HEI, Inc. Announces Second Quarter 2013 Results

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HEI, Inc. Announces Second Quarter 2013 Results

MINNEAPOLIS--(BUSINESS WIRE)-- HEI, Inc. (Pink Sheets: HEII) (http://www.heii.com) today announced its financial results for the Second quarter 2013, which ended June 29, 2013.

Sales for the Second quarter of 2013 were $13,018,000, compared to $9,648,000 for the Second quarter of 2012. The Company generated a net income of $678,000 for the Second quarter of 2013, compared to a net loss of ($351,000) for the Second quarter of 2012. Sales for the first six months of 2013 were $25,534,000, compared to $18,713,000 for the first six months of 2012. The Company generated a year-to-date net income of $1,314,000 for the first six months 2013 compared to a net loss of ($508,000) for the first six months of 2012.

Sales were up 35% in the Second quarter 2013 over the Second quarter 2012 as a result of increased sales in the Company's Victoria division while the Boulder and Tempe division's sales were comparable to Second quarter 2012. Gross margins improved to 17% of sales on a consolidated basis in the Second quarter 2013 compared to 10% in the Second quarter 2012 as a result of efficiencies related to the increased sales volumes and continued cost reduction initiatives.

"Our Victoria operation continues to grow with the large contracts relating to the military radio systems and other customer demand. We are also seeing operational improvements in the Victoria and Tempe plants with better flow and improving yields. Our focus on all the aspects of the business, including the balance sheet, has resulted in improvements in inventory turns and reductions in long-term debt that have had positive impacts on cash flow. We are pleased with the production volume gains and profitability achieved and we continue to focus on our sales efforts to build the long-term business at all of our operating divisions. We continue to be guardedly optimistic that our participation in programs with government contractors will continue uninterrupted and will be part of our continued growth," remarked HEI CEO, Mark B. Thomas.

HEI, Inc. designs, develops and manufactures ultra-miniature microelectronics, high density interconnect flexible and rigid-flex substrates, electromechanical hardware, and embedded software with complex user interface solutions for customers engaged in the medical, hearing, telecommunications, military, aerospace, and industrial markets. HEI provides its customers with a single point of contact that can take an idea from inception to a fully functional and cost effective product utilizing innovative design solutions and by the application of state-of-the-art materials, processes and manufacturing capabilities.
Corporate & HEI -Victoria (Microelectronics Contract Manufacturing)

 1495 Steiger Lake Lane, Victoria, MN 55386

HEI - Boulder (Contract Design, Development, and Medical Box Build)

 4801 North 63rd Street, Boulder, CO 80301

HEI - Tempe (Quick Turn and Production High Density Interconnect Flex and Rigid-Flex)

 610 South Rockford Drive, Tempe, AZ 85281


Information in this news release, which is not historical, includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "intend," "estimate," "continue," and similar words. Statements contained in this press release, including the implementation of business strategies, growth of specific markets, improved results and estimated HEI revenue, cash flow and profits, are forward looking statements. All such forward-looking statements involve risks and uncertainties including, without limitation, adverse business and market conditions, the ability of HEI to secure and satisfy customers, the availability and cost of materials from HEI's suppliers, HEI's ability to satisfy financial or other obligations or covenants set forth in its financing agreements, adverse competitive developments, change in or cancellation of customer requirements, collection of receivables and outstanding debt, HEI's ability to control fixed and variable operating expenses, and other risks detailed in previous HEI SEC filings. Since HEI is no longer reporting to the SEC, readers are cautioned to weigh the potential for additional risk factors based on ongoing business activities and the current economic conditions. The information set forth herein should be read in light of such risks. We undertake no obligation to update these statements to reflect ensuing events or circumstances, or subsequent actual results.

June 29, 2013 December 29, 2012
(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable, net 5,621 4,538
Inventories, net 4,638 5,454
Deferred income taxes 804 804
Other current assets   277     712  
Total current assets   11,340     11,508  
Property and equipment:
Land 216 216
Building and improvements 4,337 4,337
Fixtures and equipment 29,447 28,554
Accumulated depreciation and amortization   (27,863 )   (27,005 )
Property and equipment, net 6,137 6,102
Security deposit 230 230
Other long-term assets   203     205  
Total assets $ 17,910   $ 18,045  
Current liabilities:
Accounts payable $ 3,267 $ 3,129
Accrued liabilities 1,283 1,019
Customer deposit liabilities 9 712
Current maturities of long-term liabilities   1,128     1,120  
Total current liabilities   5,687     5,980  
Long-term liabilities:
Deferred income taxes 804 804
Other long-term liabilities, less current maturities 2,299 2,465
Long-term debt, less current maturities   4,483     5,583  
Total long-term liabilities, less current maturities   7,586     8,852  
Total liabilities   13,273     14,832  
Commitments and contingencies
Shareholders' equity:
Undesignated stock - -
Convertible preferred stock, $.05 par 2 2
Common stock, $.05 par 513 513
Additional paid-in capital 28,751 28,641
Accumulated deficit  


)   (25,943 )
Total shareholders' equity   4,637     3,213  
Total liabilities and shareholders' equity $ 17,910   $ 18,045  
Three Months Ended Six Months Ended
June 29, 2013 June 30, 2012 June 29, 2013 June 30, 2012
(In thousands, except share and per share data)
Net sales $ 13,018 $ 9,648 $ 25,534 $ 18,713
Cost of sales   10,847     8,646     21,338     16,518  
Gross profit 2,171 1,002 4,196 2,195
17 % 10 % 16 % 12 %
Operating expenses:
Selling, general and administrative   1,163     1,269     2,298     2,542  
Operating income (loss) 1,008 (267 ) 1,898 (347 )
Interest expense, net (89 ) (85 ) (178 ) (176 )
Other income (expense), net   (222 )   -     (372 )   14  
Income (loss) before income taxes 697 (352 ) 1,347 (509 )

Income tax expense (benefit)

  19     (1 )   33     (1 )
Net income (loss) $ 678   $ (351 ) $ 1,314   $ (508 )

Income (loss) per common share:

Basic $ 0.07 $ (0.03 ) $ 0.13 $ (0.05 )
Diluted $ 0.06 $ (0.03 ) $ 0.12 $ (0.05 )

Weighted average common shares outstanding:

Basic 10,276,995 10,120,000 10,272,532 10,120,000
Diluted 10,847,798 10,120,000 10,843,335 10,120,000

HEI, Inc.
Mark B. Thomas, CEO, 952-443-2500

KEYWORDS:   United States  North America  Minnesota


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