ARMOR HOLDINGS, INC. REPORTS 2ND QUARTER EARNINGS
OF $0.17 PER DILUTED SHARE
$0.21 PER DILUTED SHARE FROM CONTINUING OPERATIONS BEFORE
INTEGRATION AND OTHER NON-RECURRING CHARGES
CONFERENCE CALL SCHEDULED FOR AUGUST 13, 2003, AT 8:30 AM (EASTERN)
JACKSONVILLE, FLORIDA (AUGUST 12, 2003) - ARMOR HOLDINGS, INC. (NYSE: AH)
announced today revenues and earnings for the three-month and six-months ended
June 30, 2003.
For the three-month period ended June 30, 2003, revenue from continuing
operations increased 14.0% to $81.7 million compared to $71.6 million reported
for the three-month period ended June 30, 2002. Products Division revenue
increased 14.6% to $49.3 million for the three-month period ended June 30, 2003,
compared to $43.1 million reported in the same period last year. Mobile Security
Division revenue increased 13.2% to $32.3 million for the three-month period
ended June 30, 2003, compared to $28.5 million reported in the same period last
year. Internal revenue growth from continuing operations was 7.8% in total,
10.8% for the Products Division and 3.5% for the Mobile Security Division.
The Company's consolidated net income and diluted earnings per share for the
three-months ended June 30, 2003 and 2002, were $4.6 million, or $0.17 per
share, and $4.1 million, or $0.13 per share, respectively. The three-month
results for the period ended June 30, 2003 include a $3.3 million ($2.1 million
non-cash) severance charge related to the recent departure of the Company's
former Chief Executive Officer. Remaining integration and other non-recurring
charges for the period ended June 30, 2003 associated with acquisitions
completed in the prior twelve months decreased to $522,000 from $1.7 million in
the comparable period in the prior year. Net income and diluted earnings per
share from continuing operations after integration and other non-recurring
charges were $3.5 million and $0.13 per share for the three-months ended June
30, 2003, compared to $4.8 million and $0.15 per share in the comparable period
in the prior year. Net income from continuing operations before integration and
other non-recurring charges was $5.8 million for the three-months ended June 30,
2003, compared to $5.9 million for the comparable period in 2002. Diluted
earnings per share from continuing operations before integration and other
non-recurring charges was $0.21 per share for the three-months ended June 30,
2003, compared to $0.18 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 and six-months
ended June 30, 2003 and 2002.
For the three-months ended June 30, 2003, the net income from discontinued
operations was $1.1 million, or $0.04 per share compared to a net loss from
discontinued operations of ($749,000), or ($0.02) per share for the three-months
ended June 30, 2002.
"We are pleased with our second quarter revenue results," said Robert R.
Schiller, Chief Operating Officer and Chief Financial Officer of Armor Holdings.
"The Products Division generated strong results in spite of a late release of
the matching funds under the Bulletproof Vest Partnership Act and a challenging
domestic economy. The Mobile Security Division experienced an increase in order
volume as combat operations in Iraq converted to policing and restructuring
operations. We believe the Company is well positioned for continued growth in
the second half of 2003."
For the six-month period ended June 30, 2003, revenue from continuing operations
increased 14.8% to $162.1 million compared to $141.2 million reported for the
six-month period ended June 30, 2002. Products Division revenue increased 13.8%
to $93.4 million for the six-month period ended June 30, 2003, compared to $82.0
million reported in the same period last year. Mobile Security Division revenue
increased 16.2% to $68.8 million for the six-month period ended June 30, 2003,
compared to $59.2 million reported in the same period last year. Internal
revenue growth from continuing operations was 8.6% for the Products Division and
3.6% for the Mobile Security Division.
