Orbit International Corp. Reports 2019 Third Quarter Results
Third Qtr. 2019 Net Income of $25,000 ($0.01 per diluted share) v. $588,000 ($0.16 per diluted share) in Prior Year Period
Nine Months 2019 Net Income of $679,000 ($0.19 per diluted share) v. $1,753,000 ($0.49 per diluted share) in Prior Year PeriodBoth Current Three-Month and Nine-Month Periods Include $131,000 ($0.04 per diluted share) in Acquisition Costs Related to Q-Vio AcquisitionNine-Month Prior Year Period Includes a $573,000 ($0.16 per diluted share) Deferred Tax Benefit Resulting From Refundable AMT Credit Under New Tax Law Backlog at 9/30/19 at $20,498,000HAUPPAUGE, N.Y., Nov. 07, 2019 (GLOBE NEWSWIRE) — Orbit International Corp. (OTC PINK:ORBT) today announced results for the third quarter and nine months ended September 30, 2019.Third Quarter 2019 vs. Third Quarter 2018Net sales were $6,100,000, as compared to $6,329,000.Gross margin was 29.2%, as compared to 34.6%.Net income was $25,000 ($0.01 per diluted share), as compared to net income of $588,000 ($0.16 per diluted share).Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $58,000 ($0.02 per diluted share), as compared to EBITDA of $640,000 ($0.18 per diluted share).Nine Months 2019 vs. Nine Months 2018Net sales were $19,503,000, as compared to $16,710,000.Gross margin was 29.3%, as compared to 36.6%.Net income was $679,000 ($0.19 per diluted share), as compared to net income of $1,753,000 ($0.49 per diluted share).Earnings before interest, taxes, depreciation and amortization and stock-based compensation (EBITDA, as adjusted) was $809,000 ($0.23 per diluted share), as compared to EBITDA of $1,333,000 ($0.37 per diluted share).Backlog at September 30, 2019 was $20.5 million as compared to $19.5 million at June 30, 2019 and $20.6 at December 31, 2018.Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the nine months ended September 30, 2019 was $679,000 compared to $1,753,000 for the prior comparable period. Our net income for the prior period was positively impacted by a $573,000 deferred tax benefit resulting from a refund of our AMT credit pursuant to the Tax Cuts and Jobs Act of 2017. Our net income for the current period was adversely affected by $131,000 of one-time charges in connection with our acquisition of Q-Vio, Corp. (“Q-Vio”) in August 2019, including the closing of their facility in San Diego, CA and the integration of their operation into our facility in Hauppauge, NY. Exclusive of these items, net income for the nine months ended September 30, 2019 was $810,000 compared to $1,180,000 for the prior comparable period. Furthermore, the integration slowed the shipment of Q-Vio products during the third quarter, but shipment of products has been restored and deliveries of most of these products are expected to be made in the fourth quarter and beyond. Net income for the current third quarter was also adversely affected by lower sales from our OEG due to the timing of delivery schedules.”Mr. Binder added, “Our sales for the nine months ended September 30, 2019 increased from the comparable period of the prior year due to our OPG’s increased shipments of CAATS units. Sales from our OEG for the third quarter decreased from the second quarter due to delivery schedules and a request from a large customer to accelerate deliveries on one of its products during the prior quarter. Despite higher sales, our gross margin for the nine months ended September 30, 2019 decreased to 29.3% compared to 36.6% in the prior year. This decrease was expected due to the shipment of a high percentage of CAATS units, which have a lower gross margin than our other products. In addition, third quarter gross margins decreased from the second quarter because of lower revenues from our OEG which, historically have higher gross margins that increase further during periods of higher sales due to our operating leverage. In addition, our selling and general and administrative costs continue to be tightly managed.”Mr. Binder continued, “Our backlog at September 30, 2019 was approximately $20,498,000 compared to approximately $20,566,000 at December 31, 2018. Our backlog at September 30, 2019 includes approximately $1,062,000 of backlog from our new Q-Vio subsidiary. The slight decrease in the backlog from the prior year-end was principally due to a lower backlog from our OEG (exclusive of Q-Vio) due to a delay in the receipt of orders on two significant follow-on programs. Negotiations are on-going with our customers and these awards are expected to be received in the current fourth quarter although timing on the receipt of government contracts is always an uncertainty.”Binder further added, “Our OPG completed a previously announced solid booking month in October of approximately $1,380,000, which came on the heels of a strong third quarter of bookings which totaled approximately $4,300,000. In addition to a continuation of orders utilizing our VPX technology, our OPG has realized a significant increase in bookings for its