PPGI Releases FY 2009 Financial Results
NORTHVALE, N.J., March 31 /PRNewswire-FirstCall/ -- Photonic Products Group, Inc. (OTC Bulletin Board: PHPG) today reported its consolidated financial results for the year ended December 31, 2009.
Fourth quarter sales of $3.0 million declined by 30% from $4.3 million in the corresponding quarter of 2008. Sales for the year were $11.1 million, or approximately 32% below last year's all-time high of $16.3 million. All three of the Company's brands had a sales decline for the year.
Bookings for 2009 were $9.5 million, a decrease of 27% from $13.0 million a year earlier. Year-end backlog was $4.4 million versus $6.1 million at the end of 2008.
Net (loss) income applicable to common shareholders was $(26,000) for the fourth quarter of 2009, compared to $144,000, last year in the comparable period, which included a deferred tax benefit from income taxes of $87,000. Fourth quarter (loss) earnings per share was $0.00 basic and diluted in 2009 and $0.01 basic and diluted in 2008, respectively.
For the year ended December 31, 2009, the Company's net (loss) applicable to shareholders was $(2.8) million, including a non-cash goodwill impairment charge of $1.6 million against the full carrying value of goodwill in its Florida subsidiary. In 2008, the Company reported net income applicable to common shareholders of $1.1 million. For 2009, basic and diluted (loss) per share was $(0.25) compared to earnings per share of $0.10 basic and $0.08 diluted for 2008. The 2008 results include the positive impact of a deferred tax benefit of $408,000.
Despite lower sales in the fourth quarter compared to the fourth quarter of last year, gross profit margin as a percentage of sales ("GPM") increased, reflecting the positive impact of management's cost reductions implemented throughout 2009. Fourth quarter 2009 GPM was 25.3% of sales or $747,000, up from 23.8% of sales, or $1.03 million in 2008. For fiscal 2009, GPM of $2.15 million or 19.5% of sales decreased from $4.8 million or 29.5% of sales in the previous year.
EBITDA(1) for the year was a loss of $(1.6) million versus EBITDA of $2.1 million in 2008. Excluding the $1.6 million goodwill impairment charge which the Company recorded in the third quarter of 2009, adjusted EBITDA(2) for the year was $10,000.
During the year, the Company continued to reduce its debt obligations by paying the balance of $125,000 on a Promissory Note originally issued by the Company in 2004, as part of the purchase price of its Florida subsidiary.
Net cash flow from operating activities improved for the year to $815,000 compared to $548,000 in 2008. Cash flows were favorably impacted by reductions in accounts receivable and inventory balances, net of lower accounts payable and customer advances. Although the Company incurred losses in 2009, PPGI ended the year in a strong cash position, up $597,000 from the previous year balance including certificates of deposit.
Joe Rutherford, President and CEO of PPGI stated, "The severe economic recession affected most of the markets we served in 2009 and continues to impact our business in the first quarter of 2010. The company experienced an increase in business from the universities/national laboratories sector but this was not significant enough to offset the severe downturn in the semiconductor related marketplace that we serve. In addition, sales of products into the defense/aerospace marketplace declined due to program delays and/or cutbacks. We do, however, have reason to be optimistic that the economy and the markets we serve, are improving due to a significant increase in requests for quotes in the fourth quarter of 2009 and orders received in the first quarter of 2010. During the past year we increased our efforts to improve our international sales and are seeing encouraging interest and demand for our products in both Europe and the Far East. Our focus remains on improving our customer relationships, and decreasing our product cost while improving our product quality through process improvements."
"During 2009 the Company strengthened its cash position, made selective capital investments to improve our metrology, and prioritized our efforts in the development of new products to be released in 2010. In the first quarter of 2010, we are adding to our engineering and sales staff in order to better serve our customers and to respond to the improved business environment anticipated in 2010. We look forward to the future with cautious optimism."
(1, 2) Note Regarding Use of Certain Non-GAAP Financial Measures:
The Company defines EBITDA(1) as (loss) earnings before non-cash, stock-based compensation, net interest, income taxes, depreciation, and amortization. Adjusted EBITDA(2) is calculated by excluding the goodwill impairment charge from the EBITDA results. EBITDA and adjusted EBITDA are presented herein because we consider these numbers an important measure of the Company's ability to internally fund capital expenditures and service debt. EBITDA and adjusted EBITDA should not be considered an alternative to cash flow as an indicator of the Company's financial performance, or liquidity. The reader is referred to the Supplemental Financial Data set forth below for a reconciliation of net (loss) income to EBITDA.
