Sparton (SPA) 8-K Fiscal 2012 First Quarter Financial Results

Fiscal 2012 First Quarter

Financial Results

Conference Call

November 9, 2011

Exhibit 99.2

2

Safe Harbor Statement

Safe Harbor Statement

Certain

statements

herein

constitute

forward-looking

statements

within

the

meaning

of

the

Securities

Act

of

1933,

as

amended

and

the

Securities

Exchange

Act

of

1934,

as

amended.

When

used

herein,

words

such

as

“believe,”

“expect,”

“anticipate,”

“project,”

“plan,”

“estimate,”

“will”

or

“intend”

and

similar

words

or

expressions

as

they

relate

to

the

Company

or

its

management

constitute

forward-looking

statements.

These

forward-looking

statements

reflect

our

current

views

with

respect

to

future

events

and

are

based

on

currently

available

financial,

economic

and

competitive

data

and

our

current

business

plans.

The

Company

is

under

no

obligation

to,

and

expressly

disclaims

any

obligation

to,

update

or

alter

its

forward-looking

statements

whether

as

a

result

of

such

changes,

new

information,

subsequent

events

or

otherwise.

Actual

results

could

vary

materially

depending

on

risks

and

uncertainties

that

may

affect

our

operations,

markets,

prices

and

other

factors.

Important

factors

that

could

cause

actual

results

to

differ

materially

from

those

forward-looking

statements

include

those

contained

under

the

heading

of

risk

factors

and

in

the

management’s

discussion

and

analysis

contained

from

time-to-time

in

the

Company’s

filings

with

the

Securities

and

Exchange

Commission.

Adjusted

operating

income,

adjusted

net

income

and

adjusted

income

per

share

–

basic

and

diluted

are

non-GAAP

financial

measures

that

exclude

or

add

the

effect

of

certain

gains

and

charges,

including

imputing

taxes

at

a

36%

effective

rate.

Sparton

believes

that

the

presentation

of

non-

GAAP

financial

information

provides

useful

supplemental

information

to

management

and

investors

regarding

financial

and

business

trends

relating

to

the

Company’s

financial

results.

More

detailed

information,

including

period

over

period

segment

comparisons,

non-GAAP

reconciliation

tables

and

the

reasons

management

believes

non-GAAP

measures

provide

useful

information

to

investors,

is

included

in

the

Fiscal

2012

First

Quarter

Financial

Results

press

release

and

Form

10-Q

dated

November

8,

2011.

3

•

1   Quarter Highlights

•

Fiscal 2012 First Quarter Results

•

1   Quarter Segmented Operating Results

•

Liquidity & Capital Resources

•

Outlook

•

Q & A

Today’s Agenda

Today’s Agenda

st

st

4

•

Net sales of $51.8 million, up 13% from prior year quarter

•

Gross margins up to 16% from 15% in prior year quarter

•

Net income of $1.5 million, or $0.15 per share, versus adjusted net income of

$1.1 million, or $0.11 per share in the prior year quarter

•

Awarded nine new business programs from new and existing customers with a

potential fiscal 2012 revenue impact in excess of $6.0 million

•

Launched new and advanced navigation sensors and hydrophone products for

military and commercial uses at the AUVSI Unmanned Vehicle trade

show

•

Seventh consecutive quarter of growing sales backlog to approximately $145

million, representing a 6% increase over the previous quarter and a 28%

increase over a year ago

•

Reached agreement to sell non-performing investment in Cybernet Systems

Corporation for $1.75 million with proceeds to be received in the fiscal 2012

second quarter

1

1st

st

Quarter Highlights

Quarter Highlights

5

Consolidated Financial Results

Consolidated Financial Results

Fiscal 2012 First Quarter

Fiscal 2012 First Quarter

(Adjusted)

2011

2010

2011

2010

Net Sales

$    51,833

$    45,767

$    51,833

$    45,767

$    6,066

Gross Profit

         8,344

         7,026

         8,344

         7,026

       1,318

16.1%

15.4%

16.1%

15.4%

Selling and Administrative Expense

         5,411

         4,834

         5,411

         4,834

         (577)

10.4%

10.6%

10.4%

10.6%

Internal R&D Expense

            398

            127

            398

            127

         (271)

Amortization of intangible assets

            111

            110

                    -

                    -

Restructuring and Impairment Charges

                  -

               77

                    -

                    -

Gain On Acquisition

                  -

        (2,550)

