News Release
Merrimac Reports First Quarter 2006 Results
WEST CALDWELL, N.J. May 16, 2006: Merrimac
Industries, Inc. (AMEX: MRM), a leader in the design and manufacture
of RF Microwave components, assemblies and micro-multifunction
modules (MMFM®), today announced results for the first
quarter of 2006.
Sales for the first quarter of 2006 were $6,231,000,
a 14.2 percent decrease compared to first quarter of 2005
sales of $7,258,000. The reduction in 2006 sales was due to
lower orders placed in 2005 due to delays in expected satellite
and defense programs. Sales for the first quarter of 2006
would have been favorably impacted by an additional $750,000
order, invoiced in March 2006 (and due for payment in May
2006), which the Company is holding in its own facility at
the customer's specific instructions for shipment in June
2006. This order was completed and ready for shipment in March
2006 but cannot be recognized as a sale under applicable revenue
recognition requirements until the order is actually shipped.
The Company anticipates recognizing this order as revenue
in the second quarter of 2006. Gross profit for the first
quarter of 2006 was $2,401,000 or 38.5 percent of sales as
compared to first quarter 2005 gross profit of $3,034,000
or 41.8 percent of sales. The decrease in gross margin percent
in the first quarter of 2006 from the first quarter of 2005
was due to an increased percentage of lower margin product
in the overall product mix.
Operating loss for the first quarter of 2006
was $(457,000) compared to operating income of $182,000 for
the first quarter of 2005. Operating loss for the first quarter
of 2006 was lower than in 2005 as a result of lower gross
profit from the decrease in sales and included a non-cash
charge of $44,000 for share-based compensation expense resulting
from the adoption of SFAS No. 123R in the first quarter of
2006.
Net loss for the first quarter of 2006 was
$(441,000) compared to net income of $84,000 for the first
quarter of 2005. Net loss per share was $(.14) for the first
quarter of 2006, compared to net income per share of $.03
reported for the first quarter of 2005. Net loss for the first
quarter of 2006 included a non-cash charge of $44,000 or $.01
per share for share-based compensation expense resulting from
the adoption of SFAS No. 123R. Net loss for the first quarter
of 2006 also included a tax benefit of $35,000 or $.01 per
share representing refundable Canadian provincial technology
tax credits for which the Company has qualified and lower
net interest expense. Net income for the first quarter of
2005 included a loss on the disposition of capital assets
of $36,000 or $.01 per share.
The backlog at the end of the first quarter
of 2006 was $10.8 million, a decrease of $2.3 million or approximately
17.4 percent compared to the backlog of $13.1 million at December
31, 2005 and a decrease of $3.0 million or 21.8 percent when
compared to the backlog of $13.8 million at the end of the
first quarter of 2005. Orders received during the first quarter
of 2006 totaled $3.9 million and were approximately 36.7 percent
below first quarter 2006 sales. The book-to-bill ratio for
the first quarter of 2006 was 0.6 to 1 and for the first quarter
2005 was 1.1 to 1.
Chairman and CEO Mason N. Carter commented,
“During the first quarter of 2006:
- We completed our contractual commitment to ship Multi-Mix® phase detector subsystem assemblies for a military defense application. This opportunity extended Multi-Mix® to a new level of competency and clearly demonstrated to our customer the unique value that Multi-Mix® can contribute to an engineering design.
- Multi-Mix® WiMAX component orders increased.
- Multi-Mix® infrastructure component orders to China also increased.
- Received an additional order to custom design two additional Multi-Mix® parts for a Joint Tactical Radio System (JTRS) military customer.
- Provided custom conventional technology quadrature hybrids on a critical military Satcom application."
Mr. Carter further commented, "We are excited about receiving a patent on our Multi-Mix®
Resource Module that will be the foundation for redefining our business for high-power RF circuitry
solutions to meet the growing demand for high-power integrated amplifiers and radio transceivers,
phased-array radar transmitter elements, phase shifters, attenuators, mixers, modulators and high-power
PIN diode switches. The Resource Module offers a very attractive value proposition that may provide
enabling solutions to a variety of different commercial and military market applications."
