EDO Reports 35 Percent Revenue Increase in Third Quarter; Earnings Per Share Increase 37 Percent.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- EDO Corporation EDO Corporation (NYSE: EDO) is an American company that designs and manufactures products for defense, intelligence, and commercial markets, and provides related engineering and professional services. It employs 4,000 people worldwide and had revenues of $715 million in 2006. (NYSE NYSE See: New York Stock Exchange : EDO Edo: see Tokyo, Japan. ) recorded revenue of $175.9 million in the third quarter of 2005, up 35.4 percent from the $129.9 million recorded in the third quarter of 2004. Net earnings for the quarter were $9.8 million, up 43.2 percent from $6.9 million in the prior year's quarter. On a 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. per-share basis, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings were $0.48, up 37.1 percent from $0.35 in the third quarter of 2004. For the nine-month period ended Sept. 24, 2005, revenue was $448.5 million, up 22.2 percent from the $367.0 million recorded in the first three quarters of 2004. Net earnings for the first nine months of 2005 were $18.8 million, up 26.4 percent from $14.9 million in the same period last year. On a diluted per-share basis, earnings were $0.97, up 19.8 percent from $0.81 in the first three quarters of 2004. "As expected, 2005 is proving to be a year of substantial growth, with third quarter revenue on target to meet or exceed our projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. of $630 million to $640 million for the full year," said Chief Executive Officer James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. M. Smith. "I am very proud of the all-out effort that our employees have made to accelerate production of electronic force protection products, in support of ongoing military operations This is a list of missions, operations, and projects. Missions in support of other missions are not listed independently. World War I ''See also List of military engagements of World War I
tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. in research and development to further improve our technology in this area. We believe that EDO has the most effective, battle-proven systems available today, and we intend to remain the leader." Acquisitions At the end of the third quarter, EDO acquired Fiber Innovations, Inc., a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. based in Walpole Walpole, industrial town (1990 pop. 20,212), Norfolk co., E Mass., SW of Boston; settled 1659, inc. 1724. Textiles and paper products are the chief manufactures. Walpole is the site of a state prison. , Mass., at a purchase price of $12.4 million. Fiber Innovations has annual revenue of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $13 million. The acquisition had no impact on revenue or earnings during the third quarter. Fiber Innovations develops and manufactures composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate structures for aerospace, defense, and commercial customers. As a leader in the specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. processes of braiding, resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing transfer molding Transfer molding, like compression molding, is a process where the amount of molding material (usually a thermoset plastic) is measured and inserted before the moulding takes place. The molding material is preheated and loaded into a chamber known as the pot. , and vacuum-assisted resin transfer molding, it has perfected one of the most practical and effective manufacturing methods available to the composite industry today. This adds important complementary design and manufacturing capabilities to EDO's integrated-composite-structures business. The company employs approximately 80 people and has been added to EDO's Engineered Materials segment. Revenue Organic revenue growth, which excludes acquisitions owned for less than one year, was approximately 30 percent for the quarter, and 19 percent for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . For the full year, the company expects organic revenue growth to exceed 14 percent, substantially above our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. target rate of 8 to 10 percent. The largest contributor to revenue growth during the quarter was the accelerated delivery of electronic force protection systems. Antenna products and battlefield 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. also contributed to revenue growth. In addition, revenue related to the acquisition of EVI Evi (ē`vī), in the Bible, Midianite king. Technologies in May added approximately $7.6 million during the quarter. Partially offsetting the growth in this quarter were lower revenues in certain electronic systems, aircraft armament systems, and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Much of this was due to the normal, often-uneven timing of revenue. This timing depends on various factors and milestones, causing substantial variations from quarter to quarter. Also during the quarter, it was determined that revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. were needed to the percentage-of-completion estimates on several programs. This resulted in a reduction to revenue and earnings on those programs, primarily sonar programs in the Engineered Materials segment. Earnings Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before in the third quarter increased 23.1 percent over the same period last year, to $17.3 million. This increase corresponded to the issues discussed above in "Revenue." In addition, operating earnings were reduced by approximately $1.0 million due to higher pension and ESOP ESOP See: Employee Stock Ownership Plan ESOP See Employee Stock Ownership Plan (ESOP). expense and intangible-asset amortization. Other items impacting earnings during the quarter included an income-tax benefit of $0.8 million, as well as an additional $0.3 million environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a cost incurred at the recently vacated facility in Deer Park Deer Park. 1 Uninc. village (1990 pop. 28,840), Babylon town, Suffolk co., SE N.Y., a primarily residential suburb on Long Island. 