ANN ARBOR, Mich., May 9, 2016 /PRNewswire/ -- Arotech
Corporation (NasdaqGM: ARTX) today announced financial results
for its first quarter ended March 31,
2016.
First Quarter 2016 Financial and Business Highlights:
- Total revenues of $25.4 million
versus $24.2 million for the same
time last year and $27.4 million from
the prior quarter
- Adjusted EPS of $0.03 versus
$0.03 for the same time last year and
$0.06 from the prior quarter
- Adjusted EBITDA of $1.5 million
compared to $1.5 million for the same
time last year and $2.3 million from
the prior quarter
- New orders totaling $20.1
million
- Backlog of orders as of March 31,
2016 totaled approximately $57.7
million versus $63.4 million
for the same time last year and $63.0
million from the prior quarter
- On May 9, 2016, the Board of
Directors elected Lead Independent Director Jon B. Kutler as the new Chairman of the Board
of Directors
- Subsequent to quarter end, awarded a contract from the U.S.
Department of State for MILO Range Training Systems valued at up to
$40 million
- Subsequent to quarter end, awarded a contract from the U.S.
Marine Corps valued at $2.6 million
for the design, development and delivery of four MEHPS systems
"Our first quarter financial and operating results highlight the
progress we are making and the benefits of the cost restructuring
and production enhancements we implemented in 2015," commented
Steven Esses, Arotech's President
and CEO. "The defense industry continues to advance initiatives
designed to increase energy efficiency and enable military
organizations to perform missions, while acknowledging energy as a
potential vulnerability. We believe we are well positioned to
capitalize on this trend and are winning and effectively executing
on development contracts in our Power Systems Division, placing us
in a strong competitive position to win larger, higher margin,
contracts and follow-on production orders from key customers."
"On the Simulation and Training side of our business we continue
to execute according to plan, generating strong margins that are
typical with this business," Esses added. "Subsequent to the end of
the quarter we received an Indefinite Delivery Indefinite Quantity
(IDIQ) award with a potential value of up to $40M for our MILO Range Training Systems'
simulator products. This highly competitive procurement further
validates our position as a global leader in the international law
enforcement judgmental skills simulator market, and provides a
streamlined acquisition process to deliver this important training
capability to the various organizations supported by the U.S.
Department of State."
Esses concluded, "Market demand on all sides of our business
remains robust, and we are executing both from an operational
perspective and competitively in the marketplace, which we believe
will lead to growth and increased profitability over the
long-term."
First Quarter Financial Summary
Revenues for the first quarter were $25.4
million, compared to $24.2
million for the comparable period in 2015. The
year-over-year increase was driven by revenue growth in our Power
Systems Division.
Gross profit for the first quarter was $7.7 million, or 30.3% of revenues, compared to
$6.9 million, or 28.5% of revenues,
for the prior year period.
Operating income for the first quarter of 2016 was a loss of
($119,000) compared to operating
income of $68,000 for the
corresponding period in 2015. Operating expenses were $25.5 million in the first quarter of 2016
compared to $24.2 million in the year
ago quarter.
Total other income was a loss of ($312,000) for the first quarter of 2016 and for
the corresponding period in 2015.
The Company's net income for the first quarter was a loss of
($644,000), or ($0.03) per basic and diluted share, compared to
a loss of ($483,000), or ($0.02) per basic and diluted share, for the
corresponding period last year.
Adjusted Earnings per Share (Adjusted EPS) was $0.03 for the first quarter of 2016 and for the
corresponding period in 2015.
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA) was approximately $1.5 million for the first quarter of 2016 and
for the corresponding period of 2015.
Arotech believes that information concerning Adjusted EBITDA and
Adjusted EPS enhances overall understanding of its current
financial performance. Arotech computes Adjusted EBITDA and
Adjusted EPS, which are non-GAAP financial measures, as reflected
in the tables below.
Balance Sheet Metrics
As of March 31, 2016, the Company
had $11.5 million in cash and cash
equivalents, as compared to December 31,
2015, when the Company had $10.7
million in cash and cash equivalents.
As of December 31, 2015, Arotech
has net operating loss carryforwards for U.S. federal income tax
purposes of $40.7 million, which are
available to offset future taxable income, if any, expiring in 2021
through 2032. Utilization of U.S. net operating losses is subject
to annual limitations due to provisions of the Internal Revenue
Code of 1986 and similar state provisions. The Company accrued
$151,000 in non-cash tax expenses in
the first quarter of 2016, reflecting the uncertainty of the
deductibility of intangible expenses for federal income tax
purposes.
As of March 31, 2016, the Company
had total debt of $15.3 million,
consisting of $5.0 million in
short-term bank debt under its credit facility and $10.3 million in long-term loans. This is in
comparison to December 31, 2015, when
the Company had total debt of $20.3
million, consisting of $4.1
million in short-term bank debt and $16.2 million in long-term loans.
The Company also had $10.1 million
in available, unused bank lines of credit with its primary bank as
of March 31, 2016, under a
$15.0 million credit facility through
our main bank.
