[ARMOR HOLDINGS, INC. LOGO] FOR IMMEDIATE RELEASE
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Company Contact: Media Contact: Investor Relations Contact:
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Robert R. Schiller Michael Fox James R. Palczynski
President & Chief Operating Officer President, Corporate Communications Group Principal
Armor Holdings, Inc. Integrated Corporate Relations, Inc. Integrated Corporate Relations, Inc.
904.741.5400 203.682.8218 203.222.9013
www.armorholdings.com mfox@icrinc.com jp@icrinc.com
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ARMOR HOLDINGS, INC. REPORTS RECORD REVENUES
AND 4TH QUARTER RESULTS
- 4TH QUARTER EARNINGS PER SHARE INCREASE TO $0.74 PER DILUTED SHARE
VS. PRIOR YEAR LOSS OF $(0.17) PER DILUTED SHARE -
- FY05 GUIDANCE OF $2.75 TO $3.00 PER DILUTED SHARE AFTER $0.06 TO $0.07
ANTICIPATED INTEGRATION AND OTHER CHARGES
JACKSONVILLE, FLORIDA - FEBRUARY 10, 2005 - ARMOR HOLDINGS, INC. (NYSE:AH), a
leading manufacturer and distributor of security products and vehicle armor
systems serving law enforcement, military, homeland security and commercial
markets, today announced financial results that exceeded guidance provided on
October 19, 2004, and analyst expectations for the fourth quarter and fiscal
year ended December 31, 2004.
FOURTH QUARTER RESULTS
For the fourth quarter ended December 31, 2004, the Company reported revenue of
$337.5 million, an increase of 201.0% versus the year-ago quarter's $112.2
million. Net income for the fourth quarter was $26.4 million or $0.74 per
diluted share versus the year-ago net loss of $(4.9) million or $(0.17) per
diluted share, which included a loss of $(0.24) from discontinued operations,
and was better than the analysts' current consensus estimate of $0.72 per
diluted share. Internal revenue growth, assuming that acquired companies were
owned effective January 1, 2003, was 136.0%, including 1.7% for foreign currency
movements. Internal revenue growth by segment including foreign currency
movements was 262.7% for the Aerospace & Defense Group, 17.2% for the Products
Division and 67.2% for the Mobile Security Division.
The Company's gross profit margin in the fourth quarter decreased to 23.7% of
revenues versus 31.2% in the year-ago quarter. The reduction in gross profit
margin was largely a function of revenue mix within the Aerospace & Defense
Group and lower selling prices negotiated on the HMMWV contract renewal. The
Company's operating expenses as a percentage of revenue improved to 9.2% of
revenue versus 16.3% of revenue in the year-ago quarter. This improvement was
primarily due to the Company's ability to scale its business.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the fourth quarter increased by 391.8% to $52.0 million versus $10.6 million in
the year-ago quarter. Following to this press release is a reconciliation of net
income to EBITDA for the three months ended December 31, 2004, and 2003.
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Cash flow from operations for the fourth quarter was negative $(7.3) million
versus positive $18.0 million in the year-ago quarter. Free cash flow, defined
as cash flow from operations less capital expenditures, was negative $(15.7)
million versus positive $14.9 million in the same period last year. The decline
in cash flow resulted from an increase in net working capital necessary to
support the growth of the business.
Robert R. Schiller, President and Chief Operating Officer of Armor Holdings,
Inc., commented, "Fiscal 2004 was a watershed year in the development of our
Company. Force protection is an equipment category for personnel, aviation, and
ground vehicle applications that is of paramount importance to the successful
prosecution of modern military action. As a leading supplier of this type of
equipment, and as a leading authority on blast and ballistics technology, we
believe that Armor Holdings is in an excellent position to provide much-needed
solutions to our customers."
"We are extremely pleased that we have proven capable of meeting and exceeding
increasingly demanding production and delivery requirements for a wide variety
of programs. During the year, we up-armored 3,945 HMMWVs, and we expect to take
production to 550 vehicles per month beginning in March of 2005. This compares
to a fiscal 2002 production level of just 623 total vehicles and a 2002 peak
production rate of only 69 vehicles per month. At the same time, we have
dramatically broadened our capabilities to include vehicle armoring solutions
for a number of platforms, including light, medium, and heavy trucks, as well as
other combat and support vehicles," said Mr. Schiller.
Mr. Schiller added, "The heightened security situation on a global basis has
helped propel not only our Aerospace & Defense business, but is also driving
results in our Mobile Security and Products businesses. Backlog in our Mobile
Security business is at record levels and we are working hard to fulfill this
demand from government agencies, non-governmental organizations, and private
individuals around the globe. Our Products business continues to be a highly
stable, steadily growing operation with excellent cash-flow generation and good
prospects for continued growth."
