ARMOR HOLDINGS, INC. REPORTS 3RD QUARTER EARNINGS
OF $0.22 PER DILUTED SHARE
$0.22 PER DILUTED SHARE FROM CONTINUING OPERATIONS BEFORE
INTEGRATION AND OTHER NON-RECURRING CHARGES
INCLUDES $0.02 PER SHARE NON-CASH TAX EXPENSE
RELATED TO DISCONTINUED OPERATIONS
CONFERENCE CALL SCHEDULED FOR NOVEMBER 5, 2003, AT 8:30 AM (EASTERN)
JACKSONVILLE, FLORIDA (NOVEMBER 4, 2003) - ARMOR HOLDINGS, INC. (NYSE: AH)
announced today revenues and earnings for the three-months and nine-months ended
September 30, 2003.
For the three-month period ended September 30, 2003, revenue from continuing
operations increased 12.8% to $90.9 million compared to $80.6 million reported
for the three-month period ended September 30, 2002. Products Division revenue
increased 3.5% to $50.8 million for the three-month period ended September 30,
2003, compared to $49.0 million reported in the same period last year. Mobile
Security Division revenue increased 27.2% to $40.1 million for the three-month
period ended September 30, 2003, compared to $31.5 million reported in the same
period last year. Internal revenue growth from continuing operations was 9.4% in
total, 2.1% for the Products Division and 20.4% for the Mobile Security
Division.
In the three-months ended September 30, 2003, the Company recorded a net
impairment charge of $1.3 million in discontinued operations to maintain the
carrying value of discontinued operations (ArmorGroup) at $43.4 million,
management's best estimate of its disposal value. The Company has also revalued
intellectual property utilized by its discontinued operations. The revaluation
was necessary to comply with tax code provisions, and resulted in incremental
non-cash tax expense in the amount of $635,000 or $0.02 per share, for the three
and nine month periods ended September 30, 2003. The tax adjustment is recorded
in continuing operations as required by generally accepted accounting
principles, and resulted in utilization of foreign tax credits previously
recognized as a reduction of tax expense in a prior year.
The Company's consolidated net income (loss) and diluted earnings (loss) per
share for the three-months ended September 30, 2003 and 2002, were $6.1 million,
or $0.22 per share, and $(14.7) million, or $(0.49) per share, respectively.
Integration and other non-recurring charges for the period ended September 30,
2003 associated with acquisitions completed in the prior twelve months decreased
to $368,000 from $1.4 million in the comparable period in the prior year. Net
2
income and diluted earnings per share from continuing operations after
integration and other non-recurring charges were $6.1 million and $0.22 per
share for the three-months ended September 30, 2003, compared to $3.0 million
and $0.10 per share in the comparable period in the prior year. Net income and
diluted earnings per share from continuing operations before integration and
other non-recurring charges were $6.3 million and $0.22 per share for the
three-months ended September 30, 2003, compared to $7.1 million and $0.24 per
share for the comparable period in 2002. Attached to this press release is a
reconciliation of net income as reported to proforma net income from continuing
operations for the three and nine-months ended September 30, 2003 and 2002.
The Company generated cash flow from operations for continuing operations in the
three months ended September 30, 2003 of approximately $20.2 million compared to
$3.4 million in the same period last year.
For the three-months ended September 30, 2003, net income (loss) from
discontinued operations was $6,000, or $0.00 per share compared to a net loss
from discontinued operations of ($17.7) million, or ($0.60) per share for the
three-months ended September 30, 2002. In the three-months ended September 30,
2003, the Company recorded an impairment charge of $1.3 million, as discussed
above to maintain the carrying value of our discontinued operations at the same
$43.4 million book value carried at June 30, 2003.
"We are pleased with the performance exhibited by all of our businesses during
the third quarter," said Warren B. Kanders, Chairman and Chief Executive Officer
of Armor Holdings, Inc. "We are experiencing continued demand for our products
with emphasis on those products used by our military in the conflict in Iraq.
During the fourth quarter we expect to complete both the disposition of our
ArmorGroup Services business, as well as our previously announced acquisition of
Simula, Inc. We also expect that our strong balance sheet and operating
performance will allow us to continue to pursue acquisitions which we expect
will further our growth and strategic objectives."
For the nine-month period ended September 30, 2003, revenue from continuing
operations increased 14.1% to $253.0 million compared to $221.8 million reported
for the nine-month period ended September 30, 2002. Products Division revenue
increased 10.0% to $144.1 million for the nine-month period ended September 30,
2003, compared to $131.0 million reported in the same period last year. Mobile
Security Division revenue increased 20.0% to $108.9 million for the nine-month
period ended September 30, 2003, compared to $90.7 million reported in the same
period last year. Internal revenue growth from continuing operations was 7.5% in
total, 6.2% for the Products Division and 9.3% for the Mobile Security Division.
