Orbit International Corp. Reports 2021 Second Quarter Results
Second Quarter 2021 Net Income of $534,000
($0.15 per diluted share) v. Net Loss of $396,000 ($0.11 loss per share) in
Prior Year Period
Second Quarter 2021 EBITDA, As Adjusted, of $616,000 ($0.18 per diluted share) v. loss of $324,000 ($0.09 loss per share) in Prior Year Period
Six Months 2021 Net Income of $2,361,000 ($0.67 per diluted share) v. Net Loss of $376,000 ($0.11 loss per share) in Prior Year Period
Six months 2021 EBITDA, As Adjusted, of $2,519,000 ($0.72 per diluted share) v. loss of $238,000 ($0.07 loss per share) in Prior Year Period
Exclusive of PPP Loan Forgiveness, Six Months Net Income was $743,000 ($0.21 per diluted share) and EBITDA, As Adjusted was $901,000 ($0.26 per diluted share)
HAUPPAUGE, N.Y., Aug. 11, 2021 (GLOBE NEWSWIRE) -- Orbit International Corp. (OTC PINK:ORBT) today announced results for the second quarter and six months ended June 30, 2021.
Second Quarter 2021 vs. Second Quarter 2020
- Net sales were $5,801,000, as compared to $5,765,000.
- Gross margin was 37.2%, as compared to 18.8%.
- Net income was $534,000 ($0.15 per diluted share), as compared to a net loss of $396,000 ($0.11 loss per share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $616,000 ($0.18 per diluted share), as compared to a loss of $324,000 ($0.09 loss per share).
Six Months 2021 vs. Six Months 2020
- Net sales were $11,194,000, as compared to $11,617,000.
- Gross margin was 34.8%, as compared to 24.6%.
- Net Income was $2,361,000 ($0.67 per diluted share), as compared to net loss of $376,000 ($0.11 loss per share).
- Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liability and stock-based compensation (EBITDA, as adjusted) was $2,519,000 ($0.72 per diluted share), as compared to a loss of $238,000 ($0.07 loss per share).
- Backlog at June 30, 2021 was $15.1 million as compared to $15.8 million at March 31, 2021 and $17.9 at December 31, 2020.
Mitchell Binder, President and CEO of Orbit International Corp. commented, “Our net income for the six months ended June 30, 2021, was $2,361,000 compared to a loss of $376,000 for the prior comparable period. Included in our current period results was $1,618,000 representing the forgiveness of our loan, including accrued interest, from Peoples United Bank under the Paycheck Protection Program (“PPP”) which was recorded in our first quarter. Exclusive of the PPP loan forgiveness, our net income for the current six-month period was $743,000. Our net income for the three-month period ended June 30, 2021, was $534,000 compared to a loss of $396,000 in the prior comparable period. During the current second quarter, in addition to a slight increase in sales, our improvement in net income was attributable to an increase in gross margin despite an increase in selling, general and administrative expenses. Our operating performance in the prior comparable period was adversely affected by changes we made to our manufacturing operation in March 2020 in order to comply with the PAUSE executive order by the Governor of New York State to safeguard the health and safety of employees during the COVID-19 pandemic, which directly affected our productivity.”
Mr. Binder added, “Our sales for the three months ended June 30, 2021, increased to $5,801,000 compared to $5,765,000 from the prior comparable period. This increase in sales was attributable to an increase in sales from our Orbit Electronics Group (“OEG”) due to delivery schedules despite a reduction in sales from our Orbit Power Group (“OPG”). The decrease in sales from our OPG was due to a decrease in CAATS shipments as well as reduced shipments from our OPG’s commercial division. The shipment of CAATS units made during the first quarter of 2021 completed the contract that had been received by our OPG in September 2017. As previously mentioned, the CAATS units had a lower gross margin than our other products. Furthermore, the customer base of our OPG’s commercial division continues to be in the recovery stage resulting from the pandemic which caused sales from that division to be lower than sales from the prior comparable period. Although our commercial division’s sales during the second quarter of 2020 took place during the height of the pandemic, those sales were higher than the current year quarter as they reflected a higher backlog that had been created prior to the onset of the pandemic.”
Mr. Binder further added, “Our gross margin for the three months ended June 30, 2021, increased to 37.2% compared to 18.8% in the prior comparable period. This increase reflects a higher gross profit from both our OEG and OPG due to increased sales at our OEG and a more profitable product mix from both operating segments. Our improved gross margin at our OPG should continue due to the completion of the lower gross margin CAATS contract which has been replaced by the higher gross margin shipments of our VPX power supplies and other COTS products. Gross margins in the prior comparable period were adversely affected by the changes we made to our manufacturing operation during the peak of the COVID-19 pandemic in the second quarter of 2020. Selling, general and administrative expenses for the second quarter were higher than the comparable period of the prior year due to an increase in selling expenses and other corporate costs. In addition, selling expenses are expected to increase for the remainder of the year as all trade shows for the current year have been scheduled for the second half of 2021.”