                    -

                    -

Other operationg expense, net

               35

            192

               35

            192

           157

Operating Income

         2,389

         4,254

         2,389

         1,763

           626

4.6%

9.3%

4.6%

3.9%

Income Before Provision For (Benefit From) Income Tax

         2,358

         4,216

         2,358

         1,725

           633

Provision For (Benefit From) Income Taxes

            849

             (14)

            849

            621

         (228)

Net Income

$      1,509

$      4,230

$      1,509

$      1,104

$       405

2.9%

9.2%

2.9%

2.4%

Income per Share, Basic and Diluted

$        0.15

$        0.41

$        0.15

$        0.11

$      0.04

($ in 000’s, except per share)

(adjusted removes certain gains and charges, including imputing taxes at 36% effective rate)

Quarter ended Sept 30,

Quarter ended Sept 30,

YoY

Variance

(Reported)

(Adjusted)

6

Operating Results

Operating Results

Medical

Medical

SEGMENT

FY12

% of Total

FY11

% Change

Medical

$    27,460

53%

$    19,045

44%

Complex Systems

        12,560

24%

        12,328

2%

DSS

        15,287

30%

        17,597

-13%

Eliminations

        (3,474)

-7%

        (3,203)

8%

Totals

$    51,833

100%

$    45,767

13%

SEGMENT

FY12

GP % 

FY11

GP % 

Medical

$       3,614

13%

$       1,867

10%

Complex Systems

          1,088

9%

             907

7%

DSS

          3,642

24%

          4,252

24%

Totals

$       8,344

16%

$       7,026

15%

($ in 000’s)

1st Quarter Sales

1st Quarter Gross Profit

7

Operating Results

Operating Results

Complex Systems

Complex Systems

SEGMENT

FY12

% of Total

FY11

% Change

Medical

$    27,460

53%

$    19,045

44%

Complex Systems

        12,560

24%

        12,328

2%

DSS

        15,287

30%

        17,597

-13%

Eliminations

        (3,474)

-7%

        (3,203)

8%

Totals

$    51,833

100%

$    45,767

13%

SEGMENT

FY12

GP % 

FY11

GP % 

Medical

$       3,614

13%

$       1,867

10%

Complex Systems

          1,088

9%

             907

7%

DSS

          3,642

24%

          4,252

24%

Totals

$       8,344

16%

$       7,026

15%

($ in 000’s)

1st Quarter Sales

1st Quarter Gross Profit

8

Operating Results

Operating Results

Defense & Security Systems

Defense & Security Systems

SEGMENT

FY12

% of Total

FY11

% Change

Medical

$    27,460

53%

$    19,045

44%

Complex Systems

        12,560

24%

        12,328

2%

DSS

        15,287

30%

        17,597

-13%

Eliminations

        (3,474)

-7%

        (3,203)

8%

Totals

$    51,833

100%

$    45,767

13%

SEGMENT

FY12

GP % 

FY11

GP % 

Medical

$       3,614

13%

$       1,867

10%

Complex Systems

          1,088

9%

             907

7%

DSS

          3,642

24%

          4,252

24%

Totals

$       8,344

16%

$       7,026

15%

($ in 000’s)

1st Quarter Sales

1st Quarter Gross Profit

9

Liquidity & Capital Resources

Liquidity & Capital Resources

($ in '000)

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Cash and equivalents

27,281

29,941

26,119

24,550

26,984

LOC Availability

17,769

17,389

17,497

17,541

17,533

Total

45,050

47,330

43,616

42,091

44,517

($ in '000)

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Credit Revolver

-

-

-

-

-

Long Bank Term Debt

-

-

-

-

-

Former Astro Owners

-

-

-

-

-

IRB (Ohio)

1,887

1,856

1,826

1,796

1,766

Total

1,887

1,856

1,826

1,796

1,766

($ in '000)

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Net Inventory

36,629

35,076

40,282

38,752

41,816

Cash Availability

Debt

Inventory

10

•

Focus on sustained profitability

–

Continue margin improvements in Complex Systems

•

Targeted gross margin range adjusted up to 7%-10%

–

Backfill Medical revenue losses with new business

–

Offset reduced U.S. Navy sonobuoy contracts with foreign sonobuoy sales

–

Continue improvements in operating performance through lean and quality efforts

•

Implementation of the strategic growth plan

–

Continue refining the new business development process to increase the new business

opportunity funnel and win more new business

–

Continue to target the right trade show venues

–

Continue to invest in internal R&D for new product introductions

–

Challenge the technical staff to develop new & innovative ideas

–

Continue to look at complementary and compatible acquisitions

•

Continue to participate in upcoming trade shows and investor relations events

Fiscal 2012 Outlook

Fiscal 2012 Outlook

11

Q & A