Customer Orders Increase 15% from Preceding Quarter; FAIRVIEW, Pa.,
June 25 /PRNewswire-FirstCall/ -- Spectrum Control, Inc. (Numbers
in Thousands, Except Per Share Data) 2nd quarter ended 2nd quarter
ended 5/31/2009 YTD 5/31/2008 YTD Sales 33,623 66,740 32,574 63,728
Net Income 2,221 4,374 2,176 3,965 Average Shares 12,679 12,636
13,358 13,500 EPS $0.18 $0.35 $0.16 $0.29 Spectrum Control, Inc.
(NASDAQ:SPEC), a leading designer and manufacturer of custom
electronic products and systems, today reported results for the
second quarter ended May 31, 2009. For the second quarter of fiscal
2009, the Company reported net income of $2.2 million or 18 cents
per diluted share on sales of $33.6 million, compared to net income
of $2.2 million or 16 cents per diluted share on sales of $32.6
million for the same period last year. For the first half of fiscal
2009, the Company had net income of $4.4 million or 35 cents per
diluted share on sales of $66.7 million. For the comparable period
of 2008, the Company had net income of $4.0 million or 29 cents per
diluted share on sales of $63.7 million. Dick Southworth, the
Company's President and Chief Executive Officer, commented, "We are
very pleased to report second quarter financial results that are
consistent with our previous guidance. In addition to increased
revenue and earnings per share, total customer orders received
during the current quarter amounted to $36.1 million, a 15%
increase from the first quarter of this year. We believe this
strong performance, during an ongoing global recession,
demonstrates the effectiveness of our fundamental business
strategy. We remain committed to customer and end-market
diversification, maintaining a balance between military/defense and
commercial markets. As a result of this strategy, the current
growth of our military/defense business has substantially offset
the impact of the poor market conditions which persist for
virtually all commercial products and applications. Our sales to
military/defense customers during the second quarter of fiscal 2009
were $21.1 million or 63% of our total sales, up from the $14.6
million or 45% of sales for the same period last year, with no
individual customer representing more than 5% of our total revenue.
This diversification, along with our unbending commitment to
providing custom application specific solutions to our customers,
will continue to be the foundation for our future growth and
enhanced shareholder value." Second Quarter Highlights Record Cash
Flow Net cash provided by operating activities in the first half of
fiscal 2009 amounted to $8.1 million, including a record $6.4
million generated in the second quarter of fiscal 2009. This
increased cash flow reflects improved receivable and inventory
turnover rates, with accounts receivable and inventories decreasing
$2.5 million and $1.2 million, respectively, during the current
quarter. During the first half of fiscal 2009, with our positive
cash flow and existing cash reserves, we repaid $7.0 million under
our domestic line of credit and fully funded $1.9 million of
capital expenditures. Approximately $1.2 million of these capital
expenditures were made in our microwave components and systems
business to support manufacturing expansion and improvements needed
for growing production requirements. Improved Gross Margin Our
operating margins continue to improve. In the current quarter our
gross margin was $8.9 million or 27% of sales, compared to $8.1
million or 25% of sales for the comparable period of fiscal 2008.
This increase in gross margin percentage principally reflects
reductions in material costs, as well as certain operating
efficiencies from higher production volumes. The ongoing reduction
in our material costs has been driven by numerous factors,
including improved product yields and greater utilization of
vertical manufacturing capabilities throughout all four of our
business segments. Our manufacturing overhead, as a percentage of
sales, also continues to decrease as we realize economies of scale
with greater sales volume. Strong Financial Position At the end of
the second quarter of fiscal 2009, our ratio of current assets to
current liabilities was nearly 5.00 to 1.00 and our total debt to
equity ratio was 0.21 to 1.00. Our total stockholders' equity grew
to $108.2 million, for a book value of $8.60 per share, and our
total borrowed funds were only $4.0 million as of May 31, 2009. We
believe this strong financial position will not only serve us well
during the current economic environment, but will enable us to
effectively finance future acquisitions and continued organic
growth. Current Business Outlook Mr. Southworth added, "With the
worldwide recession continuing to negatively impact commercial
markets, forecasting future business results is extremely
difficult. Based on our current assessment of business conditions
and customer demand, we expect our fiscal 2009 third quarter sales
and profitability to approximate our second quarter performance.
With our existing sales order backlog and anticipated customer
orders, we believe the fourth quarter of fiscal 2009 will be
strong, with a 10% sequential increase in sales and profitability.
