API Technologies Reports Results for the Fiscal Third Quarter Ended August 31, 2015

Oct 08, 2015, 16:32 ET from API Technologies Corp.

ORLANDO, Fla., Oct. 8,  2015 /PRNewswire/ -- API Technologies Corp. (NASDAQ: ATNY) ("API" or the "Company"), a leading provider of high performance RF, microwave, millimeterwave, power, and security solutions, today announced results for the fiscal third quarter ended August 31, 2015. The results reflect the inclusion of Inmet and Weinschel, which the Company acquired after the start of the quarter, on June 8, 2015.

 

 

"We delivered significantly improved third quarter performance, demonstrating the impact our focus on operational improvement is beginning to have on the business," said Robert Tavares, President and Chief Executive Officer of API. "The integration of Inmet and Weinschel are substantially complete to our plan and already benefiting our top line.  API is keenly focused on creating long-term value for our customers and shareholders."

Results for the Quarter Ended August 31, 2015

API Technologies reported fiscal third quarter revenue of $68.0 million.

GAAP gross margin as a percentage of sales was 26.5% for the fiscal third quarter of 2015.

For the fiscal third quarter, the Company posted a net loss of $6.3 million. Adjusted EBITDA for the fiscal third quarter of 2015 was $9.9 million, or 14.6% of revenue.  

Results for the Nine Months Ended August 31, 2015

API Technologies reported revenue of $171.1 for the nine months ended August 31, 2015. GAAP gross margin was 24.5% for the nine -month period ended August 31, 2015.

The Company posted a net loss of $12.8 million for the nine months ended August 31, 2015. Adjusted EBITDA for the nine months ended August 31, 2015 was $19.8 million, or 11.6% of revenue.

Conference Call

API Technologies will host a conference call to review the Company's fiscal third quarter results today, October 8, at 4:45 p.m. Eastern Time. Robert Tavares, President and Chief Executive Officer, and Eric F. Seeton, Chief Financial Officer, will host the call.

The call will be available by dialing 1-877-317-6789 or 1-412-317-6789 and accessible by webcast at http://www.apitech.com/investor-relations. Recorded replays of the webcast will be available on the Company's Investor Relations App, as well as for 30 days on the Company's website and by telephone at 1-877-344-7529 or 1-412-317-0088, replay passcode #10072832, beginning 6 p.m. Eastern Time on October 8, 2015.

The API Technologies Investor Relations App is available for iPhone® and iPad® via the Apple iTunes store and for Android™ devices via Google Play. For more information, visit http://www.apitech.com/investor-relations.  

About API Technologies Corp.

API Technologies (NASDAQ: ATNY) is an innovative designer and manufacturer of high performance systems, subsystems, modules, and components for technically demanding RF, microwave, millimeterwave, electromagnetic, power, and security applications.  A high-reliability technology pioneer with over 70 years of heritage, API Technologies products are used by global defense, industrial, and commercial customers  in the areas of commercial aerospace, wireless communications, medical, oil and gas, electronic warfare, unmanned systems, C4ISR, missile defense, harsh environments, satellites, and space. Learn more about API Technologies and our products at www.apitech.com.

Non-GAAP Financial Information

In this press release, API has provided the non-GAAP financial measures for Adjusted EBITDA at the Company level and segment level.  Non-GAAP Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excludes restructuring charges, acquisition related charges, inventory provisions including charges related to purchase accounting, contingency accruals, stock-based compensation expenses, amortization of note discounts and deferred financing costs, and certain other adjustments described in the reconciliation table. API has also provided the non-GAAP financial measure for Adjusted EBITDA before corporate overhead, which is the Adjusted EBITDA number less general corporate overhead.  Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company's financial performance by excluding from operating results the impact of items that management believes do not reflect the Company's core operating performance. 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 include but are not limited to, general economic and business conditions, including without limitation, reductions in government defense spending; government regulations; our ability to integrate and consolidate our operations; our ability to expand our operations in both new and existing markets; and the ability of our review of strategic alternatives to maximize stockholder value. 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. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the above factors located in our Annual Report on Form 10-K under Part I, Item 1A "Risk Factors," and our Quarterly Reports on Form 10-Q under Part II, Item 1A "Risk Factors" as well as those additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. 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.

Contact:

Eric F. Seeton Chief Financial Officer +1 855-294-3800  investors@apitech.com

Tara Flynn Condon Vice President, Corporate Development & Marketing +1 908-546-3903 media@apitech.com

API Technologies Corp. Financial Results Consolidated Statements of Operations (unaudited) in thousands USD

For the Three

months ended August 31, 2015

For the Three

months ended August 31, 2014

For the nine

months ended August 31, 2015

For the nine

 months ended August 31, 2014

Revenue, net

$             67,993

$             56,924

$          171,124

$          169,011

Cost of revenues

Cost of revenues

49,928

41,751

129,039

129,502

Restructuring charges

38

364

147

945

Total cost of revenues

49,966

42,115

129,186

130,447

Gross profit

18,027

14,809

41,938

38,564

Operating expenses

General and administrative

8,612

6,030

19,466

17,568

Selling expenses

4,292

3,743

11,330

11,037

Research and development

2,750

1,980

6,931

6,214

Business acquisition and related charges

405

190

795

375

Restructuring charges

152

133

1,822

1,000

16,211

12,076

40,344

36,194

Operating income

1,816

2,733

1,594

2,370

Other expenses (income), net

Interest expense, net

4,880

3,289

11,099

8,586

Amortization of note discounts and deferred financing costs

355

24

401

10,916

Other expenses (income), net

2,238

24

1,695

(88)