The Company had a current ratio (current assets/current
liabilities) of 2.1, compared with the December 31, 2015 current ratio of 1.9.
2016 Guidance
The company is affirming its 2016 outlook for total revenue of
$100 to $112 million, with adjusted
earnings per share (Adjusted EPS) of $0.18
to $0.23, and adjusted EBITDA of $7
million to $9 million. This outlook includes only organic
contribution, and does not take any potential acquisition activity
into account. Adjusted EPS is based on 26.5 million current shares
outstanding. The financial guidance provided is as of today and
Arotech undertakes no obligation to update its estimates in the
future.
Conference Call
The Company will host a conference call tomorrow, Tuesday, May 10, 2016 at 9:00am Eastern Time, to review the Company's
financial results and business outlook.
To participate, please call one of the following telephone
numbers. Please dial in at least 10 minutes before the start of the
call:
- US: 1-888-471-3843
- International: + 1-719-325-2454
- Conference ID: 9168464
The conference call will also be broadcasted live as a
listen-only webcast on the investor relations section of Arotech's
website at http://www.arotech.com/.
The online webcast will be archived on the Arotech's website for
at least 90 days and a telephonic playback of the conference call
will also be available by calling 1-877-870-5176 within the U.S.
and 1-858-384-5517 internationally. The telephonic playback will be
available beginning at 12:00pm Eastern
time on Tuesday, May 10, 2016,
and continue through 11:59 pm Eastern
time on Tuesday, May 17, 2016.
The replay passcode is 9168464.
About Arotech Corporation
Arotech Corporation is a leading provider of quality defense and
security products for the military, law enforcement and homeland
security markets, including multimedia interactive
simulators/trainers and advanced battery solutions, innovative
energy management and power distribution technologies, and zinc-air
and lithium batteries and chargers. Arotech operates two major
business divisions: Training and Simulation, and Power Systems.
Arotech is incorporated in Delaware, with corporate offices in
Ann Arbor, Michigan, and research,
development and production subsidiaries in Michigan, South
Carolina, and Israel. For
more information on Arotech, please visit Arotech's website at
www.arotech.com.
Investor Relations Contacts:
Brett Maas / Rob Fink
Hayden IR
(646) 536.7331 / (646) 415.8972
ARTX@haydenir.com
Except for the historical information herein, the matters
discussed in this news release include forward-looking statements,
as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements reflect management's current knowledge,
assumptions, judgment and expectations regarding future performance
or events. Although management believes that the expectations
reflected in such statements are reasonable, readers are cautioned
not to place undue reliance on these forward-looking statements, as
they are subject to various risks and uncertainties that may cause
actual results to vary materially. These risks and uncertainties
include, but are not limited to, risks relating to: product and
technology development; the uncertainty of the market for Arotech's
products; changing economic conditions; delay, cancellation or
non-renewal, in whole or in part, of contracts or of purchase
orders (including as a result of budgetary cuts resulting from
automatic sequestration under the Budget Control Act of 2011); and
other risk factors detailed in Arotech's most recent Annual Report
on Form 10-K for the fiscal year ended December 31, 2015, and other filings with the
Securities and Exchange Commission. Arotech assumes no obligation
to update the information in this release. Reference to the
Company's website above does not constitute incorporation of any of
the information thereon into this press release.
CONDENSED
CONSOLIDATED BALANCE SHEET SUMMARY (UNAUDITED)
(U.S.
Dollars)
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
11,480,691
|
|
$
|
10,698,405
|
Trade
receivables
|
|
14,957,216
|
|
|
17,401,479
|
Unbilled
receivables
|
|
9,789,431
|
|
|
12,132,484
|
Other accounts
receivable and prepaid
|
|
1,291,747
|
|
|
1,007,358
|
Inventories
|
|
9,907,976
|
|
|
9,607,836
|
TOTAL CURRENT
ASSETS
|
|
47,427,061
|
|
|
50,847,562
|
LONG TERM
ASSETS:
|
|
|
|
|
|
Property and
equipment, net
|
|
6,483,985
|
|
|
6,440,270
|
Other long term
assets
|
|
5,779,622