The Company's consolidated net income and diluted earnings per share for the
six-months ended June 30, 2003 and 2002 were $9.7 million, or $0.34 per share,
and $10.0 million, or $0.31 per share, respectively. These six-month results
include a $3.3 million ($2.1 million non-cash) severance charge related to the
recent departure of the Company's former Chief Executive Officer. Remaining
integration and other non-recurring charges for the six-months ended June 30,
2003 associated with acquisitions completed in the prior twelve months decreased
to $944,000 from $3.1 million during the same period in 2002. Net income and
diluted earnings per share from continuing operations after integration and
other non-recurring charges were $8.7 million and $0.31 per share for the
six-months ended June 30, 2003, compared to $10.4 million and $0.32 per share in
the comparable period in the prior year. Net income from continuing operations
before integration and other non-recurring charges was $11.4 million for the
six-months ended June 30, 2003, compared to $12.3 million for the comparable
period in 2002. Diluted earnings per share before these items for the six-months
ended June 30, 2003, was $0.40 per share compared to $0.38 per share for the
comparable period in 2002.
For the six-months ended June 30, 2003, net income from discontinued operations
was $977,000, or $0.03 per share compared to a net loss from discontinued
operations of ($356,000), or ($0.01) per share for the six-months ended June 30,
2002.
Gross margins from continuing operations for the three and six-months ended June
30, 2003, were 29.9% and 29.4%, respectively, compared to 31.7% and 31.6% in the
comparable period in 2002. For the three and six-months ended June 30, 2003,
gross margins in the Products Division were 33.1% and 33.6%, compared to 38.6%
and 38.0% reported in the same period last year. The decline in the Products
Division's gross margins resulted primarily from: 1) an increase in "low margin"
training revenues; 2) an increase in low margin gas mask sales; 3) an increase
in lower margin international body armor sales produced overseas at Armor
Products International; and 4) lower production volumes within our less lethal,
automotive, and hard armor businesses lines, which resulted in reduced fixed
cost absorption and certain labor inefficiencies. Excluding the training
division, the Products Division's gross margins were 35.3% and 35.9%,
respectively, compared to 40.8% and 40.3% reported in the same period last year.
For the three and six-months ended June 30, 2003, gross margins in the Mobile
Security Division were 25.0% and 23.7%, compared to 21.4% and 22.9% reported in
the same period in the prior year. The increase in the Mobile Security
Division's gross margins is primarily attributable to: 1) favorable
manufacturing overhead cost absorption relating to increased manufacturing
volumes in our Cincinnati manufacturing facility; 2) operational efficiencies in
our Cincinnati manufacturing facility; and 3) a smaller number of purchased base
vehicles sold in 2003 compared to 2002. The Mobile Security Division often
purchases and resells base vehicles to customers as a pass-through service
without normal gross profit.
At June 30, 2003, the Company's continuing operations business segments had cash
balances of $10.8 million and total long-term debt, including current portion,
of $21.7 million compared to $16.0 million and $26.7, respectively, reported at
March 31, 2003. As of June 30, 2003, the Company had $15.0 million outstanding
on its $120 million revolving line of credit compared to $20.0 million at March
31, 2003.
For the three and six-months ended June 30, 2003, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") from continuing
operations were $7.6 million and $18.1 million, compared to $9.4 million and
$19.7 million in the comparable periods in 2002. For the three and six-months
ended June 30, 2003, the Company's EBITDA from continuing operations before
integration and non-recurring charges were $11.4 million and $22.2 million,
compared to $11.1 million and $22.8 million, respectively, in the comparable
periods in 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.
On July 23, 2003, the Company announced that it had executed a Letter of Intent
("LOI") to acquire Simula, Inc. (Amex: SMU), for $110.5 million, payable in cash
or, at the option of Armor Holdings, in a combination of cash and registered
shares of Armor Holdings' common stock. The Company expects to execute a merger
agreement in late August and complete the transaction in the fourth quarter of
2003. Simula is a safety technology company and supplier of human safety and
survival systems to all branches of the U.S. military, major aerospace and
defense contractors, international military forces, and consumer markets. Its
core markets are military aviation safety, military personnel safety, and land
and marine safety. Serving the defense industry for almost 30 years, Simula
provides ground vehicle armor and mine blast kits for military vehicles,
personnel protective equipment, including military body armor, energy absorbing
seating systems and lightweight armor for aircraft, inflatable restraints for
military aircraft, and other protective equipment and technology to the military
for the protection of soldiers in a variety of life-threatening or catastrophic
situations.
