EX-99 2 a4628218ex99.txt PRESS RELEASE Exhibit 99 EDO Revenue up 17 Percent; Earnings up 29 Percent NEW YORK--(BUSINESS WIRE)--April 29, 2004--EDO Corporation (NYSE: EDO) recorded revenue of $110.9 million in the first quarter of 2004, up $16.5 million or 17 percent from the $94.4 million recorded in the first quarter of 2003. Net earnings for the quarter were $3.9 million, up 29 percent from the $3.0 million recorded in the prior year's quarter. On a diluted per-share basis, earnings were $0.22, up 29 percent from the $0.17 recorded in the first quarter of 2003. "We posted a solid quarter," said Chief Executive Officer James M. Smith. "While the first quarter is historically our lowest sales period, we continued to generate substantial earnings improvement. At the same time, we are focusing our efforts on a number of high-potential opportunities. These include opportunities for new contract wins as well as acquisitions." Revenue Growth EDO's 17 percent revenue growth for the quarter was aided by strong sales in defense electronics and aircraft armament systems. These were partially offset by delays in certain contract awards in both the U.S. and the U.K. Excluding the impact of acquisitions owned for less than one year, revenues were about the same as the first quarter of last year. However, the company continues to forecast organic growth in the range of 7 to 9 percent for the full year. Earnings Growth The company's strong earnings growth was driven by a 68 percent improvement in the defense segment, partially offset by a loss in the communications-and-space-products segment. This segment's loss was related to the development and start-up production phases of certain interference-cancellation programs. The segment is expected to return to profitability for the full year. EBITDA margins, as adjusted, (see attached "Calculation of EBITDA" worksheet) were 12.9 percent of revenue in the first quarter of 2004, below the company's full-year target range of 13.0 to 14.0 percent. EBITDA margins were impacted by the loss in the communications and space segment, as discussed above. For the quarter, EBITDA, as adjusted, was $14.3 million, versus $13.0 million in the first quarter of 2003. Cash Flow Our cash balance at the end of the first quarter decreased to $65.8 million, from $86.6 million at the end of 2003. This was primarily the result of working-capital timing issues. These include increases in inventories and unbilled accounts receivable related to work-in-progress on sizable contracts, such as SEPS-Warlock, various reconnaissance and surveillance projects, the F/A-22 and the F-35 Joint Strike Fighter. For the full year, we expect to generate positive cash flow from operations in a range consistent with our historical performance. Backlog The total funded backlog of unfilled orders increased 11 percent since year-end, and 18 percent since the first quarter of 2003. As of March 27, the backlog stood at a record $513.5 million, up from $462.3 million on Dec. 31 and $433.5 million on March 29, 2003. Backlog does not include portions of contracts for which the U.S. government has not yet appropriated funds, nor does it include unexercised options in any contract. Such unfunded contracts and unexercised options add approximately $408 million in high-confidence future revenue, for a total of more than $900 million. Outlook The following statement is based on current expectations. This statement is forward-looking, and actual results may differ materially. "EDO continues to invest for long-term sustainable growth and profitability," concluded Smith. "We have the financial strength needed to address the normal working-capital fluctuations of our expanding business. We also have the resources to acquire operations that further develop our niche technologies. We continue to move ahead with this successful business strategy, and remain confident about our revenue estimate of $525 million to $535 million for the full year." Conference Call EDO will conduct a conference call at 10:30 a.m. EDT on April 29 to review these results in more detail. A live web cast of the conference call will be available at www.edocorp.com. For those who cannot listen to the live broadcast, a replay of the call will be available on the corporate site. There will also be a telephone replay of the call available until May 6. To listen to the telephone replay, dial 1-800-633-8284 (outside the U.S. dial 1-402-977-9140), and enter reservation #21192080. About EDO Corporation EDO Corporation provides military and commercial products and professional services, with core competencies in a wide range of critical defense areas, including: -- Aircraft Armament -- Defense Electronics -- Undersea Warfare -- C4I - Command, Control, Communications, Computers, and Intelligence -- Integrated Composite Structures EDO (www.edocorp.com) was founded in 1925, and is headquartered in New York City. The company employs 2,700 people. Forward-Looking Statements Certain statements made in this release, including statements about future profitability, future revenues and long-term organic revenue growth, as well as annual revenue expectations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, changes in the government's funding priorities, the impact of competitive products and pricing, the inability to successfully execute business strategies, difficulties encountered in the integration of acquired businesses ,the inability to secure required regulatory approvals 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. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. EDO Corporation and Subsidiaries Condensed Consolidated Statements of Earnings ($000's omitted, except per share data) Three months ended March 27, March 29, 2004 2003 ----------- ----------- (unaudited) Net sales $110,877 $94,377 Costs and expenses: Cost of sales 80,658 69,830 Selling, general and administrative 20,087 15,207 Research and development 1,465 1,990 Acquisition-related costs - 205 ----------- ----------- 102,210 87,232 ----------- ----------- Operating earnings 8,667 7,145 Interest income 242 235 Interest (expense) (2,223) (2,227) Other, net 22 33 ----------- ----------- Non-operating earnings (expense): (1,959) (1,959) ----------- ----------- Net earnings before income taxes 6,708 5,186 Income tax expense (2,851) (2,204) ----------- ----------- Net earnings $3,857 $2,982 =========== =========== Net earnings per common share: Basic: $0.22 $0.17 Diluted: $0.22 $0.17 =========== =========== Weighted average shares outstanding Basic 17,549 17,230 Diluted 17,834 17,472 =========== =========== Backlog of unfilled orders $513,490 $433,480 EDO Corporation and Subsidiaries Condensed Consolidated Balance Sheets ($000's omitted) March 27, Dec 31, 2004 2003 ------------------------ (unaudited) Assets Current Assets: Cash and cash equivalents $65,823 $86,632 Accounts receivable, net 142,034 134,303 Inventories 43,462 34,733 Deferred income tax asset, net 3,594 3,594 Prepayments & other 7,721 5,954 ------------------------ Total Current Assets 262,634 265,216 Property, plant and equipment, net 30,755 31,355 Notes receivable 6,604 6,538 Goodwill 92,550 92,527 Other intangible assets 54,465 55,898 Deferred income tax asset, net 21,655 21,774 Other assets 20,286 21,388 ------------------------ Total Assets $488,949 $494,696 ======================== Liabilities and Shareholders' Equity Current Liabilities: Accounts payable and accrued liabilities $73,076 $84,743 Contract advances and deposits 8,256 8,195 ------------------------ Total Current Liabilities 81,332 92,938 Long-term debt 137,800 137,800 Post-retirement benefits obligations 72,225 71,898 Environmental obligation 1,768 1,728 Shareholders' equity 195,824 190,332 ------------------------ Total Liabilities & Shareholders' Equity $488,949 $494,696 ======================== EDO Corporation and Subsidiaries SEGMENT DATA ($000's omitted) Three months ended March 27, March 29, 2004 2003 ------------------------ (unaudited) Net sales: Defense $88,040 $70,018 Communications and Space Products 11,552 14,380 Engineered Materials 11,285 9,979 ------------------------ $110,877 $94,377 ======================== Operating earnings (loss): Defense (1) $9,030 $5,375 Communications and Space Products (1,091) 1,224 Engineered Materials 728 546 ------------------------ 8,667 7,145 Net interest (expense) (1,981) (1,992) Other, net 22 33 ------------------------ Earnings from operations before income taxes $6,708 $5,186 ======================== (1) Acquisition-related costs included above - 205 EDO Corporation and Subsidiaries Calculation of EBITDA ($000's omitted, except per share data) Three months ended March 27, March 29, 2004 2003 ----------- ----------- (unaudited) Net earnings before income taxes $6,708 $5,186 Interest expense 2,223 2,227 Interest income (242) (235) ----------- ----------- Net interest expense 1,981 1,992 Depreciation 2,585 2,895 Amortization 1,441 940 ----------- ----------- Total depreciation & amortization 4,026 3,835 ----------- ----------- EBITDA 12,715 11,013 Acquisition-related costs - 205 ESOP compensation expense 1,051 766 Pension expense 550 1,000 ----------- ----------- EBITDA, as adjusted $14,316 $12,984 Diluted shares outstanding 17,834 17,472 EBITDA, as adjusted, per diluted share $0.80 $0.74 =========== =========== EDO Corporation and Subsidiaries GUIDANCE DATA ESTIMATES Fiscal 2004 --------------------------- Revenue range $525 million - $535 million Pension costs $2.2 million Effective operating tax rate 42.0% - 43.0% EBITDA, as adjusted, margin range 13.0% - 14.0% ESOP shares issued per quarter 42,376 Average diluted shares outstanding 17.8 million (excluding Note conversion* and unallocated ESOP shares.) * "If-converted method" (FAS 128) to determine diluted EPS: - Shares to be issued if 5.25% Notes are converted at $31.26/share would be 4,408,189. - Quarterly interest on Notes reduces Net Earnings by $1,030,916. The decision point for the dilution test is $1,030,916 / 4,408,189, or $0.2339 per share. Since EPS was otherwise less than $0.2339, the impact of the Notes was not dilutive, thus conversion of the Notes was not assumed in calculating diluted EPS this quarter. This table contains estimates based on management's current expectations. This information is forward-looking, and actual results may differ materially. CONTACT: EDO Corporation William A. Walkowiak, CFA, 212-716-2038 ir@edocorp.com