ORLANDO, FL – (Business Wire) – July 10, 2013 — API Technologies Corp. (NASDAQ:ATNY) (“API”, “API Technologies”, or the “Company”), a trusted provider of RF/microwave, microelectronics, and security solutions for critical and high-reliability applications, today announced results for the fiscal second quarter ended May 31, 2013. Results for continuing operations for the second quarter and comparable historical periods do not include the Sensors business, which was sold on April 17, 2013. Sensors business results are reported under discontinued operations.
“This quarter we delivered growth in revenue, bookings, and profitability. At the same time, we drove two divestitures that were part of the previously announced and on-going strategic review, which primarily contributed to the reduction of our term debt by $75.9 million,” said Bel Lazar, President and Chief Executive Officer of API Technologies Corp. “Through a combined emphasis on top line growth, new product introductions, and operational efficiencies, we are successfully executing on our strategy to deliver short and long-term value to our customers and shareholders alike.”
Results for the Quarter Ended May 31, 2013
API Technologies reported revenue of $68.1 million for the quarter ended May 31, 2013, compared to $61.0 million for the quarter ended February 28, 2013 and $72.2 million for the quarter ended May 31, 2012.
Gross profit, as a percent of sales, was 23.3% for the quarter ended May 31, 2013, compared to 22.2% for the quarter ended February 28, 2013, versus 11.5% for the quarter ended May 31, 2012. Adjusted EBITDA from continuing operations for the quarter ended May 31, 2013 was $8.7 million (12.8% margin), versus $6.5 million (10.6% margin) for the quarter ended February 28, 2013, compared to $9.6 million (13.3% margin) in the quarter ended May 31, 2012.
API Technologies posted a net income of $7.5 million in the quarter ended May 31, 2013, versus a net loss of $14.4 million for the quarter ended February 28, 2013 and a net loss of $109.5 million for the quarter ended May 31, 2012. The quarter-over-quarter net income gain is largely due to a $12.0 million gain on the sale of the Sensors business, partially offset by tax expense; a $10.2 million reduction in expenses associated with the amortization of note discounts and deferred financing costs; and higher revenue in the quarter-ended May 31, 2013. The year-over-year net income gain is attributable to the write-down of $87.0 million of Goodwill related to the Company’s EMS segment and the write-down of approximately $12.6 million of discounts related to the Note that converted to shares of Series A Preferred Stock during the quarter ended May 31, 2012. At the end of the quarter, the Company had $10.2 million in cash and cash equivalents, including $1.5 million in restricted cash, and $137.7 million in debt obligations, net of discounts. During the fiscal second quarter, the Company paid down $47.1 million of term debt, primarily from the sale of the Sensors business.
Results for the Six Months Ended May 31, 2013
API Technologies reported revenue of $129.1 million for the six months ended May 31, 2013, compared to $136.5 million in the prior-year period. Gross margin was 22.7% for the six-month period ended May 31, 2013, compared to 17.4% for the six-month period ended May 31, 2012. API Technologies posted a net loss of $7.0 million for the six months ended May 31, 2013 versus a $108.7 net loss for the six months ended May 31, 2012. Restructuring costs recorded in the six months ended May 31, 2013 were approximately $0.7 million compared to approximately $12.1 million in the comparable period of 2012.
On July 5, 2013, the Company divested its Data Bus product line for $32.5 million. Cash proceeds of $28.8 million from the Data Bus transaction were used for additional term loan repayment.
From the beginning of the fiscal second quarter through July 10, 2013, total term debt repayment was $75.9 million, which included the fiscal second quarter repayment of $47.1 million and the $28.8 million repayment from the sale of the Data Bus product line. As of July 10, 2013, the Company’s term loan balance was $89.1 million.
API Technologies will host a conference call to review the Company’s fiscal second quarter results tomorrow, July 11, at 10:00 a.m. Eastern Time. Bel Lazar, President and Chief Executive Officer, and Phil Rehkemper, Executive Vice President and Chief Financial Officer, will host the call.
The call will be available by dialing 1-877-317-6789 or 1-412-317-6789 and accessible by webcast at http://www.apitech.com. Recorded replays of the webcast will be available on the Company’s Investor Relations App, and for 30 days on the Company’s website and by telephone at 1-877-344-7529 or 1-412-317-0088, replay passcode #10030566, beginning 2:00 p.m. Eastern Daylight Time on July 11, 2013.
The API Technologies Investor Relations App is available free for iPhone® and iPad® via the Apple iTunes store and for Android™ devices via Google Play. For more information, visit http://www.apitech.com/investor-relations.
About API Technologies Corp.
API Technologies designs, develops and manufactures electronic systems, subsystems, RF and secure solutions for technically demanding defense, aerospace and commercial applications. API Technologies' customers include many leading Fortune 500 companies. API Technologies trades on the NASDAQ under the symbol ATNY. For further information, please visit the Company website at www.apitech.com.
Non-GAAP Financial Information In this press release, API has provided non-GAAP financial measures for Adjusted EBITDA, both excluding and including discontinued operations (the Sensors business). Non-GAAP Adjusted EBITDA including discontinued operations (Earnings before interest, taxes, depreciation and amortization) excludes restructuring charges, acquisition and divestiture-related charges, C-MAC pro forma adjustments, foreign exchange losses, stock-based compensation expenses, amortization of note discounts and deferred financing costs, goodwill impairment, SenDEC earn-out reversal, and certain other adjustments. Non-GAAP Adjusted EBITDA from continuing operations also excludes discontinued operations. Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company’s financial performance by excluding the impact of items which may obscure trends in the operating performance of the business. These are not recognized measures under US GAAP, do not have a standardized meaning, and are unlikely to be comparable to similar measures used by other companies. In addition, some of the Adjusted EBITDA measures include operations that are no longer part of the Company’s ongoing operations. Accordingly, investors are cautioned that these non-GAAP measures should not be construed as an alternative to net earnings or loss determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. We expect our financial statements to continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.
Safe Harbor for Forward-Looking Statements
Except for statements of historical fact, the information presented herein constitutes forward-looking statements. All forward-looking statements are subject to certain risks, uncertainties and assumptions which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include but are not limited to, general economic and business conditions, government regulations, our ability to integrate and consolidate our operations, our ability to expand our operations in both new and existing markets, the ability of our review of strategic alternatives to maximize stockholder value and the effect of growth on our infrastructure. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. The forward-looking statements in this news release should be read in conjunction with the more detailed descriptions of the above factors located in our Annual Report on Form 10-K under Part I, Item 1A “Risk Factors” as well as those additional factors we may describe from time to time in other filings with the Securities and Exchange Commission. All information in this release is as of the date hereof. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements in this press release, whether as a result of new information, future events, or otherwise.
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