Form 8-K AROTECH CORP For: May 11
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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
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Date of Report (Date of earliest event reported):
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May 11, 2015
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AROTECH CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware
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0-23336
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95-4302784
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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1229 Oak Valley Drive, Ann Arbor, Michigan
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48108
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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(800) 281-0356
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(Former name or former address, if changed since last report)
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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 (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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SEC 873 (01/12)
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Potential persons who are to respond to the collection of
information contained in this form are not required to respond
unless the form displays a currently valid OMB control number.
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Item 2.02 Results of Operations and Financial Condition.
On May 11, 2015, Arotech Corporation (the “Registrant”) publicly disseminated an earnings release (the “Release”) announcing its financial results for the quarter ended March 31, 2015. A copy of the Release is attached as Exhibit 99.1 hereto.
The information included in the attached Exhibit 99.1 is being furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical information regarding the Registrant’s results of operations and financial condition as of and for the quarter ended March 31, 2015. In accordance with General Instructions B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On May 11, 2015, at the Annual Meeting of Stockholders of Arotech Corporation (the “Registrant”), the stockholders of the Registrant voted on the following proposals with the following results:
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1.
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Election of Directors.
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Votes For
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Votes Withheld
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|||||||
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Dr. Jay M. Eastman
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4,711,001 | 2,017,563 | ||||||
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Michael E. Marrus
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5,354,683 | 1,373,881 | ||||||
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Kenneth W. Cappell
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5,286,100 | 1,442,464 | ||||||
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(Directors whose terms of office continued after the meeting were Robert S. Ehrlich, Steven Esses, Seymour Jones and Richard I. Rudy)
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2.
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Ratifying the appointment of BDO USA, LLP as the Company’s independent accountants for the fiscal year ending December 31, 2015.
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Votes For
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Votes Against
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Abstentions
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| 17,284.230 | 366,547 | 728,914 | ||||||||
Item 9.01 Financial Statements and Exhibits.
As described above, the following Exhibits are furnished as part of this Current Report on Form 8-K:
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Exhibit
Number
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Description
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99.1
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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.
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AROTECH CORPORATION
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(Registrant)
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/s/ Steven Esses
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Name:
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Steven Esses
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Title:
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President and CEO
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Dated: May 12, 2015
Exhibit 99.1
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Corporate News
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FOR RELEASE AT 4PM ET MAY 11, 2015
Arotech Reports First Quarter Revenues of $24.2 Million; Adjusted EPS of $0.03
Reaffirms 2015 guidance for total revenue of $110 to $125 million, with adjusted earnings per share (Adjusted EPS) of $0.31 to $0.36;
Relocation of facilities from Alabama to South Carolina Expected to Contribute to EPS Going Forward
Ann Arbor, Michigan – May 11, 2015 – Arotech Corporation (NasdaqGM: ARTX) today announced financial results for its quarter ended March 31, 2015.
First Quarter 2015 Financial and Business Highlights:
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·
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Total revenues of $24.2 million, an increase of 8.2% compared to Q1 2014
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·
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Adjusted EPS of $0.03, compared to $0.09 in Q1 2014
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·
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Backlog of orders as of March 31, 2015 totaled approximately $63.4 million versus $51.9 million for the same time last year
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“Demand for more energy-efficient power systems and our advanced simulation and training solutions continues to reinforce our confidence in our outlook for full-year 2015,” commented Steven Esses, Arotech’s President and CEO. “With a solid backlog and strong visibility into our sales pipeline we are reaffirming our full-year guidance, despite some order slippage and typical seasonal headwinds that we experienced during the first quarter.
“Subsequent to the close of the first quarter we completed the relocation of all the operations of our Auburn, Alabama facility to our cutting-edge engineering and manufacturing facilities in Charleston, South Carolina,” Mr. Esses added. “This consolidation into a single facility will enable us to both lower overhead costs in excess of $1.25 million on an annualized basis beginning in 2016 and enable collaboration across all facets of the Power Systems division, unleashing synergies from the acquisition of UEC.”
Mr. Esses continued, “The integration and consolidation of our Power Systems division facilities provides our customers with expanded and comprehensive Energy Storage and Power Management design, integration and manufacturing capabilities. The collaboration will optimize product development to provide a broader range of high performing and affordable power solutions. Programs, such as the US Army’s SWIPES and the Marine Corps’ GREENS and MEHPS, will all benefit from the optimization, and we expect to realize continued improvements as a result of this co-location.”
First Quarter Results
Revenues for the first quarter were $24.2 million, compared to $22.4 million for the comparable period in 2014, an increase of 8.2%. The year-over-year increase was driven, in large part, by the acquisition of UEC in the second quarter of 2014.
Gross profit for the quarter was $6.9 million, or 28.5% of revenues, compared to $7.3 million, or 32.8% of revenues, for the prior year period.