2 City (1990 pop. 27,652), Harris co., SE Tex. , N.Y. The year-over-year earnings comparison was also impacted by a net $0.8 million benefit in the third quarter of 2004, related to a legal settlement. Earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. , referred to as adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , were $23.6 million, or 13.4 percent of revenue in the third quarter of 2005. For the year-to-date, EBITDA, as adjusted, was $55.0 million, or 12.3 percent of revenue. The company expects adjusted EBITDA margins to reach or exceed the target range of 13 to 14 percent for the full year. EBITDA is a generally accepted metric employed by our industry. Our adjustments include primarily non-cash ESOP and pension expenses, and are identified in detail on the attached reconciliation schedule. Cash Flow Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the third quarter was a record $28.2 million. This resulted in a $10.5 million increase in the net cash balance during the three-month period. This increase was accomplished even with the $12.4 million payment for the acquisition of Fiber Innovations and a $6.0 million pension fund contribution. At the end of the third quarter, including these payments, the cash balance was $48.4 million, up from $37.9 million at the end of the second quarter. For the full year, EDO expects to generate cash flow from operations in a range consistent with historical performance. New Contracts During the third quarter, the company was successful in winning a number of new contracts. These include two pneumatic-ejection systems on the U.S. Navy's new P-8A Multi-mission Maritime INTEREST, MARITIME. By maritime interest is understood the profit of money lent on bottomry or respondentia, which is allowed to be greater than simple interest because the capital of the lender is put in jeopardy. Aircraft, as well ESM (1) (Enterprise Storage Management) Managing the online, nearline and offline storage within a large organization. It includes analysis of storage requirements as well as making routine copies of files and databases for backup, archiving, disaster recovery, (electronic support measures) systems for two international customers. The company also won a competition to provide its advanced-technology ALOFTS ALOFTS Active Low Frequency Towed SONAR undersea-warfare sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. to an international customer. "EDO continues to actively pursue new business opportunities," added Mr. Smith. "We are leaders in many important 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. . Our team is working to extend such expertise into related products, as we have successfully done in electronic force protection technology. We believe these efforts will continue to open new areas of future growth." 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. The total funded backlog of unfilled orders as of September September: see month. 24 stood at $533.9 million, down slightly from the end of the second quarter, but up from $501.3 million at the end of the third quarter of 2004, and $474.6 million on Dec. 31, 2004. Due to the urgent need to accelerate production of electronic force protection equipment, including the company's authorization The right or permission to use a system resource; the process of granting access. See access control. to manufacture these products before contracts are definitized, many of these orders have not been included in the funded backlog. Backlog also does not include portions of contracts for which the U.S. government has not yet appropriated funds, nor does it include unexercised options in any contract. Such unfunded contracts and unexercised options add approximately $590 million in what we view as high-confidence future revenue, for a total of more than $1.1 billion. Conference Call EDO will conduct a conference call at 10:30 a.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 on October October: see month. 27 to review these results in more detail. A live web cast of the conference call will be available at www.edocorp.com or www.Vcall.com. For those who cannot listen to the live broadcast, a replay of the call will be available on these websites. There will also be a telephone replay available until November November: see month. 3. To listen to the telephone replay, dial 1-877-660-6853 (outside the U.S. dial 1-201-612-7415), account #286, and conference ID #171981. About EDO Corporation EDO Corporation designs and manufactures a diverse range of products for the defense industry and commercial markets, and provides related engineering and professional services. Major product groups include: Aircraft Armament Systems, Defense Electronics, Communications, Undersea Warfare Operations conducted to establish battlespace dominance in the underwater environment, which permits friendly forces to accomplish the full range of potential missions and denies an opposing force the effective use of underwater systems and weapons. , and Integrated Structures. EDO's advanced systems are at the core of the transformation to lighter, faster, and smarter defense capabilities. EDO (www.edocorp.com) was founded in 1925, and is headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The company employs 2,800 people. 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. Certain statements made in this release, including statements about future revenue, organic revenue growth, annual revenue, net income, and EBITDA margin expectations, and future cash flow from operations, are forward-looking statements 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 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, including those described above and the following: changes in demand for the company's products and services, product mix, the timing of customer orders and deliveries, changes in the government's funding priorities, the impact of competitive products and pricing, the negotiation of undefinitized contracts, and other 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 Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release.