commercial products in the past several months, highlighted by power supplies used for oil and gas exploration, which has resulted in an increase in commercial bookings of 27.8% over the prior comparable period. Furthermore, in addition to the significant follow-on orders expected by our OEG, Q-Vio received a $300,000 award at the beginning of the current quarter from a large military contractor and is expecting an additional relatively significant award from another military contractor before the end of the quarter. Both awards have follow-on potential awards that are expected to be received in 2020.” David Goldman, Chief Financial Officer, noted, “At September 30, 2019, our cash and cash equivalents increased from the second quarter to approximately $3.9 million and our financial condition remained strong as evidenced by our 6.3 to 1 current ratio. Our cash position should be positively impacted in the fourth quarter as we expect to receive a federal tax refund of approximately $302,000 (primarily attributable to a refund of approximately 50% of our AMT credit).”Mr. Goldman concluded, “Our tangible book value per share at September 30, 2019 was $4.65 (excluding the contingent liability relating to the Q-Vio acquisition it would be $4.78) as compared to $4.66 at June 30, 2019 and $4.52 at December 31, 2018. (Note-tangible book value per share does not include any additional value for our remaining reserved deferred tax asset.) To offset future federal and state taxes resulting from profits, we have approximately $7.6 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively.”Mr. Binder concluded, “Because our revenue is tied to the delivery schedules specified in our contracts, it often is difficult to judge our performance on a quarterly basis. Although our third quarter results were relatively weak, this was attributable to lower sales from our OEG which has been the strength of our Company over the past several years. We expect that OEG delivery schedules will improve in 2020 as large follow-on orders are received as expected. We are encouraged by the improvement in business from our OPG and the acquisition during the quarter of Q-Vio will position our OEG for additional sales. Because our Q-Vio operations have been integrated into our existing Hauppauge facility, the additional sales from these operations will require minimal additional overhead costs. Our backlog still remains strong and deliveries of the CAATS units will continue through 2020. Consequently, we are confident that our Company is well positioned for improved operating performance in 2020. Furthermore, our financial condition remains strong and we will continue to make opportunistic purchases of our common stock in the marketplace.” Orbit International Corp., through its Electronics Group, including its recently acquired Q-Vio subsidiary, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial applications through its production facility in Hauppauge, New York. Orbit’s Power Group, also located in Hauppauge, NY, designs and manufactures a wide array of power products including AC power supplies, frequency converters, inverters, uninterruptible power supplies, VME/VPX power supplies as well as various COTS power sources. The Company also has a sales office in Bradenton, FL.Certain matters discussed in this news release and oral statements made from time to time by representatives of the Company including, statements regarding our expectations of Orbit’s operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although Orbit believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond Orbit International’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact Orbit International and the statements contained in this news release can be found in Orbit’s reports posted with the OTC Disclosure and News service. For forward-looking statements in this news release, Orbit claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Orbit assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.CONTACT
David Goldman
Chief Financial Officer
631-435-8300 (See Accompanying Tables)
Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)(1) The EBITDA (as adjusted) tables presented are not determined in accordance with accounting principles generally accepted in the United States of America. Management uses EBITDA (as adjusted) to evaluate the operating performance of its business. It is also used, at times, by some investors, securities analysts and others to evaluate companies and make informed business decisions. EBITDA (as adjusted) is also a useful indicator of the income generated to service debt. EBITDA (as adjusted) is not a complete measure of an entity’s profitability because it does not include costs and expenses for interest, depreciation and amortization, income taxes and stock-based compensation. EBITDA (as adjusted) as presented herein may not be comparable to similarly named measures reported by other companies.
Orbit International Corp.
Consolidated Balance Sheets