The operating loss for the first quarter of 2015 was $(827,000), compared to operating income of $1.3 million for the corresponding period in 2014. Operating costs and expenses in the quarter grew by $4.0 million compared to the corresponding quarter in 2014. A large portion of the increase was due to the inclusion of the operating costs and expenses of UEC in the results for the first quarter of 2015.
Total other income for the first quarter of 2015 was $584,000 compared to a $(87,000) loss for the corresponding period in 2014. The improvement was due to the sale of the former Armor building in Alabama.
The Company’s net loss from continuing operations for the first quarter was $(483,000), or ($0.02) per basic and diluted share, compared to net income of $1.0 million, or $0.05 per basic and diluted share, for the corresponding period last year.
Adjusted Earnings per Share (Adjusted EPS) for the quarter was $0.03 compared to $0.09 for the corresponding period in 2014. Arotech believes that information concerning Adjusted EPS enhances overall understanding of its current financial performance. Arotech computes Adjusted EPS, which is a non-GAAP financial measure, as reflected in the table below.
Balance Sheet Metrics
As of March 31, 2015, the Company had $12.0 million in cash and cash equivalents and $234,000 in restricted collateral deposits, as compared to December 31, 2014, when the Company had $11.3 million in cash and $236,000 in restricted collateral deposits.
As of December 31, 2014, Arotech has net operating loss carryforwards for U.S. federal income tax purposes of $35.0 million, which are available to offset future taxable income, if any, expiring in 2021 through 2032. Utilization of U.S. net operating losses is subject to annual limitations due to provisions of the Internal Revenue Code of 1986 and similar state provisions. The Company accrued $150,000 in non cash tax expenses in the first quarter of 2015, reflecting the uncertainty of the deductibility of intangible expenses for federal income tax purposes.
The Company ended the quarter ended March 31, 2015 with total debt of $23.6 million, consisting of $3.8 million in short-term bank debt under its credit facility, $4.3 million in short-term debt and $15.5 million in long-term loans. This is in comparison to December 31, 2014, when the Company had total debt of $21.3 million, consisting of $4.4 million in short-term debt and $16.9 million in long-term loans.
The Company also had $6.7 million in available, unused bank lines of credit with its primary bank as of March 31, 2015, under a $15.0 million credit facility through its FAAC subsidiary, which was secured by the assets of the Company’s FAAC and UEC subsidiaries and guaranteed by Arotech.
The Company had a current ratio (current assets/current liabilities) of 2.0, compared with the December 31, 2014 current ratio of 2.0.
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Business Outlook
The Company is reaffirming its 2015 guidance for total revenue of $110 to $125 million, with adjusted earnings per share (Adjusted EPS) of $0.31 to $0.36. This outlook includes only organic contribution, and does not take any potential acquisition activity into account. Adjusted EPS is based on the Company’s capitalization at the end of 2014 of approximately 25 million shares outstanding. The financial guidance provided is as of today and Arotech undertakes no obligation to update its estimates in the future.
Conference Call
The Company will host a conference call Tuesday, May 12, 2015 at 9:30 a.m. ET. To access the conference call interested investors should dial:
US: 1-888-428-9480
International: + 1-719-325-2323
The conference call will also be broadcast live as a listen-only webcast on the investor relations section of Arotech’s website at http://www.arotech.com/.
The online webcast will be archived on the Arotech’s website for at least 90 days and a telephonic playback of the conference call will also be available by calling 1-877-870-5176 within the U.S. and 1-858-384-5517 internationally. The telephonic playback will be available beginning at 12:00 pm Eastern time on Tuesday, May 12, 2015, and continue through 11:59 pm Eastern time on Tuesday, May 19, 2015. The replay passcode is 6211121.
About Arotech Corporation
Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security markets, including multimedia interactive simulators/trainers and advanced battery solutions, innovative energy management and power distribution technologies, and zinc-air and lithium batteries and chargers. Arotech operates two major business divisions: Training and Simulation, and Power Systems.
Arotech is incorporated in Delaware, with corporate offices in Ann Arbor, Michigan, and research, development and production subsidiaries in Alabama, Michigan, South Carolina, and Israel. For more information on Arotech, please visit Arotech’s website at www.arotech.com.
Except for the historical information herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary materially. These risks and uncertainties include, but are not limited to, risks relating to: product and technology development; the uncertainty of the market for Arotech's products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders (including as a result of budgetary cuts resulting from automatic sequestration under the Budget Control Act of 2011); and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and other filings with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company’s website above does not constitute incorporation of any of the information thereon into this press release.
