API Technologies Reports Results for the Fiscal First Quarter Ended February 28, 2013

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API Technologies Reports Results for the Fiscal First Quarter Ended February 28, 2013

ORLANDO, Fla.--(BUSINESS WIRE)-- API Technologies Corp. (NAS: ATNY) ("API", "API Technologies", or the "Company"), a trusted provider of RF/microwave, microelectronics, and security solutions for critical and high-reliability applications, today announced results for the fiscal first quarter ended February 28, 2013.

  • Revenue of $67.2 million, up 7.0% sequentially over prior fiscal quarter
  • GAAP Gross Margin of 22.4%
  • Quarterly gross margin improvement across all three business segments

"Our quarter-over-quarter revenue growth and the gross margin improvement across all of our segments is a reflection of our differentiated product portfolio and the team's demonstrated commitment to operational efficiency," said Bel Lazar, President and Chief Executive Officer of API Technologies Corp. "The development and launch of new products has positively contributed to our strong backlog and sales funnel, which positions us well for top line growth in fiscal year 2013."

Results for the Quarter Ended February 28, 2013

API Technologies reported revenue of $67.2 million for the quarter ended February 28, 2013, compared to $62.7 million in the quarter ended November 30, 2012 and $70.7 million in the quarter ended February 29, 2012.

Gross profit, as a percent of sales, was 22.4% for the quarter ended February 28, 2013, versus 20.2% for the quarter ended November 30, 2012, and 24.9% for quarter ended February 29, 2012. Excluding restructuring costs, gross margin was 22.5% in the quarter ended February 28, 2013, compared to 21.4% in the quarter ended November 30, 2012, versus 25.4% for the quarter ended February 29, 2012. Adjusted EBITDA for the quarter ended February 28, 2013 was $7.6 million (11.4% margin), versus $8.3 million (13.2% margin) for the quarter ended November 30, 2012, compared to $10.8 million (15.3% margin) for the quarter ended February 29, 2012.

API Technologies posted a net loss of $14.4 million for the quarter ended February 28, 2013, compared to $12.3 million net loss for the quarter ended November 30, 2012, versus net income of $0.8 million for the quarter ended February 29, 2012. Restructuring costs recorded in the quarter ended February 28, 2013 were approximately $0.3 million, compared to $3.3 million in the quarter ended November 30, 2012, versus $0.6 million in the comparable period in 2012. At the end of the quarter, the Company had $10.1 million in cash and cash equivalents and $186.0 million in debt obligations, net of discounts.

Conference Call

API Technologies will host a conference call to review the Company's fiscal first quarter results tomorrow, April 10, at 10:00 a.m. Eastern Time. Bel Lazar, President and Chief Executive Officer, and Phil Rehkemper, Executive Vice President and Chief Financial Officer, will host the call.

The call will be available by dialing 866-605-3852 or 412-317-6789 and will be accessible by webcast at www.apitech.com. Recorded replays of the webcast will be available for 30 days on the Company's website and by telephone for 30 days at 877-344-7529, replay passcode #10026550, beginning 2:00 p.m. Eastern Time on April 10, 2013.

About API Technologies Corp.

API Technologies designs, develops and manufactures electronic systems, subsystems, RF and secure solutions for technically demanding defense, aerospace and commercial applications. API Technologies' customers include many leading Fortune 500 companies. API Technologies trades on the NASDAQ under the symbol ATNY. For further information, please visit the Company website at www.apitech.com.

Non-GAAP Financial Information

In this press release, API has provided a non-GAAP financial measure for Gross Margin and Adjusted EBITDA. Non-GAAP Gross Margin excludes restructuring charges and Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization), excludes discontinued operations, restructuring charges, acquisition and divestiture related charges, a C-MAC pro forma adjustments, foreign exchange gains and losses, stock-based compensation expenses, amortization of note discounts and deferred financing costs, and certain other adjustments. Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. 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, 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.

