SL Industries Announces 2013 First Quarter Results

SL Industries Announces 2013 First Quarter Results

MT. LAUREL, N.J.--(BUSINESS WIRE)-- SL INDUSTRIES, INC. (NYSE MKT: SLI); ("SLI" or the "Company") operating results for the first quarter ended March 31, 2013 are summarized in the following paragraphs. Please read the Company's Form 10-Q, which can be found at www.slindustries.com, for a full discussion of the operating results.


First Quarter Results

Net sales for the quarter ended March 31, 2013, were $49.1 million, compared with net sales for the quarter ended March 31, 2012 of $49.3 million.

Income from continuing operations for the quarter ended March 31, 2013 was $3.0 million, or $0.71 per diluted share, compared to income from continuing operations of $1.4 million, or $0.31 per diluted share, for the quarter ended March 31, 2012.

Net income for the quarter ended March 31, 2013 was $2.8 million, or $0.66 per diluted share, compared to net income of $1.3 million, or $0.27 per diluted share, for the quarter ended March 31, 2012. Net income for the quarter ended March 31, 2013 included a net loss from discontinued operations of $0.2 million, or $0.05 per diluted share, compared to a net loss from discontinued operations of $0.2 million, or $0.04 per diluted share, for the first quarter of 2012. The loss from discontinued operations in 2013 and 2012 primarily relates to environmental remediation costs, consulting fees and legal expenses associated with the past operations of the Company's five environmental sites.

The Company generated Adjusted EBITDA from continuing operations of $5.4 million for the first quarter of 2013, as compared to $3.7 million for the same period in 2012, an increase of $1.7 million, or 46%. See "Note Regarding Use of Non-GAAP Financial Measurements" below for the definition of Adjusted EBITDA.

Updated Guidance 2013

The Company anticipates, based on current information, full-year 2013 net sales, EBITDA and Adjusted EBITDA from continuing operations in the ranges of $186 million to $227 million, $17 million to $21 million and $19 million to $23 million, respectively. The Company's outlook for the second quarter of 2013 is for net sales between $49 million and $54 million, EBITDA and Adjusted EBITDA from continuing operations between $3.8 million and $4.2 million and $4.1 million to $4.5 million, respectively.

Financial Summary

SUMMARY CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

2013

2012

(In thousands)

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

3,391

$

3,196

Receivables, net

30,846

30,306

Inventories, net

23,046

22,102

Other current assets

5,963

5,513

Total current assets

63,246

61,117

Property, plant and equipment, net

9,634

9,593

Intangible assets, net

25,292

25,405

Other assets and deferred charges, net

10,938

11,022

Total assets

$

109,110

$

107,137

LIABILITIES & SHAREHOLDERS' EQUITY

Current liabilities

$

33,530

$

34,808

Long-term liabilities

22,184

21,897

Shareholders' equity

53,396

50,432

Total liabilities and shareholders' equity

$

109,110

$

107,137

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

Three Months Ended

March 31,

2013

2012

(In thousands, except per share amounts)

Net sales

$

49,095

$

49,340

Cost and expenses:

Cost of products sold

32,199

33,771

Engineering and product development

3,503

3,021

Selling, general and administrative

8,807

9,511

Depreciation and amortization

600

665

Total cost and expenses

45,109

46,968

Income from operations

3,986

2,372

Other income (expense):

Amortization of deferred financing costs

(19

)

(33

)

Interest income

1

1

Interest expense

(35

)

(22

)

Other gain (loss), net

(26

)

(8

)

Income from continuing operations before income taxes

3,907

2,310

Income tax provision

923

866

Income from continuing operations

2,984

1,444

(Loss) from discontinued operations, net of tax

(218

)

(194

)

Net income

$

2,766

$

1,250

Basic net income (loss) per common share

Income from continuing operations

$

0.72

$

0.31

(Loss) from discontinued operations, net of tax

(0.05

)

(0.04

)

Net income

$

0.67

$

0.27

Diluted net income (loss) per common share

Income from continuing operations

$

0.71

$

0.31

(Loss) from discontinued operations, net of tax

(0.05

)

(0.04

)

Net income

$

0.66

$

0.27

Shares used in computing basic net income (loss)

per common share

4,139

4,559

Shares used in computing diluted net income (loss)

per common share

4,172

4,580

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended

March 31,

2013

2012

(In thousands)

Net income

$

2,766

$

1,250

Other comprehensive income, net of tax:

Foreign currency translation

76

19

Comprehensive income

$

2,842

$

1,269

Segment Results

(Unaudited)

Three Months Ended

March 31,

2013

2012

(In thousands)

Net sales

SLPE

$

17,594

$

18,343

High Power Group

17,093

15,575

SL-MTI

9,094

9,599

RFL

5,314

5,823

Net sales

49,095

49,340

Income from operations

SLPE

1,050

(211

)

