JPS Industries, Inc. Announces Second Quarter 2015 Results

News provided by

Jun 02, 2015, 08:00 ET

ANDERSON, S.C., June 2, 2015 /PRNewswire/ -- JPS Industries, Inc. (OTC: JPST), a leading manufacturer of composite materials, today announced financial and operating results for its second fiscal quarter ended May 2, 2015.

JPS and Handy & Harman Ltd. ("HNH") jointly announced on June 1 that they entered into a merger agreement pursuant to which HNH will acquire JPS for $11.00 per share in cash. The agreement is subject to customary closing conditions.

Second Quarter FY 2015 Highlights:

Net Sales of $44.9 million vs. $43.9 million in the year ago second quarter
Gross profit of $7.9 million, with a 17.6% gross margin, both up from the year ago second quarter gross profit of $7.6 million and gross margin of 17.3%
SG&A of $4.0 million, including $1.2 million of non-recurring legal and other costs related to the proxy contest and tender offer by affiliates of HNH. Excluding these costs, recurring SG&A was $2.8 million vs. $2.4 million in the year ago second quarter
Adjusted EBITDA of $4.7 million, in line with the prior year's quarter
GAAP net income of $1.3 million, including $1.2 million of non-recurring costs associated with the proxy contest and tender offer, vs. $9.8 million in the year ago second quarter, which included $7.9 million of income on the disposition of our Urethane division
GAAP earnings per share of $0.12 vs. $0.95 in the year ago second quarter
Closed the Greenville, SC office and moved our corporate function into the Anderson and Slater, SC operating facilities

The Statement of Operations for the prior year periods have been prepared reflecting the Urethane division as a discontinued operation, as the sale was closed on April 30, 2014.

About JPS Industries, Inc.
JPS Industries, Inc. is a major U.S. manufacturer of sheet and mechanically formed glass and aramid materials for specialty applications in a wide expanse of markets requiring highly engineered products. 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; automotive and industrial components; soft body armor for civilian and military applications. The Company operates three manufacturing locations in Anderson and Slater, South Carolina and Statesville, North Carolina.

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. This release also includes net income adjusted for non-recurring items, a non-GAAP financial measure as defined in Regulation G of the Securities 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 and net income adjusted for non-recurring items are important factors of the Company's business because they reflect financial performance that is unencumbered by debt service and other non-cash, non-recurring or unusual items. However, they 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 and net income adjusted for non-recurring items to GAAP financial information in the attached Schedule of Non-GAAP reconciliations.

Caution Regarding Forward-Looking Statements
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. 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; the Company's ability to sustain historical margins; increased competition and the risk of lost customer business; increased costs; loss or retirement of key members of management; currency exchange rate fluctuations; integration of acquired operations; international operations; compliance with environmental regulations and other laws; product compliance issues; potential impacts of natural disasters on the 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.

JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)	Three Months Ended				Six Months Ended
	May 2,		May 3,		May 2,		May 3,
	2015		2014		2015		2014

Net sales	$ 44,887		$ 43,856		$ 78,734		$ 78,889
Cost of sales	36,984		36,249		65,165		65,711
Gross profit	7,903	17.6%	7,607	17.3%	13,569	17.2%	13,178	16.7%

Selling, general & administrative	3,975		2,402		6,928		4,963
Distribution expense	1,023		945		1,850		1,891
Pension	834		988		1,668		1,908
Operating profit	2,071	4.6%	3,272	7.5%	3,123	4.0%	4,416	5.6%

Interest expense, net	91		206		184		442

Income before income taxes	1,980		3,066		2,939		3,974

Income taxes	728		1,137		1,081		1,462
Income from continuing operations	1,252		1,929		1,858		2,512

Discontinued operations:
Gain on sale, net of taxes	0		7,471		0		7,471
Income , net of taxes	0		437		0		999
Net income	$ 1,252	2.8%	$ 9,837	22.4%	$ 1,858	2.4%	$ 10,982	13.9%

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic	10,379,127		10,281,460		10,379,127		10,281,460
Diluted	10,651,866		10,348,981		10,651,866		10,348,981

Basic earnings per common share	$ 0.12		$ 0.96		$ 0.18		$ 1.07
Diluted earnings per common share	$ 0.12		$ 0.95		$ 0.17		$ 1.06

Adjusted EBITDA:
Net income	$ 1,252		$ 9,837		$ 1,858		$ 10,982
Interest expense	91		206		184		442
Income taxes	728		1,137		1,081		1,462
Depreciation and amortization	395		395		790		789
Stock comp expense	195		17		359		35
Non-recurring legal	1,202		-		1,890		-
Gain on sale of disc ops, net	-		(7,471)		-		(7,471)
Income from disc ops, net	-		(437)		-		(999)
Pension and post retirement	834		988		1,668		1,908
Adjusted EBITDA	$ 4,697	10.5%	$ 4,672	10.7%	$ 7,830	9.9%	$ 7,148	9.1%

Capital expenditures	$ 805		$ 501		$ 1,119		$ 574
Cash taxes paid	-		$ 136		$ 24		$ 238
Cash pension contributions	-		$ 1,525		$ 453		$ 2,346

JPS INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)

	May 2,	November 1,
	2015	2014

ASSETS
Current Assets:
Cash	$ 3,572	$ 2,713
Cash held in escrow	900	1,500
Accounts receivable, net of reserves	24,055	19,760
Inventories	22,944	21,600
Prepaid expenses and other	5,226	5,381
Total current assets	56,697	50,954

Property, plant and equipment, net	13,574	13,246
Deferred income taxes	44,706	45,714
Goodwill	10,100	10,100
Other assets	3,392	3,482

Total assets	$ 128,469	$ 123,496

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$ 13,886	$ 10,780
Accrued pension costs	814	1,267
Accrued expenses, salaries, benefits and withholding	2,090	3,655
Current portion of long-term debt	-	-
Total current liabilities	16,790	15,702

Long-term debt	-	-
Accrued pension costs	19,655	17,987
Other long-term liabilities	150	150

Total liabilities	36,595	33,839

Total shareholders' equity	91,874	89,657

Total liabilities and shareholders' equity	$ 128,469	$ 123,496