EXHIBIT 99.1
POINT BLANK NEWS FROM POINT BLANK SOLUTIONS, INC.
SOLUTIONS, INC. 2102 SW 2nd Street * Pompano Beach, FL 33069
Tel: 954-630-0900 * www.pointblanksolutions.com
COMPANY CONTACT: Media Relations/Investor Relations
Glenn Wiener
212-786-6013
pr@PBSInc.com or ir@PBSInc.com
POINT BLANK SOLUTIONS REPORTS 2007 THIRD QUARTER RESULTS
Pompano Beach, FL, November 9, 2007 - Point Blank Solutions, Inc. (OTC Pink
Sheets: PBSO.PK), a leader in the field of protective apparel today reported its
results for the third quarter of 2007, which ended September 30, 2007.
Additionally, the Company announced that it has filed its Form 10-Q for the same
period with the Securities and Exchange Commission (SEC).
The Company's financial performance year-to-date cannot adequately describe the
performance of Point Blank Solutions, Inc. since August 1, 2006. In a little
over a year, the Company has experienced a significant change in its structure
and culture. Under the leadership of California State Senator (retired) William
Campbell, the Chairman, and General (retired) Larry Ellis, the CEO and
President, the Company began what can only be described as a paradigm change.
From their past roles in government, they shared a unique dedication to service
and an understanding of the Company's customers.
Despite the well publicized legacy issues and the related distractions, the
Company began a process to fully cooperate with government and regulatory
agencies to resolve past legacy issues and bring the Company closer to
compliance. What facilitated this endeavor was a core of about 1,000 dedicated
employees who continued to develop, sell, manufacture, and ship what we believe
are the finest quality products in the industry. Today, the Company has over
1,300 hardworking employees that remain focused on the same goal of producing
the highest quality and best value products in the industry.
On August 1, 2006, Larry Ellis was the only officer at the Company. As CEO and
President he began the process of building a professional management team that
could handle the day-to-day issues, made more complex by the legacy issues and
costs, as well as develop and implement a vision and strategy for the future.
Because of complicated issues and the time required to recruit a professional
staff, he supplemented the staff with area expert consultants from well-known,
professional companies. At the same time, the Chairman and he began recruiting
distinguished professionals to serve on the Company's Board of Directors. Today,
the Company has a highly professional Board with complimentary skills and a
dedicated professional management team.
In a relatively short time the Company grew from an entity with less than $30
million in annual sales in 1999 to a corporation with over $300 million in sales
with several legacy issues. As such, it lacked the strategy, structure and
culture to support its role as a growing industry leader. Over the past year,
the Company developed, began implementation, and continued to refine a strategic
plan to make it the global leader in safety apparel and protective solutions.
Management wrote a business plan, accomplished several strategic studies of its
market, and developed an annual budget that was revised because the 2007
performance at mid year exceeded expectations. Today, the Company has a clear
vision and focus on its future.
Operationally, the Company is implementing several systems that will further
enhance quality, efficiency, and production. In August 2006, the Company had
information technology legacy systems that were sadly outdated and incapable of
handling its requirements. To provide adequate management tools and comply with
Sarbanes-Oxley requirements, the Company has purchased a number of servers,
computers and ancillary equipment. It is implementing several new software
enhancements to a new Oracle system as well as JESTA, an Oracle based system, to
provide the financial and management tools to further improve Company
operations.
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Over the past year, the Company began to implement changes in its plants to
enhance quality, increase efficiency and reduce costs. Although much remains to
be done, the Company has improved the efficiency of its operations while
maintaining the high quality of its products. Enhancements, through the
implementation of International Organization of Standardization (ISO) and other
specific programs, are intended to increase the Company's ability to compete and
grow its market share. Additionally, the Company enhanced its research and
development which has produced new products that to date have been well received
in the market and provides the foundation for continued innovation.
Despite the challenges and costs, caused by legacy issues, the Company has made
significant progress over the last year. More importantly, it has created a
solid platform for future growth.
