ADG AMG Critical Materials NV

VIENNA, Va., Nov. 16 /PRNewswire-FirstCall/ -- The Allied Defense Group, Inc. (NYSE Amex: ADG), a multinational defense company focused on the manufacture, sale and distribution of ammunition and ammunition-related products and services for use by the U.S. and foreign governments, today announced results for the quarter ended September 30, 2009. Financial Results: -- Revenue of $36.2 million compared to $49.3 million in the third quarter of 2008 -- Net loss of $3.3 million compared to net loss of $6.2 million during the third quarter of 2008 -- EBITDA* from continuing operations of $4.3 million for the nine months ended September 30, 2009 -- Funded, committed backlog of $89.6 million as of September 30, 2009 "During the third quarter we continued to advance our engagements throughout the world," said Major General (Ret) John J. Marcello, President and Chief Executive Officer of The Allied Defense Group. "While we are not pleased that the timing of certain contracts and shipments were delayed beyond the end of the quarter, these opportunities either remain active in our pipeline or have already closed. These ebbs and flows should be expected from quarter-to-quarter given the nature of the global ammunition business. More importantly, however, we continue to be very encouraged by the growing number of opportunities available to us in the marketplace. Our unique positioning, combined with our extensive international relationships, will serve us well as we bring these opportunities to fruition." Business Segment Details: Mecar SA -- Revenue of $19.1 million compared to $32.2 million in the third quarter of 2008 -- Backlog of $83.9 million as of September 30, 2009 Mecar USA -- Revenue of $17.1 million compared to $17.0 million in the third quarter of 2008 -- Backlog of $5.7 million as of September 30, 2009 Third Quarter Summary Revenue was $36.2 million in the third quarter of 2009, down 27% from the same period of 2008. Lower revenue was due to lower manufacturing activity and a mix of lower value sales contracts at Mecar SA. Gross margin was 10% in the third quarter of 2009, compared to 13% for the same period in 2008. The decline in gross margin was the result of a lower volume of revenue and hours worked at Mecar SA. Lower revenue and gross margins in the current quarter were partially offset by better margin contracts at Mecar USA. Net loss from continuing operations was $3.2 million in the third quarter of 2009, compared to a net loss of $3.3 million during the same period of 2008. Diluted loss per share from continuing operations was $0.39 in the third quarter of 2009, compared to a loss of $0.41 during the same period of 2008. EBITDA* from continuing operations was a loss of $0.7 million in the third quarter of 2009, compared to income of $2.7 million during the same period of 2008. Results from continuing operations in the current period were positively impacted by a $0.3 million gain associated with Mecar SA's forward exchange contracts. Selling and administrative expenses were $4.9 million, roughly in-line with the same period last year. Interest expense was $1.3 million, down from $1.4 million in the same period in 2008. Nine-Month Summary Revenue was $115.1 million for the nine months ended September 30, 2009, compared to $116.4 million during the same period of 2008. Gross margin was 13% for the nine months ended September 30, 2009, compared to 16% for the same period in 2008. Net loss from continuing operations was $2.6 million for the nine months ended September 30, 2009, compared to a net loss of $6.7 million during the same period of 2008. Diluted loss per share from continuing operations was $0.32 for the nine months ended September 30, 2009, compared to a loss of $0.83 during the same period of 2008. EBITDA* from continuing operations was $4.3 million for the nine months ended September 30, 2009, compared to $7.6 million during the same period of 2008. As of September 30, 2009, the Company's firm committed backlog was $89.6 million, compared to $168.4 million as of September 30, 2008. Cash Flow At September 30, 2009, the Company had $4.1 million of cash on hand. This is up from $1.7 million at June 30, 2009. The Company used $9.6 million of cash in operating activities during the nine months ended September 30, 2009 as compared to $17.6 million of cash used during the same period of 2008. Cash provided by investing activities was $0.9 million during the nine months ended September 30, 2009 as compared to $0.8 million generated during the same period of 2008. Cash provided by financing activities was $3.9 million during the nine months ended September 30, 2009 as compared to utilized cash of $0.4 million during the same period of 2008. The increase in cash provided by financing activities stemmed from short term financing made available by the Mecar SA bank group. "Our cash position has improved during the third quarter," said Debbie Ricci, Chief Financial Officer of The Allied Defense Group. "We are working hard to secure a longer-term lending facility to bolster our working capital needs. In the meantime, we will continue to carefully manage our cash until we secure appropriate working capital solutions." Conference Call The Company will host a conference call to discuss these results today, November 16, 2009, at 5:00 p.m. (ET). To access the conference call, interested parties may call (888) 286-2314 within the United States or (719) 325-2479 outside the United States. A