FULL YEAR RESULTS
For the full year ended December 31, 2004, the Company reported revenue of
$979.7 million, an increase of 168.3% versus the prior year's $365.2 million.
Net income for the full year ended December 31, 2004, was $80.5 million, or
$2.44 per diluted share, versus the prior year level of $10.9 million, or $0.38
per diluted share. During the full year ended December 31, 2004, the Company
incurred a $6.3 million, or $0.19 per share, non-cash charge due to the
accelerated vesting of performance based, long-term, restricted stock awards
granted to certain senior executives in 2002, as well as a $5.0 million pre-tax
charge, or $0.09 per diluted share on an after-tax basis, for the warranty
revision and product exchange program concerning a specific model of Zylon-based
ballistic vest. The Company also incurred approximately $4.0 million, or $0.07
per share on an after-tax basis, of integration and other charges.
Internal revenue growth for the full year, assuming that acquired companies were
owned effective January 1, 2003, was 111.0%, including 1.8% for foreign currency
movements. Internal revenue growth by segment including foreign currency
movements was 243.5% for the Aerospace & Defense Group, 19.7% for the Products
Division and 56.6% for the Mobile Security Division.
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The Company's gross profit margin for the full year ended December 31, 2004,
decreased to 27.1% of revenues versus 30.6% in the prior year. This decrease was
primarily due to revenue mix and lower average HMMWV selling price levels within
the Aerospace & Defense Group. The Company's operating expenses as a percentage
of revenue improved to 10.2% of revenue versus 17.2% of revenue in the prior
year. This decrease was largely due to the Company's ability to achieve scale.
EBITDA for the full year ended December 31, 2004, increased by 273.5% to $159.6
million versus $42.7 million in the prior year. Following to this press release
is a reconciliation of net income to EBITDA for the full years ended December
31, 2004, and 2003.
Cash flow from operations for the full year ended December 31, 2004, was $14.7
million versus $50.9 million in the prior year. Free cash flow was negative
$(4.7) million versus positive $42.2 million in the same period last year. Here
again, the decline in cash flow resulted from an increase in net working capital
necessary to support the growth of the business.
BALANCE SHEET
As of December 31, 2004, the Company reported a cash balance of $421.2 million
compared to $111.9 million at December 31, 2003. Total debt (short-term, current
portion and long-term) at December 31, 2004, of $501.1 million includes the
Company's $345 million, 2% Senior Subordinated Convertible Notes issued in 2004.
This compares to total debt (short-term, current portion and long-term) at
December 31, 2003, of $191.0 million.
Mr. Schiller continued, "In addition to excellent organic results from each of
our divisions, we are pleased with our ongoing ability to continue to build our
business through a strong cycle of capital markets financings and acquisitions.
During the course of the year, we raised over $495.0 million through both an
equity offering and a convertible debenture. During the fourth quarter of 2004,
we have acquired both the Specialty Defense business, which is a leading
provider of personnel safety equipment and duty gear for the military, as well
as Bianchi, a leading branded supplier of duty gear for both law-enforcement
personnel and the sporting industry. There continues to be a wide range and
strong number of potential acquisitions that exist for each of our business
segments to evaluate. Our track record with regard to acquisitions is very good,
and we have every confidence that we can deploy our capital in a way, which we
believe, will be timely and accretive, and which we expect will foster further
improvements in our strategic and competitive position. We believe that through
transformational acquisitions, which could range in value from $250 million to
more than $1.0 billion in purchase price, as well as internal growth, we now
have an opportunity to double our revenue level to in excess of $2 billion over
the next three to five years."
GUIDANCE
The Company anticipates fiscal 2005 revenues of $1.26 to $1.33 billion and fully
diluted earnings per share of $2.75 to $3.00. Approximately 65% to 70% of
anticipated 2005 revenue is currently in backlog. The Company anticipates first
quarter 2005 fully diluted earnings per share of $0.75 to $0.78, after $0.01 to
$0.02 of integration and other charges.
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Mr. Schiller concluded, "We are excited about the prospects that the year ahead
holds for our company. We believe that demand for our major programs will
continue to be strong. Further, while it is premature to quantify our outlook
beyond the current year, we believe that the long-term trends for procurement in
our major product categories are excellent. We also believe that the nature of
armed conflict in the future is likely to be dynamic, creating an ongoing
requirement for deeper and broader levels of force protection equipment."
CONFERENCE CALL SCHEDULED FOR FEBRUARY 10, 2005, AT 4:30 PM (EASTERN)
As previously announced, the Company will hold a teleconference at 4:30 PM
(Eastern) on February 10, 2005, to discuss its fourth quarter and full year
results.
There are two ways to participate in the conference call - via teleconference or
webcast. Access the webcast by visiting the Armor Holdings, Inc. website
(http://www.armorholdings.com). You may listen by selecting Investor Relations
and clicking on the microphone.
