Flanders Corporation Reports Third Quarter 2009 Financial Results
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Lowered Operating Expenses 15% Compared to Third Quarter 2008
Delivered $4.6 Million in Cash Flows From Operations
Delivered $4.8 Million in EBITDA, an Increase of 44% Over
Third Quarter 2008
WASHINGTON, N.C., Nov. 2, 2009 (GLOBE NEWSWIRE) -- Flanders Corporation (Nasdaq: FLDR) reported financial results for the third quarter ended September 30, 2009.
Flanders Corporation's Chairman, president and CEO Harry Smith said: "Our third quarter results continue to reflect our positive momentum and validate the Flanders' strategy. Although continuing lower temperatures nationwide and soft conditions in commercial markets caused orders to be softer than originally expected, we posted solid results for the third quarter in a row. Recent awards from the MOX project further underscore Flanders' position as a leader in the industry."
Financial Summary - Third Quarter 2009
Revenue for the third quarter 2009 was $60.4 million, compared to $61.1 million in the third quarter 2008. Gross margin for the third quarter was 18%, compared to 18% in the third quarter 2008. The third quarter 2009 net income was $1.8 million, or $0.07 per diluted share. This compares to the third quarter of 2008 net income of $.9 million, or $0.03 per diluted share. EBITDA for the third quarter 2009 was $4.8 million, compared to $3.3 million in the third quarter of 2008.
Management uses some measures not in accordance with generally accepted accounting principles (GAAP) to evaluate the results of the company's operations and believes earnings before interest, taxes, extraordinary items, depreciation and amortization (EBITDA) provides a useful measure of operations.
Flanders' Chief Financial Officer John Oakley said: "We continue to make operational improvements, resulting in progress in the management of our working capital which significantly contributed to our $4.6 million of cash flows from operations in the quarter. Our supply chain improvements continue to post results, however product mix and pricing pressure in both our retail and commercial markets impacted gross margin. Reductions in operating expenses led to EBITDA of $4.8 million, a growth of $1.5 million compared to third quarter 2008. Looking ahead, we are refining our revenue guidance as being between $225 million and $235 million for 2009."
Financial Summary - Nine Months Ended September 30, 2009
Revenue for the nine months ended September 30, 2009 was $167.2 million, compared to $167.5 million for the same period a year ago. Gross margin for the period was 20%, compared to 17% for the same period a year ago. Year-to-date net income was $6.0 million, or $0.23 per diluted share, compared to net income of $10.2 million, which included an $8.3 million gain for extraordinary items, or $0.39 per diluted share for the same period a year ago. EBITDA for the period was $14.9 million, compared to $9.1 million for the same period a year ago.
Financial Outlook - Full Year 2009
Management continues to expect the company to be profitable and deliver positive EBITDA for 2009. The company is refining its previously stated 2009 revenue guidance to be between $225 million and $235 million.
Recent Corporate Highlights
* Awarded $15.5 million for filtration containment systems
and an additional $7.6 million for glove boxes and associated
equipment from Shaw AREVA MOX Services, LLC in September. In
2009, the company has received $31.7 million in purchase order
awards related to this project.
Conference Call
Chairman, president and CEO Harry Smith and CFO John Oakley are scheduled to conduct a conference call and simultaneous webcast at 11:00 a.m. ET on November 2, 2009 to review these results in more detail. To access the call in the U.S., please dial 866-425-6192, and for international callers dial 973-409-9253 approximately 10 minutes prior to the start of the conference call. The conference ID will be 38123746. The conference call will also be broadcast live over the Internet and available for replay for 30 days at the company's website, www.flanderscorp.com. A telephone replay will be available until midnight Eastern Time on November 8th by dialing 800-642-1687 or 706-645-9291 and entering pass code 38123746.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this press release other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things: statements and assumptions relating to future growth, as well as management's short-term and long-term performance goals; statements regarding anticipated order patterns from our customers or the anticipated economic conditions of the industries and markets that we serve; statements related to the performance of the U.S. and other economies generally; statements relating to the anticipated effects on results of operations or financial condition from recent and expected developments or events; statements relating to the Flanders' business and growth strategies; and any other statements or assumptions that are not historical facts. Flanders believes that its expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause Flanders' actual results, performance or achievements, or industry results, to differ materially from the Flanders' expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the Flanders' past results of operations do not necessarily indicate its future results. These and other uncertainties are discussed in the "Risk Factors" section of the company's 2008 Form 10-K. The future results of Flanders may fluctuate as a result of these and other risk factors detailed from time to time in the company's filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release. Except as otherwise required by applicable laws, Flanders undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this press release, including projected sales and profit levels for any business segment in any given quarter, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.
