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Intermec Preliminary Third Quarter 2012 Results

Stock quotes in this article: IN

Intermec, Inc. (NYSE: IN) today announced preliminary financial results for its third quarter ended September 30, 2012.

Third quarter 2012 net revenues were $192.8 million and net earnings on a GAAP basis were $7.2 million, or $0.12 per diluted share, compared to 2011 third quarter revenues of $211.8 million and GAAP net earnings of $704 thousand, or $0.01 per diluted share. Excluding certain adjustments totaling $3.2 million (detailed in the table below), adjusted net earnings for the quarter were $10.4 million, or $0.17 per diluted share.

"I am pleased with our progress improving the Company’s overall performance during the third quarter," said Allen J. Lauer, Intermec Chairman and Interim CEO. “The steps taken in the second quarter led to sequential improvement in gross margins, operating expenses and cash flow. Improved bookings in North America and Latin America contributed to a relatively significant increase in backlog. This provides an improved foundation as we maintain our focus on continuous growth in revenue and profitability."

The Company remains engaged in a review of its long-term strategic direction and leadership requirements. The Company is continuing its work with its financial advisor BofA Merrill Lynch in performing its evaluation of the Company’s business and strategic alternatives. There is no specific timetable for completion of the evaluation. Concurrently, the Company is working with Spencer Stuart to conduct a nationwide search for its next Chief Executive Officer for the Company.

The following table presents the Company’s operating profit (loss), net earnings (loss) and earnings (loss) per share reported for the third quarters and nine months ended September 30, 2012 and October 2, 2011, on a GAAP basis and as adjusted excluding the impact of restructuring costs, acquisition-related costs and other adjustments, and also presents Adjusted EBITDA for those periods:

 
PRELIMINARY
INTERMEC, INC.
RECONCILIATION OF GAAP TO NON-GAAP OPERATING PROFIT (LOSS) AND ADJUSTED EBITDA
NET EARNINGS (LOSS) AND EARNINGS (LOSS) PER SHARE
(Unaudited)
(In millions, except per share amounts)
               
 
Three Months Ended September 30, 2012 Three Months Ended October 2, 2011
Operating Profit Net earnings Earnings (loss) Operating Profit Net earnings Earnings (loss)
(loss) (loss) per share (loss) (loss) per share
 
Operating profit as reported $ 9.0 $ 7.2 $ 0.12 $ 1.0 $ 0.7 $ 0.01
Acquisition related adjustments 4.5 4.5 0.07 7.1 4.4 0.07
Restructuring costs (1.1 ) (1.1 ) (0.02 ) 0.6 0.6 0.01
Executive severance - - - - - -
Forfeited executive stock awards - - - - - -
Impairment of goodwill (0.2 ) (0.2 ) - - - -
Deferred taxes and valuation allowance   -     -     -     -     0.3     0.01  
Non-GAAP profit as adjusted $ 12.2   $ 10.4   $ 0.17   $ 8.7  

$

6.0  

$

0.10  
 
Depreciation and other amortization 4.7 5.1
Stock-based compensation   1.6     3.2  
Adjusted EBITDA $ 18.5   $ 17.0  
 
Nine Months Ended September 30, 2012 Nine Months Ended October 2, 2011
Operating Profit Net earnings Earnings (loss) Operating Profit Net earnings Earnings (loss)
(loss) (loss) per share (loss) (loss) per share
 
Operating profit (loss) as reported $ (58.2 ) $ (272.4 ) $ (4.52 ) $ (10.7 ) $ (9.2 ) $ (0.15 )
Acquisition related adjustments 13.8 13.8 0.23 21.6 14.2 0.23
Capitalized legal fees charge - - - -
Restructuring costs 4.5 4.5 0.07 5.7 5.7 0.10
Executive severance 1.9 1.9 0.03 - - -
Forfeited executive stock awards (1.2 ) (1.2 ) (0.02 ) - - -
Impairment of goodwill 41.3 41.3 0.69 - - -
Deferred taxes and valuation allowance   -     212.9     3.53     -     1.1     0.02  
Non-GAAP profit as adjusted $ 2.1   $ 0.8   $ 0.01   $ 16.6   $ 11.8   $ 0.20  
 
Depreciation and other amortization 13.7 13.4
Stock-based compensation   6.0     7.5  
Adjusted EBITDA $ 21.8   $ 37.5  
 

