API Technologies Reports Results for the Fiscal Second Quarter Ended May 31, 2014 - ABC6 - Providence, RI and New Bedford, MA News, Weather

API Technologies Reports Results for the Fiscal Second Quarter Ended May 31, 2014

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SOURCE API Technologies Corp.

ORLANDO, Fla., July 9, 2014 /PRNewswire/ -- API Technologies Corp. (NASDAQ: ATNY) ("API" or the "Company"), a leading provider of high performance RF/microwave, power, and security solutions for critical and high-reliability applications, today announced results for the fiscal second quarter ended May 31, 2014.

API Technologies Corp. Logo

Results for the Quarter Ended May 31, 2014

API Technologies reported fiscal second quarter revenue of $53.2 million.

For the fiscal second quarter of 2014, GAAP gross margin as a percentage of sales was 19.6%; non-GAAP gross margin was 22.2%.

API Technologies posted a net loss of $15.0 million for the fiscal second quarter, primarily due to the write-off of note discounts and deferred financing charges from debt extinguishment, which were $10.2 million. Adjusted EBITDA for the fiscal second quarter was $4.3 million.  Restructuring costs recorded in the three months ended May 31, 2014 were approximately $1.0 million.

Results for the Six Months Ended May 31, 2014

API Technologies reported revenue of $112.1 million for the six months ended May 31, 2014. GAAP gross margin was 21.2% for the six-month period ended May 31, 2014. Non-GAAP gross margin was 23.0% for the same period.

The Company posted a net loss of $17.1 million for the six months ended May 31, 2014, primarily due to the amortization of note discounts and deferred financing charges, which were $10.9 million. Adjusted EBITDA for the six months ended May 31, 2014 was $10.8 million. Restructuring costs recorded in the six months ended May 31, 2014 were approximately $1.4 million.

"While our EMS business was weaker than expected in Q2, we enter Q3 with a company-wide, fully funded $123.7 million backlog and positive book-to-bill, highlighted by strong demand for our Systems, Subsystems, and Components (SSC) segment products. The strength of our differentiated technology portfolio continues to generate key customer design-ins that will drive shareholder return in the quarters ahead," said Bel Lazar, president and chief executive officer of API Technologies.

Conference Call

API Technologies will host a conference call to review the Company's fiscal second quarter results tomorrow, July 10, at 10:00 a.m. Eastern Time. Bel Lazar, President and Chief Executive Officer, and Claudio Mannarino, Senior Vice President and Chief Financial Officer, will host the call.

The call will be available by dialing 1-877-317-6789 or 1-412-317-6789 and accessible by webcast at http://www.apitech.com/investor-relations. Recorded replays of the webcast will be available on the Company's Investor Relations App, and for 30 days on the Company's website, and by telephone at 1-877-344-7529 or 1-412-317-0088, replay passcode #10048296, beginning noon Eastern Time on July 10, 2014.

The API Technologies Investor Relations App is available for iPhone® and iPad® via the Apple iTunes store and for Android™ devices via Google Play. For more information, visit http://www.apitech.com/investor-relations.

About API Technologies Corp.

API Technologies (NASDAQ: ATNY) is an innovative designer and manufacturer of high performance systems, subsystems, modules, and components for technically demanding RF, microwave, millimeter wave, electromagnetic, power, and security applications.  A high-reliability technology pioneer with over 70 years of heritage, API Technologies products are used by global defense, industrial, and commercial customers  in the areas of commercial aerospace, wireless communications, medical, oil and gas, electronic warfare, unmanned systems, C4ISR, missile defense, harsh environments, satellites, and space. Learn more about API Technologies and our products at www.apitech.com.

Non-GAAP Financial Information

In this press release, API has provided the non-GAAP financial measures for Adjusted EBITDA from continuing operations and non-GAAP gross margin. Non-GAAP gross margin excludes restructuring charges and certain other adjustments described in the reconciliation table and Non-GAAP Adjusted EBITDA from continuing operations (Earnings from continuing operations before interest, taxes, depreciation and amortization) excludes restructuring charges, acquisition and divestiture-related charges, foreign exchange losses, stock-based compensation expenses, amortization of note discounts and deferred financing costs, and certain other adjustments described in the reconciliation table. Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company's financial performance by excluding from operating results the impact of items that management believes do not reflect the Company's core operating performance. These are not recognized measures under US GAAP, do not have a standardized meaning, and are unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that these non-GAAP measures should not be construed as an alternative to net earnings or loss or gross margin determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. We expect our financial statements to continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.

Safe Harbor for Forward-Looking Statements

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include but are not limited to, general economic and business conditions, including without limitation, reductions in government defense spending; government regulations; our ability to integrate and consolidate our operations; our ability to expand our operations in both new and existing markets; the ability of our review of strategic alternatives to maximize stockholder value; and the effect of growth on our infrastructure. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the above factors located in our Annual Report on Form 10-K under Part I, Item 1A "Risk Factors" as well as those additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. All information in this release is as of the date hereof. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise.

