News Release
FOR IMMEDIATE RELEASE
Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
Merrimac Reports Second Quarter and Six
Months 2006 Results
WEST CALDWELL, N.J., August 15, 2006:
Merrimac Industries, Inc. (AMEX: MRM),
a leader in the design and manufacture of RF Microwave components,
subsystem assemblies and micro-multifunction modules (MMFM®),
today announced results for the second quarter and first six
months of 2006.
Sales for the second quarter of 2006 were $8,251,000,
a $682,000 or a 9.0 percent increase compared to the second
quarter of 2005 sales of $7,569,000. Sales increased due to
the shipment of a $750,000 order to a significant military
customer and $1,200,000 of revenue recognized in connection
with the early close out of a fixed price customer contract,
offset by a sales reduction in the microwave micro-circuitry
segment of $650,000 due to delays in renewals of the segment’s
defense orders. Gross profit for the second quarter of 2006
was $3,710,000, an increase of $442,000 or 13.5 percent and
was 45.0 percent of sales as compared to gross profit of $3,268,000
or 43.2 percent of sales for the second quarter of 2005. Second
quarter 2006 gross profit includes $1,200,000 of revenue recognized
from the early contract close out as to which second quarter
expenses were approximately $140,000 because the Company had
ceased work when the contract ended. Gross profit percent
in the second quarter of 2006 increased from the second quarter
of 2005 due to the revenue recognized as a result of the early
contract close out previously mentioned.
Operating income for the second quarter of
2006 increased $133,000 to $549,000 compared to operating
income of $416,000 for the second quarter of 2005 due to revenue
recognized as a result of the early contract close out previously
mentioned. Operating income for the second quarter of 2006
included a non-cash charge of $35,000 for share-based compensation
expense resulting from the adoption of SFAS No. 123R at the
beginning of fiscal year 2006. Net income for the second quarter
of 2006 was $529,000 or $.17 per diluted share compared to
net income of $332,000 or $.10 per diluted share for the second
quarter of 2005.
For the first six months of 2006 sales of $14,482,000
decreased $345,000 or 2.3 percent compared to sales of $14,827,000
for the first six months of 2005. Sales for the first six
months of 2006 were lower than the first six months of 2005
primarily due to the lower bookings levels received during
the second half of 2005 and the first quarter of 2006 as compared
to comparable prior periods from delays in space and defense
programs. 2006 sales included a sales reduction in the microwave
micro-circuitry segment of $640,000 due to delays in renewals
of the segment’s defense orders, offset by the revenue
recognized as a result of the early contract close out previously
mentioned. Gross profit for the first six months of 2006 was
$6,112,000, a decrease of $191,000 or 3.0 percent and was
42.2 percent of sales as compared to gross profit of $6,303,000
or 42.5 percent of sales for the first six months of 2005.
Operating income for the first six months of
2006 was $93,000 compared to operating income for the first
six months of 2005 of $599,000. The reduction in operating
income for the first six months of 2006 as compared to the
first six months of 2005 was due to the lower gross profit
from the decrease in sales, partially offset by revenue recognized
as a result of the early contract close out previously mentioned,
and due to higher selling, general and administrative expenses
compared to the first six months of 2005. Operating income
for the first six months of 2006 included a non-cash charge
of $79,000 for share-based compensation expense resulting
from the adoption of SFAS No. 123R. Net income for the first
six months of 2006 was $89,000 or $.03 per diluted share compared
to net income of $416,000 or $.13 per diluted share for the
first six months of 2005. Net income for the first six months
of 2006 also included a tax benefit of $48,000 or $.02 per
share representing refundable Canadian provincial technology
tax credits for which the Company has qualified.
Orders of $8,919,000 were received during the
second quarter of 2006, an increase of $779,000 or 9.6 percent
compared to $8,140,000 in orders received during the second
quarter of 2005. Orders of $12,864,000 were received for the
first six months of 2006, a decrease of $3,471,000 or 21.2
percent compared to $16,335,000 in orders received for the
first six months of 2005. The decrease in orders for the first
six months of 2006 as compared to the first six months of
2005 was due to delays in expected satellite and defense programs
for all product lines, including our Multi-Mix® products.
Backlog decreased by $1,617,000 or 12.3 percent to $11,521,000
at the end of the second quarter of 2006 compared to $13,138,000
at year-end 2005. The book-to-bill ratio for the second quarter
of 2006 was 1.08 to 1 and for the second quarter of 2005 was
1.08 to 1. The book-to-bill ratio for the first six months
of 2006 was 0.89 to 1 and for the first six months of 2005
was 1.10 to 1.
Chairman and CEO Mason N. Carter commented,
“Working closely with our customers during their initial
design stage has enabled us to position ourselves for the
future. However, we are experiencing some timing delays with
respect to our space and defense customers for all product
lines, including our Multi-Mix® customers, as they continue
to finalize their system designs and work out contract details
with their customers.”
