Tel-Instrument Electronics Corp Announces Third Quarter Results for FY 2014 and Receipt of $4.1 Million of TS-4530A Orders
EAST RUTHERFORD, N.J.--(BUSINESS WIRE)--Tel-Instrument Electronics Corp (“TIC”) (NYSE MKT:TIK) announced today that third quarter results continue to reflect the improvement in the Company’s operations. The Company is also announcing the receipt of $4.1 million of additional orders for the U.S. Army TS-4530A program bringing the total backlog on this program to $19.7 million.
“the Company has made great strides over the last year in improving its liquidity and looks forward to the commencement of full rate production on the TS-4530A program in the near term. The Company is also making solid progress in working down its inventory of CRAFT “ship in place”
For the nine months ended December 31, 2013, sales increased $5,401,327 (91.2%) to $11,323,585 as compared to $5,922,258 for the nine months ended December 31, 2012. This increase is mostly attributed the shipment of limited rate production shipment of SETS and KITS for the TS-4530A program, resumption of shipments on the CRAFT program as well as an increase in revenues for the Company’s legacy products. For the nine months ended December 31, 2013, the Company recorded operating income of $456,589 as compared to an operating loss of $2,196,354 for the nine months ended December 31, 2012. For the nine months ended December 31, 2013, the Company recorded a loss before taxes of $252,336 as compared to a loss before taxes of $2,559,585 for the nine months ended December 31, 2012. Excluding the non-cash loss on the change in the valuation of the common stock warrants, the Company would have recorded a profit before taxes of $20,163 for the first three fiscal quarters. The Company expects to improve on these results for the fourth quarter due in part to the sale of the ITATS Intellectual Property (“IP”). Management believes that going forward, revenues and profits should further improve based on the expected near-term receipt of a production release on the TS-4530A program, projected increases in CRAFT deliveries, and the commencement of ITATS production this summer.
The Company continues to work with the U.S. Army for a production release. The current U.S. Army schedule calls for a production release in March 2014 but it is possible that this date could slip into the first quarter of the next fiscal year. The Company has shipped most of the SETS and KITS required under the initial limited rate production release and it is critical that the Company receives this production release in a timely manner to continue to build on the growth and profitability it is starting to achieve.
The Company also previously announced that it had negotiated a $2.14 million contract modification on the ITATS program. The ITATS product (“AN/ARM-206”) is a fully automated TACAN test set for use in U.S. Navy Intermediate Level repair locations. This contract modification entails the sale of the IP to the U.S. Navy plus the sale of ancillary test support equipment and a modest increase in the recurring price to reflect several product enhancements. A portion of the IP sale proceeds will go to the Company’s subcontractor on this program. This contract modification is expected to result in a pre-tax benefit of about $1.2 million over the next two fiscal quarters. Management believes that the sale of the IP for the ITATS program should have no impact on sales of these units to the U.S. Navy or other customers, and should improve the Company’s balance sheet and liquidity position and help facilitate the commencement of the ITATS full rate production this summer.
Jeff O’Hara, the Company’s President and CEO, noted that: “the Company has made great strides over the last year in improving its liquidity and looks forward to the commencement of full rate production on the TS-4530A program in the near term. The Company is also making solid progress in working down its inventory of CRAFT “ship in place” units which has been limiting new production builds of CRAFT. It is expected that the CRAFT ship in place units will all be upgraded by this summer which should result in an increase in CRAFT production levels. The Company may also explore opportunities to secure lower cost commercial financing to replace its expensive existing debt this summer. Looking ahead, we are excited by our prospects for a strong conclusion to the current fiscal year and further growth in fiscal year 2015 and years to come. The Company also plans to begin earnings conference calls starting with the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014, in June 2014.”
We encourage everyone to read our full results of operations contained in our Quarterly Report on Form 10-Q for the period ended December 31, 2013, as filed with the United States Securities and Exchange Commission on February 14, 2014 at sec.gov.
About Tel-Instrument Electronics Corp
Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com.
This press release includes statements that are not historical in nature and may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits, and synergies of the combined companies, statements concerning the Company’s outlook, pricing trends, and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies, and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ materially. Among the factors which could cause a difference are: changes in the general economy; changes in demand for the Company’s products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances. A number of these factors are discussed in the Company’s previous filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
TEL-INSTRUMENT ELECTRONICS CORP
|Cash and cash equivalents||$||216,347||310,297|
|Accounts receivable, net||1,129,913||557,879|
|Prepaid expenses and other||143,929||115,852|
|Deferred financing costs||113,876||108,321|
|Deferred income tax asset||1,239,761||1,238,421|
|Total current assets||7,353,426||8,571,951|
|Equipment and leasehold improvements, net||445,735||587,958|
|Deferred financing costs – long-term||78,921||156,463|
|Deferred income tax asset – non-current||2,494,347||2,546,190|
|LIABILITIES & STOCKHOLDERS’ EQUITY|
|Current portion long-term debt||641,254||1,229,643|
|Capital lease obligations – current portion||69,448||74,508|
|Deferred revenues – current portion||8,155||18,460|
|Accrued payroll, vacation pay and payroll taxes||394,432||442,522|
|Total current liabilities||5,531,497||7,563,102|
|Subordinated notes payable-related parties||250,000||250,000|
|Capital lease obligations – long-term||25,159||76,055|
|Deferred revenues – long-term||118,350||1,045|
|Long-term debt, net of debt discount||743,290||1,134,549|
Common stock, par value $0.10 per share, 3,248,387 and 3,011,739 issued and outstanding
as of December 31, 2013 and March 31, 2013, respectively
|Additional paid-in capital||7,941,477||7,108,300|
|Total stockholders' equity||3,249,066||2,696,353|
|Total liabilities and stockholders' equity||$||10,429,301||$||11,919,434|
TEL-INSTRUMENT ELECTRONICS CORP
|Three Months Ended||Nine Months Ended|
|Cost of sales||2,693,342||1,896,652||7,465,991||4,582,773|
|Selling, general and administrative||697,919||587,146||2,022,579||1,927,380|
|Engineering, research and development||449,477||481,055||1,378,426||1,608,459|
|Total operating expenses||1,147,396||1,068,201||3,401,005||3,535,839|
|Income (loss) from operations||248,291||(614,833||)||456,589||(2,196,354||)|
|Other income (expense):|
|Amortization of debt discount||(27,120||)||(37,948||)||(75,707||)||(82,349||)|
|Loss on extinguishment of debt||0||-||(26,600||)||-|
|Amortization of deferred financing costs||(27,827||)||(68,383||)||(81,987||)||(152,174||)|
|Change in fair value of common stock Warrants||(229,726||)||19,710||(272,499||)||268,767|
|Total other income (expense)||(335,372||)||(234,132||)||(708,925||)||(363,231||)|
|Loss before income taxes||(87,081||)||(848,965||)||(252,336||)||(2,559,585||)|
|Income tax expense (benefit)||58,852||(303,788||)||51,843||(915,903||)|
|Basic income (loss) per common share||$||(0.04||)||$||(0.19||)||$||(0.10||)||$||(0.59||)|
|Diluted income (loss) per common share||$||(0.04||)||$||(0.19||)||$||(0.10||)||$||(0.59||)|
|Weighted average shares outstanding:|