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LMI Aerospace Announces Second Quarter 2015 Results
Second Quarter 2015 Highlights
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Generated
$10.2 million in cash from operations in the second quarter of 2015
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Awarded new work on Boeing 737 MAX and 787-10 and Airbus A350-900 XWB programs
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Proceeded with next phase of corporate strategy by initiating plans for additional facility consolidation and cost reduction
- Provided updated revenue and earnings guidance
Second Quarter Results
For the second quarter of 2015, net sales were
Operating income for the second quarter of 2015, excluding
"We had a number of significant successes this quarter to support our long-term strategy," said
"The actions we've taken to reshape the Aerostructures business have improved operating profit in the first half of 2015 by
Aerostructures Segment
Net Sales ($ in millions) |
Q2 2015 |
% of Total |
Q2 2014 |
% of Total | ||||
Large commercial aircraft | $ 45.4 | 53.2% | $ 42.9 | 48.5% | ||||
Corporate and regional aircraft | 21.3 | 25.0% | 27.2 | 30.7% | ||||
Military | 11.6 | 13.6% | 11.7 | 13.2% | ||||
Other | 7.0 | 8.2% | 6.7 | 7.6% | ||||
Total | $ 85.3 | 100.0% | $ 88.5 | 100.0% |
Aerostructures revenue decreased 3.6 percent to
Growth in the Boeing 787, 737 and 747 platforms contributed increases of
The Aerostructures segment generated gross profit of
Selling, general and administrative expenses were
Engineering Services Segment
Net Sales ($ in millions) |
Q2 2015 |
% of Total |
Q2 2014 |
% of Total | ||||
Large commercial aircraft | $ 5.1 | 40.8% | $ 8.6 | 48.3% | ||||
Corporate and regional aircraft | 4.6 | 36.8% | 5.1 | 28.7% | ||||
Military | 2.5 | 20.0% | 2.1 | 11.8% | ||||
Other | 0.3 | 2.4% | 2.0 | 11.2% | ||||
Total | $ 12.5 | 100.0% | $ 17.8 | 100.0% |
Engineering Services revenue decreased 29.8 percent to
Net sales in the second quarter of 2015 on large commercial aircraft platforms for Airbus and maintenance and repair revenues decreased
Gross profit for the segment was
Selling, general and administrative expenses for the segment decreased to
Non-Segment
Interest expense decreased
The Company recorded an income tax benefit of
The Company generated cash flow from operations of
Backlog at
Updated Outlook for 2015
The Company updated guidance for 2015 as follows:
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Revenue of between
$377.0 million and$387.0 million , consisting of Aerostructures revenue of between$325.0 million and$330.0 million and Engineering Services revenue of between$52.0 million and$57.0 million
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Operating profit of between
$20.0 million and $24.0 million
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Free cash flow of between
$10.0 million and$15.0 million
The Company raised overall revenue guidance due to new wins and increasing demand in the Aerostructures segment. Fewer opportunities for design revenue in Engineering Services partially offset the growth in Aerostructures.
Conference Call and Webcast Information
In connection with this release and as previously announced, LMI will hold a conference call today,
Visit http://ir.lmiaerospace.com/events.cfm to access a link to a live webcast of the call. A recording of the call will be available for a limited time on the Company's website after the call concludes.
