DeCrane Aircraft Reports First Quarter Net Income Increase of 168.4%.EL SEGUNDO El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , Calif.--(BUSINESS WIRE)--May 7, 1998-- Highlights: - Net income jumps 168.4% on 11.5% revenue gains. - 20.0% gain in earnings per share to $.30 versus $.25 (pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma ) a year ago. - Establishing major position in smoke detection and fire suppression suppression /sup·pres·sion/ (su-presh´un) 1. the act of holding back or checking. 2. sudden stoppage of a secretion, excretion, or normal discharge. 3. market. - $35.5 million in proceeds from secondary offering substantially enhances capital structure. DeCrane Aircraft Holdings, 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 :DAHX), a leading manufacturer of avionics avionics (ā'vēŏn`ĭks), electronic instruments used in air or space flight; also the design and production of such instruments. Early planes had few instruments, but as aviation and aircraft became more complex, so did instrumentation. components and an avionics systems integrator An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. for the commercial and high-end corporate aircraft industry, today announced, as a result of both its margin improvements and the success of its acquisition and consolidation strategy, net income jumped 168.4% on a 11.5% increase in quarterly revenues. Earnings per share on a fully 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. basis for the first quarter of 1998 rose to $.30 per share, up from pro forma $.25 per share for the same quarter last year. "We are quite pleased with the Company's continued strong quarterly performance, as well as with our greatly strengthened capital structure now that we raised an additional $35.5 million from our secondary stock offering," said Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , R. Jack DeCrane. "The contribution from Audio International, which we purchased last fall, provided a healthy increase to this quarter's performance when compared to the same time last year," he added. DeCrane continued, "The impact of Audio International demonstrates once again that our acquisition strategy together with our overall business approach of carefully focusing on product and service niches we can dominate is working." "We remain on course to deliver strong results for the balance of the year," he concluded. Financial Results For the first quarter ended March 31, 1998, revenues advanced 11.5% to $29.1 million from $26.1 million for the 1997 first quarter. Gross profit improved 49.5% to $9.0 million from $6.0 million in the year-ago first quarter, while the Company's gross margin continued to improve to 30.9% in the first quarter versus 23.0% for the 1997 first quarter. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. rose 54.1%, to $3.7 million in the first quarter, up from $2.4 million for the three months ended March 31, 1997. The Company's operating profit margin Operating profit margin The ratio of operating profit to net sales. also improved considerably, to 12.8% of revenues in the first quarter of 1998 compared to 9.3% of revenues during the first quarter of 1997. During the quarter, interest expense fell by 50.6% from the first quarter of 1997, as a result of the debt reduction done concurrent with the Company's initial public offering in April of 1997. This reduction in debt was partly offset by an increase in debt related to the acquisition of Audio International in November 1997. For the quarter, net income improved 168.4% to $1.7 million, up from $.6 million in the corresponding prior year-ago quarter. For the 1998 first quarter, earnings per share on a fully diluted basis increased 20.0% to $.30 per share versus pro forma .$25 per share for the comparable 1997 period. Key Performance Factors According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. DeCrane, "We continued to successfully implement our strategy. Our components business delivered steady improvements in its operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , while sales volume was adversely affected by the recent original equipment production disruptions. Improved product yield, labor productivity and raw materials savings from the 1997 capital investments all played major factors in the continued margin improvements. Systems integration continues to offer significant growth potential. We are pleased with our success in securing new contracts in in-flight entertainment In-flight entertainment (IFE) refers to the entertainment available to aircraft passengers during a flight. After World War II commercial aviation flights became a daily event in which entertainment was requested by passengers to help the time pass. and smoke detection and fire suppression, two rapidly growing markets," said DeCrane. Continued DeCrane, "We focus intensely on both top-line growth and margin improvements." "In each of our product lines, we concentrate on being the low cost producer. We are vigilant in trying to maintain our premium quality at the best possible cost structure," he added. "This effort is paying off," he said, pointing to the improvements in gross and operating profit margins as well as in net income. Systems Integration During the quarter, DeCrane's systems integration group generated steady revenue growth and more gains in broadening its customer base. DeCrane further reported the new contract with B.F. Goodrich (for American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the ) has just gotten underway, while contracts with Securaplane and Walter Kidde Walter Kidde (March 7 1877 – February 9, 1943) (IPA pronunciation: [kɪdə]) was the court appointed trustee of the bankrupt New York, Susquehanna and Western Railway from July 24, 1937 until his death in 1943. for Southwest Airlines This article is about the American airline. For the former Japanese airline, see Japan Transocean Air. For the British airline, see Air Southwest. Southwest Airlines Co. and Northwest Airlines, The Network Connection, Hamilton Standard Hamilton Standard, a famous aircraft propeller parts supplier, was formed in 1929 when United Aircraft & Transport Corporation consolidated Hamilton Aero Manufacturing and Standard Steel Propeller into the Hamilton Standard Propeller Corporation. for Air Canada and Northwest Airlines, and the KLM KLM Kaiserliche Marine (Enigma: Rising Tide game) KLM Koninklijke Luchtvaart Maatschappij (Royal Dutch Airlines) KLM Klub Langer Menschen (German: Tall Person Club) , Canadian Marconi and Smith Industries program all continued on track for the year, although some revenue from smoke detection and fire suppression is shifting to the 1998 second half. DeCrane's engineering expertise continues to be recognized in the marketplace as evidenced by new engineering contracts received from Rockwell Collins Rockwell Collins, Inc. (NYSE: COL) is a large United States-based international company headquartered in Cedar Rapids, Iowa, primarily providing aviation and information technology systems, solutions, and services to governmental agencies and aircraft manufacturers. for an in-flight entertainment system for British Airways British Airways in full British Airways PLC International passenger airline based in London. In 1936 British Airways Ltd. was founded through the merger of three smaller airlines. and an expanded relationship with Matsushita for an engineering project for Cathay Pacific Cathay Pacific Airways Limited (HKSE: 0293 ) is an airline based in Hong Kong, operating scheduled passenger and cargo services to over 104 destinations worldwide. It is the flag carrier of Hong Kong with its main base at the Hong Kong International Airport. [1]. . Results for the systems integration group also include the contribution from Audio International, whose production levels are ramping up to meet the increased delivery rates of corporate aircraft. DeCrane said, "Audio continues to position itself for the future by expanding its relationship with key customers, especially Dassault and Bombardier, as well as through its research and development activities. To meet growing demand for more sophisticated video products, we also continue to aggressively invest in developing new and improved technologies and products for this market segment." Components-- Contacts, Connectors, Harness Assemblies and Displays The components group experienced an 11.2% decrease in sales for the quarter as a result of the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. of direct and indirect sales to Boeing. According to DeCrane the actual decline was less than originally expected. The Company's aggressive marketing program to further penetrate Airbus (through Aerospatiale) is well underway with qualification for sixty contact part numbers expected in the third quarter. Quarterly results include a 19.0% growth in revenues from Aerospace Display Systems which reflects in part strong demand for display modules, particularly at Sextant sextant, instrument for measuring the altitude of the sun or another celestial body; such measurements can then be used to determine the observer's geographical position or for other navigational, surveying, or astronomical applications. and Allied Signal. In addition, DeCrane began the certification process for electronic digital clocks for the 737-200/300 for America West Airlines America West Airlines was one of the United States' ten major airlines. The airline was based in Tempe, Arizona, and is now a part of US Airways Group. At the time of its integration into US Airways, the airline maintained two hubs, one at Phoenix Sky Harbor International . Capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. At March 31, 1998, the Company reported $103.6 million in total assets, $43.2 million in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and $41.1 million in stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . The debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. ratio was 52.0%. As a result of the secondary offering on April 1st, the Company noted that it had $70.0 million available under its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Bookings, Backlog For the quarter, bookings increased to $28.2 million versus $27.3 million in the first quarter of 1997. Backlog increased $3.6 million, to $48.5 million for the quarter, vs. $44.9 million during the same period a year before. Outlook According to DeCrane, "We continue to see very strong fundamentals supporting the high growth in demand for new commercial aircraft, new corporate aircraft and new safety mandates. These trends favor DeCrane's ongoing growth, though in the nearer-term the impact from the slowdown from direct and indirect sales to Boeing is expected to affect next quarter's components results, though to a lesser degree than in the current period." DeCrane expressed continued confidence in the market position it has secured in the smoke detection and fire suppression area, noting that additional vendor decisions are expected to be made in the next quarter from several major airlines and freighters, including companies such as TWA TWA Time-weighted average, see there , UPS and Federal Express. Lastly, DeCrane noted the technology in the in-flight entertainment area is finally beginning to catch-up with demand, a trend expected to favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact the Company's year-end performance. Except for historical information contained herein, this document 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 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. These statements involve known and unknown risks and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. Further, the Company operates in an industry sector where securities values may be volatile and may be influenced by regulatory and other factors beyond the Company's control. Important factors that the Company believes might cause such differences are discussed in the cautionary statements accompanying the forward-looking statements in the Company's Prospectus, dated April 16, 1997, filed with the Securities and Exchange Commission and subsequent filings. In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in those filings with the Securities and Exchange Commission. DeCrane Aircraft Holdings, Inc. is a leading manufacturer of avionics components and a provider of avionics systems integration services in certain niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. of the commercial aircraft industry. The Company's products and services typically are utilized to provide an interface between an aircraft and its avionic a·vi·on·ics n. 1. (used with a sing. verb) The science and technology of electronics and the development of electronic devices as applied to aeronautics and astronautics: systems. For more information about DeCrane Aircraft Holdings, Inc. via facsimile simply call 1-800-PRO-INFO and dial client code "DAHX". -0-
DECRANE AIRCRAFT HOLDINGS, INC.