About Flanders
Flanders is a leading air filtration products manufacturer. Flanders' products are utilized by many industries, including those associated with commercial and residential heating, ventilation and air conditioning systems, semiconductor manufacturing, ultra-pure materials, biotechnology, pharmaceuticals, synthetics, nuclear power and nuclear materials processing.
For further information on Flanders and its products, visit its web site at www.flanderscorp.com or contact John Oakley at 252-946-8081.
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
ASSETS 2009 2008
---------------------------------------------------------------------
(unaudited)
Current assets
Cash and cash equivalents $ 1,948 $ 404
Receivables:
Trade, less allowance:
9/30/2009 $3,006; 12/31/2008 $3,683 43,325 37,682
Other 588 280
Inventories 29,311 31,549
Deferred taxes 3,550 4,285
Income Taxes 8,513 10,048
Other current assets 4,914 4,714
-------- --------
Total current assets 92,149 88,962
Property and equipment, less accumulated
depreciation: 9/30/2009 $57,564; 12/31/2008
$55,520 70,989 57,156
Intangible assets, less accumulated amortization:
9/30/2009 $1,495; 12/31/2008 $1,449 295 295
Notes Receivable and Other Assets 14,605 14,604
-------- --------
$178,038 $161,017
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------------------------------
Current liabilities
Current maturities of long-term debt and capital
lease obligations $ 2,314 $ 1,307
Accounts payable 24,047 22,795
Accrued expenses 11,871 13,517
Other current liabilities 6,179 6,179
-------- --------
Total current liabilities 44,411 43,798
Long-term capital lease obligations, less
current maturities 173 554
Long-term debt, less current maturities 38,901 29,611
Long-term liabilities, other 3,851 4,286
Commitments and contingencies
Stockholders' equity
Preferred stock, $.001 par value, 10,000 shares
authorized; none issued -- --
Common stock, $.001 par value; 50,000 shares
authorized; issued and outstanding: 26,133 and
25,524 shares at September 30, 2009 and
December 31, 2008, respectively 26 26
Additional paid-in capital 88,943 87,253
Accumulated other comprehensive loss (995) (1,231)
Retained earnings (deficit) 2,728 (3,280)
-------- --------
90,702 82,768
-------- --------
$178,038 $161,017
======== ========
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Net sales $ 60,426 $ 61,070 $167,173 $167,533
Cost of goods sold 49,445 50,252 133,689 139,495
-------- -------- -------- --------
Gross profit 10,981 10,818 33,484 28,038
Operating expenses 8,034 9,418 24,128 28,007
-------- -------- -------- --------
Operating income 2,947 1,400 9,356 31
Nonoperating income (expense):
Other income, net 451 588 1,353 4,633
Interest expense (291) (498) (876) (1,623)
-------- -------- -------- --------
160 90 477 3,010
-------- -------- -------- --------
Earnings before income taxes
and extraordinary item 3,107 1,490 9,833 3,041
Provision for income taxes 1,337 596 3,825 1,216
-------- -------- -------- --------
Income before extraordinary
item 1,770 894 6,008 1,825
Extraordinary gain on Fire
(net of taxes) -- -- -- 8,335
-------- -------- -------- --------
Net earnings $ 1,770 $ 894 $ 6,008 $ 10,160
======== ======== ======== ========
Income before extraordinary
item Basic earnings per share $ 0.07 $ 0.03 $ 0.23 $ 0.07
Extraordinary item $ -- $ -- $ -- $ 0.32
-------- -------- -------- --------
Net earnings per share $ 0.07 $ 0.03 $ 0.23 $ 0.39
======== ======== ======== ========
Income before extraordinary
item Diluted earnings
per share $ 0.07 $ 0.03 $ 0.23 $ 0.07
Extraordinary item $ -- $ -- $ -- $ 0.32
-------- -------- -------- --------
Net earnings per share $ 0.07 $ 0.03 $ 0.23 $ 0.39
======== ======== ======== ========