Executive Stock Grant
In connection with LMI's offer of employment to
About
Cautionary Statements Regarding Forward-Looking Statements
This news release includes forward-looking statements, including statements related to LMI's strategy and outlook for 2015 and beyond, and other statements based on current management expectations, estimates and projections. Such forward-looking statements are not guarantees and are inherently subject to various risks and uncertainties that could cause actual results and events to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, difficulties implementing the Company's growth strategy, continued decline in demand in the Engineering Services segment, managing the increased leverage resulting from our notes and revolving credit facility, complying with debt covenants with respect to such indebtedness and competitive pressures, as well as those Risk Factors detailed in the Company's Annual Report on Form 10-K for the year
ended
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Condensed Consolidated Balance Sheets | ||
(Amounts in thousands, except share and per share data) | ||
(Unaudited) | ||
2015 |
2014 |
|
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 2,436 | $ 7,927 |
Trade accounts receivable, net | 61,088 | 58,234 |
Inventories | 123,196 | 114,279 |
Prepaid expenses and other current assets | 10,285 | 10,255 |
Deferred income taxes | 3,913 | 3,913 |
Total current assets | 200,918 | 194,608 |
Property, plant and equipment, net | 102,445 | 99,482 |
Goodwill | 86,784 | 86,784 |
Intangible assets, net | 48,761 | 50,940 |
Other assets | 9,659 | 10,622 |
Total assets | $ 448,567 | $ 442,436 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Accounts payable | $ 22,585 | $ 21,755 |
Accrued expenses | 25,631 | 26,072 |
Current installments of long-term debt and capital lease obligations | 3,544 | 3,424 |
Total current liabilities | 51,760 | 51,251 |
Long-term debt and capital lease obligations, less current installments | 270,765 | 265,554 |
Other long-term liabilities | 3,172 | 3,289 |
Deferred income taxes | 4,294 | 4,207 |
Total long-term liabilities | 278,231 | 273,050 |
Shareholders' equity: | ||
Common stock, |
264 | 262 |
Preferred stock, |
— | — |
Additional paid-in capital | 97,058 | 95,460 |
Accumulated other comprehensive loss | (169) | (170) |
Treasury stock, at cost, 33,934 and 28,396 shares at |
(432) | (359) |
Retained earnings | 21,855 | 22,942 |
Total shareholders' equity | 118,576 | 118,135 |
Total liabilities and shareholders' equity | $ 448,567 | $ 442,436 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
(Amounts in thousands, except share and per share data)(Unaudited) | ||||
Three Months Ended |
Six Months Ended |
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2015 | 2014 | 2015 | 2014 | |
Sales and service revenue | ||||
Product sales | $ 84,158 | $ 87,172 | $ 162,616 | $ 163,656 |
Service revenue | 13,392 | 18,765 | 27,409 | 38,032 |
Net sales | 97,550 | 105,937 | 190,025 | 201,688 |
Cost of sales and service revenue | ||||
Cost of product sales | 67,147 | 71,535 | 129,697 | 133,635 |
Cost of service revenue | 11,633 | 15,268 | 24,360 | 31,458 |
Cost of sales | 78,780 | 86,803 | 154,057 | 165,093 |
Gross profit | 18,770 | 19,134 | 35,968 | 36,595 |
Selling, general and administrative expenses | 12,392 | 13,810 | 25,002 | 27,154 |
Restructuring expense | 518 | 1,095 | 792 | 1,523 |
Income from operations | 5,860 | 4,229 | 10,174 | 7,918 |
Other (expense) income: | ||||
Interest expense | (5,556) | (13,595) | (11,148) | (17,854) |
Other, net | (75) | 168 | 47 | 280 |
Total other expense | (5,631) | (13,427) | (11,101) | (17,574) |
Income (loss) before income taxes | 229 | (9,198) | (927) | (9,656) |
(Benefit) provision for income taxes | (149) | (1,787) | 160 | (1,803) |
Net income (loss) | 378 | (7,411) | (1,087) | (7,853) |
Other comprehensive income (expense): | ||||
Change in foreign currency translation adjustment | 80 | 50 | 1 | 94 |
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of |
$ 0 | $ 360 | $ 0 | $ 278 |
Total comprehensive income (loss) | $ 458 | $ (7,001) | $ (1,086) | $ (7,481) |
Amounts per common share: | ||||
Net income (loss) per common share | $ 0.03 | $ (0.58) | $ (0.08) | $ (0.62) |
