Exhibit 99.1
[LOGO] AROTECH Earnings News
632 Broadway, Suite 1200
New York, New York 10012
Tel: (646) 654-2107 o Fax (646) 654-2187
www.arotech.com
FOR IMMEDIATE RELEASE
AROTECH CORPORATION REPORTS RECORD REVENUES AND
FIRST QUARTERLY PROFIT IN ITS HISTORY
-----------------------------------
Revenues for quarter up 75% over 2002;
nine month revenues more than triple
New York, New York, November 3, 2003 - Arotech Corporation (NasdaqNM:
ARTX), a provider of quality advanced zinc-air batteries, multimedia interactive
simulators/trainers and lightweight armoring for the military, law enforcement
and homeland security markets, today reported the Company's first-ever quarterly
net profit in its third quarter and first nine months 2003 results.
Revenues for the quarter ended September 30, 2003 increased to $5.7
million as compared with $3.3 million for the corresponding period of 2002, an
increase of 75%. The respective increases are largely attributed to sales in the
Defense and Security Products Division (IES and MDT) and sales of military
batteries in the Battery Division.
Gross profit for the quarter ended September 30, 2003 increased to $2.5
million as compared with $1.6 million for the corresponding period of 2002, an
increase of 54%, with a gross margin of 43%. The respective increases are
largely attributed to sales in the Defense and Security Products Division (IES
and MDT) and sales of military batteries in the Battery Division.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA),
excluding discontinued operations, for the quarter ended September 30, 2003
increased to $491,000 as compared with a loss (LBITDA) of $(466,000) for the
corresponding period of 2002. Arotech believes that information concerning
EBITDA enhances overall understanding of its current financial performance.
Arotech computes EBIDTA, which is a non-GAAP financial measure, as reflected in
the table below.
Net profit (loss) for the quarter ended September 30, 2003 increased to
$75,000 as compared with a net loss of $(9.6) million for the corresponding
quarter of 2002.
Basic and diluted net profit (loss) per share for the quarter ended
September 30, 2003 was $0.00 as compared with a loss of $(0.29) for the
corresponding period of 2002.
Revenues for the nine months ended September 30, 2003 increased to $13.2
million as compared with $4.3 million for the corresponding period of 2002, an
increase of 211%. The respective increases are largely attributed to sales in
the Defense and Security Products Division (IES and MDT, which were not owned by
the Company in much of the corresponding period in 2002) and sales of military
batteries in the Battery Division.
( m o r e )
Gross profit for the nine months ended September 30, 2003 increased to
$4.9 million as compared with $1.8 million for the corresponding period of 2002,
an increase of 166%. The respective increases are largely attributed to sales in
the Defense and Security Products Division (IES and MDT) and sales of military
batteries in the Battery Division.
Loss Before Interest, Taxes, Depreciation and Amortization (LBITDA),
excluding discontinued operations, for the nine months ended September 30, 2003
decreased to $1.3 million as compared with $2.3 million for the corresponding
period of 2002. Arotech believes that information concerning LBITDA enhances
overall understanding of its current financial performance and its progress
towards cash-flow break even and toward GAAP profitability. Arotech computes
LBIDTA, which is a non-GAAP financial measure, as reflected in the table below.
Net loss for the nine months ended September 30, 2003 decreased to $3.8
million as compared with $15.6 million for the corresponding quarter of 2002.
Combined basic and diluted net loss per share for the nine months ended
September 30, 2003 narrowed to $0.10 as compared with $0.49 for the
corresponding period of 2002.
Cash-on-hand and cash equivalents and certificate of deposit due within
one year stood at the end of the quarter at approximately $2.7 million with
backlog of orders in excess of $3.2 million.
Stockholders' equity stood at the end of the quarter at approximately
$11.4 million.
Arotech Chairman and CEO Robert S. Ehrlich commented, "When we launched
our turnaround program around this time last year, our goal was to be cash flow
positive from operations during this half. We exceeded our expectations, and
achieved a net profit for the first time in our company's history," continued
Ehrlich. "We are now looking forward to continuing to generate operating profit
during 2004," concluded Ehrlich.
Conference Call
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Arotech Corporation will hold it second quarter 2003 conference call on
Tuesday, November 4, 2003 at 10:00 a.m. EST. Those wishing to take part in the
conference call should call 1-800-967-7134 (US) or +1-719-457-2625
(international) a few minutes before the 10:00 a.m. EST start time. In addition,
an instant replay will be available Tuesday, November 4, 2003 at 1:00 p.m. EST
until Wednesday, November 5, 2003 at 8:00 p.m. EST. The replay telephone number
is 1-888-203-1112 (US); +1-719-457-0820 (international). The confirmation number
is 686108.
About Arotech Corporation
- -------------------------
Arotech's corporate mission is to provide quality defense and security
products for the military, law enforcement and homeland security markets,
including advanced zinc-air batteries, multimedia interactive
simulators/trainers and lightweight armoring.
( m o r e )
Arotech Corporation (www.arotech.com) operates two business divisions:
Electric Fuel Batteries - developing and manufacturing zinc-air batteries for
military and homeland security applications and developing electric vehicle
batteries for zero emission public transportation; and Arotech Defense -
consisting of IES Interactive, which provides advanced high-tech multimedia
training systems for law enforcement and paramilitary organizations, MDT Armor,
which provides vehicle armoring for the military, industrial and private
sectors, and Arocon Security, which provides homeland security consulting and
other services.
