DRS Technologies Reports Record First Quarter Results; Operating Income, Net Earnings and Diluted EPS Advance 35%, 105% and 67%, Respectively; Backlog At an All Time High.Business Editors PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 8, 2001 DRS Technologies DRS Technologies, Inc. (commonly known as DRS; formerly known as Diagnostic/Retrieval Systems, Inc.) is a supplier of defense electronic products and systems to the United States Air Force, Army, Coast Guard, Marine Corps, Navy, aerospace and defense prime , Inc. (AMEX AMEX See: American Stock Exchange : DRS DRS Drives (street suffix) DRS Dispute Resolution Service DRS Doctorandus DRS Department of Rehabilitative Services DRS Direct Registration System (securities) DRS Department of Rehabilitation Services ) today reported record financial results for the first quarter of fiscal 2002. A quarterly record amount of new orders contributed to the highest funded backlog in the company's history. Revenues for the three months ended June 30, 2001 set a first quarter record at $103.4 million, up 9 percent over revenues of $94.5 million for the same period last year. Record first quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $9.7 million was 35 percent higher than the $7.2 million reported for the same quarter a year ago. Operating income as a percentage of sales was 9.4 percent, versus 7.6 percent for the first quarter of fiscal 2001, a 24 percent improvement. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Record first quarter net earnings more than doubled at $3.9 million, or $0.30 per 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. share, a 105 percent increase over $1.9 million, or $0.18 per diluted share, earned for the first three months ended June 30, 2000. Effective April 1, 2001, the company adopted Statements of Financial Accounting Standards (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," issued by the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). . The provisions of these statements apply to the company's existing goodwill and intangible asset balances as of April 1, 2001 and any subsequent additions. The favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of this adoption on first quarter operating income, net earnings and earnings per share was $1.3 million, $1.0 million and $0.07, respectively. The adoption of these standards had no impact on the company's reported EBITDA. "DRS completed the first quarter of fiscal 2002 with excellent results, establishing new first quarter records in revenues, operating income, earnings, bookings and backlog," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "Continuing the momentum of the prior fiscal year, the company's increased profitability, higher operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and strong sales are a clear indication of our progress toward achieving consistently solid operational results over the long term. DRS's core defense business areas were bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by a quarterly record amount of new orders, which contributed to the highest backlog in the company's history at the end of the period." Record fiscal 2002 first quarter revenues were primarily attributable to the addition of revenues generated by the company's DRS Communications Company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. unit, as a result of the acquisition of this operation by DRS on June 14, 2000. Record sales in the first quarter also were due to higher shipments in the company's second generation ground vehicle sighting systems and infrared detectors An infrared detector is a photodetector that reacts to infrared (IR) radiation. The two main types of detectors are thermal and photonic. The thermal effects of the incident IR radiation can be followed through many temperature dependent phenomena. , as well as progress achieved on electro-optical engineering development contracts, partially offset by lower sales in the company's electronic systems segment. First quarter record operating income was the result of improved program performance in the company's electronic systems segment, higher sales volume in DRS's electro-optical systems segment and the addition of acquisition-related income associated with the transaction completed toward the end of last year's first quarter. The company's adoption of SFAS No. 141 and 142 also contributed to record operating income. The company secured a quarterly record amount of new orders valued at approximately $140 million, up 51 percent from the same period last year. Funded backlog at June 30, 2001 was a record $494 million, 21 percent above the $408 million in backlog at the end of last year's first quarter, and 8 percent above backlog of $457 million at March 31, 2001, the company's fiscal 2001 year end. Mr. Newman continued, "DRS booked more new orders in this quarter than any other, completing the first three months of fiscal 2002 in a great position. We were especially pleased to announce that the company was competitively awarded a multi-year $86 million contract, with initial funding