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API Technologies Reports Results For The Fiscal Fourth Quarter Ended November 30, 2012

Stocks in this article: ATNY

Safe Harbor for Forward-Looking Statements

Except for statements of historical fact, the information presented herein constitutes forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include but are not limited to, general economic and business conditions, government regulations, our ability to integrate and consolidate our operations, our ability to expand our operations in both new and existing markets, the ability of our review of strategic alternatives to maximize stockholder value and the effect of growth on our infrastructure. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the above factors located in our Annual Report on Form 10-K under Part I, Item 1A “Risk Factors” as well as those additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. All information in this release is as of the date hereof. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise.

       
API Technologies Corp.
Financial Results
For the Three and Twelve Months Ended November 30, 2012
 
Consolidated Statement of Operations (unaudited)
in thousands USD
 
For the Three For the Three For the Twelve For the Twelve
Months Ended Months Ended Months Ended Months Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
  2012     2011     2012     2011  
Revenue, net $ 62,749 $ 75,082 $ 280,820 $ 197,569
Cost of revenues
Cost of revenues 49,344 57,121 214,460 154,875
Restructuring charges   706     195     10,336     1,514  
 
Total cost of revenues   50,050     57,316     224,796     156,389  
 
Gross profit   12,699     17,766     56,024     41,180  
 
Operating expenses
General and administrative 7,024 5,105 26,825 23,908
Selling expenses 3,940 3,504 15,753 12,057
Research and development 2,406 2,636 10,297 6,176
Business acquisition and related charges 584 638 4,027 13,436
Restructuring charges   2,631     1,453     7,366     4,446  
 
  16,585     13,336     64,268     60,023  
 
Operating income (loss) (3,886 ) 4,430 (8,244 ) (18,843 )
Other expenses (income), net
Goodwill impairment 111,300
Interest expense, net 4,311 3,328 16,209 7,729
Amortization of note discounts and deferred financing costs 727 524 15,684 3,900
Other expense (income), net   3,225     228     898     (329 )
 
  8,263     4,080     144,091     11,300  
 
Loss from continuing operations before income taxes (12,149 ) 350 (152,335 ) (30,143 )
Expense (benefit) for income taxes   154     2,837     (3,632 )   (12,851 )
 
Income (loss) from continuing operations, net of income taxes (12,303 ) (2,488 ) (148,703 ) (17,292 )
Income (loss) from discontinued operations, net of income taxes               (36 )
 
Net income (loss) $ (12,303 ) $ (2,488 ) $ (148,703 ) $ (17,328 )
 
Income (loss) per share from continuing operations—Basic and diluted $ (0.22 ) $ (0.05 ) $ (2.69 ) $ (0.40 )
Income (loss) per share from discontinued operations—Basic and diluted $ 0.00   $ 0.00   $ 0.00   $ 0.00  
 
Net income (loss) per share—Basic and diluted $ (0.22 ) $ (0.05 ) $ (2.69 ) $ (0.40 )
 
Weighted average shares outstanding
Basic 55,368,033 52,404,074 55,314,263 43,177,538
Diluted 55,368,033 52,416,071 55,314,263 43,177,538
 
 
Consolidated Balance Sheets (unaudited)
in thousands USD
   
November 30, November 30,
2012 2011
Assets
Current
Cash and cash equivalents $ 20,535 $ 15,689
Restricted cash 700 700
Accounts receivable 45,229 52,983
Inventories, net 67,962 72,017
Deferred income taxes 1,101 4,797
Prepaid expenses and other current assets   2,644     1,705  
138,171 147,891
Fixed assets, net 41,792 44,149
Fixed assets held for sale 900 3,217
Goodwill 156,002 253,170
Intangible assets, net 50,090 50,001
Other non-current assets   9,344     8,019  
Total assets $ 396,299   $ 506,447  
 
Liabilities and Shareholders’ Equity
Current
Accounts payable and accrued expenses $ 41,487 $ 46,002
Deferred revenue 385 1,892
Current portion of long-term debt   2,328     1,917  
44,200 49,811
Deferred income taxes 3,410 9,905
Other long-term liabilities 1,048
Long-term debt, net of current portion and discount   183,087     165,267  
  231,745     224,983  
 
Preferred Stock, net of discounts 25,581
 
Shareholders’ equity
Common stock 55 55
Special voting stock
Additional paid-in capital 326,973 322,675
Common stock subscribed but not issued 2,373 2,373
Accumulated deficit (192,513 ) (43,810 )
Accumulated other comprehensive income   2,085     171  
  138,973     281,464  
Total Liabilities and Shareholders’ Equity $ 396,299   $ 506,447  
 
 

Consolidated Adjusted EBITDA

in thousands USD

 
The following table reconciles three and twelve months GAAP net loss to non-GAAP Adjusted EBITDA from continuing operations.
  Three Months Ended   Twelve Months Ended
November 30, November 30,
  2012       2011   2012

 

