HEI, Inc. Announces First Quarter 2014 Results

MINNEAPOLIS--()--HEI, Inc. (Pink Sheets:HEII)(http://www.heii.com) today announced unaudited financial results for the first quarter of 2014, which ended March 29, 2014.

Sales in the first quarter of 2014 were $5,944,000, compared to $12,516,000 in the first quarter of 2013. The Company generated a net loss of $896,000 in the first quarter of 2014, compared to a net income of $636,000 in the first quarter of 2013.

Sales declined 53% in the first quarter 2014, compared to the first quarter 2013, as a result of decreased sales in all three of the Company’s operating divisions.

“As mentioned in our fourth quarter press release, orders had been delayed and reduced for the military radio system components in our Victoria division due to delays and reductions in government procurement. Although a limited number of follow on orders have been received in the first quarter of 2014, no assurances can be made as to whether or not additional orders will be received in 2014 and, if received, the volume and timing of any shipments. Revenues were down year over year in our Boulder operation due in part to one-time test systems built in that facility in the prior year. Tempe revenues were down year over year due to reductions in orders for customer legacy products and delays in qualification of new programs for existing customers and new customer programs.” said Mark Thomas, CEO.

HEI, Inc. designs, develops and manufactures ultra-miniature microelectronics, high density interconnect flexible and rigid-flex substrates, electromechanical hardware, and embedded software with complex user interface solutions for customers engaged in the medical, hearing, telecommunications, military, aerospace, and industrial markets. HEI provides its customers with a single point of contact that can take an idea from inception to a fully functional and cost effective product utilizing innovative design solutions and by the application of state-of-the-art materials, processes and manufacturing capabilities.

Corporate & HEI –Victoria (Microelectronics Contract Manufacturing)   1495 Steiger Lake Lane, Victoria, MN 55386
HEI – Boulder (Design and Development, Box Build and ATE) 4801 North 63rd Street, Boulder, CO 80301
HEI – Tempe (Quick Turn and Production High Density Interconnect Flex and Rigid-Flex)   610 South Rockford Drive, Tempe, AZ 85281

Information in this news release, which is not historical, includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “estimate,” “continue,” and similar words. Statements contained in this press release, including the implementation of business strategies, growth of specific markets, results and estimated HEI revenue, orders, shipments, cash flow and profits, are forward looking statements. All such forward-looking statements involve risks and uncertainties including, without limitation, adverse business and market conditions, the ability of HEI to secure and satisfy customers, the availability and cost of materials from HEI’s suppliers, HEI’s ability to satisfy financial or other obligations or covenants set forth in its financing agreements, adverse competitive developments, change in or cancellation of customer requirements, collection of receivables and outstanding debt, HEI’s ability to control fixed and variable operating expenses, and other risks detailed in previous HEI SEC filings. Since HEI is no longer reporting to the SEC, readers are cautioned to weigh the potential for additional risk factors based on ongoing business activities and the current economic conditions. The information set forth herein should be read in light of such risks. We undertake no obligation to update these statements to reflect ensuing events or circumstances, or subsequent actual results.

March 29, 2014 March 30, 2013
(In thousands, except share and per share data)
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable, net 3,557 5,547
Inventories, net 3,580 5,722
Other current assets   599     347  
Total current assets   7,736     11,616  
Property and equipment:
Land 216 216
Building and improvements 4,342 4,337
Fixtures and equipment 31,044 28,784
Accumulated depreciation and amortization   (28,931 )   (27,429 )
Property and equipment, net 6,671 5,908
Security deposit 215 230
Other long-term assets   162     192  
Total assets $ 14,784   $ 17,946  
Current liabilities:
Revolving line of credit $ 2,809 $ 4,273
Accounts payable $ 2,308 $ 3,387
Accrued liabilities 748 1,383
Customer deposit liabilities 7 119
Current maturities of long-term liabilities   1,009     1,124  
Total current liabilities   6,881     10,286  
Long-term liabilities:
Long-term lease obligation, less current maturities 1,674 1,816
Long-term capital lease obligations, less current maturities 876 567
Long-term debt, less current maturities   848     1,371  
Total long-term liabilities, less current maturities   3,398     3,754  
Total liabilities   10,279     14,041  
Commitments and contingencies
Shareholders’ equity:
Undesignated stock - -
Convertible preferred stock, $.05 par 2 2
Common stock, $.05 par 529 513
Additional paid-in capital 28,829 28,696
Accumulated deficit   (24,855 )   (25,306 )
Total shareholders’ equity   4,505     3,905  
Total liabilities and shareholders’ equity $ 14,784   $ 17,946  
Certain minor reclassifications have been made to our prior period financial information in order to conform to the current year presentation.
Three Months Ended
March 29, 2014 March 30, 2013
(In thousands, except share and per share data)
Net sales $ 5,944 $ 12,516
Cost of sales   5,953     10,491  
Gross profit (9 ) 2,025
Operating expenses:
Selling, general and administrative   814     1,135  
Operating income (loss) (823 ) 890
Interest expense, net (68 ) (90 )
Other income (expense), net   (5 )   (150 )
Income (loss) before income taxes (896 ) 650
Income tax expense   -     14  
Net income (loss) $ (896 ) $ 636  

Income (loss) per common share:

Basic $ (0.09 ) $ 0.06
Diluted $ (0.09 ) $ 0.06

Weighted average common shares outstanding:

Basic 10,435,657 10,180,352
Diluted 10,435,657 10,180,352
Certain minor reclassifications have been made to our prior period financial information in order to conform to the current year presentation.


HEI, Inc.
Mark B. Thomas, CEO, 952-443-2500


HEI, Inc.
Mark B. Thomas, CEO, 952-443-2500