API Technologies Reports Results for the Fiscal Second Quarter Ended May 31, 2015

Jul 07, 2015, 16:01 ET from API Technologies Corp.

ORLANDO, Fla., July 7, 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 second quarter ended May 31, 2015.

Results for the Quarter Ended May 31, 2015

API Technologies reported fiscal second quarter revenue of $52.3 million.

For the fiscal second quarter of 2015, GAAP gross margin as a percentage of sales was 21.0%; non-GAAP gross margin was 22.2%.

The Company posted a net loss of $4.3 million for the fiscal second quarter. Adjusted EBITDA for the fiscal second quarter of 2015 was $3.9 million, or 7.4% of revenue.  

Results for the Six Months Ended May 31, 2015

API Technologies reported revenue of $103.1 million for the six months ended May 31, 2015. GAAP gross margin was 23.2% for the six -month period ended May 31, 2015. Non-GAAP gross margin was 24.4% for the same period.

The Company posted a net loss of $6.5 million for the six months ended May 31, 2015. Adjusted EBITDA for the six months ended May 31, 2015 was $9.9 million, or 9.6% of revenue.

Recent Developments

  • On June 8, 2015, API announced the successful completion of its acquisitions of Aeroflex / Inmet, Inc. ("Inmet") and Aeroflex / Weinschel, Inc. ("Weinschel") from Cobham plc. The transaction adds breadth to API's RF, microwave, and microelectronics product portfolio, extends the Company's subsystems offering, and furthers API's reach in key end markets, including defense, space, commercial aviation, and wireless. For the twelve months ended March 31, 2015, combined revenue for Inmet and Weinschel was approximately $47.5 million and combined EBITDA was approximately $11.2 million, representing a margin of 23.6%.
  • Don Barnas was named the Company's new Vice President of Worldwide Sales, effective June 8, 2015. Mr. Barnas joins API with nearly 30 years of sales and business development leadership in RF, microwave and microelectronics; he most recently served as Vice President of Sales – Americas, for Richardson, RFPD, an Arrow Company.
  • Domingo Isasi was appointed to the newly created role of Vice President of Continuous Improvement for API, effective June 29, 2015. Reporting to API's President and Chief Executive Officer, Mr. Isasi will lead worldwide continuous improvement efforts related to delivery, quality, and reliability excellence, as well as drive cost-efficiency initiatives.

Conference Call

API Technologies will host a conference call to review the Company's fiscal second quarter results today, July 7, at 4:45 p.m. Eastern Time. Robert Tavares, President and Chief Executive Officer, and Claudio Mannarino, Senior Vice President and 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, on the Company's website for 30 days, and by telephone at 1-877-344-7529 or 1-412-317-0088, replay passcode #10068068, beginning 6 p.m. Eastern Time on July 7, 2015 for 30 days.

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 and non-GAAP gross margin. Also provided is combined EBITDA for  Inmet and Weinschel. Non-GAAP gross margin excludes restructuring charges and certain other adjustments described in the reconciliation table and non-GAAP Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) excludes restructuring charges, acquisition and divestiture-related charges, inventory provisions, 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.  The EBITDA for the Inmet and Weinschel transactions is earnings before interest, taxes, depreciation and amortization.  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 or gross margin 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" 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:

Claudio Mannarino Senior Vice President and 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 May 31, 2015

For the Three

months ended May 31, 2014

For the Six

months ended May 31, 2015

For the Six

 months ended May 31, 2014

Revenue, net

$             52,281

$             53,169

$          103,131

$          112,086

Cost of revenues

Cost of revenues

41,252

42,478

79,111

87,751

Restructuring charges

67

281

109

580

Total cost of revenues

41,319

42,759

79,220

88,331

Gross profit

10,962

10,410

23,911

23,755

Operating expenses

General and administrative

5,575

5,820

10,854

11,539

Selling expenses

3,383

3,536

7,038

7,294

Research and development

2,181

2,161

4,181

4,234

Business acquisition and related charges

328

75

390

185

Restructuring charges

840

748

1,670

866

12,307

12,340

24,133

24,118

Operating loss

(1,345)

(1,930)

(222)

(363)

Other expenses (income), net

Interest expense, net

3,092

2,887

6,219

5,297

Amortization of note discounts and deferred financing costs

23

10,228

46

10,893

Other expenses (income), net

(423)

(223)

(543)

(113)

2,692

12,892

5,722

16,077

Loss before income taxes

(4,037)

(14,822)

(5,944)

(16,440)

Expense for income taxes

255

162

527

668

Net loss

$             (4,292)

$          (14,984)

$          (6,471)

$          (17,108)

Accretion on preferred stock

(393)

Net loss attributable to common shareholders

$             (4,292)

$            (14,984)

$          (6,471)

$          (17,501)

Net loss per share--Basic and diluted

$               (0.08)

$                (0.27)

