Form 8-K API Technologies Corp. For: Jan 29

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January 29, 2015 4:18 PM EST

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�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

�

FORM 8-K

�

Current Report

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January�29, 2015

�

API TECHNOLOGIES CORP.

(Exact Name of registrant as specified in its charter)

�

Commission File Number: 001-35214

�

98-0200798

(State or other jurisdiction

of incorporation)

�

(IRS Employer

Identification No.)

�


4705 S. Apopka Vineland Rd. Suite 210 Orlando, FL	�	32819
(Address of principal executive offices)	�	(zip code)

(855) 294-3800

(Registrant�s telephone number, including area code)

�

(Former Name or Former Address, if Changed Since Last Report)

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

�

�	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

�

�	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17�CFR�240.14a-12)

�

�	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17�CFR 240.14d-2(b))

�

�	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17�CFR 240.13e-4(c))

�

Items to be Included in this Report

�

Item�2.02.

Results of Operations and Financial Condition.

On January�29, 2015, API Technologies Corp. (the �Company�) issued a press release announcing its financial results for the three and twelve months ended November�30, 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein.

The information in this Item�2.02, including the exhibit, shall not be deemed �filed� for purposes of Section�18 of the Securities Exchange Act of 1934, as amended (the �Exchange Act�), or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

�

Item�9.01.

Financial Statements and Exhibits.

�

(d)

Exhibits

�


Exhibit Number	��	Exhibit Title

99.1	��	Press Release dated January 29, 2015.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

�


Date: January�29, 2015	�	�	API TECHNOLOGIES CORP.

	�	�	By:	�	/s/ Claudio Mannarino
	�	�		�	Claudio Mannarino
	�	�		�	Senior Vice President and Chief Financial Officer

Exhibit 99.1

�

LOGO

API Technologies Reports Results for the Fiscal Fourth Quarter Ended

November�30, 2014

�

Q4 revenue of $57.8 million

�

Q4 GAAP Operating Income of $2.2 million; Non-GAAP Operating Income of $3.5 million

�

Q4 cash from operations of $3.3 million

�

FY14 GAAP Operating Income of $4.6 million; Non-GAAP Operating Income of $10.3 million

ORLANDO, Fla.� (PR Newswire) � January�29, 2015 -�API Technologies Corp. (NASDAQ: ATNY) (�API� or the �Company�), a leading provider of high performance RF, microwave, millimeterwave, power, and security solutions, today announced results for the fiscal fourth quarter ended November�30, 2014.

�During fiscal year 2014 we continued to execute on our operational and business strategies, resulting in operating income of $4.6 million � a $6.1 million increase over prior year, along with double-digit EBITDA margin and positive cash flow. Moreover, the execution of our product roadmap and successful launch of technologically advanced products continue to attract new customers and industry recognition,� said Bel Lazar, President and Chief Executive Officer, API Technologies.

Results for the Quarter Ended November�30, 2014

API Technologies reported fiscal fourth quarter revenue of $57.8 million.

For the fiscal fourth quarter of 2014, GAAP gross margin as a percentage of sales was 23.4%; non-GAAP gross margin was 24.9%.

The Company posted a net loss of $1.2 million for the fiscal fourth quarter. Adjusted EBITDA for the fiscal fourth quarter was $7.2 million or 12.5% of revenue.

Results for the Twelve Months Ended November�30, 2014

API Technologies reported revenue of $226.9 million for the twelve months ended November�30, 2014. GAAP gross margin was 23.0% for the twelve -month period ended November�30, 2014. Non-GAAP gross margin was 24.6% for the same period.

The Company posted a net loss of $18.9 million for the twelve months ended November�30, 2014, which included $10.9 million of amortization of note discounts and deferred financing charges incurred in the fiscal 2014 second quarter. Adjusted EBITDA for the twelve months ended November�30, 2014 was $25.7 million or 11.3% of revenue.

Conference Call

API Technologies will host a conference call to review the Company�s fiscal fourth quarter results today, January�29, at 4:45 p.m. Eastern Time. Bel Lazar, President and Chief Executive Officer, and Claudio Mannarino, Senior 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/investor-relations. Recorded replays of the webcast will be available on the Company�s Investor Relations App, for 30 days on the Company�s website, and by telephone at 1-877-344-7529 or 1-412-317-0088, replay passcode #10058806, beginning 6 p.m. Eastern Standard Time on January�29, 2015.

