Sparton (SPA) 8-K Regulation FD Disclosure

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Fiscal 2015 2

nd

Quarter            

Financial Results

February 4, 2015

Exhibit 99.1

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

EBITDA

and

related

reconciliation

presented

here

represents

earnings

before

interest,

taxes,

depreciation

and

amortization

as

adjusted

for

restructuring/impairment

charges,

gross

profit

effects

of

capitalized

profit

in

inventory

from

acquisition

and

acquisition

contingency

settlement,

and

gain

on

sale

of

investment.

The

Company

believes

Adjusted

EBITDA

is

commonly

used

by

financial

analysts

and

others

in

the

industries

in

which

the

Company

operates

and,

thus,

provides

useful

information

to

investors.

The

Company

does

not

intend,

nor

should

the

reader

consider,

Adjusted

EBITDA

an

alternative

to

net

income,

net

cash

provided

by

operating

activities

or

any

other

items

calculated

in

accordance

with

GAAP.

The

Company's

definition

of

Adjusted

EBITDA

may

not

be

comparable

with

Adjusted

EBITDA

as

defined

by

other

companies.

Accordingly,

the

measurement

has

limitations

depending

on

its

use.

2

•

2

nd

Quarter Business Review

•

Consolidated Financial Results

•

New Segment Reporting

•

MDS Segment Results

•

ECP Segment Results

•

Liquidity & Capital Resources

•

Fiscal 2015 Outlook

•

Q & A

Today’s Agenda

3

•

77 new program or product wins were awarded with potential first

time

order value of $17.7 million

o

14 in MDS with a first time order value of $4.0 million

o

63 in ECP with a first time order value of $13.7 million

•

Quarter end sales backlog of approximately $226.6 million, representing

an 18% increase over the prior year quarter

o

Includes approximately $13.1 million from acquisitions

o

11% increase over the prior year quarter to $213.5 million, net of acquisitions

•

Repurchased $4.6 million of the Company's stock under the Company's

stock repurchase plan

•

Completed 4 acquisitions

o

During the quarter: Argotec (tuck-in into DeLeon Springs) and Industrial

Electronic Devices (tuck-in into Aydin Displays)

o

Subsequent to quarter-end: Real Time Enterprises (stand-alone) and KEP

Marine (tuck-in into Aydin Displays)

2

nd

Quarter Business Review

4

Consolidated Financial Results

Fiscal 2015 2

nd

Quarter

5

2014

2013

2014

2013

Net Sales

$    85,642

$    84,717

$    85,642

$    84,717

$         925

1%

Base Business

73,167

83,962

73,167

83,962

(10,795)

-13%

Acquisition

12,475

755

12,475

755

11,720

1552%

Gross Profit

15,171

15,132

15,251

15,240

11

0%

% of sales

17.7%

17.9%

17.8%

18.0%

Selling and Administrative Expense

10,806

8,687

10,656

8,687

(1,969)

-23%

12.6%

10.3%

12.4%

10.3%

Internal R&D Expense

197

402

197

402

205

Amortization of intangible assets

1,450

636

1,450

636

(814)

Other operating income, net

(14)

(5)

(14)

(5)

9

Operating Income

2,732

5,412

2,962

5,520

(2,558)

-46%

% of sales

3.2%

6.4%

3.5%

6.5%

Interest expense

(357)

(202)

(357)

(202)

(155)

Interest (expense) income and other, net

(46)

10

(46)

10

(56)

Income Before Provision For Income Taxes

2,329

5,220

2,559

5,328

(2,769)

Provision For Income Taxes

767

1,736

856

1,772

916

Net Income

$      1,562

$      3,484

$      1,703

$      3,556

$    (1,853)

-52%

% of sales

1.8%

4.1%

2.0%

4.2%

Income per Share (Basic)

$        0.16

$        0.34

$        0.17

$        0.35

$       (0.18)

-51%

Income per Share (Diluted)

$        0.16

$        0.34

$        0.17

$        0.35

$       (0.18)

