CALABASAS, Calif., April 30, 2013 /PRNewswire/ -- National Technical Systems, Inc. (NASDAQ: NTSC) (NTS), a leading provider of testing and engineering services, today reported its financial results for the fiscal year and the fourth quarter ended January 31, 2013.
For fiscal year 2013, revenues increased 18.8 percent to $184.5 million compared to $155.4 million for fiscal year 2012. Revenues for the fourth quarter were up 8.8 percent year over year to $43.8 million from $40.3 million in the fourth quarter of the prior year.
"Our fiscal year financial results reflect NTS' position as the preeminent independent provider of testing and other services to critical industries in the United States," said President and CEO William C. McGinnis. "We achieved these record results despite being negatively impacted in the fourth quarter, as many of our largest clients delayed placing orders with us while the uncertainty of the sequester loomed over the economy. We saw this slowdown continue as we began fiscal year 2014; however, quote activity and other leading indicators remain fairly strong and we believe the slowdown may be temporary and may create an increasing level of pent up demand for our services.
"In fiscal year 2013, we focused on maximizing the synergies from the numerous acquisitions that we made over the last several years, a key part of which was the completion of our corporate-wide ERP," continued McGinnis. "We can now centralize many administrative functions and share resources among our locations more effectively, allowing us to streamline our organization and reduce our operating costs, including a reduction in personnel through both attrition and separations. We expect to complete these changes early in the second quarter and provide annual savings of between $5 million and $6 million with a one-time charge of about $1.5 million."
Fiscal Year 2013
Revenues for fiscal year 2013 were $184.5 million, up 18.8 percent from $155.4 million for fiscal year 2012. Organic growth was 12.4 percent, primarily due to growth in the aerospace and energy markets with a slight increase in defense industry revenue, which slowed significantly in the last quarter of fiscal year 2013 due to uncertainty regarding the U.S. budget. The remaining 6.4 percent increase came from the acquisitions of Ingenium Testing on July 21, 2011, Lightning Technologies on September 1, 2011 and Garwood Laboratories on April 17, 2012.
Gross profit for fiscal year 2013 was $48.7 million, up 29.6 percent compared to $37.6 million for fiscal year 2012, and gross profit percentage was 26.4 percent compared to 24.2 percent for the year earlier.
Selling, general and administrative (SG&A) expense for fiscal year 2013 of $35.8 million was up 18.2 percent from $30.3 million in fiscal year 2012, primarily reflecting higher compensation and incentive related expense, especially in the sales and marketing areas to support the increasing sales levels, as well as increased amortization expense as a result of recent acquisitions, partially offset by a decrease in legal and other expenses.
Net income attributable to NTS for fiscal year 2013 was $4.4 million, or $0.37 per diluted share. Net income attributable to NTS for fiscal year 2012 was $491,000, or $0.04 per diluted share, which included the effects of a $2.2 million impairment loss, or $0.20 loss per diluted share, and a $381,000 loss from discontinued operations, or $0.03 loss per diluted share.
EBITDA (earnings before interest, taxes, depreciation and amortization) as adjusted to remove the effect of share based compensation expense and non-cash impairment loss or "adjusted EBITDA" was $24.7 million for fiscal year 2013 compared with $17.4 million for fiscal year 2012. Adjusted EBITDA is a non-GAAP financial measure. The Company calculates adjusted EBITDA by taking net income, and adding back the expenses related to interest, taxes, depreciation, amortization, non-cash impairment loss and share based compensation expense, as each of those elements are calculated in accordance with GAAP. A reconciliation of the Company's adjusted EBITDA to net income is included in the tables below.
Weighted average common shares outstanding assuming dilution at the end of fiscal year 2013 were 11,952,000 shares compared to 11,239,000 shares at the end of fiscal year 2012. The increase in share count was due primarily to shares issued in conjunction with a $14 million private placement financing at the end of June 2011.
Fiscal Year 2013 Fourth Quarter
Revenues for the fourth quarter of fiscal year 2013 were $43.8 million, up 8.8 percent from $40.3 million in the prior year period. Organic revenue growth in the fourth quarter of fiscal year 2013 was 5.9 percent.
SG&A expense in the fiscal year 2013 fourth quarter increased to $9.4 million from $7.7 million in the fiscal 2012 fourth quarter, primarily due to the items noted above.
Net loss attributable to NTS for the fourth quarter of fiscal year 2013 was $298,000, or $0.03 loss per share. This compares to a net loss attributable to NTS for the fourth quarter of the prior fiscal year of $618,000, or $0.05 loss per share. The net loss for the fourth quarter of fiscal year 2013 included a $451,000 non-cash tax adjustment to the Company's deferred tax accounts and the fourth quarter of the prior year included a $2.2 million impairment loss.
As previously announced, NTS is conducting a conference call today to be broadcast live over the Internet at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time) to review the financial results for the fiscal 2013 fourth quarter and full year ended January 31, 2013. To access the call, please dial 1-877-941-8609 from the U.S. or, for international callers, please dial +1-480-629-9692. The live webcast and archived replay of the call can be accessed on the front page of the Investor Relations section of NTS' website at www.nts.com.
Non-GAAP Financial Measure – Adjusted EBITDA
This news release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined by SEC Regulation G, that management believes is among the more important measures of performance in its industry because it provides insight into operating cash flows independent of a company's capital structure or tax position and is a key factor in determining a company's valuation. Management also believes Adjusted EBITDA provides a meaningful trend of operating performance, as well as a measure of liquidity and the Company's ability to service debt. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing the Company's operating performance or financial position, as Adjusted EBITDA is not defined by GAAP.
NTS defines Adjusted EBITDA as earnings (net income) before interest, taxes, depreciation and amortization, as adjusted to eliminate the effects of stock-based compensation and non-cash impairment loss.
About National Technical Systems
National Technical Systems is a leading provider of testing and engineering services to the aerospace, defense, telecommunications, automotive, energy and high technology markets. Through a world-wide network of resources, NTS provides full product life-cycle support, offering world class design engineering, compliance, testing, certification, quality registration and program management. For additional information about NTS, visit the Company's website at www.nts.com or call 800-270-2516.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, statements in this press release concerning future operations, plans or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward looking statements, including statements about the Company's anticipated future operating results, are based on management's expectations at this time. Actual results may vary significantly from those suggested by the forward-looking statements due to uncertainties and a number of important risk factors. Those factors include, but are not limited to, the risk factors noted in NTS' Annual Report on 10-K and other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. NTS undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect circumstances or unanticipated events occurring after the date of this release.