Arotech is incorporated in Delaware and has corporate and sales offices
in New York and Denver with research, development and production subsidiaries in
Alabama, Colorado and Israel.
COMPANY CONTACTS:
Jonathan Whartman
Senior VP, Communications
1-800-281-0356 ext 622
whartman@arotech.com
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Except for the historical information herein, the matters discussed in this news
release include forward-looking statements, as defined in the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on these forward-looking statements, as they are subject to various risks and
uncertainties that may cause actual results to vary significantly. These risks
and uncertainties include, but are not limited to, risks relating to: product
and technology development; the uncertainty of the market for Arotech's
products; changing economic conditions; delay, cancellation or non-renewal, in
whole or in part, of contracts or of purchase orders; significant future capital
requirements; the outcome of the claims made by the I.E.S. Group; and other risk
factors detailed in Arotech's most recent Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 and other filings with the Securities and
Exchange Commission. Arotech assumes no obligation to update the information in
this release. Reference to the Company's website above does not constitute
incorporation of any of the information thereon into this press release.
TABLES TO FOLLOW
AROTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine months ended Three months ended
September 30, September 30,
------------ ------------ ------------ ------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues .......................................................... $ 13,232,486 $ 4,258,310 $ 5,705,898 $ 3,262,711
Cost of revenues .................................................. 8,365,212 2,428,844 3,252,323 1,668,941
------------ ------------ ------------ ------------
Gross profit ...................................................... 4,867,274 1,829,466 2,453,575 1,593,770
Research and development .......................................... 762,629 379,785 252,085 161,138
Selling and marketing expenses .................................... 2,395,190 712,502 757,614 552,863
General and administrative expenses ............................... 3,579,371 3,347,955 1,105,864 1,378,485
Amortization of intangible assets ................................. 727,127 251,721 103,584 251,721
------------ ------------ ------------ ------------
7,464,317 4,691,963 2,219,147 2,344,207
------------ ------------ ------------ ------------
Operating profit (loss) ........................................... (2,597,043) (2,862,497) 234,428 (750,437)
Financial income (expenses), net .................................. (1,084,582) 140,017 (100,761) 23,297
------------ ------------ ------------ ------------
Net profit (loss) before taxes .................................... (3,681,625) (2,722,480) 133,667 (727,140)
Tax expenses ...................................................... (308,137) (105,466) (31,089) (104,832)
------------ ------------ ------------ ------------
Net profit (loss) before minority interest in profit of a
subsidiary ..................................................... (3,989,762) (2,827,946) 102,578 (831,972)
Loss (Profit) to minority ......................................... 134,813 (91,150) (25,485) (91,150)
------------ ------------ ------------ ------------
Net profit (loss) from continuing operations ...................... $ (3,854,949) $ (2,919,096) $ 77,093 $ (923,122)
Net profit (loss) from discontinued operations .................... 80,883 (12,694,639) (2,285) (8,716,422)
------------ ------------ ------------ ------------
Net profit (loss) for the period .................................. $ (3,774,066) $(15,613,735) $ 74,808 $ (9,639,544)
============ ============ ============ ============
Basic net earnings (loss) per share from continuing operations .... $ (0.10) $ (0.09) $ 0.00 $ (0.03)
============ ============ ============ ============
Diluted net earnings (loss) per share from continuing operations. . $ (0.10) $ (0.09) $ 0.00 $ (0.03)
============ ============ ============ ============
Basic and diluted net earnings (loss) per share from
discontinued operations ......................................... $ 0.00 $ (0.40) $ (0.00) $ (0.26)
============ ============ ============ ============
Combined basic net earnings (loss) per share ...................... $ (0.10) $ (0.49) $ 0.00 $ (0.29)
============ ============ ============ ============
Combined diluted net earnings (loss) per share .................... $ (0.10) $ (0.49) $ 0.00 $ (0.29)
============ ============ ============ ============
Weighted average number of shares used in computing basic net
loss per share .................................................. 37,276,260 31,545,914 40,371,940 33,441,137
============ ============ ============ ============
Weighted average number of shares used in computing diluted net
loss per share .................................................. 44,474,334 31,545,914 47,076,792 33,441,137
============ ============ ============ ============
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Reconciliation of Non-GAAP Financial Measure
To supplement Arotech's consolidated financial statements presented in
accordance with GAAP, Arotech uses a non-GAAP measure, Earnings (Loss) Before
Interest, Taxes, Depreciation and Amortization (EBITDA). This non-GAAP measure
is provided to enhance overall understanding of Arotech's current financial
performance and its progress towards cash-flow break even and toward GAAP
profitability. Reconciliation of EBITDA to the nearest GAAP measure follows:
EBITDA
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Nine months ended September 30, Three months ended September 30,
----------------------------- ----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net profit (loss) from continuing operations (GAAP measure) $(3,854,949) $(2,919,096) $ 77,093 $ (923,122)
Add back:
Interest expense (income), net (after deduction of minority
interest) ................................................ 1,077,276 (135,764) 100,732 (19,044)
Taxes (after deduction of minority interest) ............... 166,175 54,194 23,480 53,718
Depreciation of fixed assets ............................... 529,155 445,270 180,754 170,270
Amortization of intangible assets .......................... 732,364 251,721 108,821 251,721
----------- ----------- ----------- -----------
EBITDA (LBITDA) (non-GAAP measure) ......................... $(1,349,979) $(2,303,675) $ 490,880 $ (466,457)
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