Mr. Binder continued, “Our backlog at June 30, 2021, was approximately $15,115,000 compared to approximately $17,879,000 at December 31, 2020. The reduction in backlog was due to a lower backlog at both of our operating segments. The reduction in the OPG backlog reflects a reduction in CAATS backlog at March 31, 2021 of approximately $620,000 as compared to the prior year end. Our OPG continues to book new orders for its VPX power supplies, but it continues to be offset by weak bookings from its commercial division. Our OEG had a firm second quarter of bookings but still experienced delays on certain material follow-on orders which we now expect will be booked in the third quarter although the timing of these orders is always an uncertainty.”
David Goldman, Chief Financial Officer, noted, “At June 30, 2021, our cash and cash equivalents aggregated approximately $6.9 million and our financial condition continued to improve as evidenced by our 8.4 to 1 current ratio. Our tangible book value per share at June 30, 2021 was $5.36 which compares to $5.22 at March 31, 2021 and $4.70 at December 31, 2020. (Note: tangible book value per share does not include any additional value for our remaining reserved deferred tax asset). To offset future federal and state taxes resulting from profits, we have approximately $7.0 million and $0.7 million in available federal and New York State net operating loss carryforwards, respectively.”
Mr. Binder concluded, “Because our revenues are tied to our delivery schedules specified in our contracts, it often is difficult to judge our performance on a quarterly basis. During the second quarter, based on our improved outlook on our business regarding the COVID-19 pandemic and stability of our financial condition, our Board of Directors authorized our Company to recommence our share repurchase program. Through August 4, 2021, we have purchased approximately 49,500 shares under the program. We remain confident of our operating performance in the second half of 2021 although supply chain issues could have some impact on the timing of certain deliveries in the latter part of the year. Our operating team continues to work on potential solutions in the event certain receipt of components are delayed and impact delivery schedules. We are hopeful that all of these supply chain issues are resolved as we move into the first quarter of 2022.”
Orbit International Corp., through its Electronics Group, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial applications through its production facility in Hauppauge, New York. Orbit’s Power Group, also located in Hauppauge, NY, designs and manufactures a wide array of power products including AC power supplies, frequency converters, inverters, VME/VPX power supplies as well as various COTS power sources.
On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The Company was classified as an essential business by New York State and therefore was exempt from the state’s mandate that all non-essential businesses close their business locations until further notice. In addition, as a member of the Defense Industrial Base (“DIB”), the Company is mandated by the Secretary of Defense to continue to provide the essential products and services required to meet national security commitments to the Federal Government and the U.S. Military. The Company remains open while following guidance from the Centers for Disease Control (“CDC”) to best protect our employees. At this time, the length and severity of the COVID-19 pandemic is still unknown.
Certain matters discussed in this news release and oral statements made from time to time by representatives of the Company including, statements regarding our expectations of Orbit’s operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although Orbit believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.
Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond Orbit International's ability to control or predict. Important factors that may cause actual results to differ materially and that could impact Orbit International and the statements contained in this news release can be found in Orbit's reports posted with the OTC Disclosure and News service. For forward-looking statements in this news release, Orbit claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Orbit assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.
CONTACT
David Goldman
Chief Financial Officer
631-435-8300
Orbit International
Corp.
Consolidated Statements of
Operations
(in thousands, except per share
data)
(unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 5,801 | $ | 5,765 | $ | 11,194 | $ | 11,617 | |||||||||||||||
| Cost of sales | 3,642 | 4,681 | 7,301 | 8,760 | |||||||||||||||||||
| Gross profit | 2,159 | 1,084 | 3,893 | 2,857 | |||||||||||||||||||
| Selling general and administrative | 1,586 | 1,432 | 3,078 | 3,149 | |||||||||||||||||||
| expenses | |||||||||||||||||||||||
| PPP loan forgiveness | - | - | -1,618 | - | |||||||||||||||||||
| Interest expense | - | 3 | - | 3 | |||||||||||||||||||
| Other (income) expense, net | 17 | 30 | 37 | 52 | |||||||||||||||||||
