Exhibit 99.1
AXSYS TECHNOLOGIES ANNOUNCES 47% INCREASE IN
SECOND QUARTER OPERATING INCOME
ROCKY HILL, CT – July 26, 2005 – Axsys Technologies, Inc. (NASDAQ: AXYS), a global leader in the design, manufacture and distribution of precision optical solutions, today announced financial results for the second quarter ended July 2, 2005.
Second Quarter Financial Highlights – versus fiscal 2004 second quarter:
• Sales rose 30% to $33.4 million.
• Gross margin increased to 31.0% from 30.4%.
• Operating income was up 47% to $3.3 million; operating margin rose to 10.0% from 8.8%.
• Net income was $1.6 million or $0.21 per diluted share in the second quarter of 2005 compared to $2.0 million or $0.27 per diluted share in the 2004 period, due primarily to a tax rate increase in the 2005 quarter.
• Total backlog of firm orders at the end of the second quarter was a record $100.5 million.
The Company’s acquisition of Diversified Optical Products, Inc. (DiOP) on May 2, 2005 coupled with strong military spending on surveillance and targeting programs contributed to the year-over-year growth. Organic year-over-year revenue growth during the comparable period was 12%.
Net income of $1.6 million in the second quarter of 2005 was impacted by the return to a normalized tax rate of 37.5%, compared to a tax rate of 10% in the comparable period of 2004. In addition, Axsys incurred an additional $603,000 of interest expense as a result of acquisition financing. Finally, the Company recorded a discontinued operations charge, net of tax, of $150,000, or $0.02 per diluted share, during the second quarter of 2005 for the settlement with the United States Environmental Protection Agency for an environmental site located in Prospect, Connecticut.
Segment Sales (in millions):
| | Three Months Ended: | | Six Months Ended: | |
| | July 2,
2005 | | July 3,
2004 | | July 2,
2005 | | July 3,
2004 | |
Optical Systems Group | | $ | 27.2 | | $ | 19.3 | | $ | 49.4 | | $ | 36.5 | |
Distributed Products Group | | 6.2 | | 6.4 | | 12.6 | | 12.6 | |
| | | | | | | | | | | | | |
“The second quarter was a milestone for Axsys Technologies,” said Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys. “For the first time in our history, we concluded the quarter with a backlog in excess of $100 million. This accomplishment is further evidence that our focused approach to organic growth and strategic acquisitions are establishing Axsys as an important participant in the surveillance and tracking markets.”
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Conference Call
Management will conduct a conference call to discuss the financial results on Wednesday, July 27, 2005, at 10:00 am ET. Interested parties may participate in the call by dialing 706-679-3148 – please call in 10 minutes before the call is scheduled to begin and ask for the Axsys Technologies call. The conference call will be broadcast live over the Internet via the Investors section of the Company’s web site at www.axsys.com. To listen to the live call, please go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the Company’s web site.
About Axsys
Axsys Technologies, Inc. is a vertically integrated OEM supplier of precision optical solutions for high technology applications, serving the aerospace, defense and high performance commercial markets. For more information, visit www.axsys.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. One can identify these forward-looking statements by the use of the words such as “expect,” “anticipate,” “plan,” “may,” “will,” “estimate” or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. Important factors, which could cause actual results to differ materially, are described in Axsys’ reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission, including without limitation: changes in the U.S. federal government spending priorities; the Company’s ability to compete in the industries in which it operates, including the introduction of competing products or technologies by other companies and/or pricing pressures from competitors and/or customers; the potential for the Company’s backlog to be reduced or cancelled; the Company’s ability to implement its acquisition strategy and integrate its acquired companies successfully, including the recently announced acquisition of Diversified Optical Products; the Company’s ability to manage costs under the Company’s fixed-price contracts effectively; and changes in general economic and business conditions. These statements reflect the Company’s current beliefs and are based upon information currently available to Axsys. Be advised that developments subsequent to this release are likely to cause these statements to become outdated with the passage of time, and we specifically disclaim any obligation to update these statements. For more information concerning the foregoing risks and uncertainties, see the Securities and Exchange Commission filings for Axsys.
CONTACT: | | -OR- | | INVESTOR RELATIONS COUNSEL: |
Axsys Technologies, Inc. | | | | The Equity Group Inc. |
David A. Almeida, CFO | | | | Lauren Barbera |
(860) 257-0200 | | | | (212) 836-9610, LBarbera@equityny.com |
www.axsys.com | | | | www.theequitygroup.com |
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AXSYS TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Unaudited, in thousands, except per share data)
| | For the Three Months Ended | | For the Six Months Ended | |
| | July 2, 2005 | | July 3, 2004 | | July 2, 2005 | | July 3, 2004 | |
| | | | | | | | | |
Net sales | | $ | 33,384 | | $ | 25,729 | | $ | 62,032 | | $ | 49,135 | |
Cost of sales | | 23,050 | | 17,908 | | 43,242 | | 34,533 | |
Gross profit | | 10,334 | | 7,821 | | 18,790 | | 14,602 | |
| | | | | | | | | |
Selling, general and administrative expenses | | 5,946 | | 4,868 | | 11,046 | | 9,266 | |
Research, development and engineering expenses | | 1,044 | | 726 | | 1,788 | | 1,303 | |
Write-off of restructuring accrual | | — | | (50 | ) | — | | (50 | ) |
Operating income | | 3,344 | | 2,277 | | 5,956 | | 4,083 | |
Interest expense | | (706 | ) | (76 | ) | (773 | ) | (108 | ) |
Interest income | | 34 | | 9 | | 76 | | 34 | |
Other (expense) income, net | | 51 | | (15 | ) | 36 | | (22 | ) |
Income from continuing operations before income taxes and discontinued operations | | 2,723 | | 2,195 | | 5,295 | | 3,987 | |
Provision for income taxes | | 1,021 | | 220 | | 1,986 | | 399 | |
Income from continuing operations before discontinued operations | | 1,702 | | 1,975 | | 3,309 | | 3,588 | |
Loss from discontinued operations, net of tax | | (150 | ) | — | | (150 | ) | — | |
Net income | | $ | 1,552 | | $ | 1,975 | | $ | 3,159 | | $ | 3,588 | |
| | | | | | | | | |
BASIC EARNINGS PER SHARE: | | | | | | | | | |
Continuing operations | | $ | 0.24 | | $ | 0.28 | | $ | 0.47 | | $ | 0.51 | |
Discontinued operations | | (0.02 | ) | — | | (0.02 | ) | — | |
Total | | $ | 0.22 | | $ | 0.28 | | $ | 0.45 | | $ | 0.51 | |
Weighted average basic common shares outstanding | | 7,094,794 | | 6,999,806 | | 7,079,769 | | 6,994,018 | |
| | | | | | | | | |
DILUTED EARNINGS PER SHARE: | | | | | | | | | |
Continuing operations | | $ | 0.23 | | $ | 0.27 | | $ | 0.44 | | $ | 0.50 | |
Discontinued operations | | (0.02 | ) | — | | (0.02 | ) | — | |
Total | | $ | 0.21 | | $ | 0.27 | | $ | 0.42 | | $ | 0.50 | |
Weighted average dilutive common shares outstanding | | 7,476,407 | | 7,280,829 | | 7,459,102 | | 7,223,409 | |
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AXSYS TECHNOLOGIES, INC.
Consolidated Balance Sheets
(Unaudited, in thousands)
| | July 2, 2005 | | December 31,
2004 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 2,531 | | $ | 6,000 | |
Accounts receivable – net | | 17,910 | | 15,715 | |
Inventories – net | | 37,612 | | 29,698 | |
Deferred income taxes | | 3,250 | | 3,553 | |
Other current assets | | 2,215 | | 1,020 | |
TOTAL CURRENT ASSETS | | 63,518 | | 55,986 | |
PROPERTY, PLANT AND EQUIPMENT – net | | 15,108 | | 13,337 | |
INTANGIBLE ASSET – net | | 11,048 | | 2,127 | |
GOODWILL | | 57,549 | | 13,013 | |
OTHER ASSETS | | 1,405 | | 1,352 | |
TOTAL ASSETS | | $ | 148,628 | | $ | 85,815 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Accounts payable | | $ | 7,818 | | $ | 6,459 | |
Accrued expenses and other liabilities | | 15,815 | | 9,513 | |
Deferred income | | 8,981 | | 7,195 | |
Current portion of long-term capital lease obligations | | — | | 368 | |
Current portion of long-term debt | | 5,000 | | 1,000 | |
TOTAL CURRENT LIABILITIES | | 37,614 | | 24,535 | |
CAPITAL LEASES, less current portion | | — | | 150 | |
LONG-TERM DEBT, less current portion | | 50,000 | | 3,333 | |
OTHER LONG-TERM LIABILITIES | | 4,298 | | 4,704 | |
| | | | | |
SHAREHOLDERS’ EQUITY: | | | | | |
Common stock | | 72 | | 72 | |
Capital in excess of par | | 39,954 | | 39,612 | |
Accumulated other comprehensive loss | | (224 | ) | (97 | ) |
Retained earnings | | 17,548 | | 14,389 | |
Treasury stock | | (634 | ) | (883 | ) |
TOTAL SHAREHOLDERS’ EQUITY | | 56,716 | | 53,093 | |
| | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 148,628 | | $ | 85,815 | |
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