Contact:

Claudio Mannarino
Senior Vice President and Chief Financial Officer
+1 855-294-3800
investors@apitech.com

Tara Flynn Condon
Vice President, Corporate Development & Marketing
+1 908-546-3903
media@apitech.com

 

 


API Technologies Corp.
Financial Results
For the Three and Six Months Ended May 31, 2014 and 2013

 

Consolidated Statements of Operations (unaudited)
in thousands USD








For the Three
Months Ended
May 31,
2014


For the Three
Months Ended
May 31,
2013


For the Six
Months Ended
May 31,
2014


For the Six
Months Ended
May 31,
2013

Revenue, net

$             53,169


$             64,229


$          112,086


$          122,533

Cost of revenues








Cost of revenues

42,478


49,549


87,751


95,697

Restructuring charges

281


63


580


166









Total cost of revenues

42,759


49,612


88,331


95,863









Gross profit

10,410


14,617


23,755


26,670









Operating expenses








General and administrative

5,820


6,168


11,539


12,804

Selling expenses

3,536


4,074


7,294


7,758

Research and development

2,161


2,337


4,234


4,641

Business acquisition and related charges

75


620


185


1,088

Restructuring charges

748


322


866


563










12,340


13,521


24,118


26,854









Operating income (loss)

(1,930)


1,096


(363)


(184 )

Other expenses (income), net








Interest expense, net

2,887


4,478


5,297


8,822

Amortization of note discounts and deferred 
   financing costs

10,228


521


10,893


11,275

Other expenses (income), net

(223)


421


(113)


(376 )










12,892


5,420


16,077


19,721









Loss from continuing operations before income
   taxes

(14,822 )


(4,324)


(16,440 )


(19,905 )

Expense (benefit) for income taxes

162


(350)


668


(172 )









Loss from continuing operations, net of income
   taxes

(14,984)


(3,974)


(17,108 )


(19,733 )

Income from discontinued operations, net of
   income taxes

-


11,446


-


12,779









Net income (loss)

$           (14,894)


$               7,472


$          (17,108)


$              (6,954 )

Accretion on preferred stock

-


(290)


(393)


(290)









Net income (loss) attributable to common shareholders

$            (14,984)


$              7,182


$         (17,501)


$              (7,244 )










Loss per share from continuing operations-Basic
and diluted

$               (0.27)


$               (0.07)


$                (0.32 )


$                (0.36 )

Income per share from discontinued operations-
   Basic and diluted

$                 0.00


$                 0.20


$                   0.00


$                  0.23









Net income (loss) per share-Basic and diluted

$               (0.27)


$                 0.13


$                (0.32 )


$                (0.13 )









Weighted average shares outstanding








Basic

55,446,463


55,402,595


55,463,440


55,386,031

Diluted

55,446,463


55,402,595


55,463,440


55,386,031

 


Consolidated Balance Sheets (unaudited)
in thousands USD




May 31, 
2014


November 30, 
2013


Assets





Current





Cash and cash equivalents     


$

10,632



$

6,351


Restricted cash         



-




1,500


Accounts receivable, net        



36,779




39,751


Inventories, net        



52,726




58,218


Deferred income taxes             



2,303




2,426


Prepaid expenses and other current assets          



1,426




2,445





103,866




110,691


Fixed assets, net



31,689




35,231


Fixed assets held for sale



150




150


Goodwill



116,770




116,770


Intangible assets, net



34,169




38,780


Other non-current assets



1,714




2,956


 Total assets


$

288,358



$

304,578











Liabilities, Redeemable Preferred Stock and Shareholders' Equity









Current









Accounts payable and accrued expenses            


$

23,806



$

32,217


Deferred revenue      



3,723




3,519


Current portion of long-term debt         



8,451




8,155





35,980




43,891


Deferred income taxes



5,945




5,517


Other long-term liabilities



1,133




1,135


Long-term debt, net of current portion and discount



123,298




96,606


Deferred gain



8,085




-





174,441




147,149











Redeemable Preferred Stock



-




26,326











Shareholders' equity









Common stock          



55




55


Special voting stock



-




-


Additional paid-in capital       



327,794




327,901


Common stock subscribed but not issued           



2,373




2,373


Accumulated deficit 



(218,299)




(200,798)


           Accumulated other comprehensive income         



1,994




1,572





113,917




131,103


Total Liabilities, Redeemable Preferred Stock and Shareholders' Equity


$

288,358



$

304,578





















 

Consolidated Adjusted EBITDA
in thousands USD


The following table reconciles three and six months GAAP income (loss) from operations to non-GAAP Adjusted EBITDA.






















Three months ended
May 31, 2014




Six Months ended
May 31, 2014



Loss from operations


$

(14,984)



$

(17,108)


Adjustments









    Interest expense, net      



2,887




5,297


Amortization of note discounts and deferred financing costs



10,228




10,893


    Depreciation and amortization



4,111




8,242


    Income and franchise taxes           



162




668


    Restructuring charges    



1,029




1,446


    Acquisition related charges



75




185


    Other adjustments (A)                                               



775




1,154






























Total Adjusted EBITDA


$

4,283



$

10,777


 

(A) Other adjustments primarily include inventory provisions ($824 – 3 months; $1,168 – 6 months), stock based compensation ($(21) – 3 months; $(69) – 6 months), franchise taxes ($44 – 3 months; $85 – 6 months), financing & other adjustments ($156 – 3 months; $283 – 6 months), lease payments for the State College, Pennsylvania facility ($(322) – 3 months; $(539) – 6 months) and foreign exchange loss ($94 – 3 months; $226 – 6 months).

 

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
$ amounts in thousands USD



Three Months Ended

Six Months Ended


May 31, 2014

May 31, 2014




                    Revenue

$      53,169

$       112,086

                    Gross Profit

10,410

23,755

                    GAAP Gross Margin %

19.6%

21.2%

                    Restructuring and other adjustments (A)

1,376

2,044

                    Adjusted Gross profit

11,786

25,799

                    Adjusted Gross margin %

22.2%

23.0%

 

(A) Other adjustments primarily include inventory provisions.

 

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