Exhibit 99.1
HALIFAX ANNOUNCES SECOND QUARTER FINANCIAL RESULTS
Company Reports Two Successive Quarters of Profitability;
Gross Margin Improves to 10.7% from 7.8%
ALEXANDRIA, VA - November 14, 2006 - Halifax Corporation (AMEX:HX)
today announced its financial results for the quarter ended September
30, 2006.
Revenues for the second quarter of fiscal 2007 were $12.4 million
versus $14 million for the same period in fiscal 2006. The
revenue decrease was primarily due to the cessation of an unprofitable
nationwide contract in April 2006.
The gross profit margin for this year's second quarter was $1.3
million, or 10.7% of revenues, versus $1.1 million, or 7.8% of
revenues, for the same period a year ago. Operating income was
$188,000 for the quarter ended September 30, 2006, compared to an
operating loss of $170,000 for the same period the prior year.
The Company reported net income of $22,000, or $0.01 per basic and
diluted share, for the fiscal 2007 second quarter. This compares to a
net loss of $172,000, or $0.05 per share, for the three months ended
September 30, 2005.
Charles McNew, president and chief executive officer, stated, "Our
ongoing profitability and the continuing improvement in gross margins
is the direct result of investments in IT upgrades and cost containment
actions. It is worth noting that we incurred start-up costs associated
with a major contract trial during the quarter, and this had a negative
impact on margins. On the positive side, we believe that this contract
offers long-term revenue growth potential with a major customer.
"In addition, our backlog of more than $80 million and the pipeline for
new business remain quite healthy," he added.
For the six months ended September 30, 2006, revenues were $25.1
million compared to $28.7 million for the same period last year.
Operating income for the first half of fiscal 2007 was $514,000 versus
an operating loss of $313,000 for the same period a year ago. Income
from continuing operations for the six months ended September 30, 2006,
was $106,000 compared to a loss from continuing operations of $406,000
for the same period last year. Net income for the first half of this
year was $106,000, or $0.03 per basic and diluted share, versus a net
loss of $96,000, or $ 0.03 per share, for the first half of fiscal
2006.
McNew added, "The balance sheet has been improving steadily; it
is the strongest it's been in seven years. We continue to remain
optimistic about our prospects in the managed services marketplace, as
the ongoing industry consolidation is creating multiple niche
opportunities within our well-developed partner model."
The Company will host a conference call for investors at 11 a.m. EST on
Tuesday November 14, 2006, to review the financial and operational
results for the quarter. The conference call phone number is 800-834-
5691 for U.S. callers and 212-676-5241 for international callers. The
conference call replay will be available from 1 p.m. EST on Tuesday
November 14, 2006, to 1 p.m. EST on Wednesday, November 15, 2006. The
replay number is 800-633-8284 for U.S. callers and 402-977-9140 for
international callers. The reservation number is 21309569.
Founded in 1967, Halifax Corporation is an enterprise maintenance
solutions company providing a wide range of technology services to
commercial and government customers throughout the United States. The
Company's principal products are high availability hardware maintenance
services, technology deployment and integration services. More
information on Halifax can be found at www.hxcorp.com.
Certain statements made by the Company which are not historical facts
may be considered forward-looking statements, including, without
limitation, statements as to trends, management's beliefs, views,
expectations and opinions, which are based upon a number of assumptions
concerning future conditions that ultimately may prove to be
inaccurate. Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors described in the
Risk Factors Section in the Company's Annual Report on Form 10-K that
may cause actual results to differ materially from those in the forward-
looking statements. For further information that could affect the
Company's financial statements, please refer to the Company's reports
filed with the Securities and Exchange Commission.
Halifax Corporation
Summary Financial Data
(in 000's except per share Three Months Ended Six Months Ended
amounts) September 30, September 30,
Statements of Operations 2006 2005 2006 2005
Revenues $ 12,369 $ 13,958 $ 25,115 $ 28,637
Cost of services 11,044 12,864 22,314 26,361
Gross Profit 1,094 2,801 2,276
1,325
Selling, marketing, general &
administrative 1,137 1,264 2,287 2,589
Operating income (loss) 188 (170) 514 (313)
Other income 13 5 14 5
Interest expense (159) (105) (322) (322)
Income (loss) before income
taxes 42 (270) 206 (630)
Income tax expense (benefit) 20 (98) 100 (224)
Income (loss) from continuing
operations 22 (172) 106 (406)
Income from discontinued
operations (net) - - - 310
Net income (loss) $ 22 $ (172) $ 106 $ (96)
Earnings (loss) per common
share - basic:
Continuing operations $ .01 $ (.05) $ .03 $ (.13)
Discontinued operations - - - .10
$ .01 $ (.05) $ .03 $ (.03)
Earnings (loss) per common
share - diluted:
Continuing operations $ .01 $ (.05) $ .03 $ (.13)
Discontinued operations - - - .10
$ .01 $ (.05) $ .03 $ (.03)
Weighted average number of
common shares outstanding:
Basic 3,175 3,172 3,175 3,172
Diluted 3,179 3,191 3,180 3,192
Balance Sheets September 30, March 31,
2006 2006
Current assets
Cash $ 903 $ 1,025
Trade accounts receivable, net 9,861 11,415
Inventory, net 6,459 6,363
Prepaid expense and other current assets 441 722
Deferred tax asset 1,194 1,332
Total current assets 18,858 20,857
Property and equipment, net 1,261 1,381
Goodwill and intangibles, net 4,025 4,213
Other assets 126 130
Deferred tax asset 807 828
Total assets $ 25,077 $ 27,409
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 6,174 $ 7,135
Deferred maintenance revenue 3,144 3,515
Income tax payable - 331
Current portion of long-term debt 33 202
Total current liabilities 9,351 11,183
Long-Term bank debt 6,313 6,891
Other long-term debt 137 154
Subordinated debt-affiliate 1,000 1,000
Deferred income 188 218
Total liabilities 16,989 19,446
Stockholders' equity 8,088 7,963
Total liabilities and stockholders' equity $ 25,077 $ 27,409