    
API Technologies Corp.
Financial Results
For the Three and Twelve Months Ended February 28, 2013
 

Consolidated Statements of Operations and Comprehensive Income (Loss)(unaudited)

in Thousands USD (except per share data)

 

For the Three
Months Ended
Feb. 28,
2013
For the Three
Months Ended
Feb. 29,
2012
Revenue, net

$

67,158

$70,717
Cost of revenues
Cost of revenues52,03152,771
Restructuring charges 103  305 
 
Total cost of revenues 52,134  53,076 
 
Gross profit 15,024  17,641 
 
Operating expenses
General and administrative6,9926,500
Selling expenses4,0193,766
Research and development2,4282,488
Business acquisition and related charges468290
Restructuring charges 242  339 
 
 14,149  13,383 
 
Operating income8754,258
Other expenses (income), net
Interest expense, net4,3433,370
Amortization of note discounts and deferred financing costs10,753595
Other expense (income), net (798) 26 
 
 14,298  3,991 
 
Income (loss) from continuing operations before income taxes(13,423)267
Expense (benefit) for income taxes 1,001  (506)
 
Net income (loss)$(14,424)$773 
 
Unrealized foreign currency translation adjustment (1,418) 62 
 
Other comprehensive income (loss) (1,418) 62 
 
Comprehensive income (loss)$(15,842)$835 
 
Net income (loss) per share—Basic and diluted

$

(0.26

)

 

$0.01 
 
Weighted average shares outstanding
Basic55,369,10055,192,697
Diluted55,369,10055,395,557
 
    
Consolidated Balance Sheets (unaudited)
in thousands USD
 
February 28,

2013

November 30,

2012

Assets
Current
Cash and cash equivalents$10,064$20,535
Restricted cash

700

Accounts receivable49,20245,229
Inventories, net71,01267,962
Deferred income taxes1,0391,101
Prepaid expenses and other current assets 2,737  2,644 
134,054138,171
Fixed assets, net39,64741,792
Fixed assets held for sale900900
Goodwill156,002156,002
Intangible assets, net47,64650,090
Other non-current assets 3,451  5,760 
Total assets$381,700 $392,715 
 
Liabilities, Redeemable Preferred Stock and Shareholders' Equity
Current
Accounts payable and accrued expenses$41,421$41,487
Deferred revenue492385
Current portion of long-term debt 9,585  2,328 
51,49844,200
Deferred income taxes4,0743,410
Other long-term liabilities9981,048
Long-term debt, net of current portion and discount 176,375  179,503 
 232,945  228,161 
 
Redeemable Preferred Stock25,23425,581
 
Shareholders' equity
Common stock5555
Special voting stock
Additional paid-in capital327,363326,973
Common stock subscribed but not issued2,3732,373
Accumulated deficit(206,937

)

(192,513)
Accumulated other comprehensive income 667  2,085 
 123,521  138,973 
Total Liabilities, Redeemable Preferred Stock and Shareholders' Equity$381,700 $392,715 
 
    
Consolidated Adjusted EBITDA
in thousands USD
 

The following table reconciles three months GAAP net income to non-GAAP Adjusted EBITDA from continuing operations.

 
Three Months Ended
February 28, 2013February 29, 2012

Net Income (loss)

$(14,424)$773
Adjustments
Interest expense, net4,3433,370
Amortization of note discounts and deferred financing costs10,753595
Depreciation and amortization4,6224,196
Income taxes1,001(506)
Stock based compensation390858
Restructuring345644
Acquisition related charges468290
Other adjustments (A)131673
Foreign exchange gain   (65)
Adjusted EBITDA$7,629 $10,828 
 

(A) Charges in 2013 were related to inventory obsolescence provisions, partially offset by the reduction of the contingency accrual. 2012 primarily related to non-cash inventory provisions and a loss on the sale of real estate held for sale.

        
Additional Adjusted EBITDA Reconciliations
in thousands USD
 

The following table reconciles three months GAAP net loss to non-GAAP Adjusted EBITDA for our
reportable segments for the quarter ended February 28, 2013.

 

 

Q1 2013

SSC SSIA 

Sub-total
SSC &
SSIA

 EMS Corporate Total
Q1Q1Q1Q1Q1Q1
Revenue$ Read Full Story

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