Axsys Technologies Announces Second Quarter Results; Strong Demand Drives Record Sales, Higher Profitability and Record Backlog.ROCKY HILL Rocky Hill, town (1990 pop. 16,554), Hartford co., central Conn., a suburb of Hartford, on the Connecticut River; settled c.1650, inc. 1843. Chemical coatings and synthetic textiles are made there. Rocky Hill was an important river port from 1700 to 1820. , Conn. -- Axsys Technologies, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AXYS), a global leader in the design, manufacture and distribution of precision optical solutions, today announced financial results for the second quarter ended July July: see month. 1, 2006. Second Quarter Financial Highlights - versus fiscal 2005 second quarter: --Sales increased 15% to a record $38.5 million. --Gross margin improved to 32.0% from 31.0%. --Operating income grew 24% to $4.1 million. --Net income increased 68% to $2.6 million. --Diluted earnings per share increased to $0.24 from $0.21. --Total backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of firm orders at the end of the second quarter was a record $115.5 million. Second quarter revenue growth was driven primarily by continuing demand for thermal thermal /ther·mal/ (ther´m'l) pertaining to or characterized by heat. ther·mal adj. 1. Of, relating to, using, producing, or caused by heat. 2. imaging cameras and lenses. Gross margin expansion was the result of a product mix shift toward these higher margin products. Quarter-over-quarter sales growth was also affected by the inclusion in the 2006 period of a full quarter's results from DiOP, which was acquired on May 2, 2005. If the acquisition had occurred at the beginning of the second quarter of 2005, the Company's sales growth would have been approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 11%. Net income in the second quarter of 2006 included a $257,000 pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta expense for stock-based compensation, pursuant to FAS 123R accounting policies that the Company adopted on January January: see month. 1, 2006. Net income in the second quarter of 2005 included a loss of $150,000 from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and pre-tax interest expense of $706,000. The weighted-average diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding increased by 46% over the comparable periods as a result of the Company's September September: see month. 2005 equity offering.
Segment Sales
(Millions)
Three Months Six Months
Ended: Ended:
---------------------------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
---------------------------------------
Optical Systems Group $31.7 $27.2 $62.6 $49.4
Distributed Products Group 6.8 6.2 13.4 12.6
"I am pleased to report a strong second quarter in line with expectations," said Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and W. Bershad Bershad (Ukrainian: Бершадь, translit., Bershad’), is a small city in the Vinnytsia Oblast (province) of western Ukraine. It is the administrative center of the Bershadsky Raion (district). , Chairman and Chief Executive Officer of Axsys. "Our IR Systems division continues to perform particularly well due to strong demand among military, homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States , and commercial customers. These results affirm our view that our financial performance for the year will be consistent with our previously issued guidance." Conference Call Management will conduct a conference call reviewing the financial results on Thursday Thursday: see week. , July 27, 2006 at 10:00 am ET. Interested parties may participate in the call by dialing 706-679-3148 and asking for the Axsys Technologies call (conference ID# 2710796). Phone participants are encouraged to call in at least 10 minutes before the call is scheduled to begin. The conference call will also be webcast live at http://www.axsys.com/ircal.php. Webcast listeners are encouraged to visit the web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. A recording of the conference call will be available on the Company's web site for approximately 90 days. About Axsys Axsys Technologies, Inc. is a vertically integrated OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and supplier of precision optical solutions for high technology applications, serving the aerospace, defense, and high performance commercial markets. For more information, visit www.axsys.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . One can identify these forward-looking statements by the use of the words such as "expect," "anticipate," "plan," "may," "will," "estimate" or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. Important factors, which could cause actual results to differ materially, are described in Axsys' reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and 10-Q on file with the Securities and Exchange Commission, including without limitation: changes in the U.S. federal government spending Government spending or government expenditure consists of government purchases, which can be financed by seigniorage, taxes, or government borrowing. It is considered to be one of the major components of gross domestic product. priorities; the Company's ability to compete in the industries in which it operates, including the introduction of competing products or technologies by other companies and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. pricing pressures from competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. and/or customers; the potential for the Company's backlog to be reduced or cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. ; the Company's ability to implement its acquisition strategy and integrate its acquired companies successfully; the Company's ability to manage costs under the Company's fixed-price contracts effectively; and changes in general economic and business conditions. These statements reflect the Company's current beliefs and are based upon information currently available to Axsys. Be advised that developments subsequent to this release are likely to cause these statements to become outdated out·dat·ed adj. Out-of-date; old-fashioned. outdated Adjective old-fashioned or obsolete Adj. 1. with the passage of time, and we specifically disclaim dis·claim v. dis·claimed, dis·claim·ing, dis·claims v.tr. 1. To deny or renounce any claim to or connection with; disown. 2. To deny the validity of; repudiate. 3. any obligation to update these statements. For more information concerning the foregoing risks and uncertainties, see the Securities and Exchange Commission filings for Axsys.
