Company Reports Revenue Increase of 6% and Positive Gross Margin
ALEXANDRIA, Va., Feb. 14 /PRNewswire-FirstCall/ -- Halifax Corporation
(Amex: HX) today announced its financial results for the quarter ended
December 31, 2005.
Revenues for the third quarter of fiscal 2006 were $13.4 million versus
$12.6 million for the same period in fiscal 2005, an increase of 6%, primarily
as a result of new enterprise maintenance contract business and growth within
its existing contract base. The Company reported a gross margin of $314,000
in the 2006 third quarter versus a loss of $372,000 in the same quarter a year
ago. Included in the cost of services for the 2006 third quarter was a
significant charge related to the potential cessation of one of the Company's
large nationwide enterprise maintenance contracts.
The operating loss for the third quarter of 2006 was $4.3 million versus
an operating loss of $1.8 million for the comparable quarter of last year.
The operating loss for this year's third quarter included non-recurring
charges of $3.2 million for goodwill impairment and $144,000 for severance
costs. The writedown of goodwill had no impact on cash flow or tangible net
worth. Halifax also recognized a gain on the sale of discontinued operations
for $5.4 million due to the sale of the Company's Secure Network Services
business on June 30, 2005.
The net income for the third quarter of 2006 was $1.4 million, or $0.44
per share, compared to a net loss of $1.0 million, or $0.33 per share, for the
comparable period in fiscal 2005.
According to Charles McNew, president and chief executive officer, "We are
encouraged by our continued top line growth in a difficult marketplace, and
the outlook for new enterprise maintenance business is very promising. We
have a strong balance sheet and an excellent working capital position. We're
continuing to evaluate various strategic alternatives to further position our
Company for near- and longer-term growth opportunities."
For the nine months ended December 31, 2005, revenues were $42.0 million,
up 22% compared to $34.5 million for the same period last year. The operating
loss for the nine months ended December 31, 2005, was $4.6 million versus an
operating loss of $2.7 million for the same period last year. The net income
for the nine months ended December 31, 2005, was $1.3 million, or $0.41 per
share, versus a net loss of $900,000, or $0.30 per share, for the nine months
ended December 31, 2004.
McNew noted, "We are working diligently to resolve the issues associated
with the losses on one large nationwide enterprise maintenance account, and we
will not allow the ongoing losses related to this contract to continue. We
expect to have final resolution this quarter, and we believe we can return our
Company to sustained profitability."
The Company will host a conference call for investors at 9 a.m. EST on
Wednesday, February 15, 2006, to review the financial and operational results
for the quarter. The conference call phone number is 866-503-1968 for U.S.
callers and 212-341-7080 for international callers. The conference call
replay will be available from 11 a.m. EST on Wednesday, February 15, 2006, to
11 a.m. EST on Thursday, February 16, 2006. The replay number is 800-633-8284
for U.S. callers and 402-977-9140 for international callers. The reservation
number is 21283722.
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.
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,
2005 2004 2005 2004
Revenues $13,390 $12,645 $42,027 $34,511
Cost of services 13,076 13,017 39,437 32,956
Gross Margin 314 (372) 2,590 1,555
Selling, Marketing, General &
administrative 1,259 1,384 3,848 4,041
Abandonment of facility - - - 179
Severance costs 144 - 144 -
Goodwill impairment 3,211 - 3,211 -
Operating (loss) income (4,300) (1,756) (4,613) (2,665)
Other income - - 5 3
Interest expense (135) (163) (458) (462)
(Loss) before income taxes (4,435) (1,919) (5,066) (3,124)
Income tax (benefit) (441) (668) (665) (1,107)
Loss from continuing operations (3,994) (1,251) (4,401) (2,017)
Income from continuing operations - 216 310 1,117
Gain on Sale of discontinued
operations 5,393 - 5,393 -
Net income (loss) $1,399 $(1,035) $1,302 $(900)
Income (loss) earnings per common
share - basic:
Continuing operations $(1.26) $(.40) $(1.39) $(.67)
Discontinued operations - .07 .10 .37
Gain on sale of discontinued
operations 1.70 - 1.70 -
$.44 $(.33) $.41 $(.30)
Income (loss) earnings per common
share - diluted:
Continued operations $(1.26) $(.40) $(1.39) $(.67)
Discontinued operations - .07 .10 .37
Gain on sale of discontinued
operations 1.70 - 1.70 -
$.44 $(.33) $.41 $(.30)
Weighted average number of common
shares outstanding:
Basic 3,172 3,166 3,172 3,002
Diluted 3,183 3,238 3,188 3,052
Balance Sheets December 31, 2005 March 31, 2005
Current assets
Cash $555 $1,264
Restricted cash 2,024 -
Trade accounts receivable, net 11,147 12,468
Inventory, net 6,323 5,600
Prepaid expenses and other
current assets 500 487
Deferred tax asset 1,083 3,814
Total current assets 21,632 23,633
Property and equipment, net 1,220 1,608
Goodwill and intangibles, net 4,306 7,438
Other assets 133 141
Deferred tax asset 750 930
Total assets $28,041 $33,750
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued
expenses $7,742 $10,731
Deferred maintenance revenue 3,529 3,776
Notes payable 168 662
Income tax payable 609 -
Current portion of long-term debt 4 17
Total current liabilities 12,052 15,186
Long-Term bank debt 7,028 9,463
Other long-term debt - 3
Subordinated debt - affiliate 1,000 2,400
Deferred income 233 278
Total liabilities 20,313 27,330
Stockholders' equity 7,728 6,420
Total liabilities and stockholders'
equity $28,041 $33,750
SOURCE Halifax Corporation
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http://www.hxcorp.com
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http://www.prnewswire.com/comp/391950.html
CONTACT:
Investor Relations: Karen Vahouny of Qorvis
Communications, +1-703-744-7809, or kvahouny@qorvis.com, for
Halifax Corporation
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