of $27 million, from the U.S. Army on the Improved Bradley Acquisition Subsystem A unit or device that is part of a larger system. For example, a disk subsystem is a part of a computer system. A bus is a part of the computer. A subsystem usually refers to hardware, but it may be used to describe software. (IBAS) program. This award will place DRS- produced IBAS fire control systems on most of the new M2A M2A Message to Anywhere (mobile messaging framework) 3 Bradley Fighting Vehicles, one of the most formidable ground force capabilities in U.S. Army inventory. The outstanding effort expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. for this competition, coupled with our reputation for world-class Second Generation FLIR systems | company_name = FLIR Systems | company_type = Public (NASDAQ: FLIR) | foundation = 1978 | location = Wilsonville, Oregon, United States | key_people = Earl R. Lewis }} FLIR Systems , culminated in the award of this milestone contract to DRS." The most significant awards received during the quarter included: - $43.3 million in new awards for second generation infrared ground vehicle sighting, targeting and weapons systems, primarily from the U.S. Army; - $28.6 million in new orders for infrared detectors, sensors and cooler assemblies for night vision sighting system applications; - $16.0 million in new contracts from Lockheed Martin to manufacture and provide engineering development for combat display systems associated with the U.S. Navy's AN/UYQ-70 Advanced Display Systems program in support of ships, aircraft and submarines; - $15.0 million in new contracts for radar systems, most of which was associated with providing mobile ground radar for international forces; - $12.2 million in new awards for electronic manufacturing services supporting defense, commercial and space-based applications; - $10.4 million in orders for rugged computers and peripheral equipment for U.S. Army, intelligence and international military programs. First quarter results for the company's Electronic Systems Group were marked by a substantial increase in operating income to $4.8 million, 92 percent higher than the same prior-year period, and a 110 percent operating margin improvement to 12.6 percent. These increases were due to strong performance on the company's U.S.-based rugged computer A rugged (or ruggedized) computer is a computer specifically designed to reliably operate in harsh usage environments and conditions, such as strong vibrations, extreme temperatures and wet or dusty conditions. programs associated with the U.S. Army and other government agencies, as well as engineering development contracts related to U.S. Navy display workstations. Revenues were lower at $38.1 million, compared with $41.5 million for last year's first quarter. New orders of $34.7 million contributed to strong backlog of $150.7 million at June 30, 2001, rising 12 percent above backlog at the same time last year. New contracts for Naval workstation production and rugged computers for the U.S. Army and other government agencies were the primary factors for the increase in backlog. The company's Electro-Optical Systems Group achieved solid results for the first quarter, posting increases in revenues, operating income, bookings and backlog. Operating income was $4.5 million, 16 percent higher than that reported for the previous year's first quarter, while the segment's operating margin remained essentially the same at a healthy 10.7 percent. Revenues were $41.8 million, up 17 percent from a year ago. The Group's strong performance was due primarily to robust sales in the company's Second Generation infrared An invisible band of radiation at the lower end of the visible light spectrum. With wavelengths from 750 nm to 1 mm, infrared starts at the end of the microwave spectrum and ends at the beginning of visible light. sighting and targeting systems programs associated with U.S. Army ground vehicles, and higher shipments of infrared detectors and electro-optical system sensors. Record new orders valued at $74 million boosted backlog at the end of the first quarter to a record $228 million for this segment, up 35 percent from the same time a year ago. In the first quarter of fiscal 2002, DRS's Flight Safety and Communications Group achieved a 40 percent increase in sales over the comparable prior-year period, primarily due to the addition of acquisition-related revenues from the June 2000 transaction. Bookings were 29 percent higher at $28.9 million, driving backlog to a record $114.8 million at the end of the period. New contracts associated with international ground mobile radar systems, ship communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. and electronic manufacturing services were primarily responsible for the increase. The company announced during the period the closing of its facility in Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. and the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of its mission recording and data storage systems product lines to other company facilities. Although first quarter operating