SBS Technologies Reports Results of First Quarter of Fiscal Year 2006 Ended September 30, 2005.ALBUQUERQUE Albuquerque (ăl`bəkûr'kē), city (1990 pop. 384,736), seat of Bernalillo co., W central N.Mex., on the upper Rio Grande; inc. 1890. , N.M. -- SBS Technologies SBS Technologies, Inc., (Nasdaq: SBSE) founded in 1986, designed and built open architecture embedded computer products that enable original equipment manufacturers to serve the commercial, communication and government markets. SBS was headquartered in Albuquerque, New Mexico. (R) (Nasdaq: SBSE SBSE Society of Building Science Educators ), a leading designer and manufacturer of embedded Inserted into. See embedded system. computer solutions for the government, commercial, and communications infrastructure markets, today announced the results of its first quarter of fiscal year 2006 ended September September: see month. 30, 2005. Highlights for the quarter include: --Sales were $34.4 million. --Bookings were $40.1 million, and book-to-bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can was 1.17 to 1. --A net loss of ($430,000) was incurred. --EPS was ($0.03). --Gross profit as a percentage of sales was 41.9%. --Backlog at the end of the quarter was $50.2 million compared with $44.4 million at the end of the prior quarter. --Cash at the end of the quarter was $55.9 million compared to $55.2 million at the end of the prior fiscal year. --Eleven design wins were reported. "The September quarter was an excellent bookings quarter with orders at $40.1 million, increasing our 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. to $50.2 million from $44.4 million at the end of the prior quarter. As we discussed in our press release dated September 27, 2005, sales were below our original guidance of $35 million to $37 million due to a combination of supplier problems and customer delays that unfortunately were not resolved in time to allow the affected shipments to occur before the end of September," said Clarence W. Peckham Coordinates: Peckham is an area of London, England, in the London Borough of Southwark, located 3.5 miles (5.7 km) south-east of Charing Cross, about one mile (1.6 km) east of Camberwell and one mile (1.6 km) west of New Cross. , 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. of SBS Technologies, Inc. "Although our first quarter financial results were not as strong as our original expectations, our solid bookings and increased backlog give us confidence we will achieve our sales projections for the fiscal year," added Peckham. SALES Sales for the first quarter were $34.4 million, a decrease of 1.5% compared to $34.9 million in sales for last year's first quarter. On a sequential basis, total sales decreased 9.5%, compared to $38.0 million in sales for the quarter ended June June: see month. 30, 2005.
SALES BY SEGMENT
----------------
(dollars in millions)
---------------------
Sept. 30, % of Sept. 30, % of June 30, % of
Three months ended: 2005 total 2004 total 2005 total
------------------- --------- ------ --------- ------ -------- -------
Americas Group $22.2 65% $23.4 67% $23.1 61%
Europe Group 12.2 35% 11.5 33% 14.9 39%
---------------- ---------------- ----------------
Total $34.4 100% $34.9 100% $38.0 100%
================ ================ ================
By segment, sales for the first quarter by the Americas A·mer·i·cas , the See America. Group were $22.2 million, a decrease of 5.2%, and sales by the Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). Group were
$12.2 million, an increase of 6.2%, both compared to the first quarter
of the previous fiscal year. On a sequential basis, sales by the
Americas Group decreased 3.7% and sales by the Europe Group decreased
18.5%, both compared to the quarter ended June 30, 2005. In both
periods, changes in currency exchange rates had minimal impact on sales.
