NEWS UPDATE
Contact: |
Colleen Clements |
LaBarge, Inc. |
colleen.clements@labarge.com |
LaBARGE, INC. REPORTS RECORD RESULTS FOR ITS
FISCAL 2005 SECOND QUARTER AND FIRST SIX MONTHS
In the Second Quarter:
Net Sales Grow 68 Percent;
Net Earnings Rise 94 Percent;
Earnings Per Diluted Share Increase to $.17 Vs. $.09
ST. LOUIS, January 27, 2005 . . . . . LaBarge, Inc. (AMEX: LB) today reported that financial results for its fiscal 2005 second quarter and first six months ended January 2, 2005 rose significantly over prior-year levels and set new Company records.
For the fiscal 2005 second quarter, net sales rose 68 percent to $48,718,000, compared with $29,070,000 for the year-ago period. Second-quarter net earnings increased 94 percent to $2,721,000, or $.17 per diluted share, in fiscal 2005, compared with $1,404,000, or $.09 per diluted share, in fiscal 2004. Included in the Company's fiscal 2005 second-quarter results are net sales of $13,717,000 and earnings of approximately $.04 per diluted share contributed by the Company's Pittsburgh operation, which was acquired in February 2004.
For the first half of fiscal 2005, net sales rose 57 percent to $92,352,000, compared with $58,813,000 for the year-ago period. Net earnings from continuing operations for the first half of the year increased 81 percent to $5,024,000, or $.32 per diluted share, in fiscal 2005, compared with $2,775,000, or $.18 per diluted share, in fiscal 2004. Total net earnings for the first half of the year grew 88 percent to $5,024,000, or $.32 per diluted share, in fiscal 2005, compared with $2,673,000, or $.17 per diluted share, in fiscal 2004. Included in the Company's fiscal 2005 first-half results are net sales of $26,591,000 and earnings of approximately $.06 per diluted share contributed by the Company's Pittsburgh operation. Fiscal 2004 first-half earnings included a net loss from discontinued operations of $102,000, or $.01 per diluted share.
Craig LaBarge, chief executive officer and president, commented, "We are very pleased with LaBarge's strong performance in the second quarter and first half of fiscal 2005. We achieved excellent internal growth, including substantial growth from our recently acquired Pittsburgh operation. Had LaBarge owned the Pittsburgh operation in last year's second fiscal quarter, this year's second-quarter net sales still would have grown 23 percent and net earnings would have risen 34 percent on a pro forma basis. Had we owned Pittsburgh for the first half of fiscal 2004, this year's first-half net sales would have grown 19 percent and net earnings would have risen 34 percent on a pro forma basis." See attached "Supplemental Financial Information" for a reconciliation of the pro forma to the comparable reported results.
Gross margin in the fiscal 2005 second quarter was 21.6 percent versus 22.4 percent in the fiscal 2004 second quarter. Selling and administrative expense declined as a percentage of sales to 11.9 percent in the fiscal 2005 second quarter, versus 15.0 percent in the comparable period a year ago. In actual dollars, fiscal 2005 second-quarter selling and administrative expense rose 34 percent from fiscal 2004 second-quarter levels, in contrast to the 68 percent increase in sales volume. About half of the increase in selling and administrative expense and 70 percent of the increase in sales in the fiscal 2005 period was attributable to the Pittsburgh operation. Interest expense was $405,000 in the fiscal 2005 second quarter, versus $50,000 one year earlier. This increase was due to higher debt levels primarily related to the Pittsburgh acquisition and higher working capital needs to support the higher level of sales.
Total debt at January 2, 2004 was $37,948,000, compared with $37,735,000 at June 27, 2004. Stockholders' equity was $47,674,000 at the end of the fiscal 2005 second quarter, up 12 percent from $42,584,000 at fiscal 2004 year-end.
Backlog of unshipped orders at January 2, 2005 was $144,952,000, down 3 percent from $149,527,000 at the end of the first quarter, and up 27 percent from $113,722,000 at the end of the fiscal 2004 second quarter. Approximately $20,718,000 of the backlog at January 2, 2005 was attributable to the Pittsburgh operation. Thus, even without the acquisition, backlog at the end of the current year's second quarter would have been up 9 percent from the comparable period a year earlier.
Mr. LaBarge stated further, "The largest contributor to fiscal 2005 second-quarter revenues was shipments to defense customers, accounting for 49 percent of sales, versus 59 percent in last year's second quarter," said Mr. LaBarge. "During the second quarter, LaBarge provided cables and electronic assemblies for a variety of defense applications, including military aircraft, radar systems and shipboard programs.
"Shipments of capital equipment to industrial customers were 18 percent of second-quarter revenues in fiscal 2005, compared with 8 percent in the comparable period a year ago," said Mr. LaBarge. "This growth was primarily from the Pittsburgh operation which broadened our customer mix to include companies that do business in the glass packaging and specialized instrumentation industries, as well as other industrial markets.
