EX-99.1 2 ex99_1.htm EXHIBIT 99.1
EXHIBIT 99.1


 
FOR IMMEDIATE RELEASE

ORBIT INTERNATIONAL CORP. REPORTS 2014 SECOND QUARTER RESULTS

Company Returns to Profitability, Exclusive of Facility Consolidation Costs
 
Hauppauge, New York, August 7, 2014 - Orbit International Corp. (NASDAQ:ORBT) today announced results for the second quarter ended June 30, 2014.

Second Quarter 2014 vs. Second Quarter 2013
· Net sales were $5,396,000, as compared to $6,475,000.
· Gross margin was 41.5%, as compared to 38.6%.
· Net loss was $171,000 ($0.04 loss per share), as compared to net income of $109,000 ($0.02 per diluted share).
· Net loss for the second quarter of 2014 includes $351,000 of costs associated with the completion of our consolidation of our Quakertown, PA facility into our Hauppauge, NY facility. Exclusive of these costs, net income for the second quarter was $180,000 ($0.04 per diluted share).  As of June 30, 2014, substantially all consolidation related costs have been incurred.
· Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was a loss of $62,000 ($0.01 loss per share), as compared to earnings of $244,000 ($0.05 per diluted share).

First Half 2014 vs. First Half 2013
· Net sales were $10,403,000, as compared to $12,922,000.
· Gross margin was 35.9%, as compared to 38.6%.
· Net loss was $1,233,000 ($0.28 loss per share), as compared to net income of $29,000 ($0.01 per diluted share).
· Net loss for the first half of 2014 includes $1,079,000 of costs associated with the consolidation of our Quakertown, PA facility into our Hauppauge, NY facility. Exclusive of these costs, net loss for the first half of 2014 was $154,000 ($0.04 loss per share).
· Earnings before interest, taxes, depreciation and amortization and stock based compensation (EBITDA, as adjusted) was a loss of $823,000 ($0.19 loss per share), as compared to earnings of $303,000 ($0.07 per diluted share).

Mitchell Binder, President & Chief Executive Officer, stated, “Our second quarter was a continuation of our efforts to restructure our business to significantly reduce our costs in order to offset difficult industry conditions.  For the second quarter, our net income and EBITDA, as adjusted, improved year-over-year, exclusive of the costs associated with the completion of our consolidation of our Quakertown operations into our Hauppauge facility.”
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Mr. Binder added, “Despite a reduction in sales for the quarter, we recorded gross margin improvement resulting from these cost cutting initiatives and product mix.  With the completion of the consolidation of Quakertown into Hauppauge, we should further benefit from the cost savings in the second half of 2014.  However, these cost savings will be partially offset by lower revenues due to challenging industry conditions and more specifically, the delay in the award of certain legacy contracts, particularly for our Electronics Group, that will not have delivery schedules until 2015.”

Mr. Binder continued, “Our operating performance for the second quarter of 2014 benefitted from the improved performance of our Power Group, which was insufficient to offset the results from our Electronics Group which included the costs associated with the completion of the consolidation of our Quakertown, PA facility into our Hauppauge, NY facility.  For each of the third and the fourth quarters of 2014, we expect the results from our Power Group to be comparable to the second quarter but as mentioned earlier, we expect continued weakness from our Electronics Group.”

Mr. Binder added, “Our backlog at June 30, 2014 was $8.2 million as compared to $9.6 million at March 31, 2014 due principally to a lower backlog at our Electronics Group.  Our June 30, 2014 backlog for our Power Group was comparable to the backlog at March 31, 2014.  However, the Company has received some significant contracts during the current third quarter and our bid and proposal pipeline continues to grow, particularly for our legacy business.”

