Dépêches
Quality Products Announces Results For the Three and Nine Months Ended June 30, 2009
Dépèche transmise le 6 août 2009 par Business Wire
COLUMBUS, Ohio--(BUSINESS WIRE)--Quality Products, Inc. (Pink Sheets: QPDC), a manufacturer and distributor of aircraft ground support equipment (“Columbus Jack & Regent Manufacturing”) and hydraulic press machine tools (“Multipress”), today reported fiscal 2009 third quarter and nine months operating results.
QUARTERLY RESULTS
Net income
was $1,341,628 compared to $1,144,678 earned last year, an increase of
$196,950 or 17.2%. Revenues were $6,025,236 compared to $6,378,900 last
year, a decrease of $(353,664) or (5.5)%. The gross margin increased to
44.3% this year from 38.0% last year. As with most manufacturers, our
margins can vary significantly depending on product mix and pricing
pressures in the marketplace. Due to these factors, we consider the
range of 30 – 35% to be normal for gross margins, indicating even the
most recent quarter was at the high end of our expectations.
The Multipress segment continued to struggle during the quarter. Shipments decreased by $(695,636) or (58.3)% compared to last year, and gross profit decreased by $(216,707) or (50.1)%. Additionally, incoming orders remained weak as a result of the slowdown in the economy, and were down by $(1,616,998) or (81.1)% compared to last year. Historically, the visibility of future business for this segment has rarely exceeded six months, making it difficult to predict long-term trends.
The ground support equipment segment continued its outstanding performance with an increase in shipments of $341,972 or 6.6% compared to last year, and a gross profit increase of $466,574 or 23.5%. Incoming orders increased by $3,282,480 or 96.6% compared to last year. A majority of this segment’s business is with the U.S. government, so if defense spending is reduced it is likely this segment will be unfavorably impacted.
S G & A expenses decreased to 12.7% of sales in the current quarter compared to 15.6% last year. In terms of dollars, S G & A decreased by $(228,670) primarily due to lower commissions and advertising expenses. Additionally, 2008 included one-time consulting expenses for an operational efficiency improvement project.
Other income in the latest quarter includes $431,000 of royalties for our joint participation in certain military contracts.
Income tax expense increased by approximately $429,000 primarily due to higher federal income tax estimates.
Basic EPS was $0.37, up from $0.34 and diluted EPS increased to $0.37 from $0.30.
FISCAL YTD RESULTS
Net income
was $3,435,631 compared to $2,941,334 earned last year, an increase of
$494,297 or 16.8%. Revenues were $16,522,141 compared to $15,398,737
last year, an increase of $1,123,404,or 7.3%. Gross margins decreased to
40.2% this year from 41.4% last year. While the gross margin in the
current year is very strong, it should not be considered representative
of future performance. As with most manufacturers, our margins can vary
significantly depending on product mix and pricing pressures in the
marketplace. Due to these factors, we consider the range of 30 – 35% to
be normal for gross margins.
The Multipress segment has struggled in fiscal 2009. Shipments decreased by $(153,234) or (5.0)% compared to last year. Gross profit decreased by $(132,611) or (12.0)%. Additionally, due to the slow economy, incoming orders continue to weaken. For the first nine months they were down by $(2,823,795) or (59.4)%. Historically, the visibility of future business for this segment has rarely exceeded six months, making it difficult to predict long-term trends.
The ground support equipment segment has performed very well in fiscal 2009, a surprising result in the current economy. Shipments increased by $1,276,637 or 10.4% compared to last year while gross profit increased by $397,491 or 7.5%. Even more surprising is the fact that incoming orders have remained very strong, increasing by $4,097,911 or 39.4%. However, if the U.S. government reduces defense spending, it is likely this segment will be unfavorably impacted.
S G & A expenses decreased to 15.0% of sales in 2009 compared to 16.5% in 2008. In terms of dollars, S G & A decreased by $(65,553). This difference primarily relates to one-time consulting expenses in 2008 for an operational efficiency improvement project.
2009 other income includes $1.2 million of royalties for our joint participation in certain military contracts.
Income tax expense increased by $843,759 primarily due to higher federal income tax estimates.
Basic EPS decreased to $0.94 from $0.97 and diluted EPS increased to $0.94 from $0.75.
Backlog
On August 6th, the
order backlog for Multipress was approximately $245,000, in line with
the previous quarter’s reported level of $292,000, but down
significantly from last year’s level of $2.1 million.
The backlog for Columbus Jack was approximately $7.6 million, in line with both the previous quarter’s reported level of $7.5 million, and last year’s level of $7.4 million.
We do not provide financial estimates for future periods.
Liquidity & Cash Uses for the Nine months
Ended June 30, 2009
As shown in the June 30, 2009 balance
sheet, cash, short-term investments, accounts receivable and inventories
totaled $10.2 million compared to $2.4 million of total liabilities. The
balance outstanding under our credit lines was $0, leaving us with
borrowing capacity of $3,533,000 at June 30, 2009. This was a decrease
of $1,367,000 from the previous quarter’s availability due to a
regularly scheduled annual reduction as specified in our loan agreements.
We generated positive operating cash flow of $6,305,454, while capital expenditures were $206,415. We used cash of $1,529,415 to purchase investments, $541,330 to repay debt, $539,567 to pay a common stock dividend, and $326,623 to repurchase shares of our common stock. Through August 6th we have repurchased 409,676 shares, or 81.9% of the 500,000 shares authorized by the Board on March 26, 2007.
Other Information
Quality
Products currently has 70 employees, down from 73 in the previous report.