"Revenues from the natural resources market generated 18 percent of fiscal 2005 second-quarter shipments, versus 10 percent in the same period last year," continued Mr. LaBarge. "Natural resources sales represent shipments of capital equipment to customers in the oil-and-gas and mining sectors, and include downhole tools and industrial mining equipment. The increase in revenues from this market was attributable to significantly higher sales to oil-and-gas customers, plus the addition of mining customers, primarily from the Pittsburgh operation.
"The remaining 15 percent of fiscal 2005 second-quarter sales was attributable to customers in a variety of other market sectors, including commercial aerospace and government systems," said Mr. LaBarge.
Fiscal 2005 Outlook and Commentary
Mr. LaBarge concluded, "Looking ahead, we anticipate fiscal 2005 third-quarter revenues and earnings to be substantially higher compared with the same period last year, and on a sequential basis to be down slightly from this year's second-quarter levels. For the 2005 fiscal year, we expect revenues and earnings to grow by at least 35 percent over the $131.5 million and $0.44 per diluted share, respectively, reported for fiscal 2004. In addition, we remain optimistic about LaBarge's longer-term prospects based on the healthy array of new business opportunities we currently see in the pipeline."
Today's Conference Call Webcast
Today, at 11:00 a.m. Eastern time, LaBarge will host a live audio webcast of its discussion with the investment community regarding financial results for the Company's fiscal 2005 second quarter. The webcast can be accessed at through the Investor Relations Calendar area of http://www.labarge.com. Following the live discussion, a replay of the webcast will be available at the same location on the Internet.
Non-GAAP Financial Information
The Company sometimes uses information derived from consolidated financial information, but not presented in the financial statements prepared in accordance with generally accepted accounting principles ("GAAP"). Specifically, in this release, the Company has used non-GAAP financial measures to illustrate how its fiscal 2004 second-quarter and first-half net sales and earnings would have been affected had the Company owned its recently acquired Pittsburgh operation for that period. The Company acquired the Pittsburgh operation in February 2004.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Management utilizes non-GAAP operating results as a performance measure and furnishes the information in order to provide investors with additional information to analyze the Company's operating results and facilitate period-to-period comparisons. Please refer to the financial tables following this release for a reconciliation of non-GAAP financial information to the corresponding GAAP financial information.
About LaBarge, Inc.
LaBarge, Inc. is a broad-based provider of electronics to technology-driven companies in diverse industrial markets. The Company provides its customers with sophisticated electronic products through contract design and manufacturing services. Headquartered in St. Louis, LaBarge has operations in Arkansas, Missouri, Oklahoma, Pennsylvania and Texas. The Company's Web site address is http://www.labarge.com .
(Financial tables follow)
Statements contained in this release relating to LaBarge, Inc. that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Matters subject to forward-looking statements are subject to known and unknown risks and uncertainties, including economic, competitive and other factors that may cause LaBarge or its industry's actual results, levels of activity, performance and achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Important factors that could cause LaBarge's actual results to differ materially from those projected in, or inferred by, forward-looking statements are (but are not necessarily limited to) the following: the impact of increasing competition or deterioration of economic conditions in LaBarge's markets; cutbacks in defense spending by the U.S. Government; loss of one or more large customers; LaBarge's ability to replace completed and expired contracts on a timely basis; the Company's ability to integrate recently acquired businesses; the outcome of litigation the Company may be party to; increases in the cost of raw materials, labor and other resources necessary to operate LaBarge's business; the availability, amount, type and cost of financing for LaBarge and any changes to that financing; and other factors summarized in our reports filed from time to time with the Securities and Exchange Commission. Given these uncertainties, undue reliance should not be placed on the forward-looking statements. Unless otherwise required by law, LaBarge disclaims any obligation to update any forward-looking statements or to publicly announce any revisions thereto to reflect future events or developments.
