Flanders Corporation (NASDAQ: FLDR)
-- Grew revenue 2.5% compared to second quarter 2008
-- Increased gross margins 600 basis points compared to second quarter
2008
-- Delivered $5.6 million in EBITDA, more than doubling second quarter
2008
Flanders Corporation