The reconciliation follows:
At December 31, |
||||||
Reconciliation of EBITDA and adjusted EBITDA to Net (Loss) Income |
2009 |
2008 |
||||
(in thousands) |
||||||
Net (loss) income, as reported |
$(2,800) |
$1,098 |
||||
Net income tax provision (benefit) |
— |
(303) |
||||
Interest expense, net |
131 |
170 |
||||
Depreciation and amortization |
1,008 |
1,060 |
||||
Non-cash, stock-based compensation |
113 |
88 |
||||
EBITDA |
$(1,548) |
$2,113 |
||||
Goodwill impairment charge |
1,558 |
— |
||||
Adjusted EBITDA |
$10 |
$2,113 |
||||
Founded in 1973, Photonic Products Group, Inc. develops, manufactures, and markets products and services for use in diverse Photonics industry sectors via its portfolio of distinctly branded businesses. INRAD specializes in crystal-based optical components and devices, laser accessories and instruments. Laser Optics specializes in precision custom optical components, assemblies, and optical coatings. MRC Optics' business specializes in precision diamond turned optics, metal optics, and opto-mechanical and electro-optical assemblies. PPGI's customers include leading corporations in the Defense and Aerospace, Laser Systems, and Process Control and Metrology sectors of the Photonics Industry, as well as the U.S. Government. Its products are also used by researchers at National Laboratories and Universities world-wide.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "should", "will", "plan", "anticipate", "probably", "targeting" or similar words. Such forward-looking statements, such as our expectation for revenues, new orders, and improved results involve risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties that could cause actual results to differ materially from such forward looking statements are, but are not limited to, uncertainties in market demand for the company's products or the products of its customers, future actions by competitors, inability to deliver product on time, inability to develop new business, inability to retain key employees or hire new employees, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. The forward looking statements made in this news release are made as of the date hereof and Photonic Products Group, Inc. does not assume any obligation to update publicly any forward looking statement.
PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS |
||||||
December 31, |
||||||
2009 |
2008 |
|||||
Assets |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$4,069,310 |
$2,672,087 |
||||
Certificates of deposit |
— |
800,000 |
||||
Accounts receivable (after allowance for doubtful accounts of $15,000 in 2009 and 2008) |
1,927,672 |
2,810,602 |
||||
Inventories, net |
2,265,973 |
2,732,336 |
||||
Other current assets |
164,081 |
188,084 |
||||
Total Current Assets |
8,427,036 |
9,203,109 |
||||
Plant and equipment: |
||||||
Plant and equipment at cost |
14,604,728 |
14,445,027 |
||||
Less: Accumulated depreciation and amortization |
(12,016,247 |
) |
(11,139,771 |
) |
||
Total plant and equipment |
2,588,481 |
3,305,256 |
||||
Precious Metals |
157,443 |
112,851 |
||||
Deferred Income Taxes |
408,000 |
408,000 |
||||
Goodwill |
311,572 |
1,869,646 |
||||
Intangible Assets, net of accumulated amortization |
673,016 |
751,580 |
||||
Other Assets |
45,192 |
81,707 |
||||
Total Assets |
$12,610,740 |
$15,732,149 |
||||
Liabilities and Shareholders' Equity |
||||||
Current Liabilities: |
||||||
Current portion of notes payable -other |
$9,000 |
$136,892 |
||||
Accounts payable and accrued liabilities |
1,632,650 |
2,160,665 |
||||
Customer advances |
346,429 |
456,754 |
||||
Total Current Liabilities |
1,988,079 |
2,754,311 |
||||
Related Party Convertible Notes Payable |
2,500,000 |
2,500,000 |
||||
Notes Payable – Other, net of current portion |
344,946 |
353,663 |
||||
Total Liabilities |
4,833,025 |
5,607,974 |
||||
Commitments |
||||||
Shareholders' equity: |
||||||
Common stock: $.01 par value; 60,000,000 authorized shares 11,443,347 issued at December 31, 2009 and 11,230,678 issued at December 31, 2008 |
114,433 |
112,306 |
||||
Capital in excess of par value |
17,073,871 |
16,622,466 |
||||
Accumulated deficit |
(9,395,639 |
) |
(6,595,647 |
) |
||
7,792,665 |
10,139,125 |
|||||
Less - Common stock in treasury, at cost (4,600 shares) |
(14,950 |
) |
(14,950 |
) |
||
Total Shareholders' Equity |
7,777,715 |
10,124,175 |
||||
Total Liabilities and Shareholders' Equity |
$12,610,740 |
$15,732,149 |
||||
PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