The Company's consolidated net income (loss) and diluted earnings (loss) per
share for the nine-months ended September 30, 2003 and 2002 were $15.8 million,
or $0.56 per share, and ($4.7) million, or ($0.15) per share, respectively. The
nine-month results in the period ended September 30, 2003, includes $4.6 million
of integration and other non-recurring charges (including a $3.3 million ($2.1
million non-cash) severance charge related to the recent departure of the
Company's former Chief Executive Officer) compared to $4.5 million during the
same period in 2002. The balance of the 2003 integration and other non-recurring
charges of $1.3 million relates to acquisitions completed in the prior twelve
months. Net income and diluted earnings per share from continuing operations
after integration and other non-recurring charges were $14.8 million and $0.52
per share for the nine-months ended September 30, 2003, compared to $13.4
million and $0.43 per share in the comparable period in the prior year. Net
income and diluted earnings per share from continuing operations before
integration and other non-recurring charges were $17.7 million and $0.62 per
share for the nine-months ended September 30, 2003, compared to $19.4 million
and $0.62 per share for the comparable period in 2002.
- -
3
The Company generated cash flow from operations for continuing operations in the
nine-months ended September 30, 2003 of approximately $32.9 million compared to
$(472,000) in the same period last year. At September 30, 2003, the Company's
continuing operations business segments had cash balances of $154.8 million and
total long-term debt, including current portion, of $160.9 million compared to
$10.8 million and $21.7 million, respectively, reported at June 30, 2003. As of
September 30, 2003, the Company had zero outstanding on its $60 million
revolving line of credit compared to $15 million at June 30, 2003.
For the nine-months ended September 30, 2003, net income (loss) from
discontinued operations was $983,000, or $0.04 per share compared to a net loss
from discontinued operations of ($18.0) million, or ($0.58) per share for the
nine-months ended September 30, 2002. In the nine-months ended September 30,
2003, we recorded an impairment charge of $1.3 million as previously discussed
to maintain the carrying value of our discontinued operations at the same $43.4
million book value carried at June 30, 2003.
Gross margins from continuing operations for the three and nine-months ended
September 30, 2003, were 31.8% and 30.3%, respectively, compared to 30.5% and
31.2% in the comparable period in 2002. For the three and nine-months ended
September 30, 2003, gross margins in the Products Division were 36.1% and 34.5%,
compared to 36.7% and 37.5% reported in the same period last year. The small
decrease in third quarter Products Division gross margins resulted primarily
from a negative change in product mix within our hard armor and less lethal
businesses. For the three and nine-months ended September 30, 2003, gross
margins in the Mobile Security Division were 26.4% and 24.7%, compared to 21.0%
and 22.2% reported in the same period in the prior year. The increase in the
Mobile Security Division's gross margins was primarily attributable to favorable
manufacturing overhead cost absorption relating to increased manufacturing
volumes in our Cincinnati manufacturing facility and operational efficiencies in
our Cincinnati manufacturing facility as that plant continues to reduce its per
vehicle labor and material costs.
For the three and nine-months ended September 30, 2003, the Company's earnings
before interest, taxes, depreciation and amortization ("EBITDA") from continuing
operations were $14.1 million and $32.2 million, compared to $11.6 million and
$31.3 million in the comparable periods in 2002. For the three and nine-months
ended September 30, 2003, the Company's EBITDA from continuing operations before
integration and non-recurring charges were $14.5 million and $36.7 million,
compared to $12.9 million and $35.8 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.
"We continue to improve our business performance with an emphasis on internal
growth, operating margins and free cash flow generation," said Robert R.
Schiller, Chief Operating Officer and Chief Financial Officer. "During the third
quarter, we successfully completed the issuance of $150 million of 8.25% Senior
Subordinated Notes due in 2013, as well as the corresponding interest rate swap,
lowering our effective interest rate to six-month Libor set in arrears plus a
spread ranging from 2.735% to 2.75%. This capital will enable us to complete our
announced purchase of Simula, Inc. and provide capital to continue our strategy
of growth through acquisition. Looking forward, we expect fourth quarter revenue
to be approximately $100 million, excluding Simula, with net income from
continuing operations before integration and non-recurring charges to be between
$0.28 and $0.30 per share."
4
CONFERENCE CALL SCHEDULED FOR NOVEMBER 5, 2003, AT 8:30 A.M (EASTERN)
A conference call for investors will be held on November 5, 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 1-800-923-4213 for domestic callers, or
1-904-779-4714 for international callers. The pass code is 20076440. 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 1-800-252-6030 --
access code #20076440 or 1-402-220-2491 -- access code #20076440 for
international callers. The teleconference replay will be available beginning at
12:00 p.m. on Wednesday, November 5th, and ends at 11:59 p.m. on Wednesday,
November 12th.
ABOUT ARMOR HOLDINGS
Armor Holdings, included in FORBES magazine's list of "200 Best Small Companies"
in 2002 and 2003, 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 -
5
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTHS ENDED NINE-MONTHS ENDED
----------------------------- -----------------------------
SEPT 30 ,2003 SEPT 30, 2002 SEPT 30, 2003 SEPT 30, 2002
------------- ------------- ------------- -------------
REVENUES:
Products $ 50,786 $ 49,047 $ 144,140 $ 131,049
Mobile Security 40,096 31,510 108,875 90,717
--------- --------- --------- ---------
Total Revenues 90,882 80,557 253,015 221,766
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 61,953 55,947 176,396 152,481
Operating expenses 15,977 12,852 44,505 37,046
Amortization 72 62 201 213
Integration and other non-recurring charges 368 1,359 4,565 4,476
--------- --------- --------- ---------
OPERATING INCOME 12,512 10,337 27,348 27,550
Interest expense, net 1,475 343 2,291 669
Other expense (income), net 96 (13) 181 (77)
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
INCOME TAXES 10,941 10,007 24,876 26,958
PROVISION FOR INCOME TAXES 4,832 7,043 10,044 13,603
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 6,109 2,964 14,832 13,355
--------- --------- --------- ---------
DISCONTINUED OPERATIONS
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE
PROVISION FOR INCOME TAXES 1,679 (17,032) 3,593 (17,606)
PROVISION FOR INCOME TAXES 1,673 639 2,610 421
--------- --------- --------- ---------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 6 (17,671) 983 (18,027)
NET INCOME (LOSS) $ 6,115 $ (14,707) $ 15,815 $ (4,672)
========= ========= ========= =========
NET INCOME PER COMMON SHARE - BASIC
INCOME FROM CONTINUING OPERATIONS $ 0.22 $ 0.10 $ 0.52 $ 0.44
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.60) 0.04 (0.59)
--------- --------- --------- ---------
BASIC EARNINGS (LOSS) PER SHARE $ 0.22 $ (0.50) $ 0.56 $ (0.15)
========= ========= ========= =========
NET INCOME PER COMMON SHARE - DILUTED
INCOME FROM CONTINUING OPERATIONS $ 0.22 $ 0.10 $ 0.52 $ 0.43
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 0.00 (0.59) 0.04 (0.58)
--------- --------- --------- ---------
DILUTED EARNINGS (LOSS) PER SHARE $ 0.22 $ (0.49) $ 0.56 $ (0.15)
========= ========= ========= =========
6
ARMOR HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) AS REPORTED TO PRO FORMA NET INCOME FROM
CONTINUING OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTHS ENDED NINE-MONTHS ENDED
---------------------------- -----------------------------
SEPT 30, 2003 SEPT 30, 2002 SEPT 30, 2003 SEPT 30, 2002
------------- ------------- ------------- -------------
Net income (loss), as reported $ 6,115 $(14,707) $ 15,815 $ (4,672)
Plus: (Income) loss from Discontinued operations,
net of tax (6) 17,671 (983) 18,027
-------- -------- -------- --------
Income from continuing operations $ 6,109 $ 2,964 $ 14,832 $ 13,355
Plus: Integration and other non-recurring charges 368 1,359 4,565 4,476
Tax effect of above items (165) (489) (1,735) (1,695)
Plus: Tax changes related to discontinued
operations included in the tax provision for
continuing operations, net of tax -- 3,294 -- 3,294
-------- -------- -------- --------
Pro forma net income from continuing operations $ 6,312 $ 7,128 $ 17,662 $ 19,430
======== ======== ======== ========
Weighted average diluted shares 28,249 30,037 28,438 31,373
======== ======== ======== ========
Pro forma diluted earnings per share from
continuing operations $ 0.22 $ 0.24 $ 0.62 $ 0.62
======== ======== ======== ========
Fully diluted (loss) earnings per share as reported $ 0.22 $ (0.49) $ 0.56 $ (0.15)
======== ======== ======== ========
RECONCILIATION OF NET INCOME (LOSS) 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 NINE-MONTHS ENDED
---------------------------- -----------------------------
SEPT 30, 2003 SEPT 30, 2002 SEPT 30, 2003 SEPT 30, 2002
------------- ------------- ------------- -------------
Net income (loss) as reported $ 6,115 $(14,707) $ 15,815 $ (4,672)
Plus: (Income) loss from discontinued operations (6) 17,671 (983) 18,027
Plus: Provision for income taxes on income from
continuing operations 4,832 7,043 10,044 13,603
Plus: Other expense (income), net 96 (13) 181 (77)
Plus: Interest expense, net 1,475 343 2,291 669
-------- -------- -------- --------
Operating income from continuing operations 12,512 10,337 27,348 27,550
Plus: Amortization 72 62 201 213
Plus: Depreciation 1,518 1,182 4,603 3,530
-------- -------- -------- --------
EBITDA from continuing operations 14,102 11,581 32,152 31,293
Plus: Integration and other non-recurring charges 368 1,359 4,565 4,476
-------- -------- -------- --------
EBITDA from continuing operations before
integration and other non-recurring charges $ 14,470 $ 12,940 $ 36,717 $ 35,769
======== ======== ======== ========
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