Consolidated Income Statements
(in thousands, except per share data)
Three Months Ended
March 31,
1998 1997 (1)
(Unaudited)
Revenues $ 29,128 $ 26,118
Cost of sales 20,141 20,107
Gross profit 8,987 6,011
Operating expenses 5,258 3,591
Operating profit 3,729 2,420
Other expenses (income)
Interest expense 786 1,592
Other income (17) (87)
Income before income taxes 2,960 915
Provision for income taxes 1,272 286
Net income 1,688 629
Adjustment to redemption value of
mandatorily redeemable
common stock warrants - -
Cumulative convertible preferred
stock dividends - (380)
Net income applicable to
common stockholders $ 1,688 $ 249
Pro forma, as adjusted
Income applicable to
common stockholders (2) $ 1,688 $ 1,415
Income per common share (3)
Basic $ 0.32 $ 0.27
Diluted $ 0.30 $ 0.25
Weighted average number of common
and dilutive common
equivalent shares outstanding (4)
Basic 5,319 5,302
Diluted 5,626 5,582
Income per common share
Basic $ 0.32 $ 2.90
Diluted $ 0.30 $ 0.20
Weighted average number of
common and dilutive common
equivalent shares outstanding
Basic 5,319 86
Diluted 5,626 3,071
DECRANE AIRCRAFT HOLDINGS, INC.
Notes to Consolidated Income Statements
Notes:
(1) Certain reclassifications have been made to prior quarters'
presentation to conform to the 1998 presentation.
Share and per share data for 1997 has been restated to conform
with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings Per Share."
(2) For 1997, pro forma for the sale by the Company of 2,700,000
shares of common stock in its initial public offering and the
application of the net proceeds therefrom as described in the
Company's Form 10-K as if it had occurred on January 1, 1997.
Excludes the effect of a $2,078,000 extraordinary loss incurred from
the Company's debt refinancing with the net proceeds from the initial
public offering.
(3) For 1997, computed based upon pro forma income applicable to
common stockholders (Note 2) and pro forma as if the following had
occurred as of January 1, 1997 as described in the Company's Form
10-K: (i) the effect of a 3.53 for one reverse stock split and the
recapitalization of the Company; and (ii) the sale by the Company of
2,700,000 shares of common stock in its initial public offering and
the application of the net proceeds therefrom.
(4) Pro forma as if the following had occurred as of January 1,
1997 as described in the Company's Form 10-K: (i) the effect of a
3.53 for one reverse stock split and the recapitalization of the
Company; and (ii) the sale by the Company of 2,700,000 shares of
common stock in its initial public offering and the application of
the net proceeds therefrom.
DECRANE AIRCRAFT HOLDINGS, INC.
Consolidated Balance Sheet Data
(In thousands)
March 31, December 31,
1998 1997
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 1,178 $ 206
Accounts receivable, net 19,839 18,152
Inventories 28,221 25,976
Prepaid expenses and other
current assets 1,160 782
Total current assets 50,398 45,116
Property and equipment, net 13,261 14,054
Other assets, principally
intangibles, net 39,940 39,967
Total assets $ 103,599 $ 99,137
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings $ 432 $ 568
Current portion of long-term
obligations 857 858
Accounts payable 7,991 8,032
Accrued expenses 6,226 6,911
Income taxes payable 1,800 3,975
Total current liabilities 17,306 20,344
Long-term liabilities
Long-term obligations 43,196 37,412
Deferred income taxes 1,880 1,758
Minority interest 93 96
Total long-term liabilities 45,169 39,266
Stockholders' equity
Common stock 53 53
Additional paid-in capital 51,096 51,057
Accumulated deficit (9,756) (11,444)
Foreign currency translation (269) (139)
Total stockholders' equity 41,124 39,527
Total liabilities and
stockholders' equity $ 103,599 $ 99,137
CONTACT: AT THE COMPANY: Robert A. Rankin Chief Financial Officer 310/725-9123 or AT THE FINANCIAL RELATIONS BOARD: Karen Taylor Karen Taylor is an English comedienne from Barrow-in-Furness, Cumbria. She is a former finalist in the prestigious Daily Telegraph Open Mic Award[1] and has fronted her own sketch show on BBC Three, entitled Touch Me, I'm Karen Taylor. General Information 310/442-0599 Moira Conlon Investor/Analyst Contact 310/442-0599 Michaelle Burstin Media Contact 310/442-0599 |
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