SALES BY END MARKET
-------------------
(dollars in millions)
---------------------
Sept. 30, % of Sept. 30, % of June 30, % of
Three months ended: 2005 total 2004 total 2005 total
------------------- --------- ------ --------- ------ -------- -------
Government $14.7 43% $15.3 44% $16.4 43%
Communications 10.7 31% 9.4 27% 11.8 31%
Commercial 9.0 26% 10.2 29% 9.8 26%
---------------- ---------------- ----------------
Total $34.4 100% $34.9 100% $38.0 100%
================ ================ ================
By end market, for the quarter ended September 30, 2005, sales to government customers were $14.7 million, a decrease of 4.0%, sales to communications customers were $10.7 million, an increase of 14.7%, and sales to commercial customers were $9.0 million, a decrease of 12.5%, all compared to the first quarter of the prior fiscal year. On a sequential basis, sales to government customers decreased 10.3%, sales to communications customers decreased 9.4%, and sales to commercial customers decreased 8.4%, all compared to the quarter ended June 30, 2005. For the quarter ended September 30, 2005, as a percentage of total sales, sales to one communications customer, Ericsson Er·ics·son , John 1803-1889. American engineer and inventor who built the first ironclad warship, the Monitor (1862), which engaged the Confederate Merrimack in a famous naval battle of the Civil War (March 9, 1862). , represented 17% and sales to one commercial customer, Applied Materials Applied Materials, Inc. NASDAQ: AMAT (HKSE: 4336 ) is the global leader in nanomanufacturing technology solutions with a broad portfolio of innovative equipment, service and software products for the fabrication of semiconductor chips, flat panel solar displays, solar , represented 7%. No other customer represented more than 5% of sales. NET INCOME/(LOSS) For the quarter ended September 30, 2005, SBS See Small Business Server. incurred a loss of ($430,000), compared to a profit of $1.2 million for the same period of the prior fiscal year. Net (loss) per common share - assuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. , for the quarter ended September 30, 2005, was ($0.03), compared to $0.08 reported for the first quarter of the prior fiscal year. The loss incurred for the quarter was primarily the result of lower than anticipated sales due to a combination of supplier problems and customer delays affecting shipments for the quarter. GROSS PROFIT Gross profit for the quarter as a percentage of sales was 41.9%, compared to 44.4% for the first quarter of the prior fiscal year, and 44.2% for the preceding quarter. Compared to the quarter ended September 30, 2004 and the preceding quarter, an increased proportion of sales of lower margin products and competitive pricing lowered gross profit as a percentage of sales. Consistent with SBS' 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. for the year ended June 30, 2005, SBS has included the amortization of 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. associated with completed technology and license agreements as a separate component of cost of sales. BACKLOG Company backlog as of September 30, 2005 was approximately $50.2 million, compared to $46.9 million at the end of the first quarter of the prior fiscal year, and $44.4 million at the end of the preceding quarter. Bookings for the quarter were $40.1 million, resulting in a book-to-bill ratio of 1.17 to 1. CASH The cash balance at September 30, 2005 was $55.9 million compared to $55.2 million at the end of the prior fiscal year, and SBS remains debt free. DESIGN WINS During the quarter ended September 30, 2005, SBS achieved eleven design wins. In the government and commercial markets, each reported design win represents an initial purchase order of a minimum of $100,000 and is forecasted to produce a minimum of $500,000 in annual sales when in production. Recognizing the different characteristics of the communications market, beginning this quarter SBS has lowered the minimum purchase order value for design wins in the communications market to $10,000, although the $500,000 minimum anticipated production rate remains unchanged. Based on quoting activity for design win opportunities, SBS believes that the production potential is large but initial orders are in low-value prototype quantities. The new threshold is more representative of customers' future order patterns in the communications market. By market, seven design wins were for the government market, two were for the commercial market, and two were for the communications market. All seven government wins were for systems. They are an F-16 fire control computer, vehicle management computers for the new Fire Scout Unmanned Aerial Vehicle A powered, aerial vehicle that does not carry a human operator, uses aerodynamic forces to provide vehicle lift, can fly autonomously or be piloted