EXHIBIT 99.1
Contact: | |
Kathy Taylor | |
Southwall Technologies Inc. | |
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces 2010 Second Quarter Results
PALO ALTO, Calif.--(BUSINESS WIRE)--August 20, 2010--Southwall Technologies Inc. (OTCBB: SWTX) announced second quarter 2010 revenue of $11.8 million, an increase of 42% from second quarter 2009 revenues of $8.3 million, and up approximately 13% from first quarter 2010 revenues of $10.5 million. Revenues for the six month period ended June 30, 2010 were $22.3 million, an increase of 51% compared to $14.8 for the six months ended June 30, 2009. The year over year increase reflects the improving economy and increasing demand for higher energy efficiency products across our primary markets.
Gross profit for the second quarter 2010 was $5.9 million, an increase of 59% from second quarter 2009 gross profit of $3.7 million. For the six months ended June 30, 2010, gross profit increased 74% to $10.6 million compared to $6.1 million for the same period in 2009. The year over year increase is primarily due to higher sales volume, improved production efficiencies and higher plant utilization resulting in more effective absorption of fixed manufacturing costs as a percentage of sales.
Second quarter 2010 net income was $2.9 million, or $0.08 per fully diluted share, as compared with net income for the second quarter 2009 of $1.4 million, or $0.04 per fully diluted share. Net income for the quarter ended June 30, 2010 included approximately $0.7 million, or $0.02 per fully diluted share, after tax gain relating to the acquisition of the controlling interest in Southwall Insulating Glass, LLC. Net Income for the first half of 2010 was $4.1 million, up 17% from the net income earned for the first six months of 2009.
During the second quarter, Southwall Technologies increased its ownership in Southwall Insulating Glass, LLC from 66.3% to 75% and obtained the controlling interest in that operation. Southwall Insulating Glass’ main operations are located in Chicago, Illinois.
“The Heat Mirror energy retrofit of the Empire State Building, the receipt of a $1.4 million stimulus grant from the US Department of Energy, and securing a controlling interest in our insulating glass manufacturing joint venture are highlights of our increasing momentum and commitment to green building innovation. We remain committed to accelerated investment in longer-term growth initiatives,” said Dennis Capovilla, Chief Executive Officer.
About Southwall Technologies Inc.
Southwall Technologies is the leading innovator of energy-saving films and glass products that dramatically improve the energy efficiency of buildings, homes and cars. Southwall is an ISO 9001/2000/14001 certified manufacturer with customers in over 25 countries around the world.
This press release may contain forward-looking statements, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented. These risks include the possibility that the Company’s expected future results will be materially worse than estimated, that the Company may not continue to be p rofitable in future quarters or may not be able to achieve future long-term growth, that there will be a decline in one or more portions of our business in 2010 or thereafter, that the Company will not be successful in improving operations performance or controlling costs, that the Company will suffer a decline in manufacturing or financial effectiveness, that the Company’s new product development will not be successful, that there may be decreasing demand in certain markets and that the Company will not be able to secure additional financing if required, as well as risks associated with its failure to meet potential covenant requirements under future credit facilities. Further risks are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2009, filed on March 25, 2010.