Larry Ellis, President and CEO of Point Blank Solutions, Inc. stated "About
fifteen months ago our company developed and began to implement a strategy to
make us the global leader in design and manufacture of protective apparel. While
much work remains to complete our plan, I am very pleased with our progress thus
far, as demonstrated in our year to date financial results and the increased
shareholder value. I am also confident that we, through the continued hard work
of our Board of Directors, management, and employees, will continue to make
progress towards our goal of becoming the global leader of protective apparel
and further enhance our value."
For the three months ended September 30, 2007:
o The Company's net sales were $71.8 million versus $59.8 million for
the prior year period, an increase of $12.0 million (or 20.1%),
primarily resulting from increased shipments to the U.S. military and
to domestic/distributor customers. Sequentially, net sales were lower
than the prior quarter by $21.7 million (or 23.2%), due to the impact
of the federal fiscal yearend and late approval of the new federal
budget.
o Gross profit was $11.5 million, or 16.0% of net sales, as compared to
the prior year period of $14.0 million, or 23.4% of net sales. The
change in gross profit resulted principally from a more aggressive
pricing strategy, increased industry competition and higher ballistics
and labor costs.
o Total operating costs were $11.7 million, or 16.3% of net sales,
versus $3.9 million or 6.5% of net sales for the prior year period.
Included in operating costs is a credit in equity based compensation
in the prior year period of $6.4 million (resulting from the proposed
settlement of the class action and shareholder derivative action) as
compared to equity based compensation expense in the current year
quarter of $1.2 million, a difference of $7.6 million. Also, the
Company's general and administrative expenses increased in the current
year period by $1.8 million from the prior year period, largely as a
result of higher professional fees associated with on-going efforts to
bring the Company back into compliance with statutory and regulatory
requirements.
o Adjusted EBITDA was $3.3 million, compared to $8.1 million in the
prior year period, due to the results of operations noted above.
o The Company recorded a net loss of $0.3 million, or $0.01 per share
(basic and diluted), compared to net income of $9.3 million, or $0.20
per share (basic and diluted) for the prior year period.
For the nine months ended September 30, 2007:
o The Company's net sales were $257.5 million as compared to $182.8
million for the prior year period, an increase of $74.7 million (or
40.9%), primarily as a result of increased shipments to the U.S.
military.
o Gross profit was $47.0 million, or 18.3% of net sales, as compared to
the prior year period of $42.7 million, or 23.4% of net sales. The
increase in gross profit is due to an increase in net sales; the
change in gross profit margins resulted from a more aggressive pricing
strategy, increased industry competition and higher ballistics and
labor costs.
o Total operating costs were $35.7 million or 13.9% of net sales, as
compared to $43.0 million or 23.5% of net sales for the prior year
period. The reduction in operating costs resulted from partially
reversing the employment tax withholding obligation during the current
year (of $0.7 million) versus a recording a charge in the prior year
period (of $4.4 million), a lower level of professional fees
associated with ongoing litigation and cost of investigations (of $3.6
million), offset by an increase in equity based compensation expense
(totaling $2.0 million)
o Adjusted EBITDA was $21.9 million, compared to $12.6 million in the
prior year period.
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o Net income was $6.4 million, or $0.12 per share
(basic and diluted), compared to a net loss of $1.6 million, or $0.04
per share (basic and diluted).
Conference Call and Webcast
Point Blank Solutions, Inc. will host a teleconference and web cast to discuss
its corporate and financial updates on Wednesday, November 14, 2007 at 11:00
a.m. EST. Speaking on behalf of the Company will be Larry Ellis, President and
Chief Executive Officer; Jim Anderson, Chief Financial Officer; John Siemer,
Chief Operating Officer and Chief of Staff; and Sam White, Executive Vice
President, Global Sales, Marketing and Research and Development. Interested
parties can listen to the webcast on the Point Blank Solutions website at
http://www.pointblanksolutionsinc.com and by clicking on "Investor Relations."
Additionally, parties can participate on the call by dialing:
Domestic Call-in Number: 866-831-6247
International Call-in Number: 617-213-8856
Participant Pass Code: 57861025
For those who will be unable to join in the live presentation, a replay of the
webcast will be available on the Company's website by clicking on "Investor
Relations" and then clicking "Audio Archives." Additionally, a teleconference
replay will be available as soon as practicable after the completion of the
call.