Weighted average common shares
outstanding
Basic 25,928 25,724 25,660 25,724
======== ======== ======== ========
Diluted 25,994 26,184 25,687 26,178
======== ======== ======== ========
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net earnings $ 1,770 $ 894 $ 6,008 $ 10,160
Adjustments to reconcile net
earnings to net cash provided
by (used in) operating
activities:
Depreciation and amortization
expense 1,419 1,358 4,150 4,483
Provision for bad debts 552 287 2,011 1,311
Extraordinary Gain (net
of taxes) -- -- -- (8,335)
Compensation expense -- -- 45 175
Tax impact of stock options
exercised (1,645) -- (1,645) --
Deferred gain (18) -- (42) --
Gain on disposal of property
and equipment (96) (1,459) (219) (1,388)
Deferred Taxes 166 (479) 455 (5,281)
Increase in accounts
receivable (453) (2,358) (15,711) (11,438)
(Increase) Decrease in other
receivables 309 (103) (308) (67)
(Increase) Decrease in
inventory 6,305 (2,515) 2,239 (3,725)
Proceeds from insurance claim -- -- 1,135 15,479
Gain on sale of subsidiaries -- -- -- (1,617)
(Increase) Decrease in other
current assets (125) (163) 1,565 3,685
Increase in other assets (38) -- (120) --
Increase (Decrease) in
accounts payable (613) 18 1,250 (4,753)
Increase (Decrease) in
accrued expenses (2,974) 1,517 6,411 3,776
-------- -------- -------- --------
Net cash provided by (used
in) operating activities 4,559 (3,003) 7,224 2,465
-------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES
Disposal, net of cash acquired -- -- -- (11)
Purchase of property and
equipment (2,888) (4,417) (12,798) (9,654)
Proceeds from sale of property
and equipment 5 3,397 259 3,407
Deferred gain on property sale -- 1,441 -- 1,441
Proceeds from insurance claim
on building and equipment -- -- 466 --
Decrease in other assets 354 612 1,001 1,290
-------- -------- -------- --------
Net cash provided by (used
in) investing activities (2,529) 1,033 (11,072) (3,527)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal payments on
long-term borrowings (351) (1,449) (1,484) (1,822)
Net proceeds from (payments
on) revolving credit
agreement (2,066) 3,868 5,321 3,462
Payment of Debt Issuance Costs -- -- (90) --
Tax impact of stock options
exercised 1,645 -- 1,645 --
Purchase and Retirement of
Common Stock -- -- -- (334)
Proceeds from Sales of
Common Stock -- -- -- 56
-------- -------- -------- --------
Net cash provided by (used
in) financing activities (772) 2,419 5,392 1,362
-------- -------- -------- --------
Net increase in cash and
cash equivalents $ 1,258 $ 449 $ 1,544 $ 300
CASH AND CASH EQUIVALENTS
Beginning of period $ 690 $ 349 $ 404 $ 498
-------- -------- -------- --------
End of period $ 1,948 $ 798 $ 1,948 $ 798
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period
for:
Income taxes $ 592 $ 46 $ 833 $ 839
======== ======== ======== ========
Interest $ 223 $ 477 $ 819 $ 1,599
======== ======== ======== ========
FLANDERS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA
(In thousands)
(Unaudited)
---------------------------------------------------------------------
Three months ended Nine months ended
Sept 30, Sept 30,
---------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
2009 2008 2009 2008
---------- ---------- ---------- ----------
Net Earnings $ 1,770 $ 894 $ 6,008 $ 10,160
Extraordinary items 0 0 0 (8,335)
Interest 291 498 876 1,623
Taxes 1,337 596 3,825 1,216
Depreciation and
amortization 1,419 1,358 4,150 4,483
----------------------------------------------
EBITDA $ 4,817 $ 3,346 $ 14,859 $ 9,147
---------------------------------------------------------------------
CONTACT: Flanders Corporation
John C. Oakley, Chief Financial Officer
252-946-8081
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