Company Reports Third Successive Quarter of Profitability; Gross Margin
Improves to 11 Percent From 2 Percent
ALEXANDRIA, Va., Feb. 12 /PRNewswire-FirstCall/ -- Halifax Corporation
(AMEX: HX) today announced its financial results for the quarter ended
December 31, 2006.
Revenues for the third quarter of fiscal 2007 were $12.6 million versus
$13.4 million for the same period in fiscal 2006. The revenue decrease,
primarily due to the cessation of an unprofitable nationwide contract in
April 2006, was partially offset by new, more profitable business.
The gross profit margin for this year's third quarter was $1.4 million,
or 11% of revenues, versus $314,000, or 2% of revenues, for the same period
a year ago. Operating income was $311,000 compared to an operating loss of
$1.1 million for the same period the prior year.
Income from continuing operations was $51,000 for the quarter ended
December 31, 2006, versus a loss of $783,000 for the same quarter of last
year.
The Company reported net income of $51,000, or $0.02 per basic and
diluted share, for the fiscal 2007 third quarter. In the fiscal 2006 third
quarter, net income of $1.4 million had included a $2.2 million gain on the
sale of discontinued operations related to the sale of Secure Network
Services. The Company also reported that the reclassification of goodwill
resulted in a restatement for the third quarter and first nine months of
fiscal 2006. The restatement had no effect on net income.
Charles McNew, president and chief executive officer, stated, "I'm
especially pleased that operating income rose 65% compared to the prior
quarter. This is a clear indication of the success of our strategic effort
to achieve overall profitability for each of our contracts, as we've taken
a number of steps to build customer satisfaction and contain fixed costs.
"Despite the competitive marketplace, we are encouraged by the present
volume of potential new deals. In fact, the number of large-scale
opportunities we're pursuing is higher than we've seen in recent quarters."
He added, "We're continuing to make progress on the balance sheet as
well, and it's important to note that working capital is approaching $10
million."
For the nine months ended December 31, 2006, revenues were $37.7
million compared to $42.0 million for the same period last year. Operating
income for the first nine months of fiscal 2007 was $823,000 versus an
operating loss of $1.4 million for the comparable period a year ago. Income
from continuing operations was $157,000 compared to a loss from continuing
operations of $1.2 million for the same period of fiscal 2006. Net income
for the nine months of this year was $157,000, or $0.05 per basic and
diluted share. The prior year's net income of $1.3 million, or $ 0.41 per
basic and diluted share, for the nine months had included $310,000 of
income from discontinued operations and a gain on sale of discontinued
operations of $2.2 million.
The Company will host a conference call for investors at 11 a.m. EST on
Monday, February 12, 2007, to review the financial and operational results
for the quarter. The conference call phone number is 888-898-1327 for U.S.
callers and 706-679-5341 for international callers. The conference call
replay will be available from 1 p.m. EST on Monday, February 12, 2007, to 1
p.m. EST on Tuesday, February 13, 2007. The replay number is 800-633-8284
for U.S. callers and 402-977-9140 for international callers. The
reservation number is 21328938.
Founded in 1967, Halifax Corporation is an enterprise maintenance
solutions company providing a wide range of technology services to
commercial and government customers throughout the United States. The
Company's principal products are high availability hardware maintenance
services, technology deployment and integration services. More information
on Halifax can be found at http://www.hxcorp.com. This web site reference
is intended to be an inactive textual reference, and the information on
this web site is not incorporated into this document.
Certain statements made by the Company which are not historical facts
may be considered forward-looking statements, including, without
limitation, statements as to trends, management's beliefs, views,
expectations and opinions, which are based upon a number of assumptions
concerning future conditions that ultimately may prove to be inaccurate.
Such forward-looking statements are subject to risks and uncertainties and
may be affected by various factors described in the Risk Factors Section in
the Company's Annual Report on Form 10-K that may cause actual results to
differ materially from those in the forward-looking statements. For further
information that could affect the Company's financial statements, please
refer to the Company's reports filed with the Securities and Exchange
Commission.
Halifax Corporation
Summary Financial Data
(in 000's except per share amounts)
For the three months For the nine months
Statements of operations ended December 31, ended December 31,
2006 2005 2006 2005
Restated Restated
Revenues $12,603 $13,390 $37,718 $42,027
Cost of services 11,202 13,076 33,516 39,437
Gross margin 1,401 314 4,202 2,590
Selling, marketing, general &
administrative 1,090 1,259 3,379 3,848
Severance costs - 144 - 144
Operating income (loss) 311 (1,089) 823 (1,402)
Other income 8 - 23 5
Interest expense (171) (135) (492) (458)
Income (loss) before income taxes 148 (1,224) 354 (1,855)
Income tax expense (benefit) 97 (441) 197 (665)
Income (loss) from continuing
operations 51 (783) 157 (1,190)
Income from discontinued
operations - - - 310
Gain on sale of discontinued
operations - 2,182 - 2,182
Net income (loss) $ 51 $ 1,399 $ 157 $ 1,302
Income (loss) earnings per common
share - basic:
Continuing operations $ .02 $ (.25) $ .05 $ (.37)
Discontinued operations - - - .10
Gain on sale of discontinued
operations - .69 - .69
$ .02 $ .44 $ .05 $ .41
Income (loss) earnings per common
share - diluted:
Continuing operations $ .02 $ (.25) $ .05 $ (.37)
Discontinued operations - - - .10
Gain on sale of discontinued
operations - .69 - .69
$ .02 $ .44 $ .05 $ .41
Weighted average number of common
shares
outstanding:
Basic 3,175 3,172 3,175 3,172
Diluted 3,179 3,183 3,179 3,188
Balance Sheets December March
31, 2006 31, 2006
Current assets
Cash $ 112 $ 400
Restricted cash 665 625
Trade accounts receivable,
net 10,928 11,415
Inventory, net 5,884 6,363
Prepaid expenses and other
current assets 383 722
Deferred tax asset 985 1,332
Total current assets 18,957 20,857
Property and equipment, net 1,154 1,381
Goodwill and intangibles, net 3,945 4,213
Other assets 123 130
Deferred tax asset 977 828
Total assets $25,156 $27,409
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable and accrued
expenses $6,070 $7,135
Deferred maintenance revenue 3,141 3,515
Notes payable - 168
Income tax payable 20 331
Current portion of long-term
debt 33 34
Total current liabilities 9,264 11,183
Long-term bank debt 6,444 6,891
Other long-term debt 128 154
Subordinated debt - affiliate 1,000 1,000
Deferred income 174 218
Total liabilities 17,010 19,446
Stockholders' equity 8,146 7,963
Total liabilities and
stockholders' equity $25,156 $27,409
SOURCE Halifax Corporation
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http://www.hxcorp.com
http://www.prnewswire.com/comp/391950.html /
CONTACT:
For investor relations information, contact:
Karen Vahouny of Qorvis Communications, +1-703-744-7809,
kvahouny@qorvis.com for Halifax Corporation
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