The API Technologies Investor Relations App is available 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 (NASDAQ: ATNY) is an innovative designer and manufacturer of high performance systems, subsystems, modules, and components for technically demanding RF, microwave, millimeterwave, electromagnetic, power, and security applications.�A high-reliability technology pioneer with over 70 years of heritage, API Technologies products are used by global defense, industrial, and commercial customers in the areas of commercial aerospace, wireless communications, medical, oil and gas, electronic warfare, unmanned systems, C4ISR, missile defense, harsh environments, satellites, and space. Learn more about API Technologies and our products at www.apitech.com.

Non-GAAP Financial Information

In this press release, API has provided the non-GAAP financial measures for Adjusted EBITDA from continuing operations at the Company level and segment level, non-GAAP gross margin, and non-GAAP operating income. Non-GAAP gross margin excludes restructuring charges and certain other adjustments described in the reconciliation table and non-GAAP Adjusted EBITDA from continuing operations (earnings from continuing operations before interest, taxes, depreciation and amortization) excludes restructuring charges, acquisition and divestiture-related charges, inventory provisions, stock-based compensation expenses, amortization of note discounts and deferred financing costs, and certain other adjustments described in the reconciliation table. API has also provided the non-GAAP financial measure for Adjusted EBITDA before corporate overhead, which is the Adjusted EBITDA number less general corporate overhead. Non-GAAP operating income excludes restructuring charges and certain other adjustments described in the reconciliation table. Management believes the supplemental non-GAAP presentations provide investors an additional analytical tool for understanding the Company�s financial performance by excluding from operating results the impact of items that management believes do not reflect the Company�s core operating performance. 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. Accordingly, investors are cautioned that these non-GAAP measures should not be construed as an alternative to net earnings or loss or gross margin 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, including without limitation, reductions in government defense spending; government regulations; our ability to integrate and consolidate our operations; our ability to expand our operations in both new and existing markets; and the ability of our review of strategic alternatives to maximize stockholder value. 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.

Contact:

Claudio Mannarino

Senior Vice President and Chief Financial Officer

+1 855-294-3800

[email protected]

Tara Flynn Condon

Vice President, Corporate Development�& Marketing

+1 908-546-3903

[email protected]

API Technologies Corp.

Financial Results

For the Three and Twelve Months Ended November�30, 2014 and 2013

Consolidated Statements of Operations (unaudited)

in thousands USD

�

��

For the Three
Months�Ended
November 30,
2014

�

For the Three
Months�Ended
November 30,
2013

�

For the Twelve
Months�Ended
November 30,
2014

�

For the Twelve
Months�Ended
November 30,
2013

�

Revenue, net

��

57,846

��

�

59,137

��

�

226,857

��

�

244,300

��

Cost of revenues

��

�

Cost of revenues

��

�

44,194

��

�

48,942

��

�

173,697

��

�

192,279

��

Restructuring charges

��

�

120

��

�

1,223

��

�

1,064

��

�

1,405

��

�

Total cost of revenues

��

�

44,314

��

�

50,165

��

�

174,761

��

�

193,684

��

�

Gross profit

��

�

13,532

��

�

8,972

��

�

52,096

��

�

50,616

��

�

Operating expenses

��

�

General and administrative

��

�

5,500

��

�

6,169

��

�

23,069

��

�

25,873

��

Selling expenses

��

�

3,505

��

�

3,752

��

�

14,541

��

�

15,015

��

Research�and development

��

�

2,055

��

�

2,305

��

�

8,270

��

�

9,190

��

Business acquisition and related charges

��

�

104

��

�

(129

)�

�

479

��

�

849

��

Restructuring charges

��

�

154

��

�

529

��

�

1,153

��

�

1,212

��

�

��

�

11,318

��

�

12,626

��

�

47,512

��

�

52,139

��

�

Operating income (loss)

