WEST CALDWELL, N.J., Nov. 14 /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 third quarter and first nine
months of 2006.
Sales for the third quarter of 2006 were $6,748,000, a decrease of
$1,142,000 or 14.5 percent compared to the third quarter of 2005 sales of
$7,890,000. The sales decrease was due to the loss of certain anticipated
orders as well as from delays in space and defense program orders for both
of the Company's operating segments. Gross profit for the third quarter of
2006 was $2,498,000, a decrease of $752,000 or 23.1 percent, and was 37.0
percent of sales as compared to gross profit of $3,250,000 or 41.2 percent
of sales for the third quarter of 2005. Gross profit percent in the third
quarter of 2006 decreased from the third quarter of 2005 due to the
decrease in sales and the further impact of the lower level of sales having
to absorb fixed manufacturing costs.
Operating loss for the third quarter of 2006 was $(604,000) compared to
operating income of $291,000 for the third quarter of 2005. Operating loss
for the third quarter of 2006 was due to the lower gross profit from the
decrease in sales and higher research and development costs related to the
Company's Multi-Mix(R) products and included a non-cash charge of $50,000
for share- based compensation expense resulting from the adoption of SFAS
No. 123R in the first quarter of 2006. Net loss for the third quarter of
2006 was $(599,000) or $(.19) per share compared to net income of $228,000
or $.07 per share for the third quarter of 2005.
For the first nine months of 2006 sales of $21,229,000 decreased
$1,488,000 or 6.6 percent compared to sales of $22,717,000 for the first
nine months of 2005. Sales for the first nine months of 2006 were lower
than the first nine months of 2005 primarily due to the lower bookings
levels received during the second half of 2005 and the first quarter of
2006 as compared to comparable prior periods was due to the loss of certain
anticipated orders as well as from delays in space and defense programs.
Nine month 2006 sales included $1,200,000 of revenue recognized in
connection with the early close out of a fixed price customer contract
during the second quarter and a year- to-date sales reduction in the
microwave micro-circuitry segment of $1,358,000 due to declines in the
segment's defense orders. Gross profit for the first nine months of 2006
was $8,610,000, a decrease of $943,000 or 9.9 percent and was 40.6 percent
of sales as compared to gross profit of $9,553,000 or 42.1 percent of sales
for the first nine months of 2005. Gross profit percentage in the first
nine months of 2006 decreased 1.5 percentage points compared to the first
nine months of 2005 due to the decrease in sales and the further impact of
the lower level of sales having to absorb fixed manufacturing costs.
Operating loss for the first nine months of 2006 was $(512,000)
compared to operating income of $890,000 for the first nine months of 2005.
The reduction in operating income for the first nine months of 2006 as
compared to the first nine months of 2005 was due to the lower gross profit
from the decrease in sales and due to higher selling, general and
administrative expenses compared to the first nine months of 2005.
Operating loss for the first nine months of 2006 included a non-cash charge
of $129,000 for share- based compensation expense resulting from the
adoption of SFAS No. 123R. Net loss for the first nine months of 2006 was
$(510,000) or $(.16) per share compared to net income of $644,000 or $.20
per diluted share for the first nine months of 2005. Net loss for the first
nine months of 2006 also included a tax benefit of $61,000 or $.02 per
share representing refundable Canadian provincial technology tax credits
for which the Company has qualified.
Orders of $6,216,000 were received during the third quarter of 2006, an
increase of $1,040,000 or 20.1 percent compared to $5,176,000 in orders
received during the third quarter of 2005. Orders of $19,080,000 were
received for the first nine months of 2006, a decrease of $2,431,000 or
11.3 percent compared to $21,511,000 in orders received for the first nine
months of 2005. The decrease in orders for the first nine months of 2006 as
compared to the first nine months of 2005 was due to the loss of certain
orders anticipated as well as from delays in expected satellite and defense
programs for all product lines, including our Multi-Mix(R) products.
Backlog decreased by $2,148,000 or 16.4 percent to $10,990,000 at the end
of the third quarter of 2006 compared to $13,138,000 at year-end 2005. The
backlog at the end of the third quarter of 2006 decreased by $749,000 or
6.4% when compared to the backlog of $11,739,000 at the end of the third
quarter of 2005. The book-to-bill ratio for the third quarter of 2006 was
0.92 to 1 and for the third quarter of 2005 was 0.66 to 1. The book-to-bill
ratio for the first nine months of 2006 was 0.90 to 1 and for the first
nine months of 2005 was 0.95 to 1.
Because of the declining level of orders and sales, the Company reduced
its headcount and will record a restructuring charge in the fourth quarter
of approximately $200,000. The restructuring charge and the write-off of
approximately $170,000 of loan costs related to the prior financing
agreement, combined with the lower order and sales levels will result in an
operating loss for the fourth quarter and for fiscal year 2006. The Company
anticipates an annualized rate of savings of approximately $1,500,000 to
begin in the first quarter of 2007 from the restructuring and other cost
reduction and containment measures to be implemented.