remotely, can be expendable or recoverable, and can carry a lethal or nonlethal payload. , a flight computer for a new Unmanned Aerial Vehicle, a mission computer for an upgrade to the E2C E2C Hawkeye; Navy Airborne Warning and Control System Aircraft Airborne Early Warning and Control Air surveillance and control provided by airborne early warning aircraft which are equipped with search and height-finding radar and communications equipment for controlling weapon systems. Also called AEW & C. See also air picket. (AWAC) military aircraft, a cockpit This article is about the flight deck of an aircraft. For other uses, see Cockpit (disambiguation). A cockpit is the area usually nearer the front of a piloted aircraft from which a pilot controls the aircraft. display upgrade for the B-52 Bomber bomber Military aircraft designed to drop bombs on surface targets. Aerial bombardment can be traced to the Italo-Turkish War (1911), in which an Italian pilot dropped grenades on two Turkish targets. , the control computer for the Expeditionary Fighting Vehicle The Expeditionary Fighting Vehicle (EFV) is the newest USMC amphibious vehicle, intended for deployment in 2015.<ref name="NAVWAR" /> It was renamed from the Advanced Amphibious Assault Vehicle in late 2003. The USMC wants 1,013 AAAV's by 2015. (EFV EFV Expeditionary Fighting Vehicle EFV Electronic Viewfinder EFV Enhanced Fixed Variable (rate) EFV Electric-Field-Variant Function ), and a system for a NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. application. These are representative of the types of funded high-value programs that combine a wide variety of SBS' products into sophisticated systems. In the commercial market, one of the design wins was to provide a single board computer and input/output See I/O and PC input/output. (programming, operating system) input/output - (I/O) Communication between a computer and its users, its storage devices, other computers (via a network) or the outside world. The devices the computer uses to do this are called "peripherals". (I/O (Input/Output) The transfer of data between the CPU and a peripheral device. Every transfer is an output from one device and an input to another. See PC input/output. I/O - Input/Output ) card used to provide video surveillance for public transportation facilities such as subway subway: see rapid transit. subway Underground railway system used to transport passengers within urban and suburban areas. The first subway line, 3. and train stations. The second commercial design win was an I/O card See expansion board and PC card. for an 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. system for commercial aircraft. In-flight entertainment is a growing market as commercial airlines compete for passengers. SBS' commercial market focus is on projects such as these that offer high volume potential and can utilize the broad SBS product line. In the communications market one design win was with a telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment manufacturer for a T1/E1 I/O card in a communications controller A peripheral control unit that connects several communications lines to a computer and performs the actual transmitting and receiving as well as various message coding and decoding activities. for small and medium sized businesses providing voice (VOIP (Voice Over IP) A digital telephone service that uses the public Internet as well as private backbones instead of the traditional telephone network. Many companies, including Vonage, 8x8 and AT&T (CallVantage), typically offer calling within the country for a )/data/fax capability. The second design win was with Ericsson for a single board computer for a multi-source Multi-source, as it applies to downloading data, or files from the internet, is a method of decreasing download time for large files by getting data from two or more sources. access node program. NEW PRODUCTS During the quarter, SBS released four new products: two were 3U CompactPCI The PCI bus technology implemented on a Eurocard form factor. Eurocards provide more rugged packaging and a more secure plug and socket than the standard PCI card used in desktop computers. (R) single board computers, one was a PCI Mezzanine Card (hardware) PCI Mezzanine Card - (PMC) A family of low profile mezzanine cards for VMEbus, Futurebus+, desktop computers and other computer systems with logical and electrical layers based on the Peripheral Component Interconnect (PCI) specification. PMC is defined in IEEE P1386. (PMC (1) See Portable Media Center. (2) (PCI Mezzanine Card) A PCI-based mezzanine card that is widely adapted to VMEbus, CompactPCI and PCI cards. ) Intel(R)-based single board computer, and one was a high performance graphics PMC card. The single board computers were developed to support market demand for more performance in both Intel and PowerPC(R) architectures. Customers