Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com
MERRIMAC REPORTS FIRST QUARTER 2007 RESULTS
WEST CALDWELL, N.J., MAY 14, 2007: Merrimac Industries, Inc. (Amex: MRM), a
leader in the design and manufacture of RF Microwave components, subsystem
assemblies and micro-multifunction modules (MMFM(R)), today announced results
for the first quarter of 2007.
Sales for the first quarter of 2007 were $5,424,000, a decrease of $807,000 or
12.9 percent compared to the first quarter of 2006 sales of $6,231,000. The
sales decrease was due to a problem with purchased material that was utilized in
certain products. The Company has evaluated the material and found the problem
with the material does not affect the functionality and reliability of the
products. The customers purchasing these products agreed with the Company's
conclusions. This problem did cause shipment delays of approximately $1,000,000
of products that were expected to be sold in the first quarter of 2007.
Substantially all of the products impacted should be shipped during the second
quarter of 2007. Gross profit for the first quarter of 2007 was $1,782,000, a
decrease of $619,000 or 25.8 percent, and was 32.8 percent of sales as compared
to gross profit of $2,401,000 or 38.5 percent of sales for the first quarter of
2006. Gross profit percent in the first quarter of 2007 decreased from the first
quarter of 2006 due to the impact of the lower level of sales having to absorb
fixed manufacturing costs.
Operating loss for the first quarter of 2007 was $(1,220,000), compared to an
operating loss of $(457,000) for the first quarter of 2006. Operating loss for
the first quarter of 2007 was due to the lower gross profit from the decrease in
sales and higher research and development costs related to the Company's
Multi-Mix(R) products.
Net loss for the first quarter of 2007 was $(1,264,000) compared to a net loss
of $(441,000) for the first quarter of 2006. Net loss per share was $(.41) for
the first quarter of 2007, compared to net loss per share of $(.14) reported for
the first quarter of 2006. Net loss for the first quarter of 2006 included a tax
benefit of $35,000 or $.01 per share representing refundable Canadian provincial
technology tax credits for which the Company has qualified and lower net
interest expense.
Orders of $6,485,000 were received during the first quarter of 2007, an increase
of $2,540,000 or 64.4 percent compared to $3,945,000 in orders received during
the first quarter of 2006. Backlog increased by $1,061,000 or 8.6 percent to
$13,446,000 at the end of the first quarter of 2007 compared to $12,385,000 at
year-end 2006, due to the
shipment delays caused by the problem with the purchased material. The
book-to-bill ratio for the first quarter of 2007 was 1.20 to 1 and for the first
quarter of 2006 was 0.63 to 1.
Chairman and CEO Mason N. Carter commented, "We are currently working closely
with our key account customers in establishing new Multi-Mix(R) Solutions that
may become the foundation for the next-generation of integrated modules,
platforms and subassemblies.
o We received an Internal Research and Development contract
(IRAD) for Multi-Mix(R) integrated modules from a major
satellite customer. Final design and manufacture of the
first space IRAD qualified assembly modules have been
completed and delivered in April. We are continuing
co-design efforts with our customer in developing innovative
and enabling Multi-Mix(R) Microtechnology solutions that
offer size, weight, and cost solutions. Our customer design
engineers are co-designing with our design teams in offering
and optimizing compelling reasons for technology adoption by
their customers. These applications can be utilized for the
next-generation of military satellite communications.
o We received a contract from another key account satellite
customer to develop a variety of custom solutions for use in
beam forming communications networks for some of the largest
and most powerful satellites ever built.
o We continue our research and development investment focused
on our Integrated Multi-Mix(R) High Power Amplifier Resource
Module and continue to work on very significant developments
on highly integrated radar platforms."
Mr. Carter continued, "Our financial information includes:
o Cash of $3.7 million after the repurchase in March of 238,700 shares
of Merrimac Common Stock at $9.00 per share for approximately $2.2
million.
o Working capital of $10.1 million and a current ratio of 4.0 to 1.
o Research and development costs increased $139,000 for 2007 to support
new Multi-Mix(R) products to be available later this year.
o First quarter 2007 book-to-bill ratio of 1.2 to 1."
Investors are invited to participate in the financial results conference call on
Monday, May 14, 2007 at 4:15 p.m. (Eastern) by dialing 1-800-474-8920 (for
International callers: 1-719-457-2727) ten minutes prior to the scheduled start
time, and reference the Merrimac Industries first quarter 2007 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 8993342.
This conference call will also be broadcast live over the Internet by logging on
to the web at this address:
http://www.videonewswire.com/event.asp?id=39841
If you are unable to participate during the live webcast, a link to the archived
webcast will be posted on the Merrimac Industries, Inc. 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(R)
micro-multifunction modules (MMFM(R)), for the worldwide Defense, Satellite
Communications (Satcom), Commercial Wireless and Homeland Security market
segments. Merrimac is focused on providing Total Integrated Packaging
Solutions(R) with Multi-Mix(R) Microtechnology, a leading edge competency
providing value to our customers through miniaturization and integration.