David Goldman, Chief Financial Officer, noted, “Our financial condition remains strong.  At June 30, 2014, total current assets were approximately $16.7 million versus total current liabilities of approximately $1.8 million for a 9.3 to 1 current ratio. Cash, cash equivalents and marketable securities as of June 30, 2014, aggregated approximately $2.9 million. To offset future federal and state taxes resulting from profits, we have approximately $8 million and $7 million in available federal and state net operating loss carryforwards, respectively, which should enhance future cash flow. We were in compliance with our financial covenants at June 30, 2014.”

Mr. Goldman added, “During the quarter, we continued to pay down our debt. In addition, since January 1, 2012, we have repurchased in excess of 368,000 shares of our stock in the marketplace at an average price of $3.55 per share.  Our tangible book value at June 30, 2014 was $3.07 as compared to $3.09 at March 31, 2014 and $3.32 per share at December 31, 2013.”

Mr. Binder concluded, “We remain encouraged that our new VPX technologies will layer onto our existing business in our marketplace.  Our industry-leading VPXtra power supplies, GUI driven health monitors as well as backplanes and related items can be found on our recently launched web portal - vmevpx.com.  However, the timing of awards, particularly in this environment, remains uncertain.  We remain very cautious of challenging business conditions and continue to reduce costs wherever possible in order to improve our operating margins.”

Orbit International Corp., through its Electronics Group, is involved in the manufacture of customized electronic components and subsystems for military and nonmilitary government applications through its production facility in Hauppauge, New York and designs and manufactures combat systems and gun weapons systems, provides system integration and integrated logistics support and documentation control at its facility in Louisville, Kentucky.  The Power Group, through its Behlman Electronics, Inc. subsidiary, manufactures and sells high quality commercial power units, AC power sources, frequency converters, uninterruptible power supplies and inverters. The Behlman COTS division designs, manufactures and sells highly reliable power units for industrial and military applications.
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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 filings with the Securities and Exchange Commission including quarterly reports on Form 10-Q, current reports on Form 8-K, annual reports on Form 10-K and its other periodic reports.  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
Mitchell Binder
President & Chief Executive Officer
631-435-8300

(See Accompanying Tables)
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Orbit International Corp.
Consolidated Statements of Income
 (in thousands, except per share data)
(unaudited)

 
  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
 
  
2014
    
2013
    
2014
    
2013
  
 
  
   
   
   
 
Net sales
  
$
5,396
    
$
6,475
    
$
10,403
    
$
12,922
  
 
                                
Cost of sales
    
3,159
      
3,978
      
6,666
      
7,934
  
 
                                
Gross profit
    
2,237
      
2,497
      
3,737
      
4,988
  
 
                                
Selling general and administrative expenses
    
2,384
      
2,355
      
4,927
      
4,886
  
 
                                
Interest expense
    
10
      
15
      
29
      
32
  
 
                                
Investment and other (income) expense
    
3
      
(2
)
    
(7
)
    
(5
)
 
                                
(Loss) income before taxes
    
(160
)
    
129
      
(1,212
)
    
75
  
 
                                
Income tax provision
    
11
      
20
      
21
      
46
  
                               
Net (loss) income
  
$
(171
)
  
$
109
    
$
(1,233
)
  
$
29
  
                               
Basic (loss) earnings per share
  
$
(0.04
)
  
$
0.02
    
$
(0.28
)
  
$
0.01
  
                               
Diluted (loss) earnings per share
  
$
(0.04
)
  
$
0.02
    
$
(0.28
)
  
$
0.01
  
                               
Weighted average number of shares outstanding:
                                
Basic
    
4,373
      
4,425
      
4,376
      
4,456
  
Diluted
    
4,373
      
4,459
      
4,376
      
4,491
  

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Orbit International Corp.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

 
  
Three Months Ended
June 30,
    
Six Months Ended
June 30,
  
 
  
2014
    
2013
    
2014
    
2013
  
 
   
   
   
 
EBITDA (as adjusted) Reconciliation
  
   
   
   
 
Net (loss) income
  
$
(171
)
  
$
109
    
$
(1,233
)
  
