ARMOR HOLDINGS, INC. REPORTS 1ST QUARTER EARNINGS
OF $0.17 PER DILUTED SHARE
$0.19 PER DILUTED SHARE FROM CONTINUING OPERATIONS BEFORE INTEGRATION AND OTHER
NON-RECURRING CHARGES
CONFERENCE CALL SCHEDULED FOR MAY 6, 2003, AT 8:30 AM (EASTERN)
JACKSONVILLE, FLORIDA (MAY 5, 2003) - ARMOR HOLDINGS, INC. (NYSE: AH) announced
today revenues and earnings for the three-months ended March 31, 2003.
For the three-months ended March 31, 2003, revenues from continuing operations
increased 15.6% to $80.5 million compared to $69.6 million reported for the
three-months ended March 31, 2002. Revenues from continuing operations increased
5.1% internally and 10.5% from the acquisitions of Trasco Bremen and several
smaller Products Division acquisitions, which were each acquired subsequent to
the first quarter of 2002. The Company's consolidated net income and diluted
earnings per share for the three-months ended March 31, 2003 and 2002, were $5.1
million, or $0.17 per share, and $6.0 million, or $0.19 per share, respectively.
Net income and diluted earnings per share from continuing operations after
integration and other non-recurring charges were $5.2 million and $0.18 per
share for the three-months ended March 31, 2003, compared to $5.6 million and
$0.18 per share in the comparable period in the prior year. Net income from
continuing operations before integration and other non-recurring charges was
$5.5 million for the three-months ended March 31, 2003, compared to $6.4 million
for the comparable period in 2002. Diluted earnings per share before these items
for the three-months ended March 31, 2003, was $0.19 per share compared to $0.20
per share for the comparable period in 2002. Attached to this press release is a
reconciliation of reported net income as reported to proforma net income from
continuing operations for the three-months ended March 31, 2003 and 2002.
Gross margins from continuing operations for the three-months ended March 31,
2003, were 29.0%, compared to 31.6% in the comparable period in 2002. For the
three-months ended March 31, 2003, gross margins in the Products Division were
34.2%, compared to 37.3% reported in the same period last year. The Company
expects the Products Division gross margins to improve to approximately 36.0% in
the second quarter of 2003. This improvement is expected to come from higher
margin product mix and more efficient manufacturing. Lower gross margins in the
Products Division were primarily the result of higher manufacturing costs in the
Company's body armor business and partially attributable to business mix. During
the current three-month period, the Products Division also realized higher
proportional revenue increases from its training division, which operates at
lower overall gross margins than its manufacturing segment. Excluding the
training division, the Products Division gross margins were 36.6%, compared to
39.6% reported in the same period last year. Gross margins in the Mobile
Security Division were 22.7% in the three-months ended March 31, 2003, compared
to 24.3% reported in the same period in the prior year. The decrease in the
Mobile Security Division gross margin is primarily attributable to: (1) a less
favorable mix of commercial vehicle sales in both Cincinnati and France compared
to the same period the prior year; (2) sales price deterioration in certain
Latin American markets in 2003 compared to 2002; and (3) a larger number of
purchased base vehicles in the 2003 period. The Mobile Security Division often
purchases and resells base vehicles to customers as a pass-through service
without normal gross profit.
Integration and other non-recurring charges for the three-months ended March 31,
2003, totaled $422,000, compared to $1.4 million in the same period last year.
The decrease in integration and other non-recurring items is primarily related
to completion of integration and other non-recurring spending on the 2001
acquisition of O'Gara. The Company expects integration and other non-recurring
charges to continue at this level in the second quarter of 2003.
"We are pleased with our first quarter financial results, which were in line
with our expectations and guidance for the period," said Robert R. Schiller,
Chief Operating Officer and CFO of Armor Holdings, Inc. "As we expected,
our integration and other non-recurring expenses decreased significantly during
the period as our existing integration programs near completion. We also made
progress during the quarter addressing our manufacturing efficiencies and we
expect to see our Products Division gross margins improve during the second
quarter and over the course of the year," Mr. Schiller added.
For the three-months ended March 31, 2003, loss from discontinued operations was
$158,000, or $0.01 per share, compared to income of $391,000, or $0.01 per share
for the three-months ended March 31, 2002. On April 17, 2003, the Company
completed the sale of its ArmorGroup Integrated Systems businesses, which
contributed $1.1 million of pre-tax losses to the Company's discontinued
operations for the three-months ended March 31, 2003.
