Flanders Corporation (NASDAQ: FLDR)
-- Improved gross margins 290 basis points, compared to first quarter
2008
-- Lowered operating expenses 19% compared to first quarter 2008
-- Delivered operating margin of 5% and EPS of $0.07
Flanders Corporation (NASDAQ: FLDR) reported financial results
for the first quarter ended March 31, 2009.
Flanders Corporation's Chairman, president and CEO Harry Smith
said: "Our improved efficiencies have positioned the company to
perform well during the difficult economic environment. While
revenue was impacted by lulls in commercial and industrial segments
of our business, our better procurement practices drove first
quarter 2009 gross margins to 20.6%, up 290 basis points, compared
to the first quarter of 2008. During 2008, we improved on-time
delivery to 99%, restoring customers' confidence. As a result, our
customers are relying more heavily on Flanders. Toward the quarter
end, the rate of orders increased, particularly in our retail
business. In fact, March orders were very healthy, and these trends
continued into the second quarter. We are well positioned heading
into our busy season, and we are confident in our projections for
the year: revenue growth of 8% to 13% from 2008, profitability and
positive EBITDA."
First Quarter 2009 Financial Summary
Revenue for the first quarter 2009 was $48.0 million, compared
to $49.2 million in the first quarter 2008. Gross margin for the
first quarter was 20.6%, compared to 17.7% in the first quarter
2008. The first quarter 2009 net income was $1.8 million, or $0.07
per share. This compares to the first quarter of 2008 net income of
$2.4 million, or $0.09 per share, which included a $1.5 million
gain for extraordinary items. EBITDA for the first quarter 2009 was
$4.5 million, compared to $3.7 million, before the $1.5 million
extraordinary gain in the first quarter of 2008.
Management uses some measures not in accordance with generally
accepted accounting principles (GAAP) to evaluate the results of
the company's operations and believes earnings before interest,
taxes, extraordinary items, depreciation and amortization (EBITDA)
provides a useful measure of operations.
Flanders' Chief Financial Officer John Oakley said: "We are
encouraged that during this very challenging environment, optimized
plants and production continued to yield cost benefits. We lowered
operating expenses 19%, compared to the same period last year. As a
result, operating margin increased to 5%, and we achieved
profitability of $0.07 per diluted share. We also improved
liquidity and delivered positive operating cash flow of $1.8
million. Even in an uncertain economy, our streamlined
infrastructure combined with consumer and commercial demand for
greater energy efficiency and cleaner air position us for growth.
We continue to expect 2009 revenue to be between $235 million and
$246 million delivering annual profitability and positive
EBITDA."
Conference Call
Chairman, president and CEO Harry Smith and CFO John Oakley are
scheduled to conduct a conference call and simultaneous webcast at
11:00 a.m. ET on May 4, 2009 to review these results in more
detail. To access the call in the U.S., please dial (866) 425-6192,
and for international callers dial (973) 409-9253 approximately 10
minutes prior to the start of the conference call. The conference
ID will be 95329001. A telephone replay will be available until
midnight Eastern Time on May 6th by dialing (800) 642-1687 or (706)
645-9291 and entering pass code 95329001.
Safe Harbor Statement
The statements made in this press release regarding Flanders (1)
improved efficiencies positioning the company to perform well
during the difficult economic environment, (2) better procurement
practices, (3) improved on-time delivery, (4) restoring customer
confidence and customers relying more heavily on the Company, (5)
being well positioned heading into the busy season, (6) projections
for the year of revenue growth being between 8% to 13% from 2008,
profitability and positive EBITDA, (7) optimized plants and
production yielding and continuing to yield cost benefits, (8)
lowering and continuing to lower operating expenses, (9) operating
margins increasing and continuing to increase, (10) streamlined
infrastructure combined with consumer and commercial demand for
position the Company for growth, and (11) 2009 revenue to be
between $235 million and $246 million delivering annual
profitability and positive EBITDA are based on the current
expectations and beliefs of the management of Flanders and are
subject to a number of risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. For a more detailed discussion of risk
factors that may affect Flanders' operations, please refer to the
Company's Form 10-K for the year ended December 31, 2008. These
forward-looking statements speak only as of the date on which such
statements are made, and the Company undertakes no obligation to
update such forward-looking statements, except as required by
law.
About Flanders
Flanders is a leading air filtration products manufacturer.
Flanders' products are utilized by many industries, including those
associated with commercial and residential heating, ventilation and
air conditioning systems, semiconductor manufacturing, ultra-pure
materials, biotechnology, pharmaceuticals, synthetics, nuclear
power and nuclear materials processing.
For further information on Flanders and its products, visit its
web site at http://www.flanderscorp.com/ or contact Kirsten Chapman
or Tim Dien at (415) 433-3777.