Net income (loss) per common share assuming dilution | $ 0.03 | $ (0.58) | $ (0.08) | $ (0.62) |
Weighted average common shares outstanding | 12,850,421 | 12,709,014 | 12,822,747 | 12,686,541 |
Weighted average dilutive common shares outstanding | 13,088,390 | 12,709,014 | 12,822,747 | 12,686,541 |
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Condensed Consolidated Statements of Cash Flows | ||
(Amounts in thousands) | ||
(Unaudited) | ||
Six Months Ended |
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2015 | 2014 | |
Operating activities: | ||
Net loss | $ (1,087) | $ (7,853) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 9,920 | 11,004 |
Deferred taxes | 87 | (210) |
Stock based compensation | 1,036 | 676 |
Debt issuance cost write-off | — | 8,340 |
Payments to settle interest rate derivatives | — | (793) |
Other non-cash items | (131) | (166) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,860) | (151) |
Inventories | (9,179) | 4,336 |
Prepaid expenses and other assets | 1,051 | 1,507 |
Current income taxes | 126 | (1,762) |
Accounts payable | 1,860 | (817) |
Accrued expenses | 52 | 829 |
Net cash provided by operating activities | 875 | 14,940 |
Investing activities: | ||
Additions to property, plant and equipment | (11,611) | (7,785) |
Proceeds from sale of property, plant and equipment | 159 | 981 |
Net cash used by investing activities | (11,452) | (6,804) |
Financing activities: | ||
Proceeds from issuance of debt | — | 250,000 |
Principal payments on long-term debt and notes payable | (1,169) | (224,227) |
Advances on revolving line of credit | 60,000 | 52,500 |
Payments on revolving line of credit | (53,500) | (79,500) |
Payments for debt issuance cost | (245) | (6,692) |
Other, net | — | (28) |
Net cash provided (used) by financing activities | 5,086 | (7,947) |
Net (decrease) increase in cash and cash equivalents | (5,491) | 189 |
Cash and cash equivalents, beginning of period | 7,927 | 1,572 |
Cash and cash equivalents, end of period | $ 2,436 | $ 1,761 |
Supplemental disclosure of noncash transactions: | ||
Defined contribution plan funding in company stock | $ 710 | $ 848 |
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Selected Non-GAAP Disclosures | ||||
(Amounts in thousands) | ||||
(Unaudited) | ||||
Three Months Ended |
Six Months Ended |
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2015 | 2014 | 2015 | 2014 | |
Non-GAAP Financial Information | ||||
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)(1): | ||||
Net income (loss) | $ 378 | $ (7,411) | $ (1,087) | $ (7,853) |
Income tax (benefit) expense | (149) | (1,787) | 160 | (1,803) |
Depreciation and amortization | 5,007 | 5,457 | 9,920 | 11,004 |
Stock based compensation | 852 | 540 | 1,759 | 1,022 |
Interest expense | 5,556 | 13,595 | 11,148 | 17,854 |
Restructuring expense | 518 | 1,095 | 792 | 1,523 |
Integration expense | 66 | 245 | 173 | 493 |
Other, net | 62 | 326 | (37) | 254 |
Adjusted EBITDA | $ 12,290 | $ 12,060 | $ 22,828 | $ 22,494 |
Free Cash Flow (2): | ||||
Net cash provided by operating activities | $ 10,150 | $ 4,925 | $ 875 | $ 14,940 |
Less net capital expenditures | (4,573) | (2,834) | (11,452) | (6,804) |
Free cash flow | $ 5,577 | $ 2,091 | $ (10,577) | $ 8,136 |
(1) The Company believes Adjusted EBITDA is a measure important to many investors as an indication of operating performance by the business. We feel this measure provides additional transparency to investors that augments but does not replace the GAAP reporting of net income and provides a good comparative measure. Adjusted EBITDA is not a measure of performance defined by GAAP and should not be used in isolation or as a substitute for the related GAAP measure of net income. | ||||
(2) The Company believes Free Cash Flow is a measure of the operating cash flow of the Company that is useful to investors. Free Cash Flow is a measure of cash generated by the Company for such purposes as repaying debt or funding acquisitions. Free Cash Flow is not a measure of performance defined by GAAP and should not be used in isolation or as a substitute for the related GAAP measure of cash provided by operating activities. |
CONTACT:Source:Cliff Stebe Chief Financial Officer, 636.946.6525
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