$
29
  
Interest expense
    
10
      
15
      
29
      
32
  
Tax expense
    
11
      
20
      
21
      
46
  
Depreciation and amortization
    
62
      
72
      
308
      
140
  
Stock based compensation
    
26
      
28
      
52
      
56
  
EBITDA (as adjusted) (1)
  
$
(62
)
  
$
244
    
$
(823
)
  
$
303
  
                               
EBITDA (as adjusted) Per Diluted Share Reconciliation
                                
Net (loss) income
  
$
(0.04
)
  
$
0.02
    
$
(0.28
)
  
$
0.01
  
Interest expense
    
0.00
      
0.00
      
0.01
      
0.01
  
Tax expense
    
0.00
      
0.00
      
0.00
      
0.01
  
Depreciation and amortization
    
0.02
      
0.02
      
0.07
      
0.03
  
Stock based compensation
    
0.01
      
0.01
      
0.01
      
0.01
  
EBITDA (as adjusted), per diluted share (1)
  
$
(0.01
)
  
$
0.05
    
$
(0.19
)
  
$
0.07
  

(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.

 
  
Six Months Ended
June 30,
  
Reconciliation of EBITDA (as adjusted) to cash flows provided by operating activities (1)
  
2014
    
2013
  
 
   
 
EBITDA (as adjusted)
  
$
(823
)
  
$
303
  
Interest expense
    
(29
)
    
(32
)
Income tax expense
    
(21
)
    
(46
)
Gain (loss) on sale of marketable securities
    
(2
)
    
2
  
Loss on disposal of property and equipment
    
11
      
-
  
Bond amortization
    
(3
)
    
6
  
Net change in operating assets and liabilities
    
1,350
      
1,226
  
Cash flows provided by operating activities
  
$
483
    
$
1,459
  

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Orbit International Corp.
Consolidated Balance Sheets

 
  
June 30, 2014
(unaudited)
    
December 31, 2013
  
ASSETS
  
   
 
Current assets:
  
   
 
Cash and cash equivalents
  
$
2,672,000
    
$
2,562,000
  
Investments in marketable securities
    
252,000
      
243,000
  
Accounts receivable, less allowance for doubtful accounts
    
2,402,000
      
2,981,000
  
Inventories
    
11,188,000
      
11,803,000
  
Other current assets
    
218,000
      
264,000
  
 
                
Total current assets
    
16,732,000
      
17,853,000
  
 
                
Property and equipment, net
    
724,000
      
975,000
  
Goodwill
    
868,000
      
868,000
  
Other assets
    
40,000
      
35,000
  
 
                
Total assets
  
$
18,364,000
    
$
19,731,000
  
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Note payable-bank
    
-
      
2,100,000
  
Accounts payable
    
523,000
      
510,000
  
Liability associated with non-renewal of senior officer contract
    
20,000
      
36,000
  
Accrued expenses
    
1,075,000
      
1,149,000
  
Income tax payable
    
13,000
      
25,000
  
Customer advances
    
177,000
      
17,000
  
 
                
Total current liabilities
    
1,808,000
      
3,837,000
  
 
                
Note payable-bank
    
1,885,000
      
-
  
Liability associated with non-renewal of senior officer contract, net of current portion
    
-
      
4,000
  
Other liabilities
    
48,000
      
-
  
 
                
Total liabilities
    
3,741,000
      
3,841,000
  
 
                
Stockholders’ Equity
                
Common stock
    
522,000
      
523,000
  
Additional paid-in capital
    
22,877,000
      
22,824,000
  
Treasury stock
    
(2,225,000
)
    
(2,133,000
)
Accumulated other comprehensive gain (loss)
    
1,000
      
(5,000
)
Accumulated deficit
    
(6,552,000
)
    
(5,319,000
)
 
                
Stockholders’ equity
    
14,623,000
      
15,890,000
  
 
                
Total liabilities and stockholders’ equity
  
$
18,364,000
    
$
19,731,000
  
 
 
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