- Tables Follow -
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
ASSETS 2009 2008
----------- -----------
Current assets
Cash and cash equivalents $ 451 $ 404
Receivables:
Trade, less allowance:
3/31/2009 $3,200; 12/31/2008 $3,683 39,954 37,682
Other 401 280
Inventories 33,260 31,549
Deferred taxes 4,047 4,285
Income Taxes 9,209 10,048
Other current assets 5,100 4,714
----------- -----------
Total current assets 92,422 88,962
Property and equipment, less accumulated
depreciation: 3/31/2009
$55,799; 12/31/2008 $55,520 59,528 57,156
Intangible assets, less accumulated amortization:
3/31/2009
$1,464; 12/31/2008 $1,449 293 295
Other Assets 14,669 14,604
----------- -----------
$ 166,912 $ 161,017
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt and
capital lease obligations $ 1,243 $ 1,307
Accounts payable 23,091 22,795
Accrued expenses 15,356 13,517
Other Current Liabilities 6,179 6,179
----------- -----------
Total current liabilities 45,869 43,798
Long-term capital lease obligations, less current
maturities 452 554
Long-term debt, less current maturities 31,740 29,611
Long-term liabilities, other 4,183 4,286
Deferred taxes - -
Commitments and contingencies
Stockholders' equity
Preferred stock, $.001par value, 10,000 shares
authorized; none issued - -
Common stock, $.001 par value; 50,000 shares
authorized; issued and outstanding: 25,524 and
25,524 shares at March 31, 2009 and
December 31, 2008, respectively 26 26
Additional paid-in capital 87,298 87,253
Accumulated other comprehensive loss (1,176) (1,231)
Retained deficit (1,480) (3,280)
----------- -----------
84,668 82,768
----------- -----------
$ 166,912 $ 161,017
=========== ===========
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
Net sales $ 48,020 $ 49,194
Cost of goods sold 38,115 40,470
----------- -----------
Gross profit 9,905 8,724
Operating expenses 7,535 9,276
----------- -----------
Operating income (loss) 2,370 (552)
Nonoperating income (expense):
Other income, net 754 2,603
Interest expense (267) (633)
----------- -----------
487 1,970
----------- -----------
Earnings before income taxes and
extraordinary item 2,857 1,418
Provision for income taxes 1,057 567
----------- -----------
Income before extraordinary item 1,800 851
Extraordinary gain on Fire (net of taxes) - 1,533
----------- -----------
Net earnings $ 1,800 $ 2,384
=========== ===========
Income before extraordinary item Basic
earnings per share $ 0.07 $ 0.03
Extraordinary item $ - $ 0.06
----------- -----------
Net earnings per share $ 0.07 $ 0.09
=========== ===========
Income before extraordinary item Diluted
earnings per share $ 0.07 $ 0.03
Extraordinary item $ - $ 0.06
----------- -----------
Net earnings per share $ 0.07 $ 0.09
=========== ===========
Weighted average common shares outstanding
Basic 25,524 25,723
=========== ===========
Diluted 25,780 26,124
=========== ===========
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
------------------------
2009 2008
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities $ 1,805 $ 3,650
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Disposal, net of cash acquired - (11)
Purchase of property and equipment (3,850) (2,045)
Proceeds from sale of property and equipment 49 3
Decrease in other assets 169 199
----------- -----------
Net cash used in investing activities (3,632) (1,854)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (190) (145)
Net proceeds from (payments on) revolving
credit agreement 2,154 (1,002)
Payment of Debt Issuance Costs (90) -
Purchase and Retirement of Common Stock - (281)
Proceeds from Sales of Common Stock - 56
----------- -----------
Net cash provided by (used in) financing
activities 1,874 (1,372)
----------- -----------
Net increase in cash and cash equivalents 47 424
CASH AND CASH EQUIVALENTS
Beginning of period 404 498
----------- -----------
End of period $ 451 $ 922
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 62 $ 51
=========== ===========
Interest $ 201 $ 564
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Sale of equipment for note receivable $ 166 $ 83
=========== ===========
Cashless exercise of common stock (Net) $ - $ (270)
=========== ===========
Offset of accrued expenses against trade
accounts receivable $ 3,427 $ 7,211
=========== ===========
DISPOSAL OF COMPANIES
Working Capital surplus disposed, net of cash
and cash equivalents disposed - 466
Fair value of other assets disposed,
principally property and equipment - 119
Goodwill disposed - 589
Minority interest - 141
----------- -----------
$ - $ 1,315
----------- -----------
FLANDERS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA
(In thousands)
(Unaudited)
Three months ended
March 31,
------------------------
2009 2008
Net Earnings $ 1,800 $ 2,384
Extraordinary items 0 (1,533)
Interest 267 633
Taxes 1,057 567
Depreciation and amortization 1,367 1,609
------------ -----------
EBITDA Earnings $ 4,491 $ 3,660
------------ -----------
Company Contact: John Oakley CFO Flanders Corporation (252)
946-8081 Investor Relations Contacts: Lippert / Heilshorn &
Associates Kirsten Chapman / Tim Dien Email Contact (415)
433-3777
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