On August 12, 2003, the Company closed its previously announced private
placement of $150 million aggregate principal amount of 8.25% Senior
Subordinated Notes due 2013. The Notes were rated B1/B+ by Moody's Investors'
Service and Standard & Poor's Rating Services, respectively. The Company intends
to use the net proceeds of the planned offering to fund future acquisitions,
including its potential acquisition of Simula, Inc., repay a portion of its
outstanding debt and for general corporate and working capital purposes,
including the funding of capital expenditures.
Concurrently with the issuance of the Notes, the Company terminated its existing
credit facility and entered into a new secured revolving credit facility with
Bank of America N.A., Wachovia Bank, National Association and a syndicate of
other financial institutions arranged by Bank of America Securities LLC. The new
credit facility is a five-year revolving credit facility and, among other
things, provides for: 1) total maximum borrowings of $60 million; 2) a $25
million sub-limit for the issuances of standby and commercial letters of credit;
3) a $5 million sub-limit for swing-line loans; and 4) a $5 million sub-limit
for multi-currency borrowings. All borrowings under the new credit facility will
bear interest at either 1) a rate equal to LIBOR, plus an applicable margin
ranging from 1.125% to 1.625%; 2) an alternate base rate which will be the
higher of (a) the Bank of America prime rate and (b) the Federal Funds rate plus
..50%; or 3) with respect to foreign currency loans, a fronted offshore currency
rate, plus an applicable margin ranging from 1.125% to 1.625%, depending on
certain conditions.
"With the pending acquisition of Simula, Inc., the newly placed $150 million in
notes and the policing and reconstruction effort in Iraq, the Company is
building momentum and well positioned for growth in the second half of the year
and into 2004," said Mr. Schiller. "Given the effect of additional interest from
the notes, we expect our third quarter net income from continuing operations
before integration and non-recurring charges to be $0.23 or $0.24 per diluted
share."
CONFERENCE CALL SCHEDULED FOR AUGUST 13, 2003, AT 8:30 A.M (EASTERN)
A conference call for investors will be held on August 13, 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 1-888-423-3281 for domestic callers, or
1-612-332-0226 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 #694407 or 1- 320-365-3844 -- access code #694407 for international
callers. The teleconference replay will be available beginning at 12:00 p.m. on
Wednesday, August 13th, and ending at 11:59 p.m. on Wednesday, August 20th.