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SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenues | $ | 11,790 | $ | 8,334 | $ | 22,271 | $ | 14,830 | ||||||||
Cost of revenues | 5,891 | 4,636 | 11,659 | 8,687 | ||||||||||||
Gross profit | 5,899 | 3,698 | 10,612 | 6,143 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research & development | 792 | 665 | 1,584 | 1,347 | ||||||||||||
Selling, general and administrative | 2,266 | 2,160 | 4,266 | 3,850 | ||||||||||||
Total operating expenses | 3,058 | 2,825 | 5,850 | 5,197 | ||||||||||||
Income from operations | 2,841 | 873 | 4,762 | 946 | ||||||||||||
Interest expense, net | (64 | ) | (101 | ) | (159 | ) | (171 | ) | ||||||||
Other income (expense), net | 123 | 766 | (358 | ) | 3,199 | |||||||||||
Income before provision for income taxes | 2,900 | 1,538 | 4,245 | 3,974 | ||||||||||||
Provision for /(Benefit from) income taxes | (107 | ) | 34 | (99 | ) | 191 | ||||||||||
Net income | 3,007 | 1,504 | 4,344 | 3,783 | ||||||||||||
Net loss attributable to noncontrolling interest | (30 | ) | - | (30 | ) | - | ||||||||||
Net income attributable to Southwall | 3,037 | 1,504 | 4,374 | 3,783 | ||||||||||||
Deemed dividend on preferred stock | 122 | 122 | 244 | 244 | ||||||||||||
Net income attributable to common stockholders | $ | 2,915 | $ | 1,382 | $ | 4,130 | $ | 3,539 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.10 | $ | 0.05 | $ | 0.14 | $ | 0.12 | ||||||||
Diluted | $ | 0.08 | $ | 0.04 | $ | 0.12 | $ | 0.11 | ||||||||
Weighted average shares used in computing net income per share : | ||||||||||||||||
Basic | 28,829 | 28,709 | 28,811 | 28,708 | ||||||||||||
Diluted | 36,076 | 33,799 | 35,991 | 33,785 |
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,130 | $ | 12,454 | ||||
Accounts receivable, net | 8,372 | 5,907 | ||||||
Inventories, net | 3,725 | 4,522 | ||||||
Other current assets | 1,227 | 1,479 | ||||||
Total current assets | 26,454 | 24,362 | ||||||
Property, plant and equipment, net | 12,526 | 14,393 | ||||||
Goodwill | 1,488 | - | ||||||
Intangible and other assets | 892 | 156 | ||||||
Total assets | $ | 41,360 | $ | 38,911 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt and capital lease obligations | $ | 700 | $ | 808 | ||||
Accounts payable | 1,554 | 1,258 | ||||||
Accrued compensation | 1,056 | 1,395 | ||||||
Other accrued liabilities | 4,906 | 4,881 | ||||||
Total current liabilities | 8,216 | 8,342 | ||||||
Term debt and capital lease obligations | 2,948 | 3,358 | ||||||
Other long term liabilities | - | 58 | ||||||
Total liabilities | 11,164 | 11,758 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 29 | 29 | ||||||
Capital in excess of par value | 78,352 | 78,291 | ||||||
Accumulated other comprehensive income: | ||||||||
Translation gain on subsidiary | 2,674 | 4,382 | ||||||
Accumulated deficit | (55,985 | ) | (60,359 | ) | ||||
Southwall stockholders' equity | 25,070 | 22,343 | ||||||
Noncontrolling interest | 316 | - | ||||||
Total equity | 25,386 | 22,343 | ||||||
Total liabilities, preferred stock and stockholders' equity | $ | 41,360 | $ | 38,911 |
SOUTHWALL TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended | ||||||||
June 30, | June 30, | |||||||
2010 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 4,344 | $ | 3,783 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Gain on acquisition of controlling interest in SIG | (706 | ) | - | |||||
Gain on settlement of liability | - | (2,359 | ) | |||||
Deferred income tax | (12 | ) | (44 | ) | ||||
Loss (Gain) on disposal of property, plant and equipment | 2 | (22 | ) | |||||
Depreciation and amortization | 1,227 | 1,219 | ||||||
Stock-based compensation | 265 | 190 | ||||||
Inventories reserves | (279 | ) | (61 | ) | ||||
Non-cash effect of acquisition of controlling interest in SIG | (232 | ) | - | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (1,345 | ) | (1,580 | ) | ||||
Inventories | 891 | 831 | ||||||
Other current and non-current assets | (451 | ) | (107 | ) | ||||
Accounts payable and accrued liabilities | (2,109 | ) | (726 | ) | ||||
Net cash provided by operating activities | 1,595 | 1,124 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of controlling interest in SIG, net of cash acquired | (195 | ) | - | |||||
Restricted cash | - | 261 | ||||||
Proceeds from sale of property, plant and equipment | - | 28 | ||||||
Expenditures for property, plant and equipment | (455 | ) | (502 | ) | ||||
Net cash used in investing activities | (650 | ) | (213 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 39 | 1 | ||||||
Borrowings from equipment financing | - | 49 | ||||||
Investment credit in Germany | - | 221 | ||||||
Repayments of term debt and capital lease obligations | (448 | ) | (1,451 | ) | ||||
Net cash used in financing activities | (409 | ) | (1,180 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 140 | (11 | ) | |||||
Net (decrease) increase in cash and cash equivalents | 676 | (280 | ) | |||||
Cash and cash equivalents, beginning of period | 12,454 | 10,768 | ||||||
Cash and cash equivalents, end of period | $ | 13,130 | $ | 10,488 |