Mr. Carter continued, “Our financial
highlights include:
- Orders booked of $8.9 million for the second quarter.
- Cash of $4.9 million (includes $1.5 million of restricted cash) exceeds the total of current and long-term debt of $2.7 million.
- Working capital of $10.4 million and current ratio of 3.8 to 1."
Investors are invited to participate in the
financial results conference call on Tuesday, August 15, 2006
at 4:15 p.m. (Eastern) by dialing 1-800-946-0715 (for International
callers: 1-719-457-2643) ten minutes prior to the scheduled
start time, and reference the Merrimac Industries second 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
6839549.
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=35272
If you are unable to participate during the
live webcast, a link to the archived webcast will be posted
on the Merrimac Industries, Inc. 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 used in
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®,
System In A Package®, SIP® and Total Integrated Packaging
Solutions® are registered 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.
Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
| |
|
|
Quarter
Ended
(Unaudited) |
|
| |
|
|
July
1, 2006 |
July
2, 2005 |
|
Net sales |
$8,251,000 |
$7,569,000 |
|
|
|
|
|
| Gross
profit |
3,710,000 |
3,268,000 |
| Selling,
general & administrative expenses |
2,645,000 |
2,344,000 |
| Research
and development |
516,000 |
508,000 |
| Operating
income |
549,000 |
416,000 |
| Interest
and other expense, net |
(33,000) |
(64,000) |
| Income before
income taxes |
516,000 |
389,000 |
| Provision
(benefit) for income taxes |
(13,000) |
20,000 |
| Net
income |
529,000 |
332,000 |
|
| |
| Basic
net income per common share |
$ .17 |
$.11 |
|
| Diluted
net income per common share |
$ .17 |
$.10 |
|
| |
| Weighted
average number of shares outstanding - basic |
3,144,000 |
3,141,000 |
| Weighted
average number of shares outstanding - diluted |
3,183,000 |
3,173,000 |
| |
Six
Months Ended |
| |
July
1, 2006 |
July
2, 2005 |
Net sales |
$14,482,000 |
$14,827,000 |
| Gross profit |
6,112,000 |
6,303,000 |
| Selling, general and
administrative expenses |
5,131,000 |
4,655,000 |
| Research
and development |
888,000 |
1,049,000 |
| Operating income |
93,000 |
599,000 |
| Interest and other expense,
net |
(52,000) |
(117,000) |
| Loss on disposition of
assets |
- |
(36,000) |
| Income before income
taxes |
41,000 |
446,000 |
|
| Provision (benefit) for
income taxes |
(48,000) |
30,000 |
|
| Net income |
89,000 |
416,000 |
|
| |
|
|
| Basic net income per common share |
$.03 |
$.13 |
|
| Diluted net income per common share |
$.03 |
$.13 |
|
| |
|
|
| Weighted average number
of shares outstanding - basic |
3,146,000 |
3,139,000 |
| Weighted average number
of shares outstanding - diluted |
3,166,000 |
3,174,000 |
Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets
| |
|
|
July
1, 2006
(Unaudited)
| December
31, 2005 |
| ASSETS |
Current assets: |
|
|
|
|
| Cash
and cash equivalents |
$ 3,383,000 |
$ 4,081,000 |
| Income
tax refunds receivable |
433,000 |
418,000 |
| Accounts
receivable, net |
5,545,000 |
5,310,000 |
| Inventories |
4,003,000 |
3,710,000 |
| Other
current assets |
619,000 |
693,000 |
| Deferred
tax assets |
140,000 |
140,000 |
| Total
current assets |
14,123,000 |
14,352,000 |
| Property,
plant and equipment, net |
13,618,000 |
13,973,000 |
| Restricted
cash |
1,500,000 |
1,500,000 |
| Other
assets |
646,000 |
614,000 |
| Deferred
tax assets |
502,000 |
482,000 |
| Goodwill,
net |
3,681,000 |
3,501,000 |
| Total
Assets |
$34,070,000 |
$34,422,000 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
Liabilities: |
|
|
|
|
| Current
portion of long-term debt |
$ 856,000 |
$ 908,000 |
| Other
current liabilities |
2,834,000 |
3,590,000 |
| Total
current liabilities |
3,690,000 |
4,498,000 |
| Long-term
debt, net of current portion |
1,842,000 |
2,071,000 |
| Deferred
liabilities |
31,000 |
23,000 |
| Deferred
tax liabilities |
140,000 |
140,000 |
| Total
liabilities |
5,703,000 |
6,732,000 |
| Stockholders'
equity |
28,367,000 |
27,690,000 |
| Total
Liabilities and
Stockholders' Equity |
$34,070,000 |
$34,422,000 |
|
|
|