|
|
|
5,407,427
|
Intangible assets,
net
|
|
8,594,678
|
|
|
9,334,730
|
Goodwill
|
|
45,614,293
|
|
|
45,463,027
|
TOTAL LONG TERM
ASSETS
|
|
66,472,578
|
|
|
66,645,454
|
TOTAL
ASSETS
|
$
|
113,899,639
|
|
$
|
117,493,016
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Trade
payables
|
$
|
5,230,720
|
|
$
|
5,914,042
|
Other accounts
payable and accrued expenses
|
|
5,320,801
|
|
|
5,560,040
|
Current portion of
long term debt
|
|
1,067,523
|
|
|
4,362,438
|
Short term bank
credit
|
|
4,953,579
|
|
|
4,060,000
|
Deferred
revenues
|
|
5,596,351
|
|
|
6,879,815
|
TOTAL CURRENT
LIABILITIES
|
|
22,168,974
|
|
|
26,776,335
|
LONG TERM
LIABILITIES:
|
|
|
|
|
|
Accrued Israeli
statutory/contractual severance pay
|
|
8,007,570
|
|
|
7,516,980
|
Long term portion of
debt
|
|
9,252,338
|
|
|
11,856,522
|
Other long-term
liabilities
|
|
7,262,259
|
|
|
7,295,808
|
TOTAL LONG-TERM
LIABILITIES
|
|
24,522,167
|
|
|
26,669,310
|
TOTAL
LIABILITIES
|
|
46,691,141
|
|
|
53,445,644
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
TOTAL STOCKHOLDERS'
EQUITY (NET)
|
|
67,208,498
|
|
|
64,047,371
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
113,899,639
|
|
$
|
117,493,016
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(U.S. $ in
thousands, except per share data)
|
|
|
Three months ended
March 31,
|
|
2016
|
|
2015
|
Revenues
|
$ 25,406,481
|
|
$ 24,226,708
|
|
|
|
|
Cost of
revenues
|
17,712,174
|
|
17,329,479
|
Research and
development expenses
|
1,097,728
|
|
1,094,264
|
Selling and marketing
expenses
|
1,654,866
|
|
1,225,416
|
General and
administrative expenses
|
4,292,413
|
|
3,648,442
|
Amortization of
intangible assets
|
768,003
|
|
860,773
|
Total operating costs
and expenses
|
25,525,184
|
|
24,158,374
|
|
|
|
|
Operating income
(loss)
|
(118,703)
|
|
68,334
|
|
|
|
|
Other
income
|
26,037
|
|
15,978
|
Financial income
(expense), net
|
(337,658)
|
|
(327,608)
|
Total other income
(expense)
|
(311,621)
|
|
(311,630)
|
Income (loss) before
income tax expense
|
(430,324)
|
|
(243,296)
|
|
|
|
|
Income tax
expense
|
213,453
|
|
239,381
|
Net income
(loss)
|
(643,777)
|
|
(482,677)
|
|
|
|
|
Other comprehensive
income, net of income tax
|
|
|
|
Foreign currency
translation adjustment
|
360,098
|
|
(245,514)
|
Comprehensive income
(loss)
|
$
(283,679)
|
|
$
(728,191)
|
|
|
|
|
Basic net income
(loss) per share
|
$
(0.03)
|
|
$
(0.02)
|
|
|
|
|
Diluted net income
(loss) per share
|
$
(0.03)
|
|
$
(0.02)
|
Weighted average
number of shares used in computing basic net income/loss per
share
|
24,797,875
|
|
23,305,679
|
Weighted average
number of shares used in computing diluted net income/loss per
share
|
24,797,875
|
|
23,305,679
|
Reconciliation of Non-GAAP Financial Measure –
Continuing Operations
To supplement Arotech's consolidated financial statements
presented in accordance with U.S. GAAP, Arotech uses a non-GAAP
measure, Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (Adjusted EBITDA). This non-GAAP measure is provided
to enhance overall understanding of Arotech's current financial
performance. Reconciliation of Adjusted EBITDA to the nearest GAAP
measure follows:
|
Three months ended
March 31,
|
|
2016
|
|
2015
|
Net income (loss)
continuing (GAAP measure)
|
$(643,777)
|
|
$(482,677)
|
Add
back:
|
|
|
|
Other/Financial
(income) expense – including interest
|
311,621
|
|
311,630
|
Income tax
expenses
|
213,453
|
|
239,381
|
Depreciation and
amortization expense
|
1,175,038
|
|
1,340,233
|
Other
adjustments*
|
491,806
|
|
91,596
|
Total adjusted
EBITDA
|
$1,548,141
|
|
$1,500,163
|
|
*Includes stock
compensation expense, one-time transaction expenses and other
non-cash
expenses.
|
Calculation of
Adjusted Earnings Per Share
(U.S. $ in
thousands, except per share data)
|
|
|
Three Months
ended March 31,
|
|
Three Months
ended March 31,
|
|
2016
|
|
2015
|
|
|
|
|
Revenue (GAAP
measure)
|
$
25,406
|
|
$
24,227
|
Net (Loss)/ Income
(GAAP measure)
|
$
(644)
|
|
$
(483)
|
Adjustments:
|
|
|
|
Amortization
|
768
|
|
861
|
Stock
compensation
|
492
|
|
182
|
Non-cash
taxes
|
151
|
|
150
|
EFB Transition/UEC
Acquisition costs
|
0
|
|
803
|
Building
sale
|
0
|
|
(895)
|
Net
adjustments
|
$
1,411
|
|
$
1,101
|
Adjusted Net
Income
|
$
767
|
|
$
618
|
Number of
shares
|
24,798
|
|
23,306
|
Adjusted
EPS
|
$
0.03
|
|
$
0.03
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/arotech-reports-first-quarter-results-300265235.html
SOURCE Arotech Corporation