are continuing to develop applications that require more performance in smaller form factors. An example is the CV1 PowerPC 3U CompactPCI card, which is being used in multiple military programs to upgrade flight computers. The graphics board is used primarily in military applications, such as in the cockpit display upgrade for the B-52 previously discussed. BUSINESS OUTLOOK The following statements are based on current expectations and speak only as of the date of this release, October 18, 2005. These statements are forward-looking, and actual results may differ materially. "In the communications market, we are continuing to see strong interest and increased proposal activity for our new family of AdvancedMC(TM) products," said Peckham. "In addition, we have placed product for evaluation and test with telecommunications equipment manufacturers' research and development labs. We believe the market opportunities are progressing as planned, with the remainder of fiscal year 2006 targeted to capture new design wins and low rate initial production, with significant production to follow in fiscal year 2007. "I was particularly pleased with the results of our business development activities in the government market. This quarter, we had seven excellent design wins and strong bookings for follow on production for several preexisting pre·ex·ist or pre-ex·ist v. pre·ex·ist·ed, pre·ex·ist·ing, pre·ex·ists v.tr. To exist before (something); precede: Dinosaurs preexisted humans. v.intr. design wins. Increased production orders in the government market are one of the key indicators for our anticipated second half growth. "In the commercial market, we are continuing to pursue opportunities for semiconductor manufacturing equipment, image processing image processing Set of computational techniques for analyzing, enhancing, compressing, and reconstructing images. Its main components are importing, in which an image is captured through scanning or digital photography; analysis and manipulation of the image, accomplished , and medical electronics applications. These are segments of the market that require high performance solutions which are a good fit for our product portfolio. "As discussed in previous press releases, based on our forecasts, we expect that a significant amount of our revenue growth for fiscal year 2006 will occur in the second half of the fiscal year. This is due to two primary factors. First, we expect revenues from AdvancedMC products to begin to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale during the later part of the year. Second, based on customers' forecasts, orders for military systems will increase as we progress through the fiscal year. "Based on our backlog and our customers' forecasts, we expect sales for the second quarter of fiscal year 2006 ending December 31, 2005 to be between $37 million and $39 million. This forecast reflects a government customer push-out of approximately $4 million due to technical issues not involving our product. This order, originally scheduled to ship in the second quarter, is now scheduled to ship in the second half of our fiscal year. For the fiscal year ending June 30, 2006, we continue to expect sales to be between $165 million and $175 million," said Peckham. CONFERENCE CALL INFORMATION SBS will host a conference call to discuss further the results of the quarter at 4:45 p.m. Eastern Time, Tuesday, October 18, 2005. To access the call, dial toll-free (800) 988-9518, or international dial +1(610) 794-9308. The passcode for the conference call is "SBS." The call will also be webcast live, and later archived for a limited time in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the SBS web site at http://www.sbs.com. An audio replay of the call may be accessed approximately one hour following the conclusion of the call by dialing (800) 841-6832 or international (203) 369-3832. There is no passcode for the audio replay. The replay will be available through October 29, 2005. ABOUT SBS TECHNOLOGIES SBS Technologies, Inc., (Nasdaq: SBSE) founded in 1986, designs and builds a wide range of standard and customized embedded computer products. Our products include processor boards, input/output modules, networking devices, and complete computer systems. Our products are used in many industries, including telecommunications, medical electronics, industrial automation and defense. Headquartered in Albuquerque, New Mexico “Albuquerque” redirects here. For other uses, see Albuquerque (disambiguation). Albuquerque (pronounced [ˈæl.bə.kɚ.kiː], Spanish: [al.