Compudyne (NASDAQ:CDCY)
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From May 2019 to May 2024
CompuDyne Corporation (Nasdaq:CDCY), an industry leader in sophisticated
security products, integration and technology for the public security
markets, today reported a net loss of $0.28 per share for the first
quarter of 2007, compared to a profit of $0.10 per share reported in the
first quarter of 2006. Revenues in the first quarter of 2007 were $31.1
million, down from $40.5 million in the first quarter of 2006. EBITDAS
for the first quarter of 2007 was negative $0.4 million, down from a
positive $2.5 million in the first quarter of 2006. First quarter 2007
results were negatively impacted by low backlogs entering 2007, and a
delay in the award of new projects, resulting in flat backlogs rather
than the increasing backlogs that had been anticipated. While results in
the first quarter were somewhat worse than we had anticipated, we
continue to believe that these are temporal impacts and that high levels
of new business activity should eventually translate into increasing
backlogs and increasing revenues in the coming quarters.
Institutional Security Systems (“ISS”)
revenue was $11.2 million in the first quarter of 2007 compared with
$13.4 million in the first quarter of 2006. Pre-tax loss was $1.3
million in the first quarter of 2007 compared to a $0.1 million pre-tax
income in the first quarter of 2006. ISS revenues and earnings were
negatively impacted by low backlogs, and delays in planned project
starts already in backlog. Recent increases in new business activity, as
evidenced by strong award levels in March, and a significant amount of
business that is pending formal award, suggests that backlogs will
improve throughout the year. Pipeline activity is the strongest it has
ever been, reflecting strong latent demand for additional jail and
prison capacity at all levels of the market –
local, state and federal. Especially encouraging is the increasing
acceptance of ISS’ “MaxWall”
modular steel jail cell product, which has the potential of
significantly expanding ISS’ market. ISS
backlog declined by $0.8 million to $63.9 million during the quarter.
Attack Protection (“AP”)
revenue was $4.4 million in the first quarter of 2007, down
significantly from $11.7 million in the first quarter of 2006. Pre-tax
loss was $0.9 million in the first quarter of 2007, compared to pre-tax
income of $1.2 million in the first quarter of 2006. AP’s
Norshield business, which produces bullet, blast and attack resistant
doors and windows and vehicle barrier systems, completed a very large
embassy order in 2006. Norshield continues to work to replace this
volume, however backlogs declined sharply during 2006 while working on
this project and have only recently started to recover, presaging
continuing low volumes in this business in the coming months of 2007.
The delayed receipt of a substantial change order request materially
impacted results. Norshield has undergone significant “right-sizing”
efforts during 2007 resulting in cost reductions of $1.2 million on an
annual basis, and has adopted a strategy of offering to install its
products for customers rather than just sell the products. This new
strategy, combined with a closer integration with ISS, is expected to
expand Norshield’s market potential while
improving its efficiency. AP’s Fiber SenSys (“FSI”)
brand business, which is one of the world’s
largest supplier of fiber optic based perimeter alarm systems, almost
doubled its revenues in the first quarter of 2007 compared to the first
quarter of 2006. FSI is expected to continue to improve revenues
throughout the year and produce significant earnings in 2007. AP
backlogs increased by $3.6 million to $9.3 million during the quarter,
reflecting some success in generating new business both in the
traditional embassy market and in other markets where high levels of
protection are required.
Public Safety & Justice (“PS&J”)
revenues declined to $10.6 million in the first quarter of 2007 compared
to $11.8 million in the first quarter of 2006. PS&J had a pre-tax loss
of $0.2 million in the first quarter of 2007 compared to break-even in
the first quarter of 2006. Spending by PS&J’s
Tiburon business on its “Next Generation”
suite of .NET based software products, which is being fully expensed,
continues to impact current results and will impact future results.
During the first quarter PS&J very successfully took live one of the
largest installations they have ever undertaken. PS&J backlogs declined
slightly during the quarter, from $39.1 million at the beginning of the
quarter to $37.7 million at the end of the quarter.
Integrated Electronic Systems (“IES”)
revenue was $5.0 million in the first quarter of 2007 compared to $3.6
million in the first quarter of 2006 and resulted in a doubling of
pre-tax income to $0.4 million for the first quarter of 2007 compared to
$0.2 million for the first quarter of 2006. We have been advised that
the Bureau of Engraving and Printing (“BEP”)
will put its contract out to bid again as a result of internal
reorganizations. Results of this planned re-bid are expected to become
known late this year. We are optimistic that it will be re-awarded to
IES due to our outstanding performance. IES’
Quanta subsidiary continues to perform this BEP contract. IES’
newly combined Signami DCS business, made up of our Signami acquisition
and our DCS signals intelligence business, contributed $1.8 million to
IES’ first quarter 2007 revenues. Signami DCS
continues to spend heavily on the refinement of its existing signals
intelligence product and on the new integrated platform of Signami and
DCS technologies – with the introduction of
the new product later this year we expect both revenues and margins in
this business to improve substantially.
In the first quarter of 2007, corporate had a pre-tax loss of $0.3
million, compared to a pre-tax loss of $0.9 million in the first quarter
of 2006. This included $0.4 million of net interest cost in the first
quarter of 2007, down from $0.5 million in the first quarter of 2006.
Corporate expense was reduced despite incurring $0.2 million on legal
matters and $0.2 million on Audit/SOX (down from $0.4 million in the
first quarter of 2006) related costs in the first quarter of 2007. We
ended the quarter with cash and marketable securities of $24.2 million,
working capital of $29.7 million, and only $1.5 million of debt
maturities prior to 2011.
Company-wide backlogs were essentially flat during the first quarter of
2007, ending the quarter at $117.1 million, down $0.2 million. This
remains an unacceptably low level, however pipeline, quoting, and
bidding activity levels continue to be much higher than in recent years.
Certain statements made in this press release constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, including those statements
concerning the Company’s expectations with
respect to future operating results and other events. Although the
Company believes it has a reasonable basis for these forward-looking
statements, these statements involve risks and uncertainties that cannot
be predicted or quantified and consequently, actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors which could cause actual results to differ from
expectations include, among others, capital spending patterns of the
security market and the demand for the Company’s
products, competitive factors and pricing pressures, changes in
legislation, regulatory requirements, government budget problems, the
Company’s ability to secure new contracts,
the ability to remain in compliance with its bank covenants, delays in
government procurement processes, inability to obtain bid, payment and
performance bonds on various of the Company’s
projects, technological change or difficulties, the ability to refinance
debt when it becomes due, product development risks, commercialization
difficulties, adverse results in litigation, the level of product
returns, the amount of remedial work needed to be performed, costs of
compliance with Sarbanes-Oxley requirements and the impact of the
failure to comply with such requirements, risks associated with internal
control weaknesses identified in complying with Section 404 of
Sarbanes-Oxley, the Company’s ability to
realize anticipated cost savings, the Company’s
ability to simplify its structure and modify its strategic objectives,
and general economic conditions. Risks inherent in the Company’s
business and with respect to future uncertainties are further described
in its other filings with the Securities Exchange Commission, such as
the Company’s Form 10-K, Form 10-Q, and Form
8-K reports.
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31,
December 31,
ASSETS
2007
2006
(dollars in thousands)
Current Assets
Cash and cash equivalents
$
10,694
$
7,740
Marketable securities
6,001
8,687
Accounts receivable, net
25,584
25,534
Contract costs in excess of billings
12,231
12,031
Inventories
6,152
5,577
Prepaid expenses and other
2,031
4,595
Total Current Assets
62,693
64,164
Cash equivalents pledged
7,500
7,500
Property, plant and equipment, net
9,281
9,630
Goodwill
13,275
13,274
Other intangible assets, net
7,282
7,428
Other
1,841
1,954
Total Assets
$
101,872
$
103,950
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities
$
12,933
$
14,155
Billings in excess of contract costs incurred
9,444
9,221
Deferred revenue
10,145
9,305
Current portion of notes payable
440
440
Total Current Liabilities
32,962
33,121
Notes payable
2,685
2,685
Convertible subordinated notes payable, net
39,539
39,492
Deferred tax liabilities
1,425
1,425
Other
392
388
Total Liabilities
77,003
77,111
Commitments and Contingencies
Shareholders’ Equity
24,869
26,839
Total Liabilities and Shareholders’ Equity
$
101,872
$
103,950
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31,
2007
2006
(in thousands, except per share data)
Revenues
$
31,132
$
40,470
Cost of sales
21,354
27,961
Gross profit
9,778
12,509
Selling, general and administrative expenses
9,299
9,736
Research and development
2,371
1,767
(Loss) income from operations
(1,892)
1,006
Total other expense, net
442
383
(Loss) income before taxes on income
(2,334)
623
Income tax benefit
-
(184)
Net (loss) income
$
(2,334)
$
807
Earnings (loss) per share:
Basic (loss) income per common share
$
(.28)
$
.10
Weighted average number of common
shares outstanding
8,436
8,119
Diluted (loss) income per common share
$
(.28)
$
.10
Weighted average number of common
shares and equivalents
8,436
8,159
COMPUDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, unaudited)
Three Months Ended
March 31,
2007
2006
Revenues
Institutional Security Systems
$
11,155
$
13,355
Attack Protection
4,437
11,684
Public Safety and Justice
10,583
11,844
Integrated Electronic Systems
4,957
3,587
$
31,132
$
40,470
Three Months Ended
March 31,
2007
2006
Gross Profit
Institutional Security Systems
$
986
$
2,173
Attack Protection
967
3,292
Public Safety and Justice
6,517
6,538
Integrated Electronic Systems
1,308
506
$
9,778
$
12,509
Three Months Ended
March 31,
2007
2006
Pre-tax income (loss)
Institutional Security Systems
$
(1,275)
$
136
Attack Protection
(926)
1,205
Public Safety and Justice
(200)
7
Integrated Electronic Systems
413
184
Corporate
(346)
(909)
$
(2,334)
$
623
March 31, 2007
December 31, 2006
March 31, 2006
Backlog
Institutional Security Systems
$
63,868
$
64,687
$
57,030
Attack Protection
9,299
5,686
20,961
Public Safety and Justice
37,707
39,067
43,874
Integrated Electronic Systems
6,208
7,902
6,590
$
117,082
$
117,342
$
128,455
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
EBITDAS
(in thousands, except per share data; unaudited)
Three Months Ended
March 31,
2007
2006
Net loss
$
(2,334)
$
807
Interest expense
792
815
Income tax (benefit)
-
(184)
Depreciation and amortization
841
795
Non-cash stock option expense
263
255
EBITDA adjusted for non-cash stock option expense (EBITDAS)
$
(438)
$
2,488
This press release contains unaudited financial information that is not
prepared in accordance with generally accepted accounting principles
(GAAP). Investors are cautioned that the non-GAAP financial measures are
not to be construed as an alternative to GAAP. The Company's management
uses earnings before interest, taxes, depreciation and amortization, as
adjusted for non-cash stock option expense (EBITDAS), in its internal
analysis of results of operations and monitors EBITDAS to evaluate the
Company’s compliance with its bank covenant
for a fixed charge coverage ratio. Management believes that EBITDAS and
Income (Loss) Before Non-Cash Stock Option Expense is useful to
investors as a meaningful comparison between periods and as an analysis
of the critical components of the Company’s
results of operations. Management also believes that EBITDAS is useful
to investors because it allows them to evaluate the Company’s
compliance with its bank covenant for a fixed charge coverage ratio.