��

�

2,214

��

�

(3,654

)�

�

4,584

��

�

(1,523

)�

Other expense (income), net

��

�

Interest expense, net

��

�

3,179

��

�

2,301

��

�

11,765

��

�

14,208

��

Amortization of note discounts and deferred financing costs

��

�

��

�

1,224

��

�

10,940

��

�

13,020

��

Other expense (income), net

��

�

(388

)�

�

172

��

�

(477

)�

�

(14

)�

��

�

��

�

2,814

��

�

3,697

��

�

22,228

��

�

27,214

��

�

Loss from continuing operations before income taxes

��

�

(600

)�

�

(7,351

)�

�

(17,644

)�

�

(28,737

)�

Expense (benefit) for income taxes

��

�

572

��

�

(2,019

)�

�

1,270

��

�

(5,335

)�

��

�

Loss from continuing operations, net of income taxes

��

�

(1,172

)�

�

(5,332

)�

�

(18,914

)�

�

(23,402

)�

Income (loss) from discontinued operations, net of income taxes

��

�

��

�

(1,911

)�

�

��

�

16,174

��

�

Net loss

��

(1,172

)�

�

(7,243

)�

�

(18,914

)�

�

(7,228

)�

Accretion on preferred stock

��

�

��

��

�

(387

)�

�

(393

)�

�

(1,057

)�

��

�

Net loss attributable to common shareholders

��

(1,172

)�

�

(7,630

)�

�

(19,307

)�

�

(8,285

)�

��

�

Loss per share from continuing operations�Basic and diluted

��

(0.02

)�

�

(0.11

)�

�

(0.35

)�

�

(0.44

)�

Income (loss) per share from discontinued operations�Basic and diluted

��

0.00

��

�

(0.03

)�

�

0.00

��

�

0.29

��

�

Net loss per share�Basic and diluted

��

(0.02

)�

�

(0.14

)�

�

(0.35

)�

�

(0.15

)�

��

�

Weighted average shares outstanding

��

�

Basic

��

�

55,461,217

��

�

55,426,635

��

�

55,448,862

��

�

55,405,764

��

Diluted

��

�

55,461,217

��

�

55,426,635

��

�

55,448,862

��

�

55,405,764

��

Consolidated Balance Sheets (audited)

in thousands USD

�


�	��	November�30, 2014		�	�	November�30, 2013		�
Assets	��				�
Current	��				�
Cash and cash equivalents	��	$	8,258	��	�	$	6,351	��
Restricted cash	��	�	��	��	�	�	1,500	��
Accounts receivable, net	��	�	38,657	��	�	�	39,751	��
Inventories, net	��	�	54,718	��	�	�	58,218	��
Deferred income taxes	��	�	561	��	�	�	2,426	��
Prepaid expenses and other current assets	��	�	1,592	��	�	�	2,445	��
	��	�	�	�	�	�	�	�
	��	�	103,786	��	�	�	110,691	��
Fixed assets, net	��	�	30,424	��	�	�	35,231	��
Fixed assets held for sale	��	�	150	��	�	�	150	��
Goodwill	��	�	116,770	��	�	�	116,770	��
Intangible assets, net	��	�	29,848	��	�	�	38,780	��
Other non-current assets	��	�	1,862	��	�	�	2,956	��
	��	�	�	�	�	�	�	�
Total assets	��	$	282,840	��	�	$	304,578	��
	��	�	�	�	�	�	�	�

Liabilities, Redeemable Preferred Stock and Shareholders� Equity	��				�
Current	��				�
Accounts payable and accrued expenses	��	$	27,907	��	�	$	32,217	��
Deferred revenue	��	�	2,279	��	�	�	3,519	��
Current portion of long-term debt	��	�	10,097	��	�	�	8,155	��
	��	�	�	�	�	�	�	�
	��	�	40,283	��	�	�	43,891	��
Deferred income taxes	��	�	4,575	��	�	�	5,517	��
Other long-term liabilities	��	�	1,216	��	�	�	1,135	��
Long-term debt, net of current portion and discount	��	�	118,214	��	�	�	96,606	��
Deferred gain	��	�	7,788	��	�	�	��	��
	��	�	�	�	�	�	�	�
	��	�	172,076	��	�	�	147,149	��
	��	�	�	�	�	�	�	�

Commitments and contingencies	��				�
Redeemable Preferred Stock	��	�	��	��	�	�	26,326	��

Shareholders� equity	��				�
Common stock	��	�	55	��	�	�	55	��
Special voting stock	��	�	��	��	�	�	��	��
Additional paid-in capital	��	�	327,846	��	�	�	327,901	��
Common stock subscribed but not issued	��	�	2,373	��	�	�	2,373	��
Accumulated deficit	��	�	(220,105	)�	�	�	(200,798	)�
Accumulated other comprehensive income	��	�	595	��	�	�	1,572	��
	��	�	�	�	�	�	�	�
	��	�	110,764	��	�	�	131,103	��
	��	�	�	�	�	�	�	�
Total Liabilities, Redeemable Preferred Stock and Shareholders� Equity	��	$	282,840	��	�	$	304,578	��
	��	�	�	�	�	�	�	�

Consolidated Adjusted EBITDA

in thousands USD

The following table reconciles three and twelve months GAAP loss from continuing operations to non-GAAP Adjusted EBITDA and Adjusted EBITDA less corporate overhead.