Via telephone, the dial-in number is 1-800-553-0351 for domestic callers or
1-612-332-0932 for international callers. There is no passcode required for this
call. There will be a question/answer session at the end of the conference call,
at which point only securities analysts will be able to ask questions. However,
all callers will be able to listen to the questions and answers during this
period.
An archived copy of the call will be available via replay at 1-800-475-6701 -
access code 769392 for domestic callers, or 1-320-365-3844 - access code 769392
for international callers. The teleconference replay will be available beginning
at 11:30 p.m. on Thursday, February 10th and ending at 11:59 p.m. on Thursday,
February 17th.
ABOUT ARMOR HOLDINGS
Armor Holdings, Inc. (NYSE: AH - News) is a diversified manufacturer of branded
products for the military, law enforcement, and personnel safety markets.
Additional information can be found at http://www.armorholdings.com .
Certain matters discussed in this press release constitute forward-looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from those projected. The Company may use words such as
"anticipates," "believes," "plans," "expects," "intends," "future," and similar
expressions to identify forward-looking statements. These risks and
uncertainties are described in the Company's filings with the Securities and
Exchange Commission, including the company's Registration Statement on Form S-3,
its 2003 Form 10-K/A and most recently filed Form 10-Qs and 8-Ks.
All references to earnings per share amounts in this press release are on a
fully diluted basis.
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ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
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REVENUES:
Aerospace & Defense $ 234,379 $ 38,834 $ 605,398 $ 91,673
Products 65,523 50,802 249,765 193,960
Mobile Security 37,646 22,521 124,520 79,539
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Total Revenues 337,548 112,157 979,683 365,172
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COSTS AND EXPENSES:
Cost of revenues 257,421 77,190 714,192 253,586
Cost of warranty revision -- -- 5,000 --
Operating expenses 30,929 18,290 100,261 62,795
Amortization 1,318 288 4,255 489
Integration and other charges 524 8,008 10,260 12,573
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OPERATING INCOME 47,356 8,381 145,715 35,729
Interest expense, net 1,591 1,721 6,776 4,012
Other expense, net 2,066 327 1,945 508
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INCOME FROM CONTINUING OPERATIONS BEFORE
PROVISION FOR INCOME TAXES 43,699 6,333 136,994 31,209
PROVISION FOR INCOME TAXES 17,345 4,159 56,417 14,203
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INCOME FROM CONTINUING OPERATIONS 26,354 2,174 80,577 17,006
DISCONTINUED OPERATIONS:
(LOSS) FROM DISCONTINUED OPERATIONS NET OF
TAX -- (7,103) (38) (6,120)
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NET INCOME (LOSS) $ 26,354 $ (4,929) $ 80,539 $ 10,886
========= ========= ========= =========
NET INCOME PER COMMON SHARE - BASIC
INCOME FROM CONTINUING OPERATIONS $ 0.78 $ 0.08 $ 2.56 $ 0.61
(LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.25) 0.00 (0.22)
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BASIC EARNINGS (LOSS) PER SHARE $ 0.78 $ (0.17) $ 2.56 $ 0.39
========= ========= ========= =========
NET INCOME PER COMMON SHARE - DILUTED
INCOME FROM CONTINUING OPERATIONS $ 0.74 $ 0.07 $ 2.44 $ 0.59
(LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.24) 0.00 (0.21)
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DILUTED (LOSS) EARNINGS PER SHARE $ 0.74 $ (0.17) $ 2.44 $ 0.38
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WEIGHTED AVERAGE DILUTED SHARES 35,555 29,364 33,025 28,954
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ARMOR HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(UNAUDITED)
(IN THOUSANDS) THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
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Net income (loss) $ 26,354 $ (4,929) $ 80,539 $ 10,886
Plus: Loss from discontinued
operations, net of tax - 7,103 38 6,120
Plus: Provision for income taxes 17,345 4,159 56,417 14,203
Plus: Other expense, net 2,066 327 1,945 508
Plus: Interest expense, net 1,591 1,721 6,776 4,012
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Operating income 47,356 8,381 145,715 35,729
Plus: Amortization 1,318 288 4,255 489
Plus: Depreciation 3,364 1,913 9,645 6,516
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EBITDA (Note A) $ 52,038 $ 10,582 $ 159,615 $ 42,734
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Note A. EBITDA, which represents the results from continuing operations before
interest, other expense, income taxes, and certain non-cash items,
including depreciation and amortization, is presented in the earnings
release because our credit facility and the trust indentures under
which our $150 million 8.25% Senior Subordinated notes maturing in
2013 and our $345 million 2% Senior Subordinated Convertible Notes
maturing in 2024 unless earlier converted, redeemed or repurchased are
issued contain financial covenants which are based on EBITDA.
Additionally, management believes that EBITDA is a common alternative
to measure value, cash flow and performance. We cannot assure you that
these measures are comparable to similarly titled measures presented
by other companies.
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