Third Quarter 2012 Operating Performance

  • Total revenue for the third quarter was $192.8 million, a decrease of 4% compared to the second quarter of 2012 and down 9% compared to the same period in 2011. On a constant currency basis total revenue declined 6% compared to the prior year.
  • Due primarily to the previously announced cost reduction initiatives, SG&A and R&D expense for the quarter was $74.8 million compared to $81.8 million in the second quarter 2012 and $85.7 million in the third quarter 2011.
  • In conjunction with its financial analysis and reporting procedures, the Company is evaluating its goodwill and long-lived assets including its intangible assets for impairment for the third quarter of 2012. The final income per share reported for the quarter could be less than the preliminary results reported in this press release, or could be a loss per share, if either or both of these items require adjustment as a result of this analysis. Any such adjustments would be non-cash charges and are not expected to result in any change to our Non-GAAP results.
  • Including gains from the sale of certain assets of $2.5 million, a favorable adjustment for restructuring costs of $1.1 million and a favorable adjustment of $200 thousand related to goodwill impairment finalization from the first and second quarter of 2012 analyses, GAAP operating profit was $9.0 million compared to GAAP operating profit of $1.0 million in the same period 2011.
  • North America revenues decreased 3% compared to the third quarter 2011, while Latin America revenue rose 16%. Europe, Middle East and Africa (EMEA) revenues declined 22% and Asia Pacific declined 31% compared to the third quarter 2011. On a constant currency basis EMEA revenues were down 18% compared to the prior year.
  • Total gross margin was 41.5% compared to 41.5% in the same period in 2011 and 39.4% in the second quarter 2012. Excluding certain adjustments, third quarter adjusted gross margins were 43.4% compared to 43.6% for the same period in 2011 and 41.2% in the second quarter 2012.
  • Adjusted EBITDA for the quarter was $18.5 million compared to Adjusted EBITDA of $17.0 million in the same period 2011 and Adjusted EBITDA of $10.2 million in the second quarter 2012.
  • Cash, cash equivalents, and short-term investments totaled approximately $86 million at quarter-end, an increase of over $11 million from the end of the second quarter 2012. During the quarter the company also repaid $5 million on its line of credit and the outstanding balance of its credit facility is now $80 million.

Recent Intermec and Vocollect Business Highlights

  • Launched the SRX2, an innovative new wireless headset for distribution centers (DCs) and warehouses that significantly enhances the operational efficiency of workers with superior voice recognition performance. Its modular design enables shared use of headset electronics across multiple shifts, resulting in lower total cost of ownership.
  • Announced a new HTML5 browser allowing for the development of OS agnostic web applications that can run on iOS, Android and select Intermec rugged mobile computers, enhancing workflow efficiency and offering increased flexibility to mobile workforces.
  • Announced the establishment of Intermec China, a Wholly Foreign Owned Enterprise (WFOE). Intermec China was recently granted a business license from the Chinese Ministry of Commerce to directly conduct business in China.
  • Awarded and began shipping RFID tags for a large Electronic Toll Collection (ETC) contract with the State of Sao Paulo and the Department of Transportation in Brazil to greatly improve collections revenue and to enable a more secure processing environment.
  • The 70 series rugged mobile computer enjoyed a record quarter with multiple large wins in the Direct Store Delivery, Rugged Delivery and Transportation and Logistics Deployment Environments.
  • Announced the CK3 Next Generation Series – the CK3X and CK3R which utilize a 1GHZ OMAP architecture to optimize workforce performance through industry-leading battery life, enhanced barcode scanning, superior device health monitoring and broad compliance for emerging industry standards such as HTML5.

About Intermec, Inc.

Intermec Inc. (NYSE: IN) is the workflow performance company. We design the leading data capture and information management solutions at the interface between mobile workers, assets, and customers. For more information about Intermec, visit www.intermec.com or call 800-347-2636.

Non-GAAP Financial Measures

This press release includes Non-GAAP financial measures for operating profit (loss), net earnings (loss), earnings (loss) per diluted share, and gross margins and also presents Adjusted EBITDA. Reconciliations of each of these Non-GAAP financial measures to the most directly comparable GAAP financial measures are detailed in the tables set forth in or attached to this release: Reconciliation of GAAP to Non-GAAP Operating Profit (Loss) and Adjusted EBITDA Net Earnings (Loss) and Earnings (Loss) Per Share, set forth in this press release and Reconciliation of GAAP to Non-GAAP Operating Profit (Loss) and Reconciliation of GAAP to Non-GAAP Gross Margins, for the three and nine months ended September 30, 2012, attached to this press release.

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