Protective Products of America Announces Financial Results for Third Quarter
2009
SUNRISE, FL,
Third Quarter and Recent Highlights
- Reported total sales of $6.2 million and gross margin of 18.8%;
- Reduced total SG&A expenses by approximately 50% year-over-year to
$2.6 million;
- Net loss from continuing operations of $2.4 million or a loss of
$0.18 per share;
- Backlog of $3.3 million at September 30, 2009;
- Participation in the United States Marine Corps' Improved Modular
Tactical Vests (IMTV)/Plate Carrier Program as the exclusive
ballistics provider to HUBZone-certified companies Carter Enterprises
and Ibiley Manufacturing Corp.;
- Master contract and initial delivery orders in place with both
prime contractors;
- Production and revenues to begin in early 2010;
R.
"This type of program business is supplemental to our domestic and government agency business, and our international business - the core of our three-pronged business model and growth strategy, and the foundation of our Company. Our recent, successful execution of this business model, coupled with the cost control measures we have put in place, are helping us through a difficult period. We have rightsized the company for greater efficiency, while maintaining our highest quality standards and preparing for a better balance of high-quality business.
"We believe that the results of our increased domestic focus and more concentrated sales efforts are reflected in improved domestic bookings to date. We have generated strong growth in sales to federal agencies and recently received a new four-year contract and a twelve-month extension of another multi-year federal agency contract. Our highly competitive ballistics protection systems are generating substantial interest from the security and law enforcement sectors as we close out 2009 and plan for 2010. Recent activity suggests that budget spending is beginning to be freed up and funds are being appropriated more consistently. We are increasingly optimistic by what we see from the domestic and government agency markets, and believe that the Company is well positioned for growth as we move forward,"
Third Quarter 2009 Financial Results
Total sales for the quarter ended
Total SG&A expenses were
For the quarter ended
Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations was a loss of
Financial Position
As of
Conference Call
A conference call to discuss third quarter financial results will be held at
Canada or international dial-in number: 1-480-629-9715
US toll free dial-in number: 1-877-941-2322
Participants will be able to dial in and listen to a replay of the conference 60 minutes after the meeting end time. An audio replay of the conference call will be available through
About Protective Products of America, Inc.
Protective Products of America, Inc. ("PPA"), is headquartered in Sunrise, Florida, with manufacturing facilities in Sunrise, Florida and Granite Falls, North Carolina. The Company, together with its subsidiaries, is engaged in the design, manufacture and marketing of advanced products used to provide ballistic protection for personnel and vehicles in the military and law enforcement markets. The Company's product portfolio includes concealable soft body armor products for law enforcement and the Modular Tactical Vest ("MTV"), a ballistic system for military personnel. Visit www.protectiveproductsofamerica.com for more company information.
Management is of the opinion that the Company is a leader in the design and manufacture of high performance and high quality products used for ballistic protection. Protective Products International Corp, a wholly owned subsidiary of PPA, is an ISO 9001:2000 certified manufacturer. Furthermore, PPA is capable of providing customers with an integrated personnel armoring system of soft ballistic material, vests and plates for law enforcement and the military.
Safe Harbor Language
This release may contain forward-looking statements including expectations of future sales, cash flow, and earnings. These statements are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ from those anticipated. These risks include, but are not limited to, uncertainties associated with the defense industry, commodity prices, exchange rate fluctuations, and risks resulting from potential delays, appeals or changes related to government orders in the defense sector.