Investor Relations Contacts:
Brett Maas / Rob Fink
Hayden IR
(646) 536.7331 / (646) 415.8972
3
CONDENSED CONSOLIDATED BALANCE SHEET SUMMARY (UNAUDITED)
(U.S. Dollars)
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March 31,
2015
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December 31,
2014
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$ | 12,193,960 | $ | 11,528,212 | ||||
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Trade receivables
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16,513,109 | 17,595,811 | ||||||
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Unbilled receivables
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14,454,220 | 15,937,060 | ||||||
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Other accounts receivable and prepaid
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1,709,861 | 1,155,548 | ||||||
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Inventories
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9,091,854 | 9,811,783 | ||||||
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Total current assets
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53,963,004 | 56,028,414 | ||||||
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LONG TERM ASSETS:
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Property and equipment, net
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6,395,904 | 6,462,949 | ||||||
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Other long term assets
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4,960,954 | 4,985,400 | ||||||
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Intangible assets, net
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10,979,592 | 11,840,365 | ||||||
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Goodwill
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45,287,756 | 45,422,219 | ||||||
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Total long term assets
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67,624,206 | 68,710,933 | ||||||
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Total assets
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$ | 121,587,210 | $ | 124,739,347 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES:
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Trade payables
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$ | 4,664,424 | $ | 6,772,082 | ||||
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Other accounts payable and accrued expenses
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7,636,645 | 9,105,214 | ||||||
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Current portion of long term debt
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4,330,839 | 4,380,730 | ||||||
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Short term bank credit
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3,760,000 | 33,238 | ||||||
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Deferred revenues
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6,489,188 | 7,826,178 | ||||||
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Total current liabilities
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26,881,096 | 28,117,442 | ||||||
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LONG TERM LIABILITIES:
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Accrued Israeli statutory/contractual severance pay
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6,975,295 | 7,051,630 | ||||||
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Long term portion of debt
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15,489,096 | 16,934,360 | ||||||
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Other long-term liabilities
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6,455,591 | 6,280,467 | ||||||
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Total long-term liabilities
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28,919,982 | 30,266,457 | ||||||
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Total liabilities
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55,801,078 | 58,383,899 | ||||||
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STOCKHOLDERS’ EQUITY:
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Total stockholders’ equity (net)
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65,786,122 | 66,355,448 | ||||||
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Total liabilities and stockholders’ equity
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$ | 121,587,210 | $ | 124,739,347 | ||||
4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(U.S. Dollars, except share data)
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Three months ended March 31,
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2015
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2014
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Revenues
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$ | 24,226,708 | $ | 22,382,800 | ||||
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Cost of revenues
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17,329,479 | 15,043,311 | ||||||
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Research and development expenses
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1,094,264 | 995,513 | ||||||
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Selling and marketing expenses
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1,225,416 | 1,431,768 | ||||||
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General and administrative expenses
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4,543,893 | 3,538,673 | ||||||
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Amortization of intangible assets
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860,773 | 74,119 | ||||||
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Total operating costs and expenses
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25,053,825 | 21,083,384 | ||||||
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Operating income (loss)
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(827,117 | ) | 1,299,416 | |||||
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Other income
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911,429 | 32,113 | ||||||
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Financial income (expense), net
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(327,608 | ) | (119,001 | ) | ||||
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Total other income (expense)
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583,821 | (86,888 | ) | |||||
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Income (loss) before income tax expense
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(243,296 | ) | 1,212,528 | |||||
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Income tax expense
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239,381 | 198,436 | ||||||
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Net income (loss)
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(482,677 | ) | 1,014,092 | |||||
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Other comprehensive income, net of income tax
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Foreign currency translation adjustment
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(245,514 | ) | (46,083 | ) | ||||
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Comprehensive income (loss)
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$ | (728,191 | ) | $ | 968,009 | |||
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Basic net income (loss) per share
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$ | (0.02 | ) | $ | 0.05 | |||
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Diluted net income (loss) per share
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$ | (0.02 | ) | $ | 0.05 | |||
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Weighted average number of shares used in computing basic net income/loss per share
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23,305,679 | 19,572,668 | ||||||
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Weighted average number of shares used in computing diluted net income/loss per share
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23,305,679 | 20,175,408 | ||||||
5
Calculation of Adjusted Earnings Per Share
($ in thousands, except per share data)
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Three Months ended March 31,
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Three Months ended March 31,
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2015
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2014
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Revenue (GAAP measure)
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$ | 24,227 | $ | 22,383 | ||||
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Net income (loss) (GAAP measure)
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$ | (483 | ) | $ | 1,014 | |||
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Adjustments:
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Amortization
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861 | 74 | ||||||
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Stock compensation
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182 | 129 | ||||||
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Non-cash tax
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150 | 150 | ||||||
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EFB transition /UEC acquisition costs
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803 | 535 | ||||||
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Armor building sale
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(895 | ) | – | |||||
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Net adjustments
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$ | 1,101 | $ | 888 | ||||
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Adjusted net income
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$ | 618 | $ | 1,902 | ||||
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Number of shares
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23,306 | 20,175 | ||||||
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Adjusted EPS
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$ | 0.03 | $ | 0.09 | ||||
########
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