Income from Continuing Operations For Second Quarter and First Six Months
of 2008
New Orders and $20 Million Backlog Continue Strong
WEST CALDWELL, N.J., Aug. 18 /PRNewswire-FirstCall/ -- Merrimac
Industries, Inc. (Amex: MRM), a leader in the design and manufacture of RF
Microwave components, subsystem assemblies and micro-multifunction modules
(MMFM(R)), today announced results for the second quarter and first six
months of 2008.
Previously reported results of operations of Filtran Microcircuits Inc.
("FMI") for the second quarter and first six months of 2007 have been
reclassified and reported as discontinued operations.
Net sales from continuing operations for the second quarter of 2008
were $7,524,000, an increase of $2,153,000 or 40.1 percent compared to the
second quarter of 2007 net sales of $5,371,000. Net sales from continuing
operations increased due to the higher level of orders received during the
prior year, with its resultant larger backlog that continued during 2008,
including higher sales of Core and Multi-Mix(R) products to the defense
industry-related customers the Company serves, as well as a continuation of
the favorable trend in orders received during the current year that
positively impacted backlog during 2008.
Gross profit from continuing operations for the second quarter of 2008
was $3,215,000, an increase of $848,000 or 35.8 percent, and was 42.7
percent of sales as compared to gross profit of $2,367,000 or 44.1 percent
of sales for the second quarter of 2007. The increase in gross profit from
continuing operations for the second quarter of 2008 was due to the impact
of the higher level of net sales, which improved absorption of fixed
manufacturing costs and lowered the percentage of operating costs to sales
due to the increased sales. The decrease of 1.4 percentage points in gross
profit percentage in the second quarter of 2008 was primarily due to
$600,000 of revenue recognized from a large contract with no gross profit.
Operating income from continuing operations for the second quarter of
2008 was $487,000, compared to operating income from continuing operations
of $55,000 for the second quarter of 2007. The increase in operating income
from continuing operations for the second quarter of 2008 as compared to
the second quarter of 2007 was due to the improved gross profit caused by
the increase in net sales, partially offset by higher selling, general and
administrative expenses, from recent personnel hired to meet the demand of
increased sales, and higher research and development costs.
Income from continuing operations for the second quarter of 2008 was
$439,000 compared to income from continuing operations of $50,000 for the
second quarter of 2007. Income per share from continuing operations for the
second quarter of 2008 was $.15 compared to income from continuing
operations of $.02 per share for the second quarter of 2007.
Loss from discontinued operations for the second quarter of 2008 was
$(55,000) compared to a loss from discontinued operations of $(3,519,000)
for the second quarter of 2007. Loss per share from discontinued operations
for the second quarter of 2008 was $(.02) compared to a loss from
discontinued operations of $(1.21) per basic share and $(1.20) per diluted
share for the second quarter of 2007. In the second quarter of 2007, the
Company recorded a partial impairment charge of $2,630,000 to the FMI
goodwill, and wrote down the net deferred tax asset of FMI by $506,000, for
a total of $3,136,000 of non-cash charges.
Net income for the second quarter of 2008 was $384,000 compared to a
net loss of $(3,469,000) for the second quarter of 2007. Net income per
basic and diluted share was $.13 for the second quarter of 2008, compared
to a net loss per basic share of $(1.19) and a net loss of $(1.18) per
diluted share reported for the second quarter of 2007.
Net sales from continuing operations for the first six months of 2008
were $13,282,000, an increase of $3,399,000 or 34.4 percent compared to net
sales of $9,883,000 for the first six months of 2007. The increase in net
sales for the first six months of 2008 is primarily due to the same reasons
that benefited the second quarter of 2008 increase in net sales.
Gross profit for the first six months of 2008 was $5,521,000, an
increase of $1,457,000 or 35.9 percent, and was 41.6 percent of net sales
as compared to gross profit of $4,064,000 or 41.1 percent of net sales for
the first six months of 2007. The increase in gross profit and gross profit
percentage for the first six months of 2008 was due to the higher sales
level and the positive impact that this had on the Company from a higher
level of absorption of its fixed manufacturing costs.
Operating income from continuing operations for the first six months of
2008 was $176,000 compared to an operating loss from continuing operations
for the first six months of 2007 of $(949,000). The increase in operating
income from continuing operations for the first six months of 2008 was due
to higher gross profit from the increase in net sales, partially offset by
higher sales commissions and increased selling, general and administrative
expenses as compared to the first six months of 2007.
Income from continuing operations for the first six months of 2008 was
$66,000 compared to a loss from continuing operations of $(933,000) for the
first six months of 2007. Income from continuing operations per share for
the first six months of 2008 was $.02 compared to a loss from continuing
operations of $(.31) per share for the first six months of 2007.