�


�	��	Three�(3)�months ended�November�30, 2014		�	�	Twelve�(12)�Months ended�November�30, 2014		�

Loss from continuing operations	��	$	(1,172	)�	�	$	(18,914	)�
Adjustments	��				�
Interest expense, net	��	�	3,179	��	�	�	11,765	��
Amortization of note discounts and deferred financing costs	��	�	23	��	�	�	10,940	��
Depreciation and amortization	��	�	3,695	��	�	�	15,965	��
Income taxes	��	�	572	��	�	�	1,270	��
Restructuring charges	��	�	274	��	�	�	2,217	��
Acquisition related charges	��	�	104	��	�	�	479	��
Other adjustments (A)	��	�	531	��	�	�	2,019	��
	��	�	�	�	�	�	�	�

Total Adjusted EBITDA	��	$	7,206	��	�	$	25,741	��
	��	�	�	�	�	�	�	�

Total Adjusted EBITDA percentage	��	�	12.5	%�	�	�	11.3	%�

Corporate overhead	��	$	1,497	��	�	$	6,373	��

Adjusted EBITDA before corporate overhead	��	$	8,703	��	�	$	32,114	��
	��	�	�	�	�	�	�	�

Adjusted EBITDA less corporate overhead percentage	��	�	15.0	%�	�	�	14.2	%�

�

(A)	Other adjustments primarily include inventory provisions, stock based compensation, franchise taxes, financing and other adjustments, lease payments for the State College, Pennsylvania facility, foreign exchange losses, and change in benefits liability.

Additional Adjusted EBITDA Reconciliations by Segment from Continuing Operations

in thousands USD

�

Three Months Ending

November�30, 2014

��

SSC

�

SSIA

�

EMS

�

Corporate

�

Total

�

��

�

Revenue

��

41,645

��

�

5,307

��

�

10,894

��

�

��

��

�

57,846

��

Income (loss) from continuing operations

��

�

(1,172

)�

Adjustments

��

�

Interest expense, Net

��

�

3,179

��

Amortization of note discounts and deferred financing costs

��

�

��

Depreciation and amortization

��

�

3,695

��

Income taxes

��

�

572

��

Restructuring charges

��

�

274

��

Acquisition related charges

��

�

104

��

Other adjustments (A)

��

�

531

��

Add-Back Total

��

�

8,378

��

�

Adjusted EBITDA from continuing operations

��

6,290

��

�

990

��

�

(74

)�

�

��

��

�

7,206

��

�

Adjusted EBITDA Margin from continuing operations

��

�

15.1

%�

�

18.7

%�

�

(0.7

%)�

�

0.0

%�

�

12.5

%�

��

�

(A)	Other adjustments primarily include inventory provisions, stock based compensation, franchise taxes, financing�& other adjustments, and lease payments for the State College, Pennsylvania facility.

Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin

$ amounts in thousands USD

�


�	��	Three�Months�Ended November�30, 2014		�	�	Twelve�Months�Ended November�30, 2014		�

Revenue	��	$	57,846	��	�	$	226,857	��
Gross Profit	��	�	13,532	��	�	�	52,096	��
GAAP Gross Margin %	��	�	23.4	%�	�	�	23.0	%�
Restructuring and other adjustments (A)	��	�	864	��	�	�	3,672	��
Adjusted Gross profit	��	�	14,396	��	�	�	55,768	��
Adjusted Gross margin %	��	�	24.9	%�	�	�	24.6	%�

�

(A)	Other adjustments primarily include inventory provisions.

Reconciliation of GAAP Operating Income to Non-GAAP Operating Income

$ amounts in thousands USD

�


�	��	Three�Months�Ended November�30, 2014		�	��	Twelve�Months�Ended November�30, 2014		�

Operating Income	��	$	2,214	��	��	$	4,584	��
Restructuring and other adjustments (A)	��	�	1,266	��	��	�	5,721	��
Adjusted Operating Income	��	�	3,480	��	��	�	10,305	��

�

(A)	Other adjustments primarily include inventory provisions, acquisition related charges and stock based compensation expense.

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