PHAZAR CORP (NASDAQ: ANTP) designs, manufactures and markets antennas, towers, support structures, masts and communication accessories worldwide. Today, PHAZAR CORP announces the unaudited results of operations for the three and six month periods ended December 31, 2012.
Second Quarter Fiscal Year 2013
PHAZAR CORP’s consolidated sales from operations were $1,495,130 for the quarter ended December 31, 2012 compared to sales of $2,092,367 for the quarter ended December 31, 2011. The Company’s decline in revenues of $597,237, or -29%, is attributed to a $1,116,454 non-recurring antenna shipment to EID-Portugal in the second quarter in fiscal year 2012 offset by an upturn in shipboard and safety climb product lines during the second quarter in fiscal year 2013.
Cost of sales and contracts from operations were $931,556 for the quarter ended December 31, 2012, compared to $1,273,062 for the quarter ended December 31, 2011, down $341,506, or -27%. Gross profit margin for the quarter, at 38% is down one basis point from the 39% gross profit margin reported in the comparable period last year.
Selling, general and administration expenses were up 193% for the quarter ended December 31, 2012, to $2,109,890 from $719,588 in the prior year, reflecting a $1,516,338 charge for an impairment on the Tracciare, Inc. note receivable offset by a $126,036 decline in recurring expenses quarter over quarter. The decline in selling, general and administration expense is related to an increase in plant utilization overhead charged to cost of goods sold. Discretionary product development spending for the quarter ended December 31, 2012 was $184,876, or 12% of sales, compared to $127,398, or 6% of sales for the comparable period last year.
During the second quarter of the year ended December 31, 2012, PHAZAR CORP reported large operating losses and projected cash flow shortfalls in the near future. Based on those facts, it is unlikely the remaining net deferred tax assets will be realized. Therefore, an additional valuation allowance of $513,430 has been recorded as a deferred tax expense.
The Company recorded a net loss of $2,234,115, or $(0.96) per share for the three month period ended December 31, 2012 compared to net income of $4,471 or $0.00 per share for the comparable period in the prior year.
Six Month Period Ending December 31, 2012
Consolidated sales from operations for PHAZAR CORP were $2,654,966 for the six months ended December 31, 2012 compared to $3,507,585 for the six months ended December 31, 2011. The Company’s sales decreased by $852,619, or 24% attributable to a $1,116,440 non-recurring shipment in fiscal year 2012 to EID-Portugal offset by an upturn in our shipboard antenna product line.
Costs of sales and contracts from operations were $2,250,962 for the six months ended December 31, 2012 compared to $2,052,381 for the six months ended December 3, 2011, up $198,581, or 10% due to the $600,000 slow moving inventory reserve recorded in the first quarter offset by the decline revenues for the first two quarters of fiscal year 2013. The gross profit margin for the six month period ended December 31, 2012, at 15% was down twenty six basis points compared to the gross profit margin of 41% for the same period in the prior year. The significant decline in gross profit margin is largely attributed to the $600,000 reserve for slow moving inventory that was recorded in the first quarter of fiscal year 2013.
Selling, general and administration expenses of $2,647,886 are up $1,182,928, or 81% for the six months ended December 31, 2012 compared to $1,464,958 for the six month period ended December 31, 2011. The increase in sales and administration expense reflects a $1,516,338 impairment charge on the Tracciare, Inc. note receivable offset by a $333,410 decline related to an increase in plant utilization overhead charged to cost of goods sold for the six month period ended December 31, 2012. Discretionary product development spending for the six month period ended December 31, 2012 was $358,972, or 14% of sales, compared to $226,860, or 7% of sales for the comparable period last year. Year over year there is an increase of $132,112 in discretionary product development spending. The increase represents continued product development for the commercial wireless product line.
During the second quarter of the year ended December 31, 2012, PHAZAR CORP reported large operating losses and projected cash flow shortfalls in the near future. Based on those facts, it is unlikely the remaining net deferred tax assets will be realized. Therefore, an additional valuation allowance of $513,430 has been recorded as a deferred tax expense.
The Company recorded a net loss of $3,019,487, or $(1.30) per share for the six month period ended December 31, 2012 compared to a net loss of $115,784, or $(0.05) per share for the comparable period in the prior year.