Loss from discontinued operations for the first six months of 2008 was
$(55,000) compared to a loss from discontinued operations of $(3,800,000)
for the first six months of 2007. Loss from discontinued operations per
share for the first six months of 2008 was $(.02) compared to a loss from
discontinued operations of $(1.27) per share for the first six months of
2007. Loss from discontinued operations for the first six months of 2007
includes a partial goodwill impairment charge of $2,630,000 and a charge of
$506,000 to provide a full valuation allowance for a Canadian net deferred
tax asset.
Net income for the first six months of 2008 was $11,000 compared to a
net loss of $(4,733,000) for the first six months of 2007. Net income per
share for the first six months of 2008 was nil compared to a net loss of
$(1.58) per share for the first six months of 2007.
Orders of $7,238,000 were received during the second quarter of 2008, a
decrease of $1,531,000 or 17.5 percent compared to $8,769,000 in orders
received during the second quarter of 2007. Orders of $15,393,000 were
received during the first six months of 2008, an increase of $655,000 or
4.4 percent compared to $14,738,000 in orders received during the first six
months of 2007. Backlog increased by $2,111,000 or 11.7 percent to
$20,102,000 at the end of the second quarter of 2008 compared to
$17,991,000 at year-end 2007, due to the increased orders received during
the first six months of 2008, including orders from defense
industry-related customers that are scheduled for shipment later in 2008
and 2009. The book-to-bill ratio for the second quarter of 2008 was 0.96 to
1 and for the second quarter of 2007 was 1.63 to 1. The book-to-bill ratio
for the first six months of 2008 was 1.16 to 1 and for the first six months
of 2007 was 1.49 to 1. The orders, backlog and book-to-bill data exclude
FMI information for 2007.
Chairman and CEO Mason N. Carter commented, "We are pleased with all
key operating indicators for the first six months of 2008 and the
significant improvement over 2007. The second quarter of 2008 clearly
reflected the improved order flow, backlog, product mix, operating
performance, and burden absorption that we have been reporting to you. We
continue to focus on robust and improving results from operations going
forward.
"We are also seeing the trend towards adoption of Multi-Mix(R)
technology by our key OEM customer base. The technology 'mix' of products
we have in our backlog today is also encouraging as we have seen growth
over the last several quarters in all our product types, and a significant
percentage increase for Multi-Mix(R)."
Mr. Carter continued, "Our military and space systems customers have
brought new design projects to us that, upon successful completion, can
translate into future production backlog. On the commercial front, Merrimac
has passed another milestone, by delivering our first 25 production units
of our new WiMAX amplifier to a key OEM.
"On the technology development side, we have made significant progress
in our characterization and implementation of bare die GaN transistors in
Multi-Mix(R) amplifier applications, allowing for high power and linearity
in a very small footprint. Additionally, development of certain design and
manufacturing techniques in our Multi-Mix(R) passive product line has given
us the ability to meet tighter and more difficult specifications than ever
before in a mass production environment."
Mr. Carter added, "Overall, I am encouraged by the results we are
reporting today. We are extremely busy and there is much hard work ahead
for us, but based on the results of the last few quarters, my confidence is
high that Merrimac is positioned for more positive results.
"Our financial highlights include:
-- Second quarter income from continuing operations of $439,000 or $.15
per share.
-- Orders booked for the second quarter of 2008 were $7.2 million. Orders
booked were $15.4 million for the first six months of 2008.
-- Continuing solid second quarter-end backlog of $20.1 million.
-- Book-to-bill ratio of 1.16 to 1 for the first six months of 2008.
-- Working capital of $10.7 million and current ratio of 3.5 to 1."
Investors are invited to participate in the financial results
conference call on Monday, August 18, 2008 at 4:15 p.m. (Eastern) by
dialing 1-888-727-7637 (for International callers: 1-913-312-0951) five
minutes prior to the scheduled start time, and reference the Merrimac
Industries second quarter 2008 conference call. For those unable to
participate, a replay will be available for seven days by dialing
1-888-203-1112, or 1-719-457-0820 for international callers, passcode
number 3633214.
This conference call will also be broadcast live over the internet by
logging on to the web at this address:
http://www.videonewswire.com/event.asp?id=50979
Should you be unable to participate during the live webcast, a link to
the archived webcast will be posted on the Merrimac Industries, Inc.
website http://www.merrimacind.com .
