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.