βu. , SBS maintains eight primary operating locations, has regional sales offices throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and has international sales and support offices in six countries. More information on SBS is available at www.sbs.com. This 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. regarding future events and the future financial performance of SBS, including future sales, earnings, shipment delays by customers, market conditions, customer demand, and bookings, and the continued development of SBS' competitive position, that are subject to a number of risks and other factors which could cause the actual results to differ materially from those projected or implied in the forward-looking statements. Among these factors are: timing of receipt of government production orders; continued health of SBS' end markets, including the semiconductor manufacturing equipment market and the telecommunications market; sales to Ericsson to continue during fiscal year 2006 at approximately the same dollar sales level as during fiscal year 2005; the rate of adoption of the new AdvancedTCA standard in the telecommunications market; business and economic conditions generally affecting SBS' customers and their end customers, including but not limited to the changes in size and program priorities of military procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. budgets; a high degree of uncertainty and rapid change in the markets addressed by SBS' products that could reduce sales or render certain SBS products obsolete OBSOLETE. This term is applied to those laws which have lost their efficacy, without being repealed, 2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. ; customer demand for and acceptance of SBS' products which may affect both sales and margins; SBS' ability to design, test and introduce new products on a timely basis; and the other risk factors listed from time to time in SBS' Securities and Exchange Commission reports, including those listed under "Risk Factors" in SBS' Annual Report on Form 10-K for the year ended June 30, 2005 filed with the SEC. Brand or product names are registered trademarks or trademarks of their respective holders. Tables to Follow
SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
Thousands (except per share amounts)
(Unaudited)
Three months ended
September 30,
--------------------
2005 2004
----------- --------
Sales $ 34,361 34,884
Cost of sales:
Cost of products sold 19,716 19,040
Amortization of intangible assets 259 367
----------- -------
Total cost of sales 19,975 19,407
----------- -------
Gross profit 14,386 15,477
Selling, general and administrative
expense 8,661 8,023
Research and development expense 6,693 5,505
Amortization of intangible assets 78 71
----------- -------
Operating income (loss) (1,046) 1,878
----------- -------
Interest and other income, net 396 141
Foreign exchange losses (12) (102)
----------- -------
384 39
----------- -------
Income (loss) before income taxes (662) 1,917
Income tax expense (benefit) (232) 671
----------- -------
Net income (loss) $ (430) 1,246
=========== =======
Earnings per share data:
Net income (loss) per share $ (0.03) 0.08
=========== =======
Net income (loss) per share -
assuming dilution $ (0.03) 0.08
=========== =======
Weighted average shares used in net
income (loss) per share computations 15,646 15,504
=========== =======
Weighted average shares used in net
income (loss) per share - assuming
dilution computations 15,646 15,664
=========== =======
SBS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
Thousands (except share amounts)
(Unaudited)
September 30, June 30,
2005 2005
-------------- --------
Assets
------
Current assets:
Cash and cash equivalents $ 55,868 55,195
Receivables, net 27,358 27,535
Inventories 22,377 21,815
Deferred income taxes 1,355 1,361
Prepaid expenses 1,557 1,676
Other current assets 972 718
-------------- --------
Total current assets 109,487 108,300
-------------- --------
Property and equipment, net 7,418 7,635
Goodwill 17,134 16,995
Intangible assets, net 2,840 3,108
Deferred income taxes 15,429 15,529
Other assets 941 891
-------------- --------
Total assets 153,249 152,458
============== ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 5,490 4,509
Accrued representative commissions 716 819
Income taxes payable 2,166 3,051
Accrued compensation 5,093 4,851
Accrued severance and consolidation costs 304 424
Other current liabilities 3,464 2,785
-------------- --------
Total current liabilities 17,233 16,439
Other long-term liabilities 190 132
-------------- --------
Total liabilities 17,423 16,571
-------------- --------
Stockholders' equity:
Common stock, no par value; 200,000,000
shares authorized; 15,646,255 issued
and outstanding at September 30, 2005,
15,645,929 issued and outstanding at
June 30, 2005 98,941 98,369
Unearned compensation (525) (84)
Accumulated other comprehensive income 2,252 2,014
Retained earnings 35,158 35,588
-------------- --------
Total stockholders' equity 135,826 135,887
-------------- --------
Total liabilities and stockholders'
equity $ 153,249 152,458
============== ========
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