Years Ended December 31, |
||||||||
2009 |
2008 |
2007 |
||||||
Revenues |
||||||||
Net sales |
$11,051,127 |
$16,301,209 |
$15,099,878 |
|||||
Cost and expenses |
||||||||
Cost of goods sold |
8,896,539 |
11,486,620 |
9,141,049 |
|||||
Selling, general and administrative expense |
3,278,161 |
3,857,805 |
3,561,570 |
|||||
Goodwill Impairment Charge |
1,558,074 |
— |
— |
|||||
13,732,774 |
15,344,425 |
12,702,619 |
||||||
Operating (loss) income |
(2,681,647) |
956,784 |
2,397,259 |
|||||
Other income (expense) |
||||||||
Interest expense, net |
(130,387 |
) |
(170,476 |
) |
(261,327 |
) |
||
Gain on sale of plant and equipment |
4,671 |
9,113 |
— |
|||||
Gain (loss) on sale of precious metals |
7,371 |
— |
(5,851 |
) |
||||
(118,345 |
) |
(161,363 |
) |
(267,178 |
) |
|||
(Loss) income before income taxes and preferred stock dividends |
(2,799,992 |
) |
795,421 |
2,130,081 |
||||
Income tax benefit (provision) |
— |
303,000 |
(250,000 |
) |
||||
Net (loss) income |
(2,799,992 |
) |
1,098,421 |
1,880,081 |
||||
Preferred stock dividends |
— |
— |
(238,167 |
) |
||||
Net (loss) income applicable to common shareholders |
$(2,799,992 |
) |
$1,098,421 |
$1,641,914 |
||||
Net (loss) income per share - basic |
$(0.25 |
) |
$0.10 |
$0.19 |
||||
Net (loss) income per share - diluted |
$(0.25 |
) |
$0.08 |
$0.13 |
||||
Weighted average shares outstanding - basic |
11,331,258 |
10,902,061 |
8,609,822 |
|||||
Weighted average shares outstanding – diluted |
11,331,258 |
15,619,304 |
13,777,114 |
|||||
PHOTONIC PRODUCTS GROUP, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
Years Ended December 31, |
||||||||
2009 |
2008 |
2007 |
||||||
Cash flows from operating activities: |
||||||||
Net (loss) income |
$(2,799,992 |
) |
$1,098,421 |
$1,880,081 |
||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
1,008,310 |
1,059,741 |
1,119,887 |
|||||
Goodwill impairment charge |
1,558,074 |
— |
— |
|||||
401K common stock contribution |
179,068 |
160,180 |
166,694 |
|||||
Deferred income taxes |
— |
(408,000 |
) |
— |
||||
Gain on sale of plant and equipment |
(4,671 |
) |
(9,113 |
) |
— |
|||
(Gain) loss on sale of precious metal |
(7,371 |
) |
— |
5,851 |
||||
Stock-based compensation expense |
112,950 |
88,417 |
34,074 |
|||||
Change in inventory reserve |
94,628 |
302,511 |
163,391 |
|||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
882,930 |
(628,743 |
) |
214,627 |
||||
Inventories |
371,735 |
(103,767 |
) |
(758,438 |
) |
|||
Other current assets |
24,003 |
(24,019 |
) |
12,522 |
||||
Other assets |
34,107 |
7,865 |
32,854 |
|||||
Accounts payable and accrued liabilities |
(528,015 |
) |
(581,301 |
) |
246,568 |
|||
Customer advances |
(110,325 |
) |
(413,796 |
) |
(117,413 |
) |
||
Total adjustments |
3,615,423 |
(550,025 |
) |
1,120,617 |
||||
Net cash provided by operating activities |
815,431 |
548,396 |
3,000,698 |
|||||
Cash flows from investing activities: |
||||||||
Proceeds (purchase) of certificates of deposit |
800,000 |
(800,000 |
) |
— |
||||
Purchase of plant and equipment |
(210,563 |
) |
(784,534 |
) |
(246,518 |
) |
||
Purchase of precious metals |
(53,538 |
) |
— |
— |
||||
Proceeds from sale of plant and equipment |
4,671 |
10,000 |
— |
|||||
Proceeds from sale of precious metals |
16,317 |
— |
12,030 |
|||||
Net cash provided by (used in) investing activities |
556,887 |
(1,574,534 |
) |
(234,488 |
) |
|||
Cash flows from financing activities: |
||||||||
Net proceeds from issuance of common stock |
161,514 |
1,064,357 |
445,247 |
|||||
Redemption of Series B Preferred shares |
— |
— |
(50,000 |
) |
||||
Principal payments of notes payable-other |
(136,609 |
) |
(14,989 |
) |
(647,215 |
) |
||
Principal payments of convertible promissory notes |
— |
(1,700,000 |
) |
(1,000,000 |
) |
|||
Principal payments of capital lease obligations |
— |
(47,088 |
) |
(196,349 |
) |
|||
Net cash provided by (used in) financing activities |
24,905 |
(697,720 |
) |
(1,448,317 |
) |
|||
Net increase (decrease) in cash and cash equivalents |
1,397,223 |
(1,723,859 |
) |
1,317,893 |
||||
Cash and cash equivalents at beginning of the year |
2,672,087 |
4,395,945 |
3,078,052 |
|||||
Cash and cash equivalents at end of the year |
$4,069,310 |
$2,672,087 |
$4,395,945 |
|||||
Supplemental Disclosure of Cash Flow Information: |
||||||||
Interest paid |
$19,000 |
$508,000 |
$298,000 |
|||||
Income taxes (refund) paid |
$(8,000 |
) |
$408,000 |
$69,000 |
||||
SOURCE Photonic Products Group, Inc.
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