Exhibit 99.1
AXSYS TECHNOLOGIES ANNOUNCES SECOND QUARTER RESULTS
Strong Demand Drives Record Sales, Higher Profitability and Record Backlog
ROCKY HILL, CT — July 26, 2006 — 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 1, 2006.
Second Quarter Financial Highlights — versus fiscal 2005 second quarter:
· Sales increased 15% to a record $38.5 million.
· Gross margin improved to 32.0% from 31.0%.
· Operating income grew 24% to $4.1 million.
· Net income increased 68% to $2.6 million.
· Diluted earnings per share increased to $0.24 from $0.21.
· Total backlog of firm orders at the end of the second quarter was a record $115.5 million.
Second quarter revenue growth was driven primarily by continuing demand for thermal imaging cameras and lenses. Gross margin expansion was the result of a product mix shift toward these higher margin products. Quarter-over-quarter sales growth was also affected by the inclusion in the 2006 period of a full quarter’s results from DiOP, which was acquired on May 2, 2005. If the acquisition had occurred at the beginning of the second quarter of 2005, the Company’s sales growth would have been approximately 11%.
Net income in the second quarter of 2006 included a $257,000 pre-tax expense for stock-based compensation, pursuant to FAS 123R accounting policies that the Company adopted on January 1, 2006. Net income in the second quarter of 2005 included a loss of $150,000 from discontinued operations and pre-tax interest expense of $706,000.
The weighted-average diluted shares outstanding increased by 46% over the comparable periods as a result of the Company’s September 2005 equity offering.
Segment Sales
(Millions)
| | Three Months Ended: | | Six Months Ended: | |
| | July 1,
2006 | | July 2,
2005 | | July 1,
2006 | | July 2,
2005 | |
Optical Systems Group | | $ | 31.7 | | $ | 27.2 | | $ | 62.6 | | $ | 49.4 | |
Distributed Products Group | | 6.8 | | 6.2 | | 13.4 | | 12.6 | |
| | | | | | | | | | | | | |
“I am pleased to report a strong second quarter in line with expectations,” said Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys. “Our IR Systems division continues to perform particularly well due to strong demand among military, homeland security, and commercial customers. These results affirm our view that our financial performance for the year will be consistent with our previously issued guidance.”
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Conference Call
Management will conduct a conference call reviewing the financial results on Thursday, July 27, 2006 at 10:00 am ET. Interested parties may participate in the call by dialing 706-679-3148 and asking for the Axsys Technologies call (conference ID# 2710796). Phone participants are encouraged to call in at least 10 minutes before the call is scheduled to begin. The conference call will also be webcast live at http://www.axsys.com/ircal.php. Webcast listeners are encouraged to visit the web site at least 15 minutes early to register, download and install any necessary audio software. A recording of the conference call will be available on the Company’s web site for approximately 90 days.
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; 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.
Contacts
David A. Almeida
Chief Financial Officer
(860) 257-0200
Geoffrey Ling
Director of Investor Relations
(860) 594-5773
Invest@axsys.com
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AXSYS TECHNOLOGIES, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share data - Unaudited)
| | For the Three Months Ended | | For the Six Months Ended | |
| | July 1, 2006 | | July 2, 2005 | | July 1, 2006 | | July 2, 2005 | |
| | | | | | | | | |
Sales | | $ | 38,505 | | $ | 33,384 | | $ | 75,963 | | $ | 62,032 | |
Cost of sales | | 26,202 | | 23,050 | | 51,988 | | 43,242 | |
Gross profit | | 12,303 | | 10,334 | | 23,975 | | 18,790 | |
| | | | | | | | | |
Selling, general and administrative expenses | | 6,956 | | 5,946 | | 13,942 | | 11,046 | |
Research, development and engineering expenses | | 1,212 | | 1,044 | | 2,119 | | 1,788 | |
Operating income | | 4,135 | | 3,344 | | 7,914 | | 5,956 | |
Interest expense | | (45 | ) | (706 | ) | (62 | ) | (773 | ) |
Interest income | | 42 | | 34 | | 151 | | 76 | |
Other income, net | | 45 | | 51 | | 25 | | 36 | |
Income from continuing operations before income taxes | | 4,177 | | 2,723 | | 8,028 | | 5,295 | |
Provision for income taxes | | 1,584 | | 1,021 | | 3,045 | | 1,986 | |
Income from continuing operations | | 2,593 | | 1,702 | | 4,983 | | 3,309 | |
Gain (loss) from discontinued operations, net of tax | | 20 | | (150 | ) | 20 | | (150 | ) |
Net income | | $ | 2,613 | | $ | 1,552 | | $ | 5,003 | | $ | 3,159 | |
| | | | | | | | | |
BASIC EARNINGS (LOSS) PER SHARE: | | | | | | | | | |
Continuing operations | | $ | 0.25 | | $ | 0.24 | | $ | 0.47 | | $ | 0.47 | |
Discontinued operations | | 0.00 | | (0.02 | ) | 0.00 | | (0.02 | ) |
Total | | $ | 0.25 | | $ | 0.22 | | $ | 0.47 | | $ | 0.45 | |
Weighted average basic common shares outstanding | | 10,625,504 | | 7,094,794 | | 10,622,639 | | 7,079,769 | |
| | | | | | | | | |
DILUTED EARNINGS (LOSS) PER SHARE: | | | | | | | | | |
Continuing operations | | $ | 0.24 | | $ | 0.23 | | $ | 0.46 | | $ | 0.44 | |
Discontinued operations | | 0.00 | | (0.02 | ) | 0.00 | | (0.02 | ) |
Total | | $ | 0.24 | | $ | 0.21 | | $ | 0.46 | | $ | 0.42 | |
Weighted average dilutive common shares outstanding | | 10,924,326 | | 7,476,407 | | 10,901,362 | | 7,459,102 | |
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