Mr. Carter continued, “The Company will continue to focus
its Multi-Mix® Microtechnology business strategy on development,
manufacturing and marketing of the high power amplifier Multi-Mix®
Resource Module and ancillary products. To support the Multi-Mix®
initiative, the Company expects to make significant investments
in additional technical designing and engineering personnel
resources and additional assets and equipment. As a result
of this increased investment in our technology, the lower
level of certain traditional sales currently being experienced
and anticipated and the adoption of the SFAS No. 123R accounting
standard, the Company anticipates that operating income, net
income and net income per share could be adversely affected
during the remainder of 2006 and until our Multi-Mix®
product line sales increase as anticipated.”
Investors are invited to participate in the
financial results conference call on Tuesday, May 16, 2006
at 4:15 p.m. (Eastern) by dialing 1-800-289-0493 (for International
callers: 1-913-981-5510) ten minutes prior to the scheduled
start time, and reference the Merrimac Industries first quarter
2006 conference call. For those unable to participate, a replay
will be available for seven days by dialing 1-888-203-1112,
or 1-719-457-0820 for international callers, passcode number
6804700.
This conference call will also be broadcast
live over the internet by logging on to the web at this address:
http://www.videonewswire.com/event.asp?id=33985
If you are unable to participate during the live webcast, the call will be
archived on the Merrimac website:
http://www.merrimacind.com
About Merrimac
Merrimac Industries, Inc. is a leader in the
design and manufacture of RF Microwave signal processing components,
subsystem assemblies, and Multi-Mix® micro-multifunction
modules (MMFM®), for the worldwide Defense, Satellite
Communications (Satcom), Commercial Wireless and Homeland
Security market segments. Merrimac is focused on providing
Total Integrated Packaging Solutions® with Multi-Mix®
Microtechnology, a leading edge competency providing value
to our customers through miniaturization and integration.
Multi-Mix® MMFM® provides a patented and novel packaging
technology that employs a platform modular architecture strategy
that incorporates embedded semiconductor devices, MMICs, etched
resistors, passive circuit elements and plated-through via
holes to form a three-dimensional integrated module applicable
to High Power, High Frequency and High Performance mission-critical
applications. Merrimac Industries facilities are registered
under ISO 9001:2000, an internationally developed set of quality
criteria for manufacturing operations.
Merrimac Industries, Inc. has facilities located
in West Caldwell, NJ, San Jose, Costa Rica and Ottawa, Ontario,
Canada, and has approximately 230 co-workers dedicated to
the design and manufacture of signal processing components,
gold plating of high-frequency microstrip, bonded stripline
and thick metal-backed Teflon (PTFE) micro-circuitry and subsystems
providing Total Integrated Packaging Solutions® for wireless
applications. Merrimac (MRM)
is listed on the American Stock Exchange. Multi-Mix®,
Multi-Mix PICO®, MMFM® and Total Integrated Packaging
Solutions® are trademarks of Merrimac Industries, Inc.
For more information about Merrimac Industries, Inc. and its
Canadian subsidiary Filtran Microcircuits Inc., please visit
http://www.merrimacind.com
and http://www.filtranmicro.com.