"With the sale of our ArmorGroup Integrated Systems businesses behind us, we are
hopeful that we will complete a sale of the balance of our discontinued
operations in the near future," said Mr. Schiller. Mr. Schiller continued,
"Before the $701,000 net loss incurred in the Integrated Systems businesses, the
balance of ArmorGroup produced net income of $543,000 and EBITDA of $1.2 million
for the three-months ended March 31, 2003, in line with our budgeted
expectations. We expect approximately $85 million to $90 million of revenue with
EBITDA margins of between 8% and 11% from our ArmorGroup Services Division in
2003."
At March 31, 2003, the Company's continuing operations business segments had
cash balances of $16.0 million and total long-term debt, including current
portion, of $26.7 million compared to $36.0 million and $6.9 million,
respectively, at March 31, 2002. As of March 31, 2003, the Company had $20
million outstanding on its $120 million revolving line of credit.
For the three-months ended March 31, 2003, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") from continuing
operations was $10.4 million, compared to $10.3 million for the three-months
ended March 31, 2002. For the three-months ended March 31, 2003, the Company's
EBITDA from continuing operations before integration and other non-recurring
charges was $10.8 million, compared to $11.7 million for the three-months ended
March 31, 2002. Attached to this press release is a reconciliation of net income
as reported to EBITDA from continuing operations before integration and other
non-recurring charges.
In March 2002, our Board of Directors approved a stock repurchase program
authorizing the repurchase of up to a maximum 3.2 million shares of our common
stock. In February 2003, the Board of Directors increased this stock repurchase
program to authorize the repurchase, from time to time depending upon market
conditions and other factors, of up to an additional 4.4 million shares. During
the three-months ended March 31, 2003, the Company repurchased an additional 1.9
million shares of its common stock at an average price of $11.52 per share.
Through March 31, 2003, the Company had repurchased 3.8 million shares of its
common stock under the stock repurchase program at an average price of $12.49
per share, leaving the Company with the ability to repurchase up to 3.8 million
shares of common stock. Since that date, the Company has not repurchased any
additional shares. At March 31, 2003, the Company had 27,550,630 shares of
common stock outstanding.
CONFERENCE CALL SCHEDULED FOR MAY 6, 2003, AT 8:30 A.M (EASTERN)
A conference call for investors will be held on May 6, 2003, at 8:30 a.m.
(eastern). 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. A replay will be available on
our website on the Investor Relations homepage shortly after the call is
completed. A copy of this press release will be posted on our website prior to
the conference call. You can access this release by selecting the "Financial
Releases" link on our Investor Relations homepage.
Via telephone, the dial-in number is 1-888-273-9889 for domestic callers, or
1-612-332-0725 for international callers. There is no pass code required. 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 a replay at 1-800-475-6701 --
access code #683190 or 1- 320-365-3844 -- access code #683190 for international
callers. The teleconference replay will be available beginning at 1:45 p.m. on
May 6th, and ending at 11:59 p.m. on May 13th.
ABOUT ARMOR HOLDINGS
Armor Holdings, included in FORBES magazine's list of "200 Best Small Companies"
in 2002, and a member of the S&P Smallcap 600 Index, is a leading manufacturer
of security products for law enforcement personnel around the world through its
Armor Holdings Products Division and is one of the world's largest and most
experienced passenger vehicle armoring manufacturers through its Mobile Security
Division. Armor Holdings Products manufactures and sells a broad range of high
quality branded law enforcement equipment. Such products include ballistic
resistant vests and tactical armor, less-lethal munitions, safety holsters,
batons, anti-riot products and a variety of crime scene related equipment,
including narcotic identification kits. Armor Holdings Mobile Security, through
its Commercial Products division, armors a variety of vehicles, including
limousines, sedans, sport utility vehicles, and money transport vehicles, to
protect against varying degrees of ballistic and blast threats. Through its
Military Products division, it is the prime contractor to the U.S. Military for
the supply of armoring and blast protection for High Mobility Multi-purpose
Wheeled Vehicles, commonly known as HMMWVs.