Columbus Jack will occasionally be a joint participant in certain military contracts which are awarded in the name of the other participating entity. As such, we will not recognize revenues associated with those contracts, but instead will recognize our share of the contract profits as miscellaneous income.
For more information on products and services please visit: www.columbusjack.com, www.multipress.com, and www.regentgse.com.
This press release, other than the historical information, consists of "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995), which are identified by the use of words such as "believes", "expects", "projects", and similar expressions. While these statements reflect the Company's current beliefs and are based on assumptions that the Company believes are reasonable, they are subject to uncertainties and risks that could cause actual results to differ materially from anticipated results.
| QUALITY PRODUCTS, INC. | ||||||
| CONSOLIDATED BALANCE SHEET (UNAUDITED) | ||||||
|
JUNE 30, 2009 |
||||||
|
|
||||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash | $ | 3,307,587 | ||||
| Short-term Investments | 893,106 | |||||
|
Accounts receivable, less allowance for doubtful accounts of $55,328 |
1,846,512 |
|||||
| Inventories, less reserve of $449,814 | 4,189,605 | |||||
| Deferred taxes, current | 930,161 | |||||
| Prepaid expenses and other current assets | 163,185 | |||||
| Total current assets | 11,330,156 | |||||
| PROPERTY AND EQUIPMENT, less accumulated depreciation of $1,377,025 |
1,147,852 |
|||||
| INVESTMENTS, non-current | 2,548,087 | |||||
| DEFERRED TAXES, non-current | 53,531 | |||||
|
INTANGIBLE ASSETS, less accumulated amortization of $1,332,888 |
1,025,548 |
|||||
|
GOODWILL, Less accumulated amortization of $19,174 |
2,723,247 |
|||||
| TOTAL ASSETS | $ | 18,828,421 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Current portion of notes payable | $ | 243,750 | ||||
| Accounts payable | 898,508 | |||||
| Accrued payroll and payroll related expenses | 413,238 | |||||
| Other accrued expenses and current liabilities | 315,256 | |||||
| Taxes payable | 265,588 | |||||
| Customer deposits | 117,695 | |||||
| Total current liabilities | 2,254,035 | |||||
| PENSION OBLIGATION | 164,053 | |||||
| LONG-TERM DEBT: | ||||||
|
Notes payable, net of current portion |
73,125 | |||||
| TOTAL LIABILITIES | 2,491,213 | |||||
| STOCKHOLDERS' EQUITY: | ||||||
| Convertible preferred stock, Series A | - | |||||
| Convertible preferred stock, Series B | - | |||||
| Common stock | 29 | |||||
| Additional paid-in capital | 21,090,183 | |||||
| Accumulated other comprehensive loss | (119,588 | ) | ||||
| Accumulated deficit | (4,633,416 | ) | ||||
| Total stockholders' equity | 16,337,208 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 18,828,421 | ||||
| QUALITY PRODUCTS, INC. | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2009 AND 2008 | ||||||||||||||||||
|
Three Months |
Nine months |
|||||||||||||||||
|
(UNAUDITED) |
(UNAUDITED) |
|||||||||||||||||
|
2009 |
2008 |
2009 |
2008 |
|||||||||||||||
| NET SALES | $ | 6,025,236 | $ | 6,378,900 | $ | 16,522,141 | $ | 15,398,737 | ||||||||||
| COST OF GOODS SOLD | 3,353,886 | 3,957,384 | 9,879,444 | 9,021,082 | ||||||||||||||
| GROSS PROFIT | 2,671,350 | 2,421,516 | 6,642,697 | 6,377,655 | ||||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||||
| ADMINISTRATIVE EXPENSES |
767,228 |
995,898 |
2,481,306 |
2,546,859 |
||||||||||||||
| INCOME FROM OPERATIONS |
1,904,122 |
1,425,618 |
4,161,391 |
3,830,796 |
||||||||||||||
| OTHER INCOME: | ||||||||||||||||||
| Interest expense | (11,710 | ) | (27,528 | ) | (33,311 | ) | (88,680 | ) | ||||||||||
| Interest income | 11,219 | 3,823 | 38,471 | 3,823 | ||||||||||||||
| Miscellaneous other income |
443,817 |
258,450 |
1,268,545 |
351,101 |
||||||||||||||
| Other income, net | 443,326 | 234,745 | 1,273,705 | 266,244 | ||||||||||||||
| INCOME BEFORE | ||||||||||||||||||
| PROVISION FOR INCOME TAXES |
2,347,448 |
1,660,363 |
5,435,096 |
4,097,040 |
||||||||||||||
|
PROVISION FOR
INCOME TAXES |
1,005,820 |
515,685 |
1,999,465 |
1,155,706 |
||||||||||||||
| NET INCOME | $ | 1,341,628 | $ | 1,144,678 | $ | 3,435,631 | $ | 2,941,334 | ||||||||||
| UNREALIZED GAIN | ||||||||||||||||||
| ON INVESTMENTS | 96,225 | -- | 45,002 | -- | ||||||||||||||
| COMPREHENSIVE INCOME | $ | 1,437,853 | $ | 1,144,678 | $ | 3,480,633 | $ | 2,941,334 | ||||||||||
| BASIC INCOME PER SHARE: |
$ |
.37 |
$ |
.34 |
$ |
.94 |
$ |
.97 |
||||||||||
| DILUTED INCOME PER SHARE: |
$ |
.37 |
$ |
.30 |
$ |
.94 |
$ |
.75 |
||||||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES: | ||||||||||||||||||
| Basic | 3,618,818 | 3,337,324 | 3,651,237 | 2,952,042 | ||||||||||||||
| Diluted | 3,618,818 | 3,859,710 | 3,651,237 | 3,898,083 | ||||||||||||||