This press release contains statements relating
to future results of the Company (including certain projections
and business trends) that are "forward-looking statements"
as defined in the Private Securities Litigation Reform Act
of 1995. Actual results may differ materially from those projected
as a result of certain risks and uncertainties. These risks
and uncertainties include, but are not limited to: risks associated
with demand for and market acceptance of existing and newly
developed products as to which the Company has made significant
investments, particularly its Multi-Mix® products; the
possibilities of impairment charges to the carrying value
of our Multi-Mix® assets, thereby resulting in charges
to our earnings; slower than anticipated penetration into
the satellite communications, defense and wireless markets;
failure of our Original Equipment Manufacturer, or OEM, customers
to successfully incorporate our products into their systems;
changes in product mix resulting in unexpected engineering
and research and development costs; delays and increased costs
in product development, engineering and production; reliance
on a small number of significant customers; the emergence
of new or stronger competitors as a result of consolidation
movements in the market; the timing and market acceptance
of our or our OEM customers’ new or enhanced products;
general economic and industry conditions; the risk that the
benefits expected from the Company’s acquisition of
Filtran Microcircuits Inc. are not realized; the ability to
protect proprietary information and technology; competitive
products and pricing pressures; our ability and the ability
of our OEM customers to keep pace with the rapid technological
changes and short product life cycles in our industry and
gain market acceptance for new products and technologies;
foreign currency fluctuations between the U.S. and Canadian
dollars; risks relating to governmental regulatory actions
in communications and defense programs; and inventory risks
due to technological innovation and product obsolescence,
as well as other risks and uncertainties as are detailed from
time to time in the Company's Securities and Exchange Commission
filings. These forward-looking statements are made only as
of the date hereof, and the Company undertakes no obligation
to update or revise the forward-looking statements, whether
as a result of new information, future events or otherwise.
Contact:
Mason N. Carter, Chairman & CEO
973.575.1300, ext. 1202
E-mail: mnc@merrimacind.com
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)
| |
Quarter Ended
|
| |
April
1, 2006
|
April
2, 2005
|
Net sales
|
$6,231,000
|
$7,258,000
|
|
Gross profit
|
2,401,000
|
3,034,000
|
|
Selling, general and administrative expenses
|
2,486,000
|
2,311,000
|
|
Research and development
|
372,000
|
541,000
|
|
Operating income (loss)
|
(457,000)
|
182,000
|
|
Interest and other expense, net
|
19,000
|
52,000
|
|
Loss on disposition of capital assets
|
-
| 36,000
|
|
Income (loss) before income taxes
|
(476,000)
|
94,000
|
|
Provision (benefit) for income taxes
|
(35,000)
|
10,000
|
|
Net income (loss)
|
(441,000)
|
84,000
|
| |
|
|
| Net income (loss) per
common share - basic and diluted
|
$(.14)
|
$.03
|
| |
|
|
| Weighted average number
of shares outstanding - basic
|
3,149,000
|
3,138,000
|
| Weighted average number
of shares outstanding - diluted
|
3,149,000
|
3,175,000
|
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
| |
|
|
April
1, 2006
(Unaudited)
|
December
31, 2005
|
|
ASSETS |
Current assets: |
|
|
|
|
| Cash
and cash equivalents |
$ 3,303,000 |
$ 4,081,000 |
| Restricted cash |
1,500,000 |
- |
| Income tax
refunds receivable |
419,000 |
418,000 |
| Accounts
receivable |
5,405,000 |
5,310,000 |
| Inventories |
4,223,000 |
3,710,000 |
| Other
current assets |
654,000 |
693,000 |
| Deferred
tax assets |
140,000 |
140,000 |
| Total current
assets |
15,644,000 |
14,352,000 |
| Property,
plant and equipment, net |
13,934,000 |
13,973,000 |
| Restricted
cash |
- |
1,500,000 |
| Other
assets |
634,000 |
614,000 |
| Deferred
tax assets |
481,000 |
482,000 |
| Goodwill |
3,497,000 |
3,501,000 |
| Total
Assets |
$34,190,000 |
$34,422,000 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
Liabilities: |
|
|
|
|
| Current
portion of long-term debt |
$2,608,000 |
$908,000 |
| Other current
liabilities |
3,772,000 |
3,590,000 |
| Total
current liabilities |
6,380,000 |
4,498,000 |
| Long-term
debt, net of current portion |
298,000 |
2,071,000 |
| Deferred
liabilities |
17,000 |
23,000 |
| Deferred
tax liabilities |
140,000 |
140,000 |
| Total
liabilities |
6,835,000 |
6,732,000 |
| Stockholders'
equity |
27,355,000 |
27,690,000 |
| Total
Liabilities and Stockholders' Equity |
$34,190,000 |
34,422,000 |
|
|
|