AXSYS TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share data - Unaudited)
For the For the
Three Months Ended Six Months Ended
----------------------- -----------------------
July 1, July 2, July 1, July 2,
2006 2005 2006 2005
----------- ---------- ----------- ----------
Sales $ 38,505 $ 33,384 $ 75,963 $ 62,032
Cost of sales 26,202 23,050 51,988 43,242
----------- ---------- ----------- ----------
Gross profit 12,303 10,334 23,975 18,790
Selling, general and
administrative
expenses 6,956 5,946 13,942 11,046
Research, development
and engineering
expenses 1,212 1,044 2,119 1,788
----------- ---------- ----------- ----------
Operating income 4,135 3,344 7,914 5,956
Interest expense (45) (706) (62) (773)
Interest income 42 34 151 76
Other income, net 45 51 25 36
----------- ---------- ----------- ----------
Income from
continuing
operations before
income taxes 4,177 2,723 8,028 5,295
Provision for income
taxes 1,584 1,021 3,045 1,986
----------- ---------- ----------- ----------
Income from
continuing
operations 2,593 1,702 4,983 3,309
Gain (loss) from
discontinued
operations, net of
tax 20 (150) 20 (150)
----------- ---------- ----------- ----------
Net income $ 2,613 $ 1,552 $ 5,003 $ 3,159
=========== ========== =========== ==========
BASIC EARNINGS (LOSS)
PER SHARE:
Continuing
operations $ 0.25 $ 0.24 $ 0.47 $ 0.47
Discontinued
operations 0.00 (0.02) 0.00 (0.02)
----------- ---------- ----------- ----------
Total $ 0.25 $ 0.22 $ 0.47 $ 0.45
=========== ========== =========== ==========
Weighted average
basic common shares
outstanding 10,625,504 7,094,794 10,622,639 7,079,769
DILUTED EARNINGS
(LOSS) PER SHARE:
Continuing
operations $ 0.24 $ 0.23 $ 0.46 $ 0.44
Discontinued
operations 0.00 (0.02) 0.00 (0.02)
----------- ---------- ----------- ----------
Total $ 0.24 $ 0.21 $ 0.46 $ 0.42
=========== ========== =========== ==========
Weighted average
dilutive common
shares outstanding 10,924,326 7,476,407 10,901,362 7,459,102
AXSYS TECHNOLOGIES, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
July 1, Dec. 31,
2006 2005
(Unaudited)
----------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,874 $ 7,079
Accounts receivable - net 20,612 18,821
Inventories - net 41,225 37,866
Income taxes - deferred 3,374 3,256
Other current assets 1,497 1,182
-------- --------
TOTAL CURRENT ASSETS 68,582 68,204
PROPERTY, PLANT AND EQUIPMENT - net 19,573 15,351
INTANGIBLE ASSETS - net 9,917 10,461
GOODWILL 61,048 61,048
OTHER ASSETS 1,073 1,144
-------- --------
TOTAL ASSETS $160,193 $156,208
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,536 $ 8,019
Accrued expenses and other current liabilities 13,689 16,835
Deferred income 5,652 7,044
-------- --------
TOTAL CURRENT LIABILITIES 29,877 31,898
OTHER LONG-TERM LIABILITIES 5,236 4,769
SHAREHOLDERS' EQUITY:
Common stock 106 106
Capital in excess of par 98,381 97,875
Accumulated other comprehensive income - 3
Retained earnings 26,715 21,712
Treasury stock (122) (155)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 125,080 119,541
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $160,193 $156,208
======== ========
Reconciliation of Pro Forma Sales*
(Dollars in thousands, unaudited)
For the Three Months Ended
----------------------------------
July 1, 2006 July 2, 2005
--------------- -----------------
Sales $38,505 $33,384
Diversified Optical Products, Inc.
April 1, 2005 - April 30, 2005 - 1,380
--------------- -----------------
Pro Forma Sales $38,505 $34,764
=============== =================
* The Company has provided sales information as if the results of the
DiOP acquisition had been consolidated for the entire second
quarter of 2005 because management believes that this information
is a useful tool for understanding post-acquisition revenue growth.
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