High Power Group

2,114

1,365

SL-MTI

1,313

1,703

RFL

936

1,058

Unallocated Corporate Expenses

(1,427

)

(1,543

)

Income from operations

3,986

2,372

Other income (expense):

Amortization of deferred financing costs

(19

)

(33

)

Interest income

1

1

Interest expense

(35

)

(22

)

Other gain (loss), net

(26

)

(8

)

Income from continuing operations before income taxes

$

3,907

$

2,310

Supplemental Non-GAAP Disclosures

EBITDA and Adjusted EBITDA

(Unaudited)

Three Months Ended

March 31,

2013

2012

(In thousands)

Income from continuing operations

$

2,984

$

1,444

Add (deduct):

Interest income

(1

)

(1

)

Interest expense

35

22

Income tax provision

923

866

Depreciation and amortization

600

665

Amortization of deferred financing costs

19

33

EBITDA

4,560

3,029

China work stoppage costs

734

-

Non-cash stock-based compensation expense

122

149

Unrealized loss on foreign exchange contracts

26

8

China investigation costs

-

360

Direct acquisition costs

-

200

Adjusted EBITDA

$

5,442

$

3,746

Note Regarding Use of Non-GAAP Financial Measurements

The financial data contained in this press release includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission ("SEC"), including "EBITDA" and "Adjusted EBITDA". The Company is presenting EBITDA and Adjusted EBITDA because it believes that it provides useful information to investors about SLI, its business and its financial condition. The Company defines EBITDA as net income from continuing operations before the effects of interest income, interest expense, income taxes, depreciation and amortization, and the amortization of deferred financing costs. The Company defines Adjusted EBITDA as EBITDA before the effects of certain items, including China work stoppage costs, non-cash stock-based compensation expense, unrealized loss on foreign exchange contracts, China investigation costs, and direct acquisition costs. The Company believes EBITDA and Adjusted EBITDA are useful to investors because they are key measures used by the Company's Board of Directors and management to evaluate its business, including internal management reporting, budgeting and forecasting processes, in comparing operating results across the business, as an internal profitability measure, as a component in evaluating the ability and the desirability of making capital expenditures and significant acquisitions, and as an element in determining executive compensation.

However, EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles in the United States of America ("GAAP"), and the items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. Therefore, EBITDA and Adjusted EBITDA should not be considered a substitute for net income (loss) or cash flows from operating, investing, or financing activities. Because EBITDA and Adjusted EBITDA are calculated before recurring cash items, including interest income, interest expense, and income taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a measure of discretionary cash available to invest in the growth of the business. There are a number of material limitations to the use of EBITDA and Adjusted EBITDA as an analytical tool, including the following:

  • EBITDA and Adjusted EBITDA do not reflect the Company's interest income and interest expense;

  • EBITDA and Adjusted EBITDA do not reflect the Company's income tax expense or the cash requirements to pay its income taxes;

  • Although depreciation and amortization are non-cash expenses in the period recorded, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacement;

  • Adjusted EBITDA does not include work stoppage costs;

  • EBITDA and Adjusted EBITDA do not include discontinued operations;

  • Adjusted EBITDA does not include non-cash charges for stock-based compensation;

  • Adjusted EBITDA does not include investigation and acquisition costs;

  • Adjusted EBITDA does not include loss, realized or unrealized on foreign exchange contracts.

The Company compensates for these limitations by relying primarily on its GAAP financial measures and by using EBITDA and Adjusted EBITDA only as supplemental information. The Company believes that consideration of EBITDA and Adjusted EBITDA, together with a careful review of its GAAP financial measures, is the most informed method of analyzing SLI.

The Company reconciles EBITDA and Adjusted EBITDA to net income from continuing operations, and that reconciliation is set forth above. Because EBITDA and Adjusted EBITDA are not a measurement determined in accordance with GAAP and is susceptible to varying calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Net sales and expenses are measured in accordance with the policies and procedures described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

About SL Industries, Inc.

SL Industries, Inc., designs, manufactures and markets power electronics, motion control, power protection, power quality electromagnetic and specialized communication equipment that is used in a variety of medical, commercial and military aerospace, solar, computer, datacom, industrial, telecom, transportation, utility, rail and highway equipment applications. For more information about SL Industries, Inc. and its products, please visit the Company's web site at www.slindustries.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect SLI's current expectations and projections about its future results, performance, prospects, and opportunities. SLI has tried to identify these forward-looking statements by using words such as "may," "should," "expect," "hope," "anticipate," "believe," "intend," "plan," "estimate," and similar expressions. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause its actual results, performance, prospects, or opportunities in 2013 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These factors include, without limitation: the effectiveness of the cost reduction initiatives undertaken by the Company, changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, constraints on supplies of critical components, excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses 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, and general domestic and international economic conditions. Although SLI believes that the expectations reflected in these forward-looking statements are reasonable and achievable, such statements involve significant risks and uncertainties, and no ass