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 business, 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 program, 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: consummate the acquisition of Simula; successfully integrate
Simula's operations into Armor Holdings' operations; 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 SIX-MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002
------------- ------------- ------------- -------------
REVENUES:
Products $49,347 $ 43,057 $93,354 $ 82,002
Mobile Security 32,312 28,548 68,779 59,207
----------------- ---------------- ---------------------------------
Total Revenues 81,659 71,605 162,133 141,209
----------------- ---------------- ---------------------------------
COSTS AND EXPENSES:
Cost of sales 57,281 48,904 114,443 96,534
Operating expenses 14,524 12,781 28,528 24,194
Amortization 69 32 129 151
Integration and other non-recurring charges 3,775 1,720 4,197 3,117
----------------- ---------------- ---------------------------------
OPERATING INCOME 6,010 8,168 14,836 17,213
Interest expense, net 437 284 816 326
Other expense (income), net 16 - 85 (64)
----------------- ---------------- --------------- ----------------
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
INCOME TAXES 5,557 7,884 13,935 16,951
PROVISION FOR INCOME TAXES 2,079 3,060 5,212 6,560
----------------- ---------------- --------------- ----------------
INCOME FROM CONTINUING OPERATIONS 3,478 4,824 8,723 10,391
----------------- ---------------- --------------- ----------------
DISCONTINUED OPERATIONS
INCOME FROM DISCONTINUED OPERATIONS BEFORE PROVISION
(BENEFIT) FOR INCOME TAXES 1,860 (817) 1,914 (574)
PROVISION (BENEFIT) FOR INCOME TAXES 725 (68) 937 (218)
----------------- ---------------- --------------- ----------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 1,135 (749) 977 (356)
----------------- ---------------- --------------- ----------------
NET INCOME $4,613 $ 4,075 $ 9,700 $ 10,035
================= ================ =============== ================
NET INCOME PER COMMON SHARE - BASIC
INCOME FROM CONTINUING OPERATIONS $ 0.13 $ 0.15 $ 0.31 $ 0.33
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 0.04 (0.02) 0.03 (0.01)
----------------- ---------------- --------------- ----------------
BASIC EARNINGS PER SHARE
$ 0.17 $ 0.13 $ 0.34 $ 0.32
================= ================ =============== ================
NET INCOME PER COMMON SHARE - DILUTED
INCOME FROM CONTINUING OPERATIONS $ 0.13 $ 0.15 $ 0.31 $ 0.32
(LOSS) INCOME FROM DISCONTINUED OPERATIONS 0.04 (0.02) 0.03 (0.01)
----------------- ---------------- --------------- ----------------
DILUTED EARNINGS PER SHARE $0.17 $ 0.13 $ 0.34 $ 0.31
================= ================ =============== ================
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET (LOSS) INCOME AS REPORTED TO PRO FORMA NET INCOME FROM
CONTINUING OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTHS ENDED SIX-MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002
------------------ ----------------- ------------------ ------------------
Net (loss) income as reported $ 4,613 $4,075 $9,700 $10,035
Plus: Loss (gain) from Discontinued operations,
Net of tax (1,135) 749 (977) 356
------------------ ----------------- ------------------ ------------------
Income from continuing operations $3,478 $4,824 $8,723 $10,391
Plus: Integration and other non-recurring charges 3,775 1,720 4,197 3,117
Tax effect of above items (1,411) (667) (1,569) (1,206)
------------------ ----------------- ------------------ ------------------
Pro forma net income from continuing operations $5,842 $5,877 $11,351 $ 12,302
================== ================= ================== ==================
Weighted average diluted shares 27,836 32,110 28,511 32,044
================== ================= ================== ==================
Pro forma diluted earnings per share from
continuing operations $ 0.21 $ 0.18 $ 0.40 $0.38
================== ================= ================== ==================
Fully diluted (loss) earnings per share as reported $ 0.17 $ 0.13 $ 0.34 $0.31
================== ================= ================== ==================
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 SIX-MONTHS ENDED
JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2003 JUNE 30, 2002
------------------ ----------------- ------------------ ------------------
Net income as reported $ 4,613 $ 4,075 $ 9,700 $10,035
Plus: Loss (Income) from discontinued operations (1,135) 749 (977) 356
Plus: Provision for income taxes on income from
continuing operations 2,079 3,060 5,212 6,560
Plus: Other expense (income), net 16 - 85 (64)
Plus: Interest expense, net 437 284 816 326
------------------ ----------------- ------------------ ------------------
Operating income from continuing operations 6,010 8,168 14,836 17,213
Plus: Amortization 69 32 129 151
Plus: Depreciation 1,564 1,197 3,085 2,348
------------------ ----------------- ------------------ ------------------
EBITDA from continuing operations 7,643 9,397 18,050 19,670
Plus: Integration and other non-recurring charges 3,775 1,720 4,197 3,117
------------------ ----------------- ----------------- ------------------
EBITDA from continuing operations before
integration and other non-recurring charges $ 11,418 $ 11,117 $ 22,247 $ 22,787
================== ================= ================== ==================
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