Replay Number: 888-286-8010
International Replay Number: 617-801-6888
Access Code: 61044696
About Point Blank Solutions, Inc.
Point Blank Solutions, Inc. is a leader in the design and production of
technologically advanced body armor systems for the U.S. Military, Government
and law enforcement agencies, as well as select international markets. The
Company is also recognized as the largest producer of soft body armor in the
U.S. With state-of-the-art manufacturing and laboratory testing facilities,
strategic technology and marketing alliances, and an ongoing commitment to drive
innovation, Point Blank Solutions believes that it can deliver the most advanced
body armor solutions, quicker and better than anyone in the industry.
The Company maintains facilities in Deerfield Beach, FL, Oakland Park, FL,
Pompano Beach, FL, Jacksboro, TN and Washington, DC. To learn more about Point
Blank Solutions, Inc. visit our website at www.PointBlankSolutionsInc.com.
Non-GAAP Financial Disclosure
This press release contains information regarding Adjusted EBITDA. Adjusted
EBITDA is computed as net income, plus the sum of interest expense, income
taxes, depreciation and amortization, litigation and cost of investigations,
non-recurring professional fees and equity based compensation. This measure is a
non-GAAP financial measure, defined as numerical measures of financial
performance that exclude or include amounts so as to be different than the most
directly comparable measure calculated and presented in accordance with
generally accepted accounting principles, or GAAP in our statement of
operations, balance sheet or statement of cash flows. Pursuant to the
requirements of Regulation G, we have provided a reconciliation of this non-GAAP
financial measure to the most directly comparable GAAP financial measure.
Although Adjusted EBITDA represents a non-GAAP financial measure, we consider
this measure to be a key operating metric of our business. We use this measure
in our planning and budgeting processes and to monitor and evaluate our
financial and operating results. We also believe that Adjusted EBITDA is useful
to investors because it provides an analysis of financial and operating results
using the same measures that we use in evaluating the Company. We expect that
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such measure provides investors with the means to evaluate our financial and
operating results against other companies within our industry. Our calculation
of Adjusted EBITDA may not be consistent with the calculation of this measure by
other companies in our industry. Adjusted EBITDA is not a measurement of
financial performance under GAAP and should not be considered as an alternative
to net earnings (loss) as an indicator of our operating performance or cash
flows from operating activities, as a measure of liquidity or any other measure
of performance derived in accordance with GAAP.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: THE STATEMENTS WHICH ARE NOT HISTORICAL FACTS CONTAINED IN THIS PRESS
RELEASE ARE FORWARD-LOOKING STATEMENTS, WHICH ARE BASED LARGELY ON THE COMPANY'S
EXPECTATIONS AND ARE SUBJECT TO VARIOUS BUSINESS RISKS AND UNCERTAINTIES,
CERTAIN OF WHICH ARE BEYOND THE COMPANY'S CONTROL. WORDS SUCH AS "EXPECTS,"
"ANTICIPATES," "TARGETS," "GOALS," "PROJECTS," "INTENDS," "PLANS," "BELIEVES,"
"SEEKS," "ESTIMATES," VARIATIONS OF SUCH WORDS, AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS ARE ONLY PREDICTIONS THAT SPEAK AS OF THE DATE HEREOF AND ARE SUBJECT
TO RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT.