| Income (loss) before income taxes | 556 | -381 | 2.396 | -347 | |||||||||||||||||||
| Income tax provision | 22 | 15 | 35 | 29 | |||||||||||||||||||
| Net income (loss) | $ | 534 | $ | (396) | $ | 2,361 | $ | (376) | |||||||||||||||
| Basic earnings (loss) per share | $ | 0.15 | $ | (0.11) | $ | 0.67 | $ | (0.11) | |||||||||||||||
| Diluted earnings (loss) per share | $ | 0.15 | $ | (0.11) | $ | 0.67 | $ | (0.11) | |||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | 3,498 | 3,511 | 3,505 | 3,517 | |||||||||||||||||||
| Diluted | 3,498 | 3,511 | 3,505 | 3,517 | |||||||||||||||||||
Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months
Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| EBITDA (as adjusted) Reconciliation | ||||||||||||||||
| Net income (loss) | $ | 534 | $ | (396) | $ | 2,361 | $ | (376) | ||||||||
| Interest expense | - | 3 | - | 3 | ||||||||||||
| Income tax expense | 22 | 15 | 35 | 29 | ||||||||||||
| Depreciation and amortization | 26 | 23 | 53 | 46 | ||||||||||||
| Fair value adj-contingent liability | 18 | 31 | 40 | 60 | ||||||||||||
| Stock-based compensation | 16 | - | 30 | - | ||||||||||||
| EBITDA (as adjusted) (1) | $ | 616 | $ | (324) | $ | 2,519 | $ | (238) | ||||||||
| EBITDA (as adjusted) Per Diluted Share Reconciliation | ||||||||||||||||
| Net income (loss) | $ | 0.15 | $ | (0.11) | $ | 0.67 | $ | (0.11) | ||||||||
| Interest expense | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
| Income tax expense | 0.01 | 0.00 | 0.01 | 0.01 | ||||||||||||
| Depreciation and amortization | 0.01 | 0.01 | 0.02 | 0.01 | ||||||||||||
| Fair value adj-contingent liability | 0.01 | 0.01 | 0.01 | 0.02 | ||||||||||||
| Stock-based compensation | 0.00 | 0.00 | 0.01 | 0.00 | ||||||||||||
| EBITDA (as adjusted), per diluted share (1) | $ | 0.18 | $ | (0.09) | $ | 0.72 | $ | (0.07) | ||||||||
- The EBITDA (as adjusted) tables presented are not determined in accordance with accounting principles generally accepted in the United States of America. Management uses EBITDA (as adjusted) to evaluate the operating performance of its business. It is also used, at times, by some investors, securities analysts and others to evaluate companies and make informed business decisions. EBITDA (as adjusted) is also a useful indicator of the income generated to service debt. EBITDA (as adjusted) is not a complete measure of an entity's profitability because it does not include costs and expenses for interest, depreciation and amortization, income taxes, fair value adjustment-contingent liability and stock-based compensation. EBITDA (as adjusted) as presented herein may not be comparable to similarly named measures reported by other companies.
| Six Months
Ended June 30, | ||||||||
| Reconciliation of EBITDA, as adjusted, to cash flows used in operating activities (1) | 2021 | 2020 | ||||||
| EBITDA (as adjusted) | $ | 2,519 | $ | (238) | ||||
| Interest Expense | - | (3) | ||||||
| Income tax expense | (35) | - | ||||||
| Stock-based compensation | (30) | (29) | ||||||
| Gain on forgiveness of PPP Loan | (1,618) | - | ||||||
| Fair value adj-contingent liability | (40) | (60) | ||||||
| Net change in operating assets and liabilities | (1,179) | 74 | ||||||
| Cash flows used in operating activities | $ | (383) | $ | (256) | ||||
Orbit International Corp.
Consolidated Balance Sheets
| June 30, 2021 (unaudited) | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 6,872,000 | $ | 7,501,000 | ||||
| Accounts receivable, less allowance for doubtful accounts | 2,727,000 | 2,751,000 | ||||||
| Inventories | 8,964,000 | 9,396,000 | ||||||
| Contract assets | 933,000 | 403,000 | ||||||
| Income tax receivable | - | 290,000 | ||||||
| Other current assets | 336,000 | 301,000 | ||||||
| Total current assets | 19,832,000 | 20,642,000 | ||||||
| Property and equipment, net | 313,000 | 351,000 | ||||||
| Right of use assets, operating leases | 3,258,000 | 501,000 | ||||||
| Goodwill | 901,000 | 901,000 | ||||||
| Deferred tax asset | 545,000 | 545,000 | ||||||
| Other assets | 30,000 | 30,000 | ||||||
| Total assets | $ | 24,879,000 | $ | 22,970,000 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 854,000 | $ | 1,779,000 | ||||
| Accrued expenses | 745,000 | 934,000 | ||||||
| Lease liabilities, operating leases Contingent liability | 438,000 187,000 | 478,000 256,000 | ||||||
| Customer advances | 133,000 | 155,000 | ||||||
| Total current liabilities | 2,357,000 | 3,602,000 | ||||||
| Notes payable, PPP loan, net of current portion | - | 1,606,000 | ||||||
| Contingent liability, net of current portion Lease liabilities, operating leases | 166,000 2,835,000 | 318,000 53,000 | ||||||
| Total liabilities | 5,358,000 | 5,579,000 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock | 361,000 | 361,000 | ||||||
| Additional paid-in capital | 17,667,000 | 17,667,000 | ||||||
| Treasury stock | (800,000 | ) | (569,000 | ) | ||||
| Retained earnings (accumulated deficit) | 2,293,000 | (68,000 | ) | |||||
| Stockholders’ equity | 19,521,000 | 17,391,000 | ||||||
| Total liabilities and stockholders’ equity | $ | 24,879,000 | $ | 22,970,000 | ||||