Statements in this press release may be forward-looking. Actual events will be
dependent upon factors and risks including, but not limited to, the Company's
ability to: sell the ArmorGroup Services Division on favorable terms;
manufacture and market its core products; provide a variety of services to its
customers on a global basis; respond to new laws and regulations; continue its
strategy of growth by acquisition; manage the impact of foreign exchange; and
manage general world wide security issues, economic conditions, uncertainties
and risks, including those described from time to time in the Company's filings
with the Securities and Exchange Commission, including, the Company's
Registration Statement on Form S3, its 2002 Form 10K and its most recent Form
10Qs. The Company undertakes no obligation to make any revisions to the
forward-looking statements contained in this release or to update them to
reflect events or circumstances occurring after the date of this release.
- TABLES FOLLOW -
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2002
-------------- --------------
REVENUES:
Products $ 44,007 $ 38,945
Mobile Security 36,467 30,659
-------- --------
Total Revenues 80,474 69,604
-------- --------
COSTS AND EXPENSES:
Cost of sales 57,162 47,630
Operating expenses 14,004 11,413
Amortization 60 119
Integration and other non-recurring charges
422 1,397
-------- --------
OPERATING INCOME 8,826 9,045
Interest expense, net 379 42
Other expense (income), net 69 (64)
-------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
8,378 9,067
PROVISION FOR INCOME TAXES 3,133 3,500
-------- --------
INCOME FROM CONTINUING OPERATIONS 5,245 5,567
-------- --------
DISCONTINUED OPERATIONS
INCOME FROM DISCONTINUED OPERATIONS BEFORE PROVISION (BENEFIT) FOR INCOME
TAXES 54 242
PROVISION (BENEFIT) FOR INCOME TAXES 212 (149)
-------- --------
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (158) 391
NET INCOME $ 5,087 $ 5,958
======== ========
NET INCOME PER COMMON SHARE - BASIC
INCOME FROM CONTINUING OPERATIONS $ 0.18 $ 0.18
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (0.01) 0.01
-------- --------
BASIC EARNINGS PER SHARE $ 0.17 $ 0.19
======== ========
NET INCOME PER COMMON SHARE - DILUTED
INCOME FROM CONTINUING OPERATIONS $ 0.18 $ 0.18
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (0.01) 0.01
-------- --------
DILUTED EARNINGS PER SHARE $ 0.17 $ 0.19
======== ========
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME AS REPORTED TO PRO FORMA NET INCOME FROM CONTINUING
OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTHS ENDED
March 31, 2003 March 31, 2002
-------------- --------------
Net income as reported $ 5,087 $ 5,958
Plus: Loss (income) from Discontinued operations, net of tax 158 (391)
-------- --------
Income from continuing operations 5,245 5,567
Plus: Integration and other non-recurring charges 422 1,397
Tax effect of above items (158) (539)
-------- --------
Pro forma net income from continuing operations $ 5,509 $ 6,425
======== ========
Weighted average diluted shares 29,111 31,986
======== ========
Pro forma diluted earnings per share from continuing operations $ 0.19 $ 0.20
======== ========
Fully diluted earnings per share as reported $ 0.17 $ 0.19
======== ========
RECONCILIATION OF NET INCOME AS REPORTED TO OPERATING INCOME FROM CONTINUING
OPERATIONS, EBITDA FROM CONTINUING OPERATIONS AND EBITDA FROM CONTINUING
OPERATIONS BEFORE INTEGRATION AND OTHER NON-RECURRING CHARGES (UNAUDITED)
(IN THOUSANDS)
THREE-MONTHS ENDED
March 31, 2003 March 31, 2002
-------------- --------------
Net income as reported $ 5,087 $ 5,958
Plus: Loss (Income) from discontinued operations 158 (391)
Plus: Provision for income taxes on income from continuing operations
3,133 3,500
Plus: Other expense (income), net 69 (64)
Plus: Interest expense, net 379 42
-------- --------
Operating income from continuing operations 8,826 9,045
Plus: Amortization 60 119
Plus: Depreciation 1,521 1,151
-------- --------
EBITDA from continuing operations 10,407 10,315
Plus: Integration and other non-recurring charges 422 1,397
-------- --------
EBITDA from continuing operations before integration and other
non-recurring charges $ 10,829 $11, 712
======== ========
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