About Merrimac
Merrimac Industries, Inc. is a leader in the design and manufacture of
RF Microwave signal processing components, subsystem assemblies, and
Multi-Mix(R) micro-multifunction modules (MMFM(R)), for the worldwide
Defense, Satellite Communications (Satcom), Commercial Wireless and
Homeland Security market segments. Merrimac is focused on providing Total
Integrated Packaging Solutions(R) with Multi-Mix(R) Microtechnology, a
leading edge competency providing value to our customers through
miniaturization and integration. Multi-Mix(R) MMFM(R) provides a patented
and novel packaging technology that employs a platform modular architecture
strategy that incorporates embedded semiconductor devices, MMICs,
resistors, passive circuit elements and plated-through via holes to form a
three-dimensional integrated module used in High Power, High Frequency and
High Performance mission-critical applications. Merrimac Industries
facilities are registered under ISO 9001:2000, an internationally developed
set of quality criteria for manufacturing operations.
Merrimac Industries, Inc. has facilities located in West Caldwell, NJ
and San Jose, Costa Rica and has approximately 210 co-workers dedicated to
the design and manufacture of signal processing components, gold plating of
high-frequency microstrip and bonded stripline Teflon (PTFE) circuits and
subsystems providing Total Integrated Packaging Solutions(R) for wireless
applications. Merrimac (MRM) is listed on the American Stock Exchange.
Multi-Mix(R), Multi-Mix PICO(R), MMFM(R), System In A Package(R), SIP(R)
and Total Integrated Packaging Solutions(R) are registered trademarks of
Merrimac Industries, Inc. For more information about Merrimac Industries,
Inc. please visit our website http://www.merrimacind.com .
This press release contains statements relating to future results of
the Company (including certain projections and business trends) that are
"forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from
those projected as a result of certain risks and uncertainties. These risks
and uncertainties include, but are not limited to: risks associated with
demand for and market acceptance of existing and newly developed products
as to which the Company has made significant investments, particularly its
Multi-Mix(R) products; the possibilities of impairment charges to the
carrying value of our Multi-Mix(R) assets, thereby resulting in charges to
our earnings; risks associated with adequate capacity to obtain raw
materials and reduced control over delivery schedules and costs due to
reliance on sole source or limited suppliers; slower than anticipated
penetration into the satellite communications, defense and wireless
markets; failure of our Original Equipment Manufacturer or OEM customers to
successfully incorporate our products into their systems; changes in
product mix resulting in unexpected engineering and research and
development costs; delays and increased costs in product development,
engineering and production; reliance on a small number of significant
customers; the emergence of new or stronger competitors as a result of
consolidation movements in the market; the timing and market acceptance of
our or our OEM customers' new or enhanced products; general economic and
industry conditions; the ability to protect proprietary information and
technology; competitive products and pricing pressures; our ability and the
ability of our OEM customers to keep pace with the rapid technological
changes and short product life cycles in our industry and gain market
acceptance for new products and technologies; risks relating to
governmental regulatory actions in communications and defense programs; and
inventory risks due to technological innovation and product obsolescence,
as well as other risks and uncertainties as are detailed from time to time
in the Company's Securities and Exchange Commission filings. These
forward-looking statements are made only as of the date hereof, and the
Company undertakes no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise.
Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
Merrimac Industries, Inc.
Summary of Condensed Consolidated Statements of Operations
(Unaudited)
Quarters Ended
June 28, June 30,
2008 (a) 2007 (a)
Net sales $7,524,000 $5,371,000
Gross profit 3,215,000 2,367,000
Selling, general and administrative expenses 2,353,000 1,977,000
Research and development 375,000 335,000
Operating income 487,000 55,000
Interest and other (expense), net (48,000) (5,000)
Income from continuing operations 439,000 50,000
Loss from discontinued operations,
after taxes in 2007 (55,000) (3,519,000)
Net income (loss) $384,000 $(3,469,000)
=========== ===========
Net income (loss) per common share:
Income from continuing operations - basic $.15 $.02
(Loss) from discontinued operations - basic $(.02) $(1.21)
----------- -----------
Net income (loss) per common share - basic $.13 $(1.19)
=========== ===========
Income from continuing operations - diluted $.15 $.02
(Loss) from discontinued operations - diluted $(.02) $(1.20)
----------- -----------
Net income (loss) per common share - diluted $.13 $(1.18)
=========== ===========
Weighted average number of shares
outstanding - basic 2,940,000 2,911,000
Weighted average number of shares
outstanding - diluted 2,945,000 2,947,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the current and prior period have been
reported as discontinued operations.
Merrimac Industries, Inc.
Summary of Condensed Consolidated Statements of Operations
(Unaudited)
Six Months Ended
June 28, June 30,
2008 (a) 2007 (a)
Net sales $13,282,000 $9,883,000
Gross profit 5,521,000 4,064,000
Selling, general and administrative expenses 4,598,000 4,194,000
Research and development 747,000 819,000
Operating income (loss) 176,000 (949,000)
Interest and other (expense) income, net (110,000) 16,000
Income (loss) from continuing operations 66,000 (933,000)
Loss from discontinued operations (55,000) (3,800,000)
Net income (loss) $11,000 $(4,733,000)
=========== ===========
Net income (loss) per common share
- basic and diluted:
Income (loss) from continuing operations $.02 $(.31)
(Loss) from discontinued operations $(.02) $(1.27)
----------- -----------
Net income (loss) per common share $ - $(1.58)
=========== ===========
Weighted average number of shares
outstanding - basic 2,936,000 3,004,000
Weighted average number of shares
outstanding - diluted 2,948,000 3,004,000
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the current and prior period have been
reported as discontinued operations.