-51%

($ in 000’s, except per share)

(adjusted removes certain gains and charges)

Total YoY

Variance (%)

(Adjusted)

(Reported)

(Adjusted)

Quarter ended Dec 31,

Quarter ended Dec 31,

Total YoY

Variance ($)

Consolidated Financial Results

Adjusted EBITDA

6

2014

2013

Net Income

$      1,562

$      3,484

Interest expense

357

202

Provision for income taxes

767

1,736

Depreciation and amortization

2,588

1,919

Capitalized profit in inventory from acquisition

80

108

Success based acquisition finders fee

150

-

Adjusted EBITDA

$      5,504

$      7,449

% of sales

6.4%

8.8%

($ in 000’s)

3 months ended Dec 31,

Operating Results

MDS

7

2014

% of Sales

2013

% of Sales

Chg ($)

Chg (%)

Sales

Base Business

$    44,386

73.0%

$    57,907

93.2%

$  (13,521)

-23.3%

Acquisitions

12,475

20.5%

755

1.2%

11,720

Intercompany

3,929

6.5%

3,484

5.6%

445

12.8%

Total Sales

60,790

100.0%

62,146

100.0%

(1,356)

-2.2%

Gross Profit

8,208

13.5%

8,923

14.4%

(715)

-8.0%

Selling and administrative expenses

4,133

6.8%

3,519

5.7%

614

17.4%

Amortization of intangible assets

1,402

2.3%

567

0.9%

835

147.3%

Operating income

$      2,673

4.4%

$      4,837

7.8%

$    (2,164)

-44.7%

($ in 000’s)

3 months ended Dec 31,

Operating Results

ECP

8

2014

% of Sales

2013

% of Sales

Chg ($)

Chg (%)

Sales

Base Business

$

28,781

99.5%

$    26,055

99.9%

$      2,726

10.5%

Intercompany

138

0.5%

23

0.1%

115

nmf

Total Sales

28,919

100.0%

26,078

100.0%

2,841

10.9%

Gross Profit

6,963

24.1%

6,209

23.8%

754

12.1%

Selling and administrative expenses

2,445

8.5%

2,148

8.2%

297

13.8%

Amortization of intangible assets

48

0.2%

69

0.3%

(21)

-30.4%

Internal research and development expense

197

0.7%

402

1.5%

(205)

-51.0%

Operating income

$      4,273

14.8%

$      3,590

13.8%

$         683

19.0%

($ in 000’s)

3 months ended Dec 31,

Liquidity & Capital Resources

9

($ in '000)

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Cash and equivalents

1,009

7,502

8,028

6,546

3,236

Credit Availability

40,000

30,000

59,000

158,000

141,500

Total

41,009

37,502

67,028

164,546

144,736

($ in '000)

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Credit Revolver

25,000

35,000

41,000

42,000

58,500

IRB (Ohio)

1,472

1,437

-

-

-

Total

26,472

36,437

41,000

42,000

58,500

($ in '000)

Dec-13

Mar-14

Jun-14

Sep-14

Dec-14

Net Inventory

52,393

51,466

53,372

57,201

56,333

Cash Availability

Debt

Inventory

•

Fiscal 2015 growth target revised to flat to slightly up, net of

acquisitions

–

Orders in 1

st

half pushed into future quarters

–

Expect a robust 2nd half of the year

–

Continue cost containment actions

–

Drive the closure of new business opportunities

•

Execute the 2020 Vision

•

Upcoming investor relations events

–

Non deal road show in New York from March 18-19

–

Non deal road show in Boston on March 25

–

Bank of America in New York on March 26

–

B Riley in Santa Monica from May 12-14

–

Barrington Research in Chicago from May 13-14

–

KeyBanc in Boston from May 26-28

Fiscal 2015 Outlook

10

11

“Reach $1 billion by 2020,

expanding our manufacturing and

design services while providing

more engineered components and

products to meet the needs of our

customers and markets”

Q&A