replay of the call will be available from approximately 8:00 p.m. (ET) today, November 16, 2009, through 11:59 p.m. (ET) on November 23, 2009. To access the replay, please call (888) 203-1112 in the United States, or (719) 457-0820 outside the United States, and enter the following code: 2628448. The Allied Defense Group, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Thousands of Dollars, except per share and share data) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue $36,185 $49,247 $115,113 $116,364 Cost and expenses Cost of sales 32,738 42,851 99,614 97,323 Selling and administrative 4,902 4,877 13,653 15,125 Research and development 443 535 1,515 1,667 Impairment of long-lived assets - 462 - 462 ------- ------- ------- ------- Operating income (loss) (1,898) 522 331 1,787 ------- ------- ------- ------- Other income (expenses) Interest income 20 102 83 511 Interest expense (1,282) (1,429) (3,186) (5,470) Net gain (loss) on fair value of senior convertible notes and warrants 10 (155) 257 (682) Gain (loss) from foreign exchange contracts 343 (1,329) 912 (1,473) Other-net (402) (846) (1,205) (837) ------- ------- ------- ------- (1,311) (3,657) (3,139) (7,951) ------- ------- ------- ------- Loss from continuing operations before income taxes (3,209) (3,135) (2,808) (6,164) Income tax (benefit) expense (4) 173 (199) 495 ------- ------- ------- ------- Loss from continuing operations (3,205) (3,308) (2,609) (6,659) ------- ------- ------- ------- Income (loss) from discontinued operations, net of tax Gain on sale of subsidiaries 45 - 1,856 113 Loss from discontinued operations (114) (2,912) (1,679) (2,063) ------- ------- ------- ------- Net income (loss) from discontinued operations (69) (2,912) 177 (1,950) ------- ------- ------- ------- NET LOSS $(3,274) $(6,220) $(2,432) $(8,609) ======= ======= ======= ======= Earnings (Loss) per share - basic and diluted: Net loss from continuing operations $(0.39) $(0.41) $(0.32) $(0.83) Net earnings (loss) from discontinued operations (0.01) (0.36) 0.02 (0.24) ------- ------- ------- ------- Total loss per share - basic and diluted $(0.40) $(0.77) $(0.30) $(1.07) ====== ====== ====== ====== Weighted average number of common shares: Basic 8,143,661 8,067,089 8,102,913 8,034,164 Diluted 8,143,661 8,067,089 8,102,913 8,034,164 The Allied Defense Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Thousands of Dollars, except per share and share data) September 30, December 31, ASSETS 2009 2008 (a) -------- -------- Current Assets Cash and cash equivalents $4,083 $8,816 Restricted cash 8,039 9,666 Accounts receivable, net 20,610 12,646 Costs and accrued earnings on uncompleted contracts 35,360 21,999 Inventories, net 20,798 21,508 Contracts in progress 2,413 1,469 Prepaid and other current assets 4,145 3,137 Assets held for sale - 4,474 -------- -------- Total current assets 95,448 83,715 -------- -------- Property, Plant Equipment, net 17,789 19,525 -------- -------- Other Assets 1,852 459 -------- -------- TOTAL ASSETS $115,089 $103,699 ======== ======== CURRENT LIABILITIES Current maturities of senior secured convertible notes $- $933 Bank overdraft facility 4,657 381 Current maturities of long-term debt 5,294 2,659 Current maturities of foreign exchange contracts 261 405 Accounts payable 15,983 14,536 Accrued liabilities 18,100 16,099 Customer deposits 23,748 16,731 Belgium social security 2,876 3,522 Income taxes 3,842 3,913 Liabilities held for sale - 1,316 -------- -------- Total current liabilities 74,761 60,495 -------- -------- LONG TERM OBLIGATIONS Long-term debt, less current maturities 5,210 6,681 Long-term foreign exchange contracts, less current maturities 295 1,072 Derivative instrument 65 318 Other long-term liabilities 1,353 682 -------- -------- Total long-term obligations 6,923 8,753 -------- -------- TOTAL LIABILITIES 81,684 69,248 -------- -------- CONTINGENCIES AND COMMITMENTS STOCKHOLDERS' EQUITY Preferred stock, no par value; authorized 1,000,000 shares; none issued - - Common stock, par value, $.10 per share; authorized 30,000,000 shares; issued and outstanding, 8,172,368 at September 30, 2009 and 8,079,509 at December 31, 2008 817 808 Capital in excess of par value 56,361 55,912 Accumulated deficit (40,783) (38,351) Accumulated other comprehensive income 17,010 16,082 -------- -------- Total stockholders' equity 33,405 34,451 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $115,089 $103,699 ======== ======== (a) Condensed consolidated balance sheet as of December 31, 2008, has been derived from audited consolidated financial statements. The Allied Defense Group, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Thousands of Dollars) Nine Months Ended September 30, 2009 2008 ---- ---- Cash flows from operating activities Net Loss $(2,432) $(8,609) Less: Gain on sale of subsidiaries (1,856) (113) Discontinued operations, net of tax 1,679 2,063 ----- ----- Loss from continuing operations (2,609) (6,659) in operating activities, net of divestitures: Depreciation and amortization 3,201 4,568 Unrealized (gain) loss on forward contracts (912) 1,473 Loss on sale of fixed assets 90 - Net (gain) loss related to fair value of notes and warrants (257) 682 Provision (reduction) for estimated losses on contracts (52) 906 Provision (reduction) for warranty reserves, uncollectible accounts and inventory obsolescence (55) 495 Common stock and stock option awards 322 292 Deferred director stock awards 82 54 (Increase) decrease in operating assets and increase (decrease) in liabilities, net of effects from discontinued businesses Restricted cash 1,833 5,076 Accounts receivable (7,475) (13,374) Costs and accrued earnings on uncompleted contracts (11,779) (19,580) Inventories 1,462 (1,271) Contracts in progress (944) (3,265) Prepaid and other current assets (1,263) 629 Accounts payable and accrued liabilities 2,274 4,419 Customer deposits 6,130 4,139 Deferred compensation 614 40 Income taxes (284) 390 ---- --- Net cash used in operating activities - continuing operations (9,622) (20,986) Net cash provided by operating activities - discontinued operations - 3,436 -- ------- Net cash used in operating activities (9,622) (17,550) ------ ------- Cash flows from investing activities Capital expenditures (1,220) (1,493) Proceeds from sale of fixed assets 137 - Net proceeds from sale of subsidiaries 2,023 2,433 ----- ----- Net cash provided by investing activities - continuing operations 940 940 Net cash used in investing activities - discontinued operations - (114) -- --- Net cash provided by investing activities 940 826 --- --- Cash flows from financing activities Increase in short-term borrowings $977 $2,587 Principal payments on senior convertible notes (928) (481) Bank overdraft 3,993 (1,822) Net borrowings (repayments) of long-term debt and capital lease obligations (213) (702) Net cash transferred to discontinued operations - 3,090 Proceeds from employee stock purchases 54 80 Retirement of stock - (9) ----- ----- Net cash provided by financing activities - continuing operations 3,883 2,743 Net cash used in financing activities - discontinued operations - (3,136) -- ---- Net cash provided by (used in) financing activities 3,883 (393) ----- ---- Net change in cash of discontinued operations - (185) Effects of exchange rate on cash 66 460 -- --- NET DECREASE IN CASH AND CASH EQUIVALENTS (4,733) (16,842) Cash and cash equivalents at beginning of period 8,816 21,651 ----- ------ Cash and cash equivalents at end of period $4,083 $4,809 ====== ====== Supplemental Disclosures of Cash Flow information Cash paid during the period for Interest $3,609 $5,518 Taxes $28 $99 Supplemental Disclosures of Non-Cash Investing and Financing Activities Capital leases $22 $26 The Allied Defense Group, Inc Calculation of EBITDA from continuing operations (Unaudited) (All amounts are in thousands of U.S. Dollars) Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Consolidated Loss from continuing operations $(3,205) $(3,308) $(2,609) $(6,659) Any extraordinary or non recurring gains or losses (Gain) loss from fair value of notes and warrants (10) 155 (257) 682 (Gain) Loss from Sale of Fixed Assets (90) - (90) 231 Non-cash expenses associated with stock compensation expense 118 132 404 436 Impairment of long-lived assets - 462 - 462 ------- ------- ------- ------- Adjusted Net Loss from continuing operations $(3,187) $(2,559) $(2,552) $(4,848) Interest Income (20) (102) (83) (511) Interest Expense 1,282 1,429 3,186 5,470 Income tax expense (4) 173 (199) 495 Depreciation and Amortization Expense 1,132 1,338 3,201 4,040 Any non-cash transactions: Foreign currency (gain) loss (28) 2,280 499 2,477 Adjustments related to Inventory (80) 114 (177) 285 Other non-cash charges 232 (1) 439 152 ----- ------ ------ ------ Consolidated EBITDA $(673) $2,672 $4,314 $7,560 ----- ------ ------ ----- *Earnings before interest, taxes, depreciation and amortization, non-cash stock compensation and payments, non-cash charges that do not result in future cash obligations, any extraordinary or non recurring gains (losses) and any non-cash transactions (EBITDA) is not intended to present a measure of performance in accordance with accounting principles generally accepted in the United States (GAAP). Nor should Consolidated EBITDA from continuing operations be considered as an alternative to statements of cash flows as a measure of liquidity. Consolidated EBITDA from continuing operations is included herein as means to measure operating performance that financial analysts, lenders, investors and other interested parties find to be a useful tool for analyzing companies. The measurement of EBITDA from continuing operations, as provided above, is defined in the terms of the Company's senior secured convertible notes that were repaid in January 2009 and may not reflect EBITDA from continuing operations as calculated by other parties. The above table reconciles GAAP Net Income (Loss) from continuing operations to EBITDA from continuing operations for the reported periods. About The Allied Defense Group, Inc. The Allied Defense Group, Inc. is a multinational defense company focused on the manufacture, sale and distribution of ammunition and ammunition-related products and services for use by the U.S. and foreign governments. For more information, please visit our web site: http://www.allieddefensegroup.com/. Certain statements contained herein are "forward looking" statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Because statements include risks and uncertainties, actual results may differ materially from those expressed or implied and include, but are not limited to, those discussed in filings by the Company with the Securities and Exchange Commission. Contact: Geoff Grande, CFA FD P: 617-747-1721 F: 617-897-1511 DATASOURCE: The Allied Defense Group, Inc. CONTACT: Geoff Grande, CFA, FD, +1-617-747-1721, fax, +1-617-897-1511, Web Site: http://www.allieddefensegroup.com/

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