7,473

3,337

13,195

19,414

Loss before income taxes

(5,657 )

(604 )

(11,601 )

(17,044 )

Expense for income taxes

639

30

1,165

698

Net loss

$          (6,296)

$          (634)

$        (12,766)

$          (17,742)

Accretion on preferred stock

(393)

Net loss attributable to common shareholders

$          (6,296)

$          (634)

$        (12,766)

$          (18,135)

Net loss per share—Basic and diluted

$               (0.11)

$                (0.01 )

$                (0.23 )

$                (0.33 )

Weighted average shares outstanding

  Basic

55,489,938

55,461,217

55,474,617

55,444,759

  Diluted

55,489,938

55,461,217

55,474,617

55,444,759

 

Consolidated Balance Sheets (unaudited)  in thousands USD

August 31,

2015

November 30,

2014

Assets

Current

Cash and cash equivalents     

$

6,554

$

8,258

Accounts receivable, net        

41,777

38,657

Inventories, net        

71,442

54,718

Deferred income taxes             

370

561

Prepaid expenses and other current assets          

1,717

1,592

121,860

103,786

Fixed assets, net

32,412

30, 574

Goodwill

150,280

116,770

Intangible assets, net

51,032

29,848

Other non-current assets

1,969

1,862

 Total assets

$

357,553

$

282,840

Liabilities and Shareholders' Equity

Current

Accounts payable and accrued expenses            

$

42,339

$

27,907

Deferred revenue      

1,855

2,279

Current portion of long-term debt         

20,504

10,097

64,698

40,283

Deferred income taxes

5,160

4,575

Other long-term liabilities

1,562

1,216

Long-term debt, net of current portion

180,856

118,214

Deferred gain

7,341

7,788

259,617

172,076

Commitments and contingencies

Shareholders' equity

Common stock          

55

55

Special voting stock

Additional paid-in capital       

328,380

327,846

Common stock subscribed but not issued           

2,373

2,373

Accumulated deficit 

(232,871)

(220,105)

          Accumulated other comprehensive income         

(1)

595

97,936

110,764

Total Liabilities and Shareholders' Equity

$

357,553

$

282,840

Consolidated Adjusted EBITDA  in thousands USD

The following table reconciles three months GAAP net loss to non-GAAP Adjusted EBITDA and Adjusted EBITDA less corporate overhead.

 

Three (3) months ended

 August 31, 2015

Nine (9)

months ended

August 31, 2015

Net loss

 

$

(6,296)

$

(12,766)

Adjustments

    Interest expense, net      

4,880

11,099

Amortization of note discounts and deferred financing costs

355

401

    Depreciation and amortization

5,494

11,966

    Income taxes    

639

1,165

    Restructuring charges    

190

1,969

    Acquisition related charges

405

795

    Other adjustments (A)                                               

4,253

5,190

Total Adjusted EBITDA

 

$

9,920

$

19,819

Total Adjusted EBITDA percentage

14.6%

11.6%

Corporate overhead            

$

1,482

$

4,337

Adjusted EBITDA before corporate overhead              

$

11,402

$

24,156

Adjusted EBITDA before corporate overhead %         

16.8%

14.1%

 

(A) Other adjustments primarily include non-cash inventory provisions and charges related to Inmet and Weinschel purchase accounting, contingency accruals, stock based compensation expense, franchise taxes, financing related costs, lease payments for the State College, Pennsylvania facility and foreign exchange losses.

 

Additional Adjusted EBITDA Reconciliations by Segment in thousands USD

 

Three Months Ending

August 31, 2015

SSC

SSIA

 EMS

 Corporate

 Total

Q3

Q3

Q3

Q3

Q3

Revenue

$   47,609

$    5,004

$  15,380

$             -

$   67,993

Net loss

(6,296)

Adjustments

  Interest expense, net

4,880

 

  Amortization of note discounts and deferred financing costs

355

  Depreciation and amortization

5,494

  Income taxes

639

  Restructuring charges

190

  Acquisition related charges

405

  Other adjustments (A)

4,253

Add-Back Total

16,215

Adjusted EBITDA

$     6,913

$     1,320

$      1,687

$              -

$     9,920

Adjusted EBITDA Margin %

14.5%

26.4%

11.0%

0.0%

14.6%

(A) Other adjustments primarily include non-cash inventory provisions and charges related to Inmet and Weinschel purchase accounting, contingency accruals, stock based compensation expense, franchise taxes, financing related costs, lease payments for the State College, Pennsylvania facility and foreign exchange losses.

 

SOURCE API Technologies Corp.



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