More importantly, we will continue to invest in the long-term
growth of our Company, as we develop innovative new products and
seek to consummate strategic business acquisitions. With this
ongoing focus, we remain very confident in the future of our
Company." Forward-Looking Information This press release contains
statements that are forward-looking statements within the meaning
of the Private Securities Reform Act of 1995. These statements are
based on current expectations, estimates and projections about the
Company's business based, in part, on assumptions made by
management. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements due to numerous factors and risks
discussed from time to time in the Company's Securities and
Exchange Commission filings and reports. In addition, such
statements could be affected by general industry and market
conditions and growth rates, and general domestic and international
economic conditions. Such forward-looking statements speak only as
of the date on which they are made and the Company does not
undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
Simultaneous Webcast and Teleconference Replay Spectrum Control,
Inc. will host a teleconference to discuss its second quarter
fiscal 2009 results on Thursday, June 25, 2009, at 4:45 p.m.,
Eastern Time. Internet users will be able to access a simultaneous
webcast of the teleconference at http://www.spectrumcontrol.com/ or
http://www.vcall.com/. A taped replay of the call will be available
through June 26, 2009, at 877-660-6853, access account 286,
conference 324770, or for 30 days over the Internet at the
Company's website. About Spectrum Control Spectrum Control, Inc. is
a leader in the design, development and manufacture of custom
electronic products and systems for the defense, aerospace,
communications, and medical industries worldwide. For more
information about Spectrum Control and its products, please visit
the Company's website at http://www.spectrumcontrol.com/. Spectrum
Control, Inc. and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited) (Dollar Amounts in Thousands) May 31, November
30, 2009 2008 Assets Current assets Cash and cash equivalents
$5,112 $5,397 Accounts receivable, net 21,830 24,043 Inventories,
net 30,867 30,638 Deferred income taxes 1,684 1,684 Prepaid
expenses and other current assets 2,025 2,307 Total current assets
61,518 64,069 Property, plant and equipment, net 26,127 27,250
Other assets Goodwill 36,811 36,811 Other 6,148 6,654 Total assets
$130,604 $134,784 Liabilities and Stockholders' Equity Current
liabilities Short-term debt $3,000 $10,000 Accounts payable 4,584
6,541 Income taxes payable 15 36 Accrued liabilities 4,267 4,415
Current portion of long-term debt 487 487 Total current liabilities
12,353 21,479 Long-term debt 465 545 Other liabilities 903 978
Deferred income taxes 8,725 8,491 Stockholders' equity 108,158
103,291 Total liabilities and stockholders' equity $130,604
$134,784 Spectrum Control, Inc. and Subsidiaries Condensed
Consolidated Statements of Income (Unaudited) (Amounts in
Thousands, Except Per Share Data) For the Three Months For the Six
Months Ended Ended May 31, May 31, 2009 2008 2009 2008 Net sales
$33,623 $32,574 $66,740 $63,728 Cost of products sold 24,675 24,494
49,534 48,797 Gross margin 8,948 8,080 17,206 14,931 Selling,
general and administrative expense 5,464 4,671 10,331 8,882 Income
from operations 3,484 3,409 6,875 6,049 Other income (expense):
Interest expense (66) (97) (163) (139) Other income and expense,
net 9 15 38 256 (57) (82) (125) 117 Income before provision for
income taxes 3,427 3,327 6,750 6,166 Provision for income taxes
1,206 1,151 2,376 2,201 Net income $2,221 $2,176 $4,374 $3,965
Earnings per common share: Basic $0.18 $0.16 $0.35 $0.30 Diluted
$0.18 $0.16 $0.35 $0.29 Average number of common shares
outstanding: Basic 12,571 13,234 12,571 13,298 Diluted 12,679
13,358 12,636 13,500 Spectrum Control, Inc. and Subsidiaries
Selected Financial Data (Unaudited) For the Three Months For the
Six Months Ended Ended May 31, May 31, Selected Financial Data,
2009 2008 2009 2008 as a Percentage of Net Sales: Net sales 100.0%
100.0% 100.0% 100.0% Cost of products sold 73.4 75.2 74.2 76.6
Gross margin 26.6 24.8 25.8 23.4 Selling, general and
administrative expense 16.2 14.3 15.5 13.9 Income from operations
10.4 10.5 10.3 9.5 Other income (expense): Interest expense (0.2)
(0.3) (0.2) (0.2) Other income and expense, net - - - 0.4 Income
before provision for income taxes 10.2 10.2 10.1 9.7 Provision for
income taxes 3.6 3.5 3.5 3.5 Net income 6.6% 6.7% 6.6% 6.2%
Selected Operating Segment Data: (Dollar Amounts in Thousands)
Advanced specialty products: Customer orders received $14,056
$19,568 $26,713 $32,339 Net sales 10,218 13,665 20,819 26,815
Microwave components and systems: Customer orders received 15,827
13,548 28,301 21,591 Net sales 16,236 10,355 30,242 20,747 Power
management systems: Customer orders received 1,382 2,434 3,489
6,171 Net sales 2,047 2,942 4,841 5,390 Sensors and controls:
Customer orders received 4,803 6,889 9,034 13,966 Net sales 5,122
5,612 10,838 10,776 DATASOURCE: Spectrum Control, Inc. CONTACT:
Investor Relations, John P. Freeman, Senior Vice President and
Chief Financial Officer of Spectrum Control, Inc., +1-814-474-4310,
or Fax, +1-814-474-2208 Web Site: http://www.spectrumcontrol.com/
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