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
June 28, December 29,
2008 2007
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $409,000 $2,004,000
Accounts receivable, net 7,609,000 5,300,000
Inventories 6,462,000 5,040,000
Other current assets 543,000 774,000
Due from assets sale contract - 664,000
----------- -----------
Total current assets 15,024,000 13,782,000
Property, plant and equipment, net 10,299,000 10,956,000
Restricted cash - 250,000
Other assets 470,000 532,000
Deferred tax assets 52,000 52,000
----------- -----------
Total Assets $25,845,000 $25,572,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Current portion of long-term debt $1,050,000 $550,000
Accounts payable 1,085,000 944,000
Other current liabilities 2,129,000 2,328,000
Deferred tax liabilities 52,000 52,000
----------- -----------
Total current liabilities 4,316,000 3,874,000
Long-term debt, net of current portion 3,238,000 3,763,000
Deferred liabilities 62,000 61,000
----------- -----------
Total liabilities 7,616,000 7,698,000
----------- -----------
Stockholders' equity:
Common stock 33,000 33,000
Additional paid-in capital 20,133,000 19,790,000
Retained earnings 1,185,000 1,173,000
Treasury stock (3,122,000) (3,122,000)
----------- -----------
Stockholders' equity 18,229,000 17,874,000
----------- -----------
Total Liabilities and Stockholders' Equity $25,845,000 $25,572,000
=========== ===========
Merrimac Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 28, June 30,
2008 (a) 2007 (a)
Cash flows from operating activities:
Net income (loss) $ 11,000 $(4,733,000)
Less, loss from discontinued operations (55,000) (3,800,000)
----------- -----------
Income (loss) from continuing operations 66,000 (933,000)
Adjustments to reconcile loss from continuing
operations to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,270,000 1,158,000
Amortization of deferred financing costs 16,000 15,000
Share-based compensation 258,000 132,000
Changes in operating assets
and liabilities:
Accounts receivable (2,309,000) 645,000
Inventories (1,422,000) (826,000)
Other current assets 126,000 187,000
Other assets 126,000 (199,000)
Other current liabilities (34,000) 282,000
Deferred liabilities 1,000 12,000
----------- -----------
Net cash provided by (used by) operating
activities - continuing operations (1,902,000) 473,000
Net cash used by operating
activities - discontinued operations (55,000) (296,000)
----------- -----------
Net cash provided by (used by)
operating activities (1,957,000) 177,000
----------- -----------
Cash flows from investing activities:
Purchases of capital assets (613,000) (756,000)
Proceeds from sale of
discontinued operations 664,000 -
----------- -----------
Net cash provided by (used in) investing
activities - continuing operations 51,000 (756,000)
Net cash used in investing
activities - discontinued operations - (171,000)
----------- -----------
Net cash provided by (used in)
investing activities 51,000 (927,000)
----------- -----------
Cash flows from financing activities:
Repurchase of common stock for the treasury - (2,148,000)
Borrowings under revolving credit facility 500,000 -
Repayment of long-term debt (525,000) (275,000)
Restricted cash returned 250,000 -
Proceeds from stock sales 86,000 81,000
----------- -----------
Net cash provided by (used in) financing
activities - continuing operations 311,000 (2,342,000)
Net cash used in financing
activities - discontinued operations - (68,000)
----------- -----------
Net cash provided by (used in)
financing activities 311,000 (2,410,000)
----------- -----------
Effect of exchange rate changes - 16,000
----------- -----------
Net (decrease) in cash
and cash equivalents (1,595,000) (3,144,000)
Cash and cash equivalents at
beginning of period, including
$562,000 reported under assets
held for sale in 2007 2,004,000 5,961,000
----------- -----------
Cash and cash equivalents at end of
period, including $43,000 reported under
assets held for sale in 2007 $ 409,000 $ 2,817,000
=========== ===========
(a) In accordance with the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the operating results of
Filtran Microcircuits Inc. for the current and prior period have been
reported as discontinued operations.
SOURCE Merrimac Industries, Inc.
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Related links:
http://www.merrimacind.com
http://www.prnewswire.com/comp/567525.html /
CONTACT:
Mason N. Carter, Chairman & CEO of Merrimac
Industries, Inc., +1-973-575-1300, ext. 1202, mnc@merrimacind.com
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