Sparton 8K Fiscal 2013 First Quarter Financial Results | SPA 7 Nov 12

Fiscal 2013 First Quarter

Financial Results

Conference Call

November 7, 2012

Exhibit 99.2

Safe Harbor Statement

Certain statements herein constitute forward-looking statements within the meaning of the Securities

Act

1933,

amended

and

the

Securities

Exchange

Act

1934,

amended.

When

used

herein,

words

such

“believe,”

“expect,”

“anticipate,”

“project,”

“plan,”

“estimate,”

“will”

“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

future

events

and

are

based

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

risk

factors

and

the

management’s

discussion

and

analysis contained from time-to-time in the Company’s filings with the Securities and Exchange

Commission.

•

Quarter Highlights

•

Fiscal 2013 First Quarter Results

•

Segmented Operating Results

•

Liquidity & Capital Resources

•

Pending Acquisition of Onyx

•

Outlook

•

Q & A

Today’s Agenda

•

14 new business programs with estimated future annualized revenue of

$13.4 million.

•

Quarter

end

sales

backlog

approximately

$156.1

million,

from

the previous quarter and up 7% increase over a year ago.

•

Medical business continued sales growth of 2.2% with a gross profit

percentage improvement to 14.9% as compared to 13.2% in the prior

year quarter.

•

The Company’s revolving credit facility was amended and extended in

July 2012.

•

Sparton signed a definitive agreement on November 2, 2012 to acquire

Onyx

Quarter Highlights

Consolidated Financial Results

Fiscal 2013 First Quarter

2012

2011

Net Sales

$ 49,020

$ 51,833

$ (2,813)

Gross Profit

7,213

8,344

(1,131)

14.7%

16.1%

Selling and Administrative Expense

5,472

5,411

Internal R&D Expense

305

398

(93)

Amortization of intangible assets

102

111

(9)

Other operating expense, net

(10)

(45)

Operating Income

1,344

2,389

(1,045)

2.7%

4.6%

Income Before Provision For Income Tax

1,401

2,358

(957)

Provision For Income Taxes

448

849

(401)

Net Income

$ 953

$ 1,509

$ (556)

1.9%

2.9%

Income per Share, Basic and Diluted

$ 0.09

$ 0.15

$ (0.06)

($ in 000’s, except per share)

YoY

Variance

(Reported)

Quarter ended Sept 30,

Sales & Gross Margin Results

Medical

SEGMENT

2012

% of Total

2011

% Change

Medical

$ 28,059

57%

$ 27,460

Complex Systems

12,347

25%

12,560

-2%

DSS

13,206

27%

15,287

-14%

Eliminations

(4,592)

-9%

(3,474)

32%

Totals

$ 49,020

100%

$ 51,833

-5%

SEGMENT

2012

GP %

2011

GP %

Medical

$ 4,194

15%

$ 3,614

13%

Complex Systems

1,096

1,088

DSS

1,923

15%

3,642

24%

Totals

$ 7,213

15%

$ 8,344

16%

($ in 000’s)

3 Months Ended Sept 30,

SALES

GROSS MARGIN

Sales & Gross Margin Results

Complex Systems

SEGMENT

2012

% of Total

2011

% Change

Medical

$ 28,059

57%

$ 27,460

Complex Systems

12,347

25%

12,560

-2%

DSS

13,206

27%

15,287

-14%

Eliminations

(4,592)

-9%

(3,474)

32%

Totals

$ 49,020

100%

$ 51,833

-5%

SEGMENT

2012

GP %

2011

GP %

Medical

$ 4,194

15%

$ 3,614

13%

Complex Systems

1,096

1,088

DSS

1,923

15%

3,642

24%

Totals

$ 7,213

15%

$ 8,344

16%

($ in 000’s)

3 Months Ended Sept 30,

SALES

GROSS MARGIN

Sales & Gross Margin Results

Defense & Security Systems

SEGMENT

2012

% of Total

2011

% Change

Medical

$ 28,059

57%

$ 27,460

Complex Systems

12,347

25%

12,560

-2%

DSS

13,206

27%

15,287

-14%

Eliminations

(4,592)

-9%

(3,474)

32%

Totals

$ 49,020

100%

$ 51,833

-5%

SEGMENT

2012

GP %

2011

GP %

Medical

$ 4,194

15%

$ 3,614

13%

Complex Systems

1,096

1,088

DSS

1,923

15%

3,642

24%

Totals

$ 7,213

15%

$ 8,344

16%

($ in 000’s)

3 Months Ended Sept 30,

SALES

GROSS MARGIN

Liquidity & Capital Resources

($ in '000)

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Cash and equivalents

26,984

30,610

26,682

46,950

43,096

LOC Availability

17,533

17,290

16,469

16,277

16,012

Total

44,517

47,900

43,151

63,227

59,108

($ in '000)

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Credit Revolver

IRB (Ohio)

1,766

1,735

1,702

1,669

1,637

Total

1,766

1,735

1,702

1,669

1,637

($ in '000)

Sep-11

Dec-11

Mar-12

Jun-12

Sep-12

Net Inventory

41,816

38,545

39,252

35,102

38,467

Cash Availability

Debt

Inventory

•

$43.25 million purchase price, all-cash transaction.

•

$50 million of revenue at 18% gross profit (TTM as of June 30, 2012).

•

Onyx primarily manufactures devices for OEM and emerging technology

companies in the Medical and Industrial markets.

•

Strategic implications…

–

Regional expansion into the Minneapolis medical device corridor.

–

Diversifies our customer base and continues to increase the number of

complex sub-assembly and full device programs within Sparton.

–

Strong business development pipeline.

–

Sparton’s Viet Nam facility is an viable option for Onyx’s customer base.

–

Sparton can provide full engineering design capabilities to Onyx’s

customers.

Pending Acquisition of Onyx

•

Implementation of the strategic growth plan

–

Continue

gain

traction

nationally

focused

direct

selling

effort

–

Further leverage Viet Nam as a low cost country alternative and in-region provider

–

Maintain our level of investment in internal research & development to commercially extend our

product lines

–

Continue to enable our engineering workforce to develop new and innovative proprietary solutions

for our end markets

–

Continue to seek out complementary and compatible acquisitions

•

Focus on sustained profitability

–

Continue margin improvements in Complex Systems

–

Increase capacity utilization

–

Improve the working capital turnover rate

–

Continue additional improvements in operating performance through lean and quality efforts

•

Integration of Onyx

We continue to be optimistic with the outlook that both the second quarter and the

remainder of the fiscal year will outpace fiscal 2012 results

Fiscal 2013 Outlook

Q & A

Sparton (SPA) 8-KFiscal 2013 First Quarter Financial Results