Chairman and CEO Mason N. Carter commented, "We have developed a new
commercial banking relationship with North Fork Bank and completed our
refinancing in mid-October 2006. Continued investment in research and
development efforts are focused on our Integrated Multi-Mix(R) High Power
Amplifier Resource Platform Module. Recently we announced the receipt of
two military orders. One order for $708,000 is scheduled to be shipped
during 2007 and is part of a five-year Multi-Mix(R) contract that could
potentially reach a maximum value of $4.3 million. The second order of
$740,000 was for a mission-critical suite of products for use in military
surveillance aircraft with deliveries scheduled for 2007."
Mr. Carter continued, "Our financial information includes:
* Orders booked of $6.2 million for the third quarter.
* Cash of $3.6 million (includes $1.5 million of restricted cash at
September 30, 2006, which has since been released and is available to
the Company) exceeds the total of current and long-term debt of
$2.5 million.
* Working capital increased $2.0 million to $11.8 million and the current
ratio improved to 4.2 to 1."
Investors are invited to participate in the financial results
conference call on Tuesday, November 14, 2006 at 4:15 p.m. (Eastern) by
dialing 1-866- 550-6338 (for International callers: 1-347-284-6930) ten
minutes prior to the scheduled start time, and reference the Merrimac
Industries third quarter 2006 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 1914217.
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=36685
If you are 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, etched
resistors, passive circuit elements and plated-through via holes to form a
three-dimensional integrated module applicable to 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,
San Jose, Costa Rica and Ottawa, Ontario, Canada, and has approximately 230
co- workers dedicated to the design and manufacture of signal processing
components, gold plating of high-frequency microstrip, bonded stripline and
thick metal-backed Teflon (PTFE) micro-circuitry 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. and its Canadian
subsidiary Filtran Microcircuits Inc., please visit
http://www.merrimacind.com and http://www.filtranmicro.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 risk that the benefits expected from the Company's
acquisition of Filtran Microcircuits Inc. are not realized; 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;
foreign currency fluctuations between the U.S. and Canadian dollars; 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 Consolidated Statements of Operations
(Unaudited)
Quarter Ended
September 30, October 1,
2006 2005
Net sales $6,748,000 $7,890,000
Gross profit 2,498,000 3,250,000
Selling, general and administrative
expenses 2,494,000 2,470,000
Research and development 608,000 489,000
Operating income (loss) (604,000) 291,000
Interest and other expense, net (8,000) (61,000)
Loss on disposition of assets - (7,000)
Income (loss) before income taxes (612,000) 223,000
Provision (benefit) for income taxes (13,000) (5,000)
Net income (loss) (599,000) 228,000
Net income (loss) per common share -
basic and diluted $(.19) $.07
Weighted average number of shares
outstanding - basic 3,137,000 3,145,000
Weighted average number of shares
outstanding - diluted 3,137,000 3,179,000
Nine Months Ended
September 30, October 1,
2006 2005
Net sales $21,229,000 $22,717,000
Gross profit 8,610,000 9,553,000
Selling, general and administrative
expenses 7,625,000 7,125,000
Research and development 1,497,000 1,538,000
Operating income (loss) (512,000) 890,000
Interest and other expense, net (59,000) (178,000)
Loss on disposition of assets - (43,000)
Income (loss) before income taxes (571,000) 669,000
Provision (benefit) for income taxes (61,000) 25,000
Net income (loss) (510,000) 644,000
Net income (loss) per common share -
basic $(.16) $.21
Net income (loss) per common share -
diluted $(.16) $.20
Weighted average number of shares
outstanding - basic 3,143,000 3,141,000
Weighted average number of shares
outstanding - diluted 3,143,000 3,175,000
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
2006 2005
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $2,115,000 $4,081,000
Restricted cash 1,500,000 -
Accounts receivable, net 6,342,000 5,310,000
Income tax refunds receivable 317,000 418,000
Inventories, net 4,240,000 3,710,000
Other current assets 785,000 693,000
Deferred tax assets 144,000 140,000
Total current assets 15,443,000 14,352,000
Property, plant and equipment, net 13,248,000 13,973,000
Restricted cash - 1,500,000
Other assets 612,000 614,000
Deferred tax assets 498,000 482,000
Goodwill 3,680,000 3,501,000
Total Assets $33,481,000 $34,422,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $680,000 $908,000
Other current liabilities 2,986,000 3,590,000
Total current liabilities 3,666,000 4,498,000
Long-term debt, net of current portion 1,801,000 2,071,000
Deferred liabilities 38,000 23,000
Deferred tax liabilities 140,000 140,000
Total liabilities 5,645,000 6,732,000
Stockholders' equity 27,836,000 27,690,000
Total Liabilities and Stockholders' Equity $33,481,000 $34,422,000
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,
+1-973-575-1300, ext. 1202, mnc@merrimacind.com
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