JPS Industries, Inc. Announces Fiscal Year October 2013 Results

GREENVILLE, S.C., Dec. 19, 2013 /PRNewswire/ -- JPS Industries, Inc. (JPST.PK), a leading manufacturer of composite and urethane materials today announced financial and operating results for our fiscal year ended November 2, 2013.

Fiscal year 2013 Highlights:

• Net Sales of $202.0 million, a 28% increase over FY 2012
• Gross profit of $33.6 million, a 22% increase over FY 2012
• Reduced recurring SG&A of $19.0 million, down from FY 2012 of $21.6 million
• Adjusted EBITDA of $19.3 million, a 30% increase over FY 2012
• GAAP net income of $2.0 million, a 62% increase over FY 2012

Mikel Williams, President and Chief Executive Officer of JPS stated, "I am pleased with the performance of the company for 2013.  We registered solid improvements in both of our operating divisions.  Our Composite materials business experienced strong gains in most all of our product sets.  Our ballistics products in particular demonstrated marked improvements, more than doubling over the prior year.  We also experienced some significant costs with the transition of management and a newly appointed board of directors.  Excluding these costs, we nonetheless drove down our on-going SG&A costs by $2.6 million or 12% over the prior year." 

"Going forward, we will continue to focus on operational excellence in all we do for our customers, while also working to drive our financial profitability and returns for our shareholders," Williams concluded. 

Fiscal Year 2013 Operating Results
Net sales of $202.0 million, a 28% increase over the prior year, were driven by a 30% increase in our Composites business and a 17% gain in our Urethane business.  The strong growth at our Composites business was driven by our ballistics and aerospace market sectors, with essentially flat year over year results for our electronics and filtration markets. 

Gross margins of 16.6% in 2013 were slightly below the 17.4% gross margins of FY 2012.  The gross margins were impacted by the lower gross margins on our ballistics products.  Gross margins at our Urethane division expanded as did the margins on our other product lines at Composites, reflecting the operating leverage inherent in our business model.   

Sales, general and administrative expenses, exclusive of our non-recurring severance related to the change of executive personnel and write-downs at Urethane, were down 12% from the prior year.  We will continue to focus on cost management as we go forward. 

Non-recurring Costs
As a result of our executive management change, we recorded one-time non-recurring severance costs of $4.0 million.  Additionally, primarily related to our Urethane division's solar market related activities of the past, we recorded non-recurring write-downs for accounts receivable, inventory and equipment of $5.5 million, net of a small settlement gain on the cessation of a potential litigation claim.  We anticipate no future costs or write-downs relative to these prior activities.

Fiscal Year 2013 End Balance Sheet and Liquidity
We ended FY 2013 with a $5.3 million cash balance, of which $3.7 million was restricted and held in a trust account for the benefit of the prior officers' severance and was paid out by early December 2013.  We ended the fiscal year with a balance of $15.2 million outstanding on our revolving credit facility.  Our revolving credit facility is an asset backed facility limited to the lesser of the amount of our qualified borrowing base or $40 million.  As of November 2, 2013, based on our borrowing base, we had excess available borrowing capacity of approximately $13 million.  We also have a term note facility, with $8.0 million outstanding as of year-end 2013.  On October 31, 2013, we amended the note facility to continue the monthly principal amortization at $415,000 per month until the facility is fully repaid in June 2015.

Both facilities have standard covenant requirements, and as of year-end FY 2013 we were in compliance with all covenants.  Both facilities mature in June 2015.

As a result of pension plan asset growth, as well as our continued annual funding and an improving interest rate environment, our pension liability as of year-end has been reduced from $56.8 million to $36.3 million.  We expect funding of the plan in fiscal year 2014 to total  $8.6 million.

2014 Outlook
Williams added, "As we begin our fiscal year 2014, we are optimistic about our prospects.  Relative to our Composites division, we see continued gains in our aerospace related composite material sales, and we believe we are well positioned to continue to be a trusted supplier to the defense industry with our ballistics products.   The electronics and filtration markets are experiencing increased competition from foreign suppliers, and we anticipate continued challenging market conditions.  Our Urethane division, under new leadership brought in mid-year 2013, is poised to continue its progress and we expect continued growth.   All in all, I believe we are well positioned to build upon FY 2013 and drive improved operating results and shareholder value.  Additionally, we will always be looking at the opportunities to drive shareholder value with inorganic opportunities as we look forward."

About JPS Industries, Inc.
JPS Industries, Inc. is a major U.S. manufacturer of sheet and  mechanically  formed  glass and aramid substrate materials, extruded urethane film, sheet and tubing and ethylene  vinyl  acetate  film for specialty applications in a wide expanse of markets requiring highly engineered ­­­­­­components.   JPS's  products are used in a wide range of applications including: advanced composite materials; civilian and military aerospace components; printed electronic circuit boards; filtration and insulation products; specialty commercial construction substrates; high performance glass laminates for security and transportation applications; paint protection films; plasma display screens; medical, automotive and industrial components; and soft  body armor for  civilian and military applications.   Headquartered in Greenville, South Carolina, the Company operates four manufacturing locations in Anderson and Slater, South Carolina; Statesville, North Carolina; and Easthampton, Massachusetts.

Non-GAAP Financial Measures
This release includes 'adjusted EBITDA', a non-GAAP financial measure as defined in Regulation G of the Securities Exchange Act of 1934. Management believes that the disclosure of non-GAAP financial measures, when presented in conjunction with the corresponding GAAP measures, provide useful information to the Company, investors and other users of the financial statements and other financial information in identifying and understanding operating performance for a given level of net sales and business trends.  Management believes that adjusted EBITDA is an important factor of the Company's business because it reflects financial performance that is unencumbered by debt service and other non-cash, non-recurring or unusual items. This financial measure is commonly used in the Company's industry.  However, adjusted EBITDA should not be considered as an alternative to cash flow from operating activities, as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with generally accepted accounting principles.  The Company's definition of adjusted EBITDA may differ from definitions of such financial measure used by other companies. The Company has provided a reconciliation of adjusted EBITDA to GAAP financial information in the attached Schedule of Non-GAAP reconciliations.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding the Company's assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "targets," "will likely result," "will continue," "may," "could" or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed. The Company cautions that while it makes such statements in good faith and it believes such statements are based on reasonable assumptions, including without limitation, management's examination of historical operating trends, data contained in records, and other data available from third parties, it cannot assure you that the Company's projections will be achieved. In addition to other factors and matters discussed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, or the SEC, some important factors that could cause actual results or outcomes for JPS or its subsidiaries to differ materially from those discussed in forward-looking statements include changes in general economic conditions in the markets in which it may compete and fluctuations in demand in the electronics industry; the Company's ability to sustain historical margins; increased competition; increased costs; loss or retirement of key members of management; currency exchange rate fluctuations; integration of acquired operations; international operations; compliance with environmental regulations; potential impacts of natural disasters on the electronics industry and the Company's supply chain; increases in the Company's cost of borrowings or unavailability of additional debt or equity capital on terms considered reasonable by management; and adverse state, federal or foreign legislation or regulation or adverse determinations by regulators. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors.

For Further Information:
Mikel H. Williams
President and Chief Executive Officer
(864) 239-3900

SOURCE JPS Industries, Inc.