News Release
Merrimac Reports Third Quarter and Nine
Months 2005 Results; Achieves Eight Consecutive Profitable
Quarters
WEST CALDWELL, N.J., November 15, 2005:
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 third quarter and first nine months of 2005.
Sales for the third quarter of 2005 were $7,890,000,
an increase of 3.5 percent compared to third quarter of 2004
sales of $7,620,000. Operating income in the third quarter
of 2005 was $291,000 compared to operating income of $384,000
in the third quarter of 2004. Net income for the third quarter
of 2005 was $228,000 or $.07 per diluted share compared to
net income of $315,000 or $.10 per diluted share for the third
quarter of 2004.
For the first nine months of 2005 sales of
$22,717,000 decreased 1.9 percent compared to sales of $23,164,000
for the first nine months of 2004. Operating income for the
first nine months of 2005 was $890,000 compared to operating
income for the first nine months of 2004 of $1,165,000. Net
income for the first nine months of 2005 was $644,000 or $.20
per diluted share compared to net income for the first nine
months of 2004 of $990,000 or $.31 per diluted share.
Sales for the third quarter 2005 were higher
due to our successful efforts to diversify Filtran Microcircuits
into wireless base station, automotive and defense applications,
which increased Filtran’s sales by $516,000, partly
offset by a reduction in electronic components and sub-assemblies
sales of $256,000, compared to the third quarter of 2004.
Sales for the first nine months of 2005 were lower primarily
due to reduced orders from delays in satellite and defense
programs. Gross profit percentage for the third quarter and
first nine months of 2005 was approximately the same as the
third quarter and first nine months of 2004. Operating results
for the third quarter 2005 were lower than 2004 due to an
increase in research and development costs to support new
Multi-Mix® products. Operating results for the first nine
months of 2005 were lower than 2004 due to a reduction of
gross profit of $265,000, resulting from decreased sales of
electronic components and sub-assemblies of $1,575,000 partly
offset by a $1,121,000 increase in sales for Filtran, and
an increase in research and development costs of $212,000
as previously noted.
Orders of $5,176,000 were received during the
third quarter of 2005, a decrease of $2,592,000 or 33.4 percent
compared to $7,768,000 in orders received during the third
quarter of 2004. Orders of $21,511,000 were received for the
first nine months of 2005, a decrease of $1,779,000 or 7.6
percent compared to $23,290,000 in orders received for the
first nine months of 2004. The reduction in orders for the
third quarter and nine months was due to delays in expected
satellite and defense programs. The delayed satellite and
defense programs, which resulted in lower orders for the third
quarter, may result in lower fourth quarter sales and slightly
lower fiscal 2005 sales as compared to 2004. Backlog decreased
by $1,206,000 to $11,739,000 at the end of third quarter 2005
compared to $12,945,000 at year-end 2004. Orders received
during the first nine months of 2005 were approximately 5.3
percent below sales for the first nine months of 2005.
Chairman and CEO Mason N. Carter commented,
“The Company achieved eight consecutive profitable quarters
while, just as importantly, continues its research and development
investment which should fuel our Multi-Mix® strategic
growth plan.
“Multi-Mix® is an enabling technology
that provides integrated platform families that are key to
our strategic growth plan. Our research and development is
currently taking RF Microwave integration to a new level and
provide “plug and play” modules that represent
leading-edge product solutions.”
Mr. Carter continued, “The reduction
in backlog reflects timing delays in expected third quarter
orders. As we make this report, we have received nearly $1.5
million of those delayed orders in the current fourth quarter.
Included was an important order for key satellite radio components.
Our financial results continue to reflect consistent profitable,
asset-managed performance:
- Gross profit of 41.2 percent for the third quarter and 42.1 percent for the first nine months of 2005
- Cash of $4.9 million (includes $1.5 million of restricted cash) exceeds the total of current and long-term debt of $3.3 million.
- Working capital of $10.2 million and current ratio of 3.4 to 1.
- Research and development costs increased $130,000 for the third quarter and $212,000 for the first nine months of 2005 to support new Multi-Mix® products to be available in 2006."
Investors are invited to participate in the
financial results conference call on Tuesday November 15,
2005 at 4:15 p.m. (Eastern) by dialing 1-800-310-1961 (for
International callers: 1-719-457-2692) ten minutes prior to
the scheduled start time, and reference the Merrimac Industries
third quarter 2005 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
8566482.
This conference call will also be broadcast
live over the Internet by logging on to the web at this address:
http://phx.corporate-ir.net/playerlink.zhtml?c=73209&s=wm&e=1162357
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 240 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 vishttp://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; general
economic and industry conditions; the possibilities of impairment
charges to the carrying value of our Multi-Mix(R) assets,
thereby resulting in charges to our earnings; slower than
anticipated penetration into the satellite communications,
defense and wireless markets; 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; failure of our Original Equipment Manufacturer,
or OEM, customers to successfully incorporate our products
into their systems; 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; 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; 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; 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
(Unaudited)
| |
Quarter
Ended |
| |
Oct. 1,
2005
|
Oct.
2,
2004
|
Net sales |
$7,890,000 |
$7,620,000 |
| Gross profit |
3,250,000 |
3,162,000 |
| Selling, general and
administrative expenses |
2,470,000 |
2,419,000 |
| Research and development |
489,000 |
359,000 |
| Operating income |
291,000 |
384,000 |
| Interest and other expense,
net |
(61,000) |
(54,000) |
| Loss on disposition of
assets |
(7,000) |
- |
| Income before income
taxes |
223,000 |
330,000 |
| Provision (benefit) for
income taxes |
(5,000) |
15,000 |
| Net income |
228,000 |
315,000 |
| |
|
|
| Basic and diluted net
income per common share |
$.07 |
$.10 |
| |
|
|
| Weighted average number
of shares outstanding - basic |
3,145,000
|
3,131,000
|
| Weighted average number
of shares outstanding - diluted |
3,179,000
|
3,155,000
|
| |
Nine
Months Ended |
| |
Oct. 1,
2005
|
Oct. 2,
2004
|
Net sales |
$22,717,000 |
$23,164,000 |
| Gross profit |
9,553,000 |
9,818,000 |
| Selling, general and
administrative expenses |
7,125,000 |
7,327,000 |
| Research and development |
1,538,000 |
1,326,000 |
| Operating income |
890,000 |
1,165,000 |
| Interest and other expense,
net |
(178,000) |
(205,000) |
| Loss on disposition of
assets |
(43,000) |
- |
| Income before income
taxes |
669,000 |
960,000 |
| Provision (benefit) for
income taxes |
25,000 |
(30,000) |
| Net income |
644,000 |
990,000 |
| |
|
|
| Basic net income per
common share |
$.21 |
$.32 |
| Diluted net income per
share |
$.20 |
$.31 |
| |
|
|
| Weighted average number
of shares outstanding - basic |
3,141,000
|
3,125,000
|
| Weighted average number
of shares outstanding - diluted |
3,175,000
|
3,151,000
|
Merrimac Industries,
Inc.
Condensed Consolidated Balance Sheets
| |
|
| |
Oct. 1,
2005
(Unaudited)
|
Jan. 1,
2005
|
ASSETS |
| Current Assets: |
| Cash and
cash equivalents |
$3,385,000 |
$2,166,000 |
| Income tax
refunds receivable |
- |
98,000 |
| Accounts
receivable, net |
5,958,000 |
6,473,000 |
| Inventories |
3,503,000 |
2,931,000 |
| Other current
assets |
867,000 |
583,000 |
| Deferred
tax assets |
681,000
|
676,000
|
| Total current
assets |
14,394,000 |
12,927,000
|
| Property, plant &
equipment, net |
14,261,000 |
15,584,000 |
| Restricted cash |
1,500,000 |
1,500,000 |
| Other assets |
640,000 |
747,000 |
| Deferred tax assets |
429,000 |
439,000 |
| Goodwill, net |
3,518,000 |
3,378,000 |
| Total Assets |
$34,742,000
|
$34,575,000
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
| Liabilities: |
| Current portion of long-term
debt |
$955,000 |
$905,000 |
| Other current liabilities |
3,205,000 |
3,558,000 |
| Total current liabilities |
4,160,000 |
4,463,000 |
| Long-term debt, net of
current portion |
2,305,000 |
2,778,000 |
| Deferred liabilities |
36,000 |
88,000 |
| Deferred tax liabilities |
648,000 |
648,000 |
| Total liabilities |
7,149,000 |
7,977,000 |
| Stockholders' equity |
27,593,000
|
26,598,000
|
| Total Liabilities &
Stockholders' Equity |
$34,742,000
|
$34,575,000
|
|
|
|