LaBarge, Inc. |
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| Three Months Ended |
| Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| January 2, | December 28, |
| January 2, | December 28, | |||||||||||||||||||||||||||||||||||||||||||||||||
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| 2005 | 2003 |
| 2005 | 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 48,718 | $ | 29,070 | $ | 92,352 | $ | 58,813 | |||||||||||||||||||||||||||||||||||||||||||||||
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| Costs and expenses: |
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| Cost of sales |
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| 38,176 | 22,568 | 71,770 | 45,467 | ||||||||||||||||||||||||||||||||||||||||||||||||
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| Selling and administrative expense | 5,812 | 4,352 | 11,670 | 9,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| Interest expense | 405 | 50 | 919 | 99 | ||||||||||||||||||||||||||||||||||||||||||||||||||
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| Other income, net | (113 | ) | (176 | ) | (202 | ) | (291 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings from continuing operations |
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| Income tax expense | 1,717 | 872 | 3,171 | 1,713 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings from continuing operations | 2,721 | 1,404 | 5,024 | 2,775 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| Discontinued operations: |
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| Loss from discontinued operations (less applicable income tax benefit of $70) |
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| --- |
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| Loss on disposal of discontinued operations of $20 (less applicable income tax expense of $8) |
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| Net earnings |
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| $ | 2,721 | $ | 1,404 | $ | 5,024 | $ | 2,673 | |||||||||||||||||||||||||||||||||||||||||||||
| Basic net earnings per common share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings from continuing operations | $ | 0.18 | $ | 0.09 | $ | 0.34 | $ | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss from discontinued operations | --- | --- | --- | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Basic net earnings | $ | 0.18 | 0.09 | $ | 0.34 | $ | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Average common shares outstanding | 15,006 | 15,026 | 14,990 | 14,987 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted net earnings per share: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings from continuing operations | $ | 0.17 | $ | 0.09 | $ | 0.32 | $ | 0.18 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings from discontinued operations | --- | --- | --- | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted net earnings | $ | 0.17 | $ | 0.09 | $ | 0.32 | $ | 0.17 | |||||||||||||||||||||||||||||||||||||||||||||||
| Average diluted common |
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LaBarge, Inc. |
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| January 2, | June 27, | ||||||||||||
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ASSETS |
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Current assets: |
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| Cash and cash equivalents |
| $ | 296 | $ | 793 |
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| Accounts and other receivables, net |
| 26,843 | 22,335 |
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| Inventories |
| 43,232 | 40,202 |
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| Prepaid expenses |
| 790 | 854 |
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| Deferred tax assets, net |
| 938 | 818 |
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Total current assets |
| 72,099 | 65,002 |
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Property, plant and equipment, net |
| 18,995 | 18,910 |
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Intangible assets, net |
| 3,544 | 3,881 |
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Goodwill, net | 24,358 | 24,471 | |||||||||||||
Other assets, net |
| 5,493 | 5,694 |
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Total assets |
| $ | 124,489 | $ | 117,958 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Short-term borrowings | $ | 9,475 | $ | 7,050 | |||||||||||
| Current maturities of long-term debt |
| 4,407 | 4,415 |
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| Trade accounts payable |
| 11,132 | 12,305 |
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| Accrued employee compensation |
| 8,122 | 8,466 |
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| Other accrued liabilities |
| 2,256 | 2,567 |
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Cash advances | 12,609 | 8,864 | |||||||||||||
| Total current liabilities |
| 48,001 | 43,667 |
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Long-term advances from customer for purchase of materials |
| 4,568 | 5,370 |
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Deferred tax liabilities, net | 180 | 67 | |||||||||||||
Long-term debt |
| 24,066 | 26,270 |
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Stockholders' equity: |
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| Common stock, $.01 par value. Authorized 40,000,000 shares; 15,773,253 issued at January 2, 2005 and at June 27, 2004, including shares in treasury |
| 158 | 158 |
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| Additional paid-in capital |
| 13,828 | 13,462 |
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| Retained earnings |
| 36,877 | 31,853 |
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Accumulated other comprehensive income (loss) | (25 | ) | 157 | ||||||||||||
Less cost of common stock in treasury, shares of 758,541 at |
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Total stockholders' equity |
| 47,674 | 42,584 |
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| Total liabilities and stockholders' equity |
| $ | 124,489 | $ | 117,958 |
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LaBarge, Inc. |
Reconciliation of Pro Forma Financial Measures |
Three Months Ended | |||||
Dec. 28, 2003 As reported |
| Dec. 28, 2003 Pro Forma | Jan. 2, 2005 As reported | ||
Net sales | $29,070 | $10,504 (a) | $39,574 | $48,718 | + 23.1% |
Net earnings from continuing operations |
1,404 |
629 (b) |
2,033 |
2,721 |
+33.8% |
Diluted earnings per share |
$ 0.09 |
$ 0.04 (c) |
$ 0.13 |
$ 0.17 | |
(a) Sales of Pinnacle Electronics LLC for the quarter ended December 27, 2003.
(b) Tax-affected net earnings of Pinnacle Electronics LLC for the quarter ended December 27, 2003.
(c) Additional earnings per share from a $629,000 increase in net earnings.
Six Months Ended | |||||
Dec. 28, 2003 As reported |
| Dec. 28, 2003 Pro Forma | Jan. 2, 2005 As reported | ||
Net sales | $58,813 | $18,705 (a) | $77,518 | $92,352 | +19.1% |
Net earnings from continuing operations |
2,775 |
984 (b) |
3,759 |
5,024 |
+33.7% |
Diluted earnings per share |
$ 0.18 |
$ 0.06 (c) |
$ 0.24 |
$ 0.32 | |
(a) Sales of Pinnacle Electronics LLC for the six months ended December 27, 2003.
(b) Tax-affected net earnings of Pinnacle Electronics LLC for the six months ended December 27, 2003.
(c) Additional earnings per share from a $984,000 increase in net earnings.
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