Multi-Mix(R) MMFM(R) 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 210 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(R) for wireless applications. Merrimac (MRM) is listed on
the American Stock Exchange. Multi-Mix(R), Multi-Mix PICO(R), MMFM(R) and Total
Integrated Packaging Solutions(R) are trademarks of Merrimac Industries, Inc.
For more information about Merrimac Industries, Inc. and its Canadian subsidiary
Filtran Microcircuits Inc., please visit http://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(R) products; the possibilities of
impairment charges to the carrying value of our Multi-Mix(R) assets, thereby
resulting in charges to our earnings; risks associated with adequate capacity to
obtain raw materials and reduced control over delivery schedules and costs due
to reliance on sole source or limited suppliers; slower than anticipated
penetration into the satellite communications, defense and wireless markets;
failure of our Original Equipment Manufacturer or OEM customers to successfully
incorporate our products into their systems; 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; 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; general
economic and industry conditions; 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; 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; 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
Quarter Ended
(Unaudited)
------------------------
March 31, April 1,
2007 2006
----------- ----------
Net sales $ 5,424,000 $6,231,000
Gross profit 1,782,000 2,401,000
Selling, general and administrative expenses 2,491,000 2,486,000
Research and development expense 511,000 372,000
Operating loss (1,220,000) (457,000)
Interest and other expense, net 44,000 19,000
Loss before income taxes (1,264,000) (476,000)
Benefit for income taxes -- (35,000)
Net loss (1,264,000) (441,000)
Net loss per common share $ (.41) $ (.14)
Weighted average number of shares outstanding 3,096,000 3,149,000
MERRIMAC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2007 December 30, 2006
(Unaudited) (Unaudited)
-------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,702,000 $ 5,961,000
Accounts receivable, net 4,830,000 5,852,000
Income tax refunds receivable 99,000 99,000
Inventories 4,074,000 3,917,000
Other current assets 647,000 882,000
Deferred tax assets 10,000 10,000
----------- -----------
Total current assets 13,362,000 16,721,000
Property, plant and equipment, net 12,862,000 12,985,000
Other assets 467,000 493,000
Deferred tax assets 557,000 552,000
Goodwill 3,545,000 3,503,000
----------- -----------
Total Assets $30,793,000 $34,254,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt $ 622,000 $ 649,000
Deferred tax liabilities 100,000 100,000
Other current liabilities 2,577,000 2,618,000
----------- -----------
Total current liabilities 3,299,000 3,367,000
Long-term debt, net of current portion 4,413,000 4,564,000
Deferred liabilities 44,000 38,000
----------- -----------
Total liabilities 7,756,000 7,969,000
----------- -----------
Stockholders' equity
Common stock 33,000 33,000
Additional paid-in capital 19,340,000 19,237,000
Retained earnings 5,336,000 6,600,000
Accumulated other comprehensive income 1,450,000 1,389,000
Less treasury stock (3,122,000) (974,000)
----------- -----------
Stockholders' equity 23,037,000 26,285,000
----------- -----------
Total Liabilities and Stockholders' Equity $30,793,000 $34,254,000
=========== ===========
MERRIMAC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTER ENDED
(UNAUDITED)
------------------------------
MARCH 31, 2007 APRIL 1, 2006
-------------- -------------
Cash flows from operating activities:
Net loss $(1,264,000) $ (441,000)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 635,000 663,000
Amortization of deferred financing costs 7,000 12,000
Share-based compensation 51,000 44,000
Changes in operating assets and liabilities:
Accounts receivable 1,029,000 (83,000)
Inventories (155,000) (514,000)
Other current assets 236,000 39,000
Other assets 17,000 (11,000)
Other current liabilities (47,000) 76,000
Deferred liabilities 6,000 (6,000)
----------- ----------
Net cash provided by (used in) operating activities 515,000 (221,000)
----------- ----------
Cash flows from investing activities:
Purchases of capital assets (499,000) (552,000)
----------- ----------
Net cash used in investing activities (499,000) (552,000)
----------- ----------
Cash flows from financing activities:
Borrowings under revolving lease line -- 160,000
Repurchase of stock for the treasury (2,148,000) --
Repayment of borrowings (180,000) (233,000)
Proceeds from stock sales 51,000 71,000
----------- ----------
Net cash used in financing activities (2,277,000) (2,000)
----------- ----------
Effect of exchange rate changes 2,000 (4,000)
----------- ----------
Net decrease in cash and cash equivalents (2,259,000) (779,000)
Cash and cash equivalents at beginning of year 5,961,000 4,081,000
----------- ----------
Cash and cash equivalents at end of period $ 3,702,000 $3,302,000
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