JPS Industries, Inc. Announces Fourth Quarter and Full Year 2014 Results

GREENVILLE, S.C., Jan. 14, 2015 /PRNewswire/ -- JPS Industries, Inc. (JPST.PK), a leading manufacturer of composite materials, today announced financial and operating results for our fourth fiscal quarter and full year ended November 1, 2014.

Highlights:

• Fourth quarter gross profit of $8.3 million, a 20.5% gross margin vs. $8.1 million, a 14.8% gross margin in the year ago fourth quarter, as lower margin ballistics business comprised a smaller portion of our overall business mix
• Fourth quarter and full year adjusted EBITDA of $4.9 million and $16.2 million vs. $5.2 million and $15.1 million in the prior year periods
• Fourth quarter GAAP net income of $1.5 million, or $0.14 per share, compared to the year ago quarter 2013 net loss of $700,000. Adjusted for non-recurring items, the fourth quarter adjusted net income was $2.3 million compared to $2.0 million in the year ago quarter
• Full year GAAP net income of $14.0 million, or $1.34 per share, which includes $8.5 million of income and gain from discontinued operations, compared to 2013 full year net income of $2.0 million, which includes $1.1 million loss from discontinued operations. Adjusted for non-recurring items, full year adjusted net income was $6.3 million compared to $6.7 million in the prior year
• Fourth quarter net sales of $40.4 million, a 26% decrease from the year ago quarter net sales of $55.0 million, driven by a $14.3 million or 53% reduction in ballistics market net sales, consistent with the third quarter of this year as defense programs are running below the prior year's level
• Full year net sales of $162.8 million, a 3% decrease from the prior year, again due to $9.0 million or 15% lower ballistics sales offsetting growth in our other markets
• Fourth quarter SG&A of $2.7 million, increased over the prior year quarter of $2.5 million due to $0.4 million higher non-cash stock compensation and legal expenses
• Recorded an additional $800,000 reserve against our receivable of $4.2 million due from a former ballistics customer related to a 2010 bankruptcy proceeding
• Cash of $2.7 million and escrow cash of $1.5 million with no debt outstanding
• Contributed $17.8 million in cash to the pension plan in the 2014 fiscal year

Mikel H. Williams, JPS's CEO stated: "This quarter and full year reflect lower sales to the ballistics market, while our electronics, aerospace and other markets generally remained stable with modest growth. For the full year, I am pleased to see that our focus on operational execution continues to show results, with improved gross margins  and lower controllable recurring operating expenses.  On a non-operating note, we recorded an additional $800,000 reserve against our receivable from a former ballistics customer currently in a bankruptcy settlement proceeding primarily due to the extended time of the settlement process and moved the net asset of $3.2 million to other long-term assets.  We also took the opportunity to significantly add to our pension contributions with $17.8 million in cash funded into the plan.  Our banking facility remains in place with approximately $24 million available, and we will likely renew the facility when it matures in June."

Williams continued, "Now let me add a bit of a longer term historical perspective.  Since fiscal year 2012, we have reduced by over $72 million our net debt and pension obligations, which reflects a significant improvement in our capital structure and value for the benefit of our shareholders.  Further, over this period we have improved our annual adjusted EBITDA from $14.8 million in fiscal year 2012 to $16.2 million in fiscal year 2014, despite having sold our Urethane division and eliminated its contribution to our adjusted EBITDA of $2.3 million in fiscal year 2012.  This was accomplished through a combination of improved operating performance at the Composite Materials division and reductions in our operating expenses. After adjusting out the fiscal year 2012 $2.2 million of selling, general and administrative costs related to our Urethane division that we sold, we have further reduced our selling, general and administrative costs by an additional $1.7 million from fiscal year 2012 to fiscal year 2014, or 14 percent. We do not believe these balance sheet and operating improvements have been reflected in the OTC trading price of our stock, as our quoted share price has increased by only 10 cents on the exchange, from $7.00 at the end of fiscal year 2012 to $7.10 at the end of fiscal year 2014.  Because the volume of company stock traded on the OTC is extremely low, we do not believe that the trading price reflected on the OTC exchange properly reflects the value of the stock.  As a result, the company's pension plan has for many years obtained an independent appraisal of the value of the stock for purposes of valuing the stock held in the pension plan.  At fiscal year end 2014, the mid-point of the valuation range determined by the independent appraisal for a block of stock was $13 per share.  The increase from the prior year's value of $11.70 as determined by the independent appraisal reflects another year of solid cash flows and a slightly improving outlook for our Composite Materials business coupled with overall record valuations in the equity markets generally.  The appraised value also considers our significant NOLs, which at $54 million for federal taxes translates to approximately $18 million of future cash tax benefits.  The appraised stock value was $7.15 at the end of fiscal year 2012. I am pleased that we have been able to generate this level of improvement in our shareholder value over the past two years, and we will continue to look for ways to improve and also realize this value for the benefit for our shareholders.  As always, we will aggressively seek opportunities to fully realize the fair value of the shares for the benefit of our shareholders, considering all possibilities," Williams concluded. 