$                (0.12)

$                (0.32)

Weighted average shares outstanding

  Basic

55,472,798

55,446,463

55,466,944

55,436,440

  Diluted

55,472,798

55,446,463

55,466,944

55,436,440

          

Consolidated Balance Sheets (unaudited)

in thousands USD

May 31,

2015

November 30,

2014

Assets

Current

Cash and cash equivalents     

$

5,420

$

8,258

Accounts receivable, net        

35,822

38,657

Inventories, net        

61,285

54,718

Deferred income taxes             

475

561

Prepaid expenses and other current assets          

1,814

1,592

104,816

103,786

Fixed assets, net

28,283

30, 574

Goodwill

116,770

116,770

Intangible assets, net

26,630

29,848

Other non-current assets

1,945

1,862

 Total assets

$

278,444

$

282,840

Liabilities and Shareholders' Equity

Current

Accounts payable and accrued expenses            

$

34,844

$

27,907

Deferred revenue      

2,344

2,279

Current portion of long-term debt         

11,737

10,097

48,925

40,283

Deferred income taxes

4,893

4,575

Other long-term liabilities

1,551

1,216

Long-term debt, net of current portion

111,523

118,214

Deferred gain

7,490

7,788

174,382

172,076

Commitments and contingencies

Shareholders' equity

Common stock          

55

55

Special voting stock

Additional paid-in capital       

328,099

327,846

Common stock subscribed but not issued           

2,373

2,373

Accumulated deficit 

(226,576)

(220,105)

          Accumulated other comprehensive income         

111

595

104,062

110,764

Total Liabilities and Shareholders' Equity

$

278,444

$

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

 May 31, 2015

Six (6)

months ended

May 31, 2015

Net loss

 

$

(4,292)

$

(6,471)

Adjustments

    Interest expense, net      

3,092

6,219

Amortization of note discounts and deferred financing costs

23

46

    Depreciation and amortization

3,013

6,472

    Income taxes    

255

527

    Restructuring charges    

907

1,779

    Acquisition related charges

328

390

    Other adjustments (A)                                               

526

937

Total Adjusted EBITDA

 

$

3,852

$

9,899

Total Adjusted EBITDA percentage

7.4%

9.6%

Corporate overhead            

$

1,439

$

2,855

Adjusted EBITDA before corporate overhead              

$

5,291

$

12,754

Adjusted EBITDA before corporate overhead %         

10.1%

12.4%

(A) Other adjustments primarily include non-cash inventory provisions, stock based compensation, 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

May 31, 2015

SSC

SSIA

 EMS

 Corporate

 Total

Q2

Q2

Q2

Q2

Q2

Revenue

$   37,217

$    5,285

$   9,779

$             -

$   52,281

Net loss

(4,292)

Adjustments

  Interest expense, net

3,092

 

  Amortization of note discounts and deferred financing costs

23

  Depreciation and amortization

3,013

  Income taxes

255

  Restructuring charges

907

  Acquisition related charges

328

  Other adjustments (A)

526

Add-Back Total

8,144

Adjusted EBITDA

$     3,497

$     597

$         (242)

$              -

$     3,852

Adjusted EBITDA Margin %

9.4%

11.3%

-2.5%

0.0%

7.4%

(A) Other adjustments primarily include non-cash inventory provisions, stock based compensation, franchise taxes, financing related costs, lease payments for the State College, Pennsylvania facility and foreign exchange losses.

        

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin

$ amounts in thousands USD

Three Months Ended

Six Months Ended

May 31, 2015

May 31, 2015

Revenue

$      52,281

$      103,131

Gross Profit

10,962

23,911

GAAP Gross Margin %

21.0%

23.2%

Restructuring and other adjustments (A)

657

1,230

Adjusted Gross profit

11,619

25,141

Adjusted Gross margin %

22.2%

24.4%

(A) Other adjustments primarily include inventory provisions.

       

Financial Results of Inmet and Weinschel Combined

$ amounts in thousands USD

Unaudited

Twelve Months Ended

March 31, 2015

Revenue

$      47,481

Gross Profit

21,068

GAAP Gross Margin %

44.4%

Operating Income

10,375

EBIT

10,375

Net income

10,375

EBITDA

11,197

EBITDA %

23.6%

       

Consolidated EBITDA of Inmet and Weinschel Combined

in thousands USD

Unaudited

The following table reconciles twelve months GAAP net income to non-GAAP EBITDA.

Twelve months ended

 March 31, 2015

Revenue

 

$

47,481

Net income

10,375

Add:

0

    Interest and taxes

Depreciation and amortization

822

Total EBITDA

 

$

11,197

Total EBITDA percentage

23.6%

Logo - http://photos.prnewswire.com/prnh/20110629/NY28451LOGO        

SOURCE API Technologies Corp.



RELATED LINKS

http://www.apitech.com