PPA depends on reliable supplies of high quality source materials used in the manufacture of armor products, including aramid fabrics and polyethylene materials, and works actively with key suppliers to ensure that requirements and demands for these materials are anticipated and properly met. The foregoing is not exhaustive and other risks are detailed from time to time in other disclosure filings of PPA. Should one or more of these risks or uncertainties materialize, or should stated assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The reader is also referred to other uncertainties and risks discussed in detail in the MD&A section of the Company's
In light of certain sensitive aspects in regard to customers and products, PPA may choose not to disclose all information related to the purchasers of its products, such as government agencies, countries or other end users. Products manufactured for export in the
UNAUDITED RESULTS OF OPERATIONS
The following table presents the unaudited results of operations from
Protective Products of America, Inc.'s consolidated financial statements
prepared in accordance with U.S. GAAP:
(thousands of United Three Months Ended Nine Months Ended
States dollars, September 30, September 30,
except per share data) 2009 2008 2009 2008
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(restated) (restated)
Sales $6,194 $16,567 $24,164 $65,249
Cost of goods sold 5,032 12,869 17,870 47,528
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Gross margin 1,162 3,698 6,294 17,721
Operating expense
Selling, general and
administrative 2,628 5,182 9,750 15,645
Research and development 416 350 1,202 1,188
Impairment of goodwill
and intangible assets - 28,288 - 28,288
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Total operating expenses 3,044 33,820 10,952 45,121
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Operating (loss) from
continuing operations (1,882) (30,122) (4,658) (27,400)
Interest expense 526 526 1,673 1,936
Other expense (income) 18 (628) 586 (95)
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Total other expense 544 (102) 2,259 1,841
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Loss from continuing
operations before
income taxes (2,426) (30,020) (6,917) (29,241)
Income tax provision
(benefit) - 442 - 210
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Net loss from continuing
operations (2,426) (30,462) (6,917) (29,451)
Net loss from
discontinued operations (37) (6,199) (216) (39,525)
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Net loss ($2,463) ($36,661) ($7,133) ($68,976)
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Basic loss per share:
Continuing operations ($0.18) ($2.21) ($0.50) ($2.28)
Discontinued operations $0.00 ($0.45) ($0.02) ($3.06)
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Net loss ($0.18) ($2.66) ($0.52) ($5.34)
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Diluted loss per common
share:
Continuing operations ($0.18) ($2.21) ($0.50) ($2.28)
Discontinued operations $0.00 ($0.45) ($0.02) ($3.06)
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Net loss ($0.18) ($2.66) ($0.52) ($5.34)
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Weighted average common
shares outstanding:
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Basic 13,762,557 13,762,557 13,762,557 12,925,148
Diluted 13,762,557 13,762,557 13,762,557 12,925,148
RECONCILATION OF NET LOSS FROM CONTINUING OPERATIONS
TO EBITDA AND ADJUSTED EBITDA
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER, 2009 AND 2008
(thousands of United Three Months Ended Nine Months Ended
States dollars, September 30, September 30,
except per share data) 2009 2008 2009 2008
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Net income (loss) (2,426) (30,463) (6,917) (29,451)
Interest expense 526 526 1,673 1,936
Income tax provision (benefit) - 442 - 210
Depreciation and
amortization 228 212 708 959
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EBITDA (loss) (1,672) (29,283) (4,536) (26,346)
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Share based compensation 529 295 1,371 859
Impairment of goodwill and
intangible assets - 28,288 - 28,288
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Adjusted EBITDA (loss) (1,143) (700) (3,165) 2,801
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EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations. EBITDA does not have a standardized meaning prescribed by GAAP and is unlikely to be comparable to similar measures presented by other entities.
Adjusted EBITDA is EBITDA before non-recurring and certain non-cash charges. Management believes that this non-GAAP measure provides a better assessment of the Corporations operations on a continuous basis by eliminating certain non-cash charges and charges that are non-recurring.
PROTECTIVE PRODUCTS OF AMERICA, INC
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008
September December
30, 31,
(thousands of United States dollars) 2009 2008
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ASSETS
Current assets
Cash $1,588 $1,498
Accounts receivable 1,598 5,853
Inventory, net 6,360 7,062
Prepaid expenses and other current assets 435 539
Current portion of note receivable - 37
Income taxes receivable 5,016 5,373
Deferred income taxes 31 31
Current assets of discontinued operations 46 1,305
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Total current assets 15,074 21,698
Property, plant and equipment, net 2,027 2,513
Intangible assets, net 9,285 9,351
Note receivable - 27
Other assets 232 220
Long term assets of discontinued operations - 2,566
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Total Assets $26,618 $36,375
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LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $5,253 $7,180
Deferred revenue and customer deposits 221 1,128
Operating line of credit 6,590 8,124
Current portion of long term debt 5,378 4,783
Current liabilities of discontinued operations 1,271 2,134
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Total current liabilities 18,713 23,349
Deferred income taxes 4,097 3,521
Long term debt 6,243 6,000
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Total liabilities 29,053 32,870
Commitments and contingencies - -
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value,
10,000,000 shares authorized, none issued - -
Common stock, $0.001 par value, 40,000,000 shares
authorized, 13,762,557 and 13,762,557 issued
and outstanding, respectively 14 14
Additional paid in capital 61,752 60,381
Accumulated other comprehensive income 891 1,467
Accumulated deficit (65,092) (57,957)
Receivables from stockholder - (400)
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Total stockholders' equity ($2,435) $3,505
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Total liabilities and stockholders' equity $26,618 $36,375
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%SEDAR: 00001737E
For further information: Kristen McNally, The Piacente Group, Inc., Investor Relations, (212) 481-2050, [email protected]
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