Backlog of Orders
The Company’s backlog of orders on December 31, 2012, totaled $2,473,662, up 71% compared to backlog of $1,442,802 at December 31, 2011 and up 66% from June 30, 2012. Incoming orders for the six month period ended December 31, 2012 totaled $3,657,481 versus $2,693,051 for the six month period ended December 31, 2011, an increase of 36% year over year.
More information and analysis of PHAZAR CORP’s financial results will be provided in the management discussion and analysis of financial condition and results of operations in the Form 10-Q for the second quarter ended December 31, 2012, estimated to be filed with the Securities and Exchange Commission on or about February 14, 2013.
The Form 10-Q will also be available at the SEC’s website at www.sec.gov and PHAZAR CORP’s website at www.phazarcorp.com.
Product information is available at www.antennaproducts.com and www.phazar.com.
The common stock of PHAZAR CORP is listed on the NASDAQ Capital Market under the trading symbol “ANTP”. This press release contains forward-looking information within the meaning of Section 29A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performances and underlying assumption and other statements, which are other than statements of historical facts. Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties, which could cause actual results, or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties, but there can be no assurance that management’s expectations, beliefs or projections will result, or be achieved, or accomplished.
| PHAZAR CORP AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| December 31, 2012 (Unaudited) | June 30, 2012 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 639,548 | $ | 528,876 | ||||
| Accounts receivable: | ||||||||
| Trade, net of allowance for doubtful accounts of $0 | ||||||||
| as of December 31, 2012 and June 30, 2012 | 429,117 | 880,342 | ||||||
| Inventories (net of slow moving reserve) | 2,041,634 | 2,376,427 | ||||||
| Note receivable (net of impairment reserve) | - | 1,477,161 | ||||||
| Prepaid expenses and other assets | 76,063 | 95,231 | ||||||
| Income taxes receivable | 29,321 | 29,321 | ||||||
| Deferred income taxes | - | 211,674 | ||||||
| Total current assets | 3,215,683 | 5,599,032 | ||||||
| Property and equipment, net | 931,819 | 997,426 | ||||||
| Long-term deferred income tax | - | 301,547 | ||||||
| TOTAL ASSETS | $ | 4,147,502 | $ | 6,898,005 | ||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 348,345 | $ | 274,628 | ||||
| Accrued liabilities | 391,211 | 300,637 | ||||||
| Deferred revenues | 68,226 | 19,619 | ||||||
| Liabilities held for discontinued operations | 114,571 | 114,571 | ||||||
| Total current liabilities | $ | 922,353 | $ | 709,455 | ||||
| TOTAL LIABILITIES | $ | 922,353 | $ | 709,455 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred Stock, $1 par, 2,000,000 shares authorized, none issued | ||||||||
| or outstanding, attributes to be determined when issued | - | - | ||||||
| Common stock, $0.01 par, 6,000,000 shares authorized | ||||||||
2,323,537 issued and outstanding on December 31, 2012 and 2,391,628 | ||||||||
| issued June 30, 2012 | 23,236 | 23,917 | ||||||
Additional paid in capital | 4,576,649 | 4,735,800 | ||||||
Treasury stock, at cost, 0 and 74,691 shares on December 31, 2012 | ||||||||
| and June 30, 2012, respectively | - | (215,918 | ) | |||||
| Retained earnings (deficit) | (1,374,736 | ) | 1,644,751 | |||||
| Total shareholders’ equity | 3,225,149 | 6,188,550 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 4,147,502 | $ | 6,898,005 | ||||
| PHAZAR CORP AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Sales and contract revenues | $ | 1,495,130 | $ | 2,092,367 | $ | 2,654,966 | $ | 3,507,585 | ||||||||
| Cost of sales and contracts | 931,556 | 1,273,062 | 2,250,962 | 2,052,381 | ||||||||||||
| Gross profit | 563,574 | 819,305 | 404,004 | 1,455,204 | ||||||||||||