EDO Corporation and Subsidiaries
Condensed Consolidated Statements of Earnings
(In thousands, except per share amounts)
Three months ended Nine months ended
Sept 24, Sept 25, Sept 24, Sept 25,
2005 2004 2005 2004
----------- --------- ----------- ---------
(unaudited) (unaudited)
Net sales $175,884 $129,875 $448,504 $367,042
Costs and expenses:
Cost of sales 133,098 94,168 336,512 270,090
Selling, general and
administrative 21,626 18,326 61,928 57,237
Research and development 3,578 3,333 11,990 7,649
Environmental cost
provision 288 - 1,538 -
-------- -------- -------- --------
158,590 115,827 411,968 334,976
----------- --------- ---------- --------
Operating earnings 17,294 14,048 36,536 32,066
Interest income 407 337 1,202 781
Interest expense (2,408) (2,304) (6,873) (6,771)
Other, net (18) (126) (78) (151)
-------- -------- -------- --------
Non-operating expense, net (2,019) (2,093) (5,749) (6,141)
----------- --------- ---------- --------
Net earnings before income
taxes 15,275 11,955 30,787 25,925
Income tax expense (5,434) (5,081) (11,949) (11,018)
----------- --------- ---------- --------
Net earnings $ 9,841 $ 6,874 $ 18,838 $ 14,907
======== ======== ======== ========
Net earnings per common
share:
Basic: $ 0.54 $ 0.39 $ 1.04 $ 0.84
Diluted: $ 0.48 $ 0.35 $ 0.97 $ 0.81
======== ======== ======== ========
Weighted average shares
outstanding
Basic 18,136 17,737 18,044 17,652
Diluted (a) 22,794 22,406 22,725 22,328
======== ======== ======== ========
Backlog of unfilled orders $533,872 $501,320
(a) Assumes exercise of dilutive stock options, and conversion of the
5.25% Convertible Subordinated Notes into 4.4 million common
shares.
EDO Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
Sept 24, Dec 31,
2005 2004
------------ ----------
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 48,388 $ 98,884
Accounts receivable, net 180,753 153,810
Inventories 64,558 52,867
Deferred income tax asset, net 4,990 5,046
Notes receivable 7,175 7,202
Prepayments & other 4,472 3,493
------------ ----------
Total Current Assets 310,336 321,302
Property, plant and equipment, net 47,002 34,830
Goodwill 132,388 91,651
Other intangible assets 51,737 50,356
Deferred income tax asset, net 30,092 30,241
Other assets 20,332 18,309
------------ ----------
Total Assets $ 591,887 $ 546,689
============ ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities $ 83,513 $ 80,898
Contract advances and deposits 31,233 13,696
------------ ----------
Total Current Liabilities 114,746 94,594
Income taxes payable 5,768 5,768
Long-term debt 137,800 137,800
Post-retirement benefits obligations 96,123 94,936
Environmental obligation 1,648 1,663
Shareholders' equity 235,802 211,928
------------ ----------
Total Liabilities & Shareholders' Equity $ 591,887 $ 546,689
============ ==========
EDO Corporation and Subsidiaries
SEGMENT DATA
(In thousands)
Three months ended Nine months ended
Sept 24, Sept 25, Sept 24, Sept 25,
2005 2004 2005 2004
-------- -------- -------- --------
(unaudited) (unaudited)
Net sales:
Defense $ 96,823 $ 98,781 $286,986 $286,248
Communications and Space
Products 68,690 20,485 129,805 46,547
Engineered Materials 10,371 10,609 31,713 34,247
-------- -------- -------- --------
$175,884 $129,875 $448,504 $367,042
======== ======== ======== ========
Operating earnings (loss):
Defense $ 7,507 $ 9,503 $ 22,848 $ 27,503
Communications and Space
Products 10,706 2,633 15,539 1,639
Engineered Materials (631) 1,912 (313) 2,924
Environmental cost provision (288) - (1,538) -