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY AND ADVERSELY FROM THOSE
EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, (1) CHANGES IN
THE COMPANY'S INTERNAL CONTROL STRUCTURE OVER FINANCIAL REPORTING, (2)
DE-LISTING FROM THE AMERICAN STOCK EXCHANGE, (3) UNCERTAINTY OF FUTURE FINANCIAL
RESULTS, (4) ADDITIONAL FINANCING REQUIREMENTS, (5) DEVELOPMENT OF NEW PRODUCTS,
(6) GOVERNMENT APPROVAL PROCESSES, INCLUDING APPROVAL OF THE SETTLEMENT BY THE
COURT, (7) THE IMPACT OF COMPETITIVE PRODUCTS OR PRICING, (8) TECHNOLOGICAL
CHANGES, (9) THE EFFECT OF POLITICAL AND ECONOMIC CONDITIONS, (10) THE OUTCOME
AND IMPACT OF LITIGATION TO WHICH THE COMPANY IS A PARTY AND THE SECURITIES AND
EXCHANGE COMMISSION AND OTHER INVESTIGATIONS REGARDING THE COMPANY, (11)
TURNOVER IN THE COMPANY'S SENIOR MANAGEMENT AND (12) OTHER UNCERTAINTIES
DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING, WITHOUT LIMITATION, THOSE UNCERTAINTIES AND RISKS DISCUSSED IN DETAIL
IN PART II ITEM 1A. "RISK FACTORS," IN THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2007. THE COMPANY UNDERTAKES NO
OBLIGATION TO REVISE OR UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS TO
REFLECT ANY CHANGE IN THE EXPECTATIONS OF OUR MANAGEMENT WITH REGARD THERETO OR
ANY CHANGE IN EVENTS, CONDITIONS, OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS
ARE BASED.
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POINT BLANK SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, 2007 December 31, 2006
(Unaudited)
ASSETS
Current assets:
177
Cash and cash equivalents....................................................$ 261 $
Restricted cash.............................................................. 35,200 35,200
Accounts receivable, less allowance for doubtful accounts of $238 and $911,
respectively.............................................................. 26,235 38,087
Inventories, net............................................................. 38,759 32,210
Deferred income tax assets................................................... 35,812 38,125
Prepaid expenses and other current assets.................................... 3,412 2,326
------------------ -------------------
Total current assets......................................................... 139,679 146,125
Property and equipment, net........................................................ 5,035 1,825
Other assets....................................................................... 1,460 249
------------------ -------------------
Total assets.................................................................$ 146,174 $ 148,199
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit.....................................................$ 7,843 $ 8,425
Accounts payable............................................................. 15,577 17,626
Accrued expenses and other current liabilities............................... 8,376 12,912
Reserve for class action settlement.......................................... 39,372 39,372
Vest replacement program obligation.......................................... 4,083 6,054
Income taxes payable......................................................... 4,649 5,904
Employment tax withholding obligation........................................ 35,746 36,483
------------------ -------------------
Total current liabilities.................................................... 115,646 126,776
Other liabilities.................................................................. 554 852
------------------ -------------------
Total liabilities............................................................ 116,200 127,628
Commitments and contingencies
Minority interest in consolidated subsidiary....................................... 378 253
Contingently redeemable common stock (related party)............................... 19,326 19,326
Stockholders' equity:
Common stock, $0.001 par value, 100,000,000 shares authorized,
48,016,836 million shares issued and outstanding.......................... 48 48
Additional paid in capital................................................... 83,819 80,903
Accumulated deficit.......................................................... (73,597) (79,959)
------------------ -------------------
Total stockholders' equity................................................... 10,270 992
------------------ -------------------
Total liabilities and stockholders' equity...................................$ 146,174 $ 148,199
================== ===================
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POINT BLANK SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
-----------------------------------------
- ------------------------------------------
September 30, 2007 September 30, 2007
--------------------- September 30, 2006 -------------------- September 30, 2006
- --------------------- ---------------------
Net sales.......................................$ 71,843 $ 59,772 $ 257,469 $ 182,773
Cost of goods sold.............................. 60,367 45,822 210,515 140,031
Gross profit.............................. 11,476 13,950 46,954 42,742
Selling, general and administrative expenses.... 9,467 73 29,042 27,627
Litigation and cost of investigations........... 2,203 3,804 7,364 11,002
Income tax withholding charge (credit).......... -- -- (737) 4,407
Total operating costs........................... 11,670 3,877 35,669 43,036
Operating income (loss)................... (194) 10,073 11,285 (294)
Interest expense................................ 185 536 465 1,153
Other (income) expense.......................... 30 94 16 90
Total other expense, net........................ 215 630 481 1,243
Income (loss) before income tax expense
(benefit).................................... (409) 9,443 10,804 (1,537)
Income tax expense (benefit).................... (180) 132 4,317 (40)
Income (loss) before minority interest of
subsidiary................................... (229) 9,311 6,487 (1,497)
Less minority interest of subsidiary............ 28 39 125 96
9,272 (1,593)
Net income (loss)...............................$ (257) $ $ 6,362 $
.20 (.04)
Basic income (loss) per common share............$ (.01) $ $ .12 $
.20 (.04)
Diluted income (loss) per common share..........$ (.01) $ $ .12 $
-- --
Basic and Diluted income (loss) per
contingently redeemable common share........ $ -- $ $ .12 $
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POINT BLANK SOLUTIONS, INC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In thousands)
For the Nine Months Ended
September 30,
-------------------------
-
2007 2006
------------
- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss)..................................................................................$ 6,362 $ (1,593)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization...................................................................... 467 507
Amortization of deferred financing costs........................................................... 49 41
Deferred income tax expense (benefit).............................................................. 1,382 (3,310)
Gain on sale of fixed assets....................................................................... -- (94)
Minority interest in consolidated subsidiary....................................................... 125 96
Stock based compensation........................................................................... 2,916 934
Legal fees paid by stock issuance.................................................................. -- 220
Changes in assets and liabilities:
Increase in restricted cash........................................................................ -- (35,200)
Accounts receivable, net........................................................................... 11,852 7,206
Accounts receivable from insurers.................................................................. -- 12,875
Inventories, net................................................................................... (6,549) (8,366)
Prepaid expenses and other current assets.......................................................... (1,086) (1,296)
Other assets....................................................................................... 15 21
Accounts payable................................................................................... (821) 2,430
Income taxes payable............................................................................... (1,255) 3,249
Employment tax withholding obligation.............................................................. (737) 4,407
Vest replacement program obligation................................................................ (1,972) (3,899)
Accrued expenses and other current liabilities..................................................... (4,537) (1,695)
Other liabilities.................................................................................. (298) (429)
------------
-
Net cash provided by (used in) operating activities................................................ 5,913 (23,896)
------------
-
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment....................................................... -- 572
Purchases of property and equipment................................................................ (3,677) (364)
------------
-
Net cash provided by (used in) investing activities................................................ (3,677) 208
------------
-
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft..................................................................................... (1,226) 4,174
Net proceeds from revolving line of credit......................................................... 7,842 13,178
Repayment of note payable - bank................................................................... (8,425) (15,000)
Deferred financing costs........................................................................... (343)
Issuance of contingently redeemable common stock (related party)................................... -- 19,326
Repurchase of common stock......................................................................... -- (3,133)
Net proceeds from exercise of stock warrants....................................................... -- 5,250
------------
-
Net cash provided by (used in) financing activities................................................ (2,152) 23,795
------------
-
Net increase in cash and cash equivalents.......................................................... 84 107
Cash and cash equivalents at beginning of year..................................................... 177 1,283
------------
-
1,390
Cash and cash equivalents at end of period.........................................................$ 261 $
============
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POINT BLANK SOLUTIONS, INC
ADJUSTED EBITDA
(In thousands)
For the three months ended September 30,
--------------------------------------------------------
2007 2006
-------------------------- --------------------------
Net income (loss) $ (257) $ 9,272
Add Back:
Interest expense 185 537
Income taxes (180) 132
Depreciation and amortization 167 147
Litigation and cost of investigations 2,203 3,804
Equity based compensation 1,212 (6,432)
Relocation of corporate offices - 649
-------------------------- --------------------------
Adjusted EBITDA $ 3,331 $ 8,110
========================== ==========================
For the nine months ended September 30,
--------------------------------------------------------
2007 2006
-------------------------- --------------------------
Net Income (Loss) $ 6,362 $ (1,593)
Add Back:
Interest expense 465 1,153
Income taxes 4,317 (40)
Depreciation and amortization 467 507
Litigation and cost of investigations 7,364 11,002
Equity based compensation 2,916 934
Relocation of corporate offices - 649
-------------------------- --------------------------
Adjusted EBITDA $ 21,892 $ 12,612
========================== ==========================
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