2011

Net income (loss) $ (12,303 )   $ (2,488 ) $ (148,703 ) $ (17,328 )
Adjustments
Interest expense, net 4,311 3,328 16,209 7,729
Amortization of note discounts and deferred financing costs 727 524 15,684 3,900
Depreciation and amortization 5,045 4,056 18,230 10,619
Goodwill impairment 111,300
Income taxes 154 2,837 (3,632 ) (12,851 )
Stock based compensation 290 128 2,224 2,900
Restructuring 3,337 1,650 17,702 5,960
Acquisition related charges 584 638 4,027 13,436
Other adjustments (A) 4,884 6,283 92
Spectrum acquisition inventory fair value 732 1,704
SenDEC earn-out reversal (2,213 )
C-MAC pro-forma adjustment 924 2,100
Foreign exchange (gain) loss 301 42 425 42
Discontinued operations               36  
Adjusted EBITDA $ 8,254   $ 11,447   $ 39,636   $ 16,239  
Adjusted EBITDA Margin   13.2 %   15.2 %   14.1 %   8.2 %
 

(A)

 

Charges in 2012 primarily relate to non-cash inventory provisions, a $1.9 million impairment write-down on assets held for sale ($1.8 million in Q4-2012), and a $1.1 million loss contingency accrual in Q4-2012.

 
 

Additional Adjusted EBITDA Reconciliations

in thousands USD

 
The following table reconciles three months GAAP net loss to non-GAAP Adjusted EBITDA for our reportable segments for the quarter ended November 30, 2012.
  SSC   SSIA   Sub-total

SSC & SSIA

  EMS   Corporate   Total
Q4 Q4 Q4 Q4 Q4 Q4
 
Revenue $ 48,721 $ 3,370 $ 52,091 $ 10,658 $ - $ 62,749
Net Income (loss) (1,999 ) (246 ) (2,245 ) (2,906 ) (7,152 ) (12,303 )
Adjustments
Interest expense, Net 1,850 (2 ) 1,848 86 2,377 4,311
Amortization of note discounts and deferred financing costs - - - - 727 727
Depreciation & amortization 4,011 134 4,145 820 80 5,045
Goodwill impairment - - - - - -
Income taxes (119 ) (42 ) (161 ) 10 305 154
Stock based compensation - - - - 290 290
Restructuring 880 634 1,514 1,749 74 3,337
Acquisition related charges 8 - 8 - 576 584
C-MAC pro-forma adjustments 924 - 924 - - 924
Other adjustments (A) 3,313 - 3,313 373 1,198 4,884
Foreign exchange loss - - - - 301 301
Net corporate costs (B) (950 ) (66 ) (1,016 ) (208 ) 1,224 -
Add-Back Total 9,917     658     10,575     2,830     7,152     20,557  
Adjusted EBITDA $ 7,918   $ 412   $ 8,330   $ (76 ) $ -   $ 8,254  
Adjusted EBITDA Margin 16.3 %   12.2 %   16.0 %   -0.7 %     13.2 %
 
(A)   Charges relate to non-cash inventory provisions.

(B)

Net Corporate costs are allocated to the three segments by percentage of total consolidated revenues.

 
 

Additional Adjusted EBITDA Reconciliations

in thousands USD

 
The following table reconciles three months GAAP net loss to non-GAAP Adjusted EBITDA for our reportable segments for the quarter ended November 30, 2011.
  SSC   SSIA   Sub-total

SSC & SSIA

  EMS   Corporate   Total
Q4 Q4 Q4 Q4 Q4 Q4
 
Revenue $ 45,651 $ 6,456 $ 52,107 $ 22,975 $ - $ 75,082
Net Income (loss) 1,617 658 2,275 340 (5,103 ) (2,488 )
Adjustments
Interest expense, Net - 9 9 - 3,319 3,328
Amortization of note discounts and deferred financing costs - - - - 524 524
Depreciation & amortization 2,832 84 2,916 1,120 20 4,056
Goodwill impairment - - - - - -
Income taxes 2,578 225 2,803 3 31 2,837
Stock based compensation - - - - 128 128
Restructuring 554 442 996 564 90 1,650
Acquisition related charges 150 - 150 - 488 638
Spectrum fair value adjustments 732 - 732 - - 732
Foreign exchange loss 32 18 50 - (8 ) 42
Net corporate costs (A) (311 ) (44 ) (355 ) (156 ) 511 -
Add-Back Total 6,567     734     7,301     1,531     5,103     13,935  
Adjusted EBITDA $ 8,184   $ 1,392   $ 9,576   $ 1,871   $ -   $ 11,447  
Adjusted EBITDA Margin 17.9 %   21.6 %   18.4 %   8.1 %     15.2 %
 
(A)   Net Corporate costs are allocated to the three segments by percentage of total consolidated revenues.
 
     
Gross Margin without Restructuring Charges
$ amounts in thousands USD
 
Three Months Ended Three Months Ended Three Months Ended
November 30, 2012 August 31, 2011 November 30, 2011
Revenue $ 62,749 $ 68,448 $ 75,082
Gross Profit $ 12,699 $ 15,285 $ 17,766
Restructuring $ 706 $ 1,738 $ 195
Gross profit without restructuring $ 13,405 $ 17,023 $ 17,961
Gross margin % without restructuring 21.4 % 24.9 % 23.9 %




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