-------- -------- -------- --------
17,294 14,048 36,536 32,066
Net interest expense (2,001) (1,967) (5,671) (5,990)
Other, net (18) (126) (78) (151)
-------- -------- -------- --------
Net earnings before income taxes $ 15,275 $ 11,955 $ 30,787 $ 25,925
======== ======== ======== ========
EDO Corporation and Subsidiaries
Calculation of EBITDA
(In thousands, except per share amounts)
Three months ended Nine months ended
Sept 24, Sept 25, Sept 24, Sept 25,
2005 2004 2005 2004
--------- -------- --------- ----------
(unaudited) (unaudited)
Net earnings before income
taxes $15,275 $11,955 $ 30,787 $ 25,925
Interest expense 2,408 2,304 6,873 6,771
Interest income (407) (337) (1,202) (781)
------- ------- -------- --------
Net interest expense 2,001 1,967 5,671 5,990
Depreciation 2,331 2,618 7,238 8,073
Amortization 1,698 1,369 4,319 4,254
------- ------- -------- --------
Total depreciation &
amortization 4,029 3,987 11,557 12,327
--------- -------- -------- ----------
EBITDA 21,305 17,909 48,015 44,242
ESOP compensation expense 1,221 1,058 3,771 3,086
Pension expense 1,070 550 3,209 1,650
------- ------- -------- --------
EBITDA, as adjusted $23,596 $19,517 $ 54,995 $ 48,978
Diluted shares outstanding * 18,385 17,998 18,316 17,919
EBITDA, as adjusted, per
share * $ 1.28 $ 1.08 $ 3.00 $ 2.73
======= ======= ======== ========
* Excludes potential impact of subordinated note conversion.
Summary of Cash Flows
(In thousands)
Three months ended Nine months ended
Sept 24, Sept 25, Sept 24, Sept 25,
2005 2004 2005 2004
---------- --------- ---------- ---------
(unaudited) (unaudited)
Cash provided by operations $ 28,211 $ 22,068 $ 20,759 $ 20,347
Cash (used) by investing
activities $(17,402) $ (2,731) $(63,359) $ (6,479)
Cash (used) by financing
activities $ (349) $ (253) $ (7,896) $ (675)
-------- -------- -------- --------
$ 10,460 $ 19,084 $(50,496) $ 13,193
======== ======== ======== ========
EDO Corporation and Subsidiaries
GUIDANCE DATA ESTIMATES
Fiscal 2005
-----------
Revenue range $630 million - $640 million
Pension expense $4.3 million
Effective operating tax rate range 41% - 42%
EBITDA, as adjusted, margin range 13.0% - 14.0%
ESOP shares issued per quarter 42,376
Average diluted shares outstanding*:
- If Note conversion is NOT dilutive 18.4 million
- If Note conversion is dilutive 22.8 million
* "If-converted method" (FAS 128) to determine diluted EPS: (Shares to
be issued if 5.25% Notes are converted at $31.26/share would be
4,408,189.)
- Quarterly Dilution Test
Since the after-tax interest on Notes reduces Net Earnings by
$1,067,089 per quarter, the decision point for the dilution test
is $1,067,089 / 4,408,189, or $0.2421 per share. When basic EPS
for a quarter are more than $0.2421, the impact of the Notes is
dilutive.
The Notes were dilutive to EPS this quarter and for the year to
date.
- Annual Dilution Test
Since the after-tax interest on Notes reduces Net Earnings by
$4,268,355 per year, the decision point for the dilution test is
$4,268,355 / 4,408,189, or $0.9683 per share. When basic EPS for
the year are more than $0.9683, the impact of the Notes is
dilutive.
Based on current projections, the Notes are expected to be
dilutive for the 2005 full-year. If so, the EPS calculation will
be based on about 22.8 million shares.
This table contains estimates based on management's current
expectations.
This information is forward-looking, and actual results may differ
materially.
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion