Company Reports Gross Margin Increase for the Quarter and Year; Annual
Revenues Up 13 Percent
ALEXANDRIA, Va., June 22 /PRNewswire-FirstCall/ -- Halifax Corporation
(Amex: HX) today announced its financial results for the fourth quarter and
fiscal year ended March 31, 2006.
For the year, revenues were $54.9 million, up 13% compared to prior
year revenues of $48.4 million. The revenue increase was the result of
growth in both high-availability nationwide maintenance services and
site-based managed services.
Halifax reported a gross margin of $3.7 million, or 7% of revenues, for
the 2006 fiscal year versus $1.9 million, or 4% of revenues, for the
previous year. As previously reported, fiscal year 2006 included costs
related to the cessation of a large nationwide enterprise maintenance
contract that had generated significant losses for the Company over the
last two years. This contract was concluded in April 2006.
The operating loss for fiscal 2006 was $4.7 million versus an operating
loss of $3.8 million for the prior year. The operating loss for fiscal year
2006 included non-recurring goodwill charges of $3.2 million and certain
contract cessation costs. The writedown of goodwill had no impact on cash
flow or tangible net worth. Halifax also recognized a gain of $5.7 million
from the sale of its Secure Network Services business on June 30, 2005.
Net income for fiscal year 2006 was $1.5 million, or $0.48 per diluted
share, compared to a net loss of $1.4 million, or $0.46 per share, a year
ago.
According to Charles McNew, president and chief executive officer, "We
are extremely pleased with our top line growth and our gross margin
improvement. Our current backlog stands at a healthy $80 million and our
pipeline for prospective new business is strong. We expect to return to
sustainable profitability for the quarter ended June 30, 2006, and hope to
have some exciting new revenue announcements in the near future. It's also
worth noting that our balance sheet continues to strengthen as working
capital improves and debt is reduced."
For the quarter ended March 31, 2006, revenues were $12.9 million
compared to $13.9 million for the same period last year. The revenue drop
was attributable to the expiration of several contracts. The gross margin
was $1.1 million, or 8.6%, for the 2006 fourth quarter versus $339,000, or
2.4%, for the comparable quarter a year ago. The operating loss for the
quarter ended March 31, 2006, was $74,000 versus an operating loss of $1.1
million for the same period last year. Net income for the three months
ended March 31, 2006, was $233,000, or $0.07 per diluted share, versus a
net loss of $511,000, or $0.16 per share, for the same period in 2005. The
net income improvement for the fiscal 2006 fourth quarter was due to the
strengthening margin and certain tax benefits recorded during the period.
McNew noted, "Our confidence in the long-term prospects for Halifax
remains high, despite the challenging marketplace. As we approach our
return to profitability, we're looking forward to building our stature in
the enterprise maintenance solutions and managed services marketplace. In
addition, we're continuing to evaluate various strategic alternatives to
further position our Company for near and longer term growth
opportunities."
The Company will host a conference call for investors at 11:00 a.m. EDT
on Thursday, June 22, 2006, to review the financial and operational results
for the quarter. The conference call phone number is 800-847-8127 for U.S.
callers and 212-676-5269 for international callers. The conference call
replay will be available from 11 a.m. EDT on Thursday, June 22, 2006, to 11
a.m. EDT on Friday, June 23, 2006. The replay number is 800-633-8284 for
U.S. callers and 402-977-9140 for international callers. The reservation
number is 21296626.
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 years
Statements of operations ended March 31, ended March 31,
2006 2005 2006 2005
Revenues $12,884 $13,915 $54,911 $48,426
Cost of services 11,774 13,576 51,211 46,530
Gross margin 1,110 339 3,700 1,896
Selling, marketing, general &
administrative 1,184 1,454 5,032 5,496
Abandonment of facility - - - 179
Severance costs - - 144 -
Goodwill impairment - - 3,211 -
Operating loss (74) (1,115) (4,687) (3,779)
Other income
Other income (expense) 1 (3) 6 -
Interest expense (126) (201) (583) (663)
Loss before income taxes (199) (1,319) (5,264) (4,442)
Income tax (benefit) (112) (553) (777) (1,653)
Loss from continuing operations (87) (766) (4,487) (2,789)
Income from discontinued
operations - 255 310 1,378
Gain on sale of discontinued
operations 320 - 5,713 -
Net income (loss) $ 233 $ (511) $ 1,536 $(1,411)
Income (loss) earnings per common
share - basic:
Continuing operations $ (.03) $ (.24) $ (1.41) $ (.92)
Discontinued operations - .08 .09 .46
Gain on sale of discontinued
operations 0.10 - 1.80 -
$ .07 $ (.16) $ .48 $ (.46)
Income (loss) earnings per
common share - diluted:
Continued operations $ (.03) $ (.24) $ (1.41) $ (.92)
Discontinued operations - .08 .09 .46
Gain on sale of discontinued
operations 0.10 - 1.80 -
$ .07 $ (.16) $ .48 $ (.46)
Weighted average number of common
shares outstanding:
Basic 3,175 3,168 3,174 3,043
Diluted 3,183 3,227 3,188 3,095
Balance Sheets March 31, 2006 March 31, 2005
Current assets
Cash $ 400 $ 1,264
Restricted cash 625 -
Trade accounts receivable, net 11,415 9,626
Inventory, net 6,363 5,600
Prepaid expenses and other current assets 722 487
Deferred tax asset 1,332 3,814
Assets held for sale - 2,869
Total current assets 20,857 23,660
Property and equipment, net 1,381 1,581
Goodwill and intangibles, net 4,213 7,438
Other assets 130 141
Deferred tax asset 828 930
Total assets $ 27,409 $ 33,750
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued expenses $ 7,135 $ 9,112
Deferred maintenance revenue 3,515 3,776
Notes payable 168 662
Income tax payable 331 -
Current portion of long-term debt 34 17
Liabilities from discontinued operations - 1,619
Total current liabilities 11,183 15,186
Long-term bank debt 6,891 9,463
Other long-term debt 154 3
Subordinated debt - affiliate 1,000 2,400
Deferred income 218 278
Total liabilities 19,446 27,330
Stockholders' equity 7,963 6,420
Total liabilities and stockholders' equity $ 27,409 $ 33,750
SOURCE Halifax Corporation
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Related links:
http://www.hxcorp.com
http://www.prnewswire.com/comp/391950.html/
CONTACT:
Karen Vahouny of Qorvis Communications,
+1-703-744-7809 or kvahouny@qorvis.com, for Halifax Corporation
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