The Statement of Operations for both the current year and the prior year periods have been prepared reflecting the Urethane division as a discontinued operation, as the sale was closed on April 30, 2014.  The prior year balance sheet has not been restated for comparison purposes since the division was not an asset held for sale at that time, nor for the 2013 presentation of the ballistics customer's receivable where it was reflected as a current account in that year.  Certain reclassifications as well as re-allocations among quarterly periods have been made to the prior year's fourth quarter's financial statements to conform to the current year's presentation. These changes had no effect on the previously reported results of operations for the full fiscal year 2013.

About JPS Industries, Inc.
JPS Industries, Inc. is a major U.S. manufacturer of sheet and mechanically formed glass and aramid materials for specialty applications in a wide expanse of markets requiring highly engineered ­­­­­­products.  JPS's products are used in a wide range of applications including: advanced composite materials; civilian and military aerospace components; printed electronic circuit boards; filtration and insulation products; specialty commercial construction substrates; automotive and industrial components; soft body armor for civilian and military applications.  Headquartered in Greenville, South Carolina, the Company operates three manufacturing locations in Anderson and Slater, South Carolina and Statesville, North Carolina.

Non-GAAP Financial Measures
This release includes 'adjusted EBITDA', a non-GAAP financial measure as defined in Regulation G of the Securities Exchange Act of 1934.  This release also includes net income adjusted for non-recurring items, a non-GAAP financial measure as defined in Regulation G of the Securities Act of 1934.  Management believes that the disclosure of non-GAAP financial measures, when presented in conjunction with the corresponding GAAP measures, provide useful information to the Company, investors and other users of the financial statements and other financial information in identifying and understanding operating performance for a given level of net sales and business trends.  Management believes that adjusted EBITDA and net income adjusted for non-recurring items are important factors of the Company's business because they reflect financial performance that is unencumbered by debt service and other non-cash, non-recurring or unusual items.  However, they should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with generally accepted accounting principles.  The Company's definition of adjusted EBITDA may differ from definitions of such financial measure used by other companies. The Company has provided a reconciliation of adjusted EBITDA to GAAP financial information and net income adjusted for non-recurring items to GAAP financial information in the attached Schedule of Non-GAAP reconciliations.

"SafeHarbor" Statement under the Private Securities Litigation Reform Act of 1995
Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding the Company's assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "targets," "will likely result," "will continue," "may," "could" or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company cautions that while it makes such statements in good faith and it believes such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records, and other data available from third parties, it cannot assure you that the Company's projections will be achieved. Important factors that could cause actual results or outcomes for JPS or its subsidiaries to differ materially from those discussed in forward-looking statements include changes in general economic conditions in the markets in which it may compete and fluctuations in demand; the Company's ability to sustain historical margins; increased competition and the risk of lost customer business; increased costs; loss or retirement of key members of management; currency exchange rate fluctuations; integration of acquired operations; international operations; compliance with environmental regulations and other laws; product compliance issues; potential impacts of natural disasters on the industry and the Company's supply chain; increases in the Company's cost of borrowings or unavailability of additional debt or equity capital on terms considered reasonable by management; and adverse state, federal or foreign legislation or regulation or adverse determinations by regulators. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.

See EBITDA calculation on following page.

For Further Information:
Mikel H. Williams
President and Chief Executive Officer
(864) 239-3900

SOURCE JPS Industries, Inc.