income of $801,000 was lower than the previous year's first quarter due to a charges for the Santa Clara Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. closure and the relocation of the facility's engineering and production capabilities, higher profitability is expected in subsequent quarters of fiscal 2002, as a result of the consolidation and related cost savings. "We continue to see positive results from our ongoing efforts toward implementing operating efficiencies and proven business strategies that focus on our key strengths," Mr. Newman added. "Delivering increased profitability and strong top line growth throughout this new year will remain key goals." "In addition, we are continuing our pursuit of viable acquisition opportunities that will enhance our strategic position in the aerospace and defense industry. Last week, we announced that we signed a definitive agreement to acquire The Boeing Company's Sensors and Electronic Systems (SES) business. SES is recognized as a world leader in helicopter and surface ship surveillance and targeting systems, and is known for technical superiority in high-performance focal plane The plane, perpendicular to the optical axis of the lens, in which images of points in the object field of the lens are focused. array sensors for space, ground and airborne applications. It is a national resource for infrared sensor technology that will contribute diversified diversified (di·verˑ·s revenue streams, significant intellectual property and a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. contract base of programs strongly complementing
our own. This transaction will add a fundamental technology building
block and engineering talent to support growth in our Electro-Optical
Systems segment, as well as position DRS to become a leading supplier of
uncooled infrared sensor systems, opening up a new market for us. It
also will provide an opportunity for us to participate in national
missile defense National Missile Defense (NMD) as a generic term is a military strategy and associated systems to shield an entire country against incoming Intercontinental Ballistic Missiles (ICBMs). The missiles could be intercepted by other missiles, or possibly by lasers. programs. This acquisition is expected to add
approximately $75 million to our annual sales and be accretive to
earnings."
Mr. Newman concluded, "This milestone transaction reinforces our commitment as a leading mid-tier defense electronics industry consolidator. Our acquisition program continues to be integral to our long-term plans for growth." DRS Technologies provides leading edge products and services to government and commercial customers worldwide. Focused on defense electronics, the company develops and manufactures a broad range of mission critical systems and components in the areas of communications, combat systems, rugged computers, electro-optics, data storage, digital imaging, flight safety and space. Additional information is available on the company's web site at www.drs.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Except for historical information contained herein, the matters set forth in this news release are 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. . The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, and include, without limitation, demand and competition for the Company's products and other risks or uncertainties detailed in the Company's Securities and Exchange Commission filings. Note to investors: DRS Technologies will host a conference call, which will be simultaneously broadcast live over the internet. Mark S. Newman, chairman, president and chief executive officer, and Richard A. Schneider, executive vice president, chief financial officer and treasurer, will host the call, which is scheduled for today, Wednesday, August 8, 2001 at 3:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . Listeners can access the call live and archived at http://www.streetfusion.com or at the company's web site at http://www.drs.com/investor/index.html. Please allow 15 minutes prior to the call to visit these sites and download and install any necessary audio software.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
(Millions Except Earnings per Share)
Three Months Ended June 30,
---------------------------
2001 2000
---- ----
Revenues $ 103.4 $ 94.5
Operating Income $ 9.7 $ 7.2
Interest and Related Expenses $ 2.1 $ 3.1
Earnings before Income Taxes $ 7.4 $ 3.8
Net Earnings $ 3.9 $ 1.9
Net Earnings per
Share of Common Stock:
Basic $ .32 $ .20
Diluted $ .30 $ .18
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 12.1 9.3
Diluted 13.0 12.0
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)
($ Millions)
Three Months Ended June 30,
2001 2000
---- ----
EBITDA $ 12.4 $ 11.0
Depreciation and Amortization $ 2.8 $ 4.1
Capital Expenditures $ 3.5 $ 2.6
Bookings $ 139.7 $ 92.6
June 30, March 31,
2001 2001
---- ----
Backlog $ 494.2 $ 408.5
Cash and Cash Equivalents $ 1.7 $ 2.2
Total Debt $ 72.9 $ 75.9
Stockholders' Equity $ 116.5 $ 111.9
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