.  We are excited about the future of the Company, and we appreciate our more than 2,000 employees working together to successfully demonstrate how much more we can offer our customers today than as separate organizations."

About API Technologies Corp.

API Technologies designs, develops and manufactures electronic systems, subsystems, RF and secure solutions for technically demanding defense, aerospace and commercial applications. API Technologies' customers include many leading Fortune 500 companies. API Technologies trades on the NASDAQ under the symbol ATNY. For further information, please visit the Company website at www.apitechnologies.com. 

Non-GAAP Financial Information

In this press release, API has provided a non-GAAP financial measure for adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization), excluding discontinued operations, restructuring charges, acquisition charges and stock-based compensation expenses and certain non-recurring income items. API also provided adjusted EBITDA from operating segments, which excludes corporate overhead. Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. These are not recognized measures under US GAAP, do not have a standardized meaning, and are unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that these non-GAAP measures should not be construed as an alternative to net earnings or loss determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. We expect our financial statements to continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.

Safe Harbor for Forward-Looking Statements 

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties, which are more fully described in the Company's Annual and Quarterly Reports filed with the Securities and Exchange Commission, include but are not limited to, general economic and business conditions, government regulations, our ability to integrate and consolidate our operations, our ability to expand our operations in both new and existing markets, and the effect of growth on our infrastructure. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. All information in this release is as of the date hereof. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise. 

Investor Relations Contact:
Bel Lazar
President and Chief Operating Officer
+1-877-274-0274
[email protected]

Chris Witty
Darrow Associates
+1-646-438-9385
[email protected]

SOURCE API Technologies Corp.