| Selling, general and administration expenses | 593,552 | 719,588 | 1,131,548 | 1,464,958 | ||||||||||||
| Impairment of note receivable | 1,516,338 | - | 1,516,338 | - | ||||||||||||
| Research and development costs | 184,876 | 127,398 | 358,972 | 226,860 | ||||||||||||
| Total operating expenses | 2,294,766 | 846,986 | 3,006,858 | 1,691,818 | ||||||||||||
| Operating loss | (1,731,192 | ) | (27,681 | ) | (2,602,854 | ) | (236,614 | ) | ||||||||
| Other income | ||||||||||||||||
| Interest income | 34,448 | 29,585 | 51,767 | 67,877 | ||||||||||||
| Other income (expense) | (23,941 | ) | 4,871 | 45,030 | 11,351 | |||||||||||
| Total other income | 10,507 | 34,456 | 96,797 | 79,228 | ||||||||||||
| Income (loss) from operations before income taxes | (1,720,685 | ) | 6,775 | (2,506,057 | ) | (157,386 | ) | |||||||||
| Income tax expense (benefit) | 513,430 | 2,304 | 513,430 | (53,511 | ) | |||||||||||
| Net income (loss) before discontinued operations | (2,234,115 | ) | 4,471 | (3,019,487 | ) | (103,875 | ) | |||||||||
| Loss from discontinued operations | - | - | - | (18,044 | ) | |||||||||||
| Income tax benefit from discontinued operations | - | - | - | 6,135 | ||||||||||||
| Net loss from discontinued operations | - | - | - | (11,909 | ) | |||||||||||
Net income (loss) | $ | (2,234,115 | ) | $ | 4,471 | $ | (3,019,487 | ) | $ | (115,784 | ) | |||||
| Basic loss per common share | ||||||||||||||||
| Continuing operations | $ | ( 0.96 | ) | $ | - | $ | (1.30 | ) | $ | (0.04 | ) | |||||
| Discontinued operations | - | - | - | (0.01 | ) | |||||||||||
| Net loss | $ | (0.96 | ) | $ | - | $ | (1.30 | ) | $ | (0.05 | ) | |||||
| Diluted loss per common share | ||||||||||||||||
| Continuing operations | $ | (0.96 | ) | $ | - | $ | (1.30 | ) | $ | (0.04 | ) | |||||
| Discontinued operations | - | - | - | (0.01 | ) | |||||||||||
| Net loss | $ | (0.96 | ) | $ | - | $ | (1.30 | ) | $ | (0.05 | ) | |||||
| Basic weighted average of common shares outstanding | 2,322,578 | 2,313,569 | 2,320,319 | 2,312,346 | ||||||||||||
| Diluted weighted average of common shares outstanding | 2,322,578 | 2,313,569 | 2,320,319 | 2,312,346 | ||||||||||||
| PHAZAR CORP AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Six Months Ended | ||||||||
| December 31, 2012 | December 31, 2011 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (3,019,487 | ) | $ | (115,784 | ) | ||
|
Adjustments to reconcile net loss to net cash
provided by operating activities: | ||||||||
| Depreciation | 65,607 | 64,692 | ||||||
| Provision for slow moving inventory | 600,000 | - | ||||||
| Impairment of note receivable | 1,516,338 | - | ||||||
| Loss from discontinued operations | - | 11,909 | ||||||
| Stock based compensation | 56,086 | 27,114 | ||||||
| Deferred federal income tax | 513,221 | (33,512 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 451,225 | 338,158 | ||||||
| Inventories | (265,207 | ) | 84,928 | |||||
| Income taxes receivable | - | (24,955 | ) | |||||
| Prepaid expenses and other assets | 19,168 | 62,996 | ||||||
| Accounts payable | 73,717 | 22,498 | ||||||
| Accrued liabilities | 90,574 | 170,493 | ||||||
| Deferred revenues | 48,607 | 19,618 | ||||||
| Net cash used in discontinued operations | - | (75,398 | ) | |||||
| Net cash provided by operating activities | 149,849 | 552,757 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Funding of note receivable | (39,177 | ) | (256,235 | ) | ||||
| Purchase of property and equipment | - | (37,250 | ) | |||||
| Net cash used in investing activities | (39,177 | ) | (293,485 | ) | ||||
| Net increase in cash and cash equivalents | 110,672 | 259,272 | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period | 528,876 | 1,169,318 | ||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 639,548 | $ | 1,428,590 | ||||
Contacts:
Kathy Kindle, 940-325-3301
Fax: 940-325-0716
kindle@phazarcorp.com
