Exhibit 99.1
OMEGA FLEX, INC.
Manufacturer of flexible metal hose and gas piping products
Westfield, Massachusetts | Contact: Kevin R. Hoben |
March 13, 2007 | (413) 564-5731 |
PRESS RELEASE
Omega Flex today reported its results of operations for the Fourth Quarter, 2006:
OMEGA FLEX, INC. (OFLX) | EARNINGS DIGEST |
| | |
Three Months Ended December 31: | 2006 | 2005 |
| | |
Revenues | $19,068,000 | $19,989,000 |
| | |
Net income before unusual items (Non-GAAP Financial Measure) | 3,048,000 | 3,034,000 |
Unusual litigation expenses (net of tax) | (108,000) | (565,000) |
Net income (GAAP Financial Measure) | $2,940,000 | $2,469,000 |
| ========= | ========= |
Basic and diluted earnings per share: | | |
Net income before unusual items (Non-GAAP Financial Measure) per common share | $0.30 | $0.30 |
Unusual litigation expenses (net of tax) | (0.01) | (0.06) |
Net income (GAAP Financial Measure) per common share | $0.29 | $0.24 |
| ==== | ==== |
| | |
Twelve Months Ended December 31: | 2006 | 2005 |
| | |
Revenues | $73,574,000 | $65,638,000 |
| | |
Net income before unusual items (Non-GAAP Financial Measure) | 11,642,000 | 9,138,000 |
Stock-based compensation expense (net of tax) | --- | (362,000) |
Unusual litigation expenses (net of tax) | (6,478,000) | (1,299,000) |
Net income (GAAP Financial Measure) | $5,164,000 | $7,477,000 |
| ========= | ========= |
Basic and diluted earnings per share: | | |
Net income before unusual items (Non-GAAP Financial Measure) per common share | $1.15 | $0.90 |
Stock-based compensation expense (net of tax) | --- | (0.03) |
Unusual litigation expenses (net of tax) | (0.64) | (0.13) |
Net income (GAAP Financial Measure) per common share | $0.51 | $0.74 |
| ==== | ==== |
Kevin R. Hoben, President and CEO, indicated the Company’s 4th Quarter Revenues declined 4.6% from Revenues in the 4th Quarter 2005, but Net Income Before Unusual Items (a non-GAAP financial measure that reports net income before unusual or anomalous items) improved nominally over same period. Revenues for the year increased 12.1%, and Net Income Before Unusual Items increased 27.4% over the same period last year. The decline in Revenues for the 4th Quarter 2006 as compared to the 4th Quarter 2005 reflects the continuing weakness in the residential construction industry. However, the increase in Net Income for the same periods is due, in part, to a decline in unusual litigation expenses.
Net Income Before Unusual Items is a non-GAAP financial measure that represents the Company's after-tax earnings exclusive of items that the Company believes are unusual in nature. Management believes that the unusual items identified, while not necessarily "nonrecurring", are sufficiently anomalous to warrant the presentation of a separate financial measure which allows investors to evaluate the Company's performance exclusive of these items. The unusual items consist of (1) non-recurring stock-based compensation (a non-cash charge to earnings), the obligation for which was cancelled at the time of the “Spin-Off” in July 2005 as explained more fully in the Company’s filings with the Securities and Exchange Commission; and (2) charges incurred regarding the settlement of the Arkansas class
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action litigation, including defense costs, also explained more fully in the Company’s filings with the Securities and Exchange Commission.
The first Unusual Item, consisting of non-recurring stock-based compensation served to suppress earnings $0.03 per share in 2005.
The second Unusual Item relates to the settlement of the Arkansas class action litigation, which was disclosed on Form 8-K filed on September 6, 2006. The costs incurred pursuant to the Arkansas court’s final order and judgment approving the settlement, including attorneys’ fees and expenses, and the costs directly incurred by the Company in defending the litigation, are identified as Unusual Litigation Expenses (net of tax). These expenses served to suppress Net Income by ($0.01) per share for the fourth quarter and ($0.64) per share for twelve months to date compared to ($0.06) and ($0.13) per share for the same periods last year.
After deducting the above two unusual items, Net Income, a GAAP financial measure, resulted in income of $0.29 per share in the fourth quarter 2006 as compared to income of $0.24 per share in the same period 2005. For the twelve months ended December 31, Net Income per share was $0.51 and $0.74 respectively for the years 2006 and 2005.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS - This news release contains forward-looking statement, which are subject to inherent uncertainties which are difficult to predict, and may be beyond the ability of Omega Flex to control. Certain statement in this news release constitute forward-looking statements with the meaning of the Private Securities Litigation Reform act of 1995, that are not historical facts, but rather reflect Omega Flex’s current expectations concerning future results and events. The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Omega Flex (or entities in which Omega Flex has interests) or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s view only as of the date of this news release. Omega Flex undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.
OMEGA FLEX, Inc., 451 Creamery Way, Exton, PA 19341-2509
Tel: 800-671-8622 or 610-524-7272 Fax: 610-524-7582
Omega Flex Corporate Office, 260 North Elm St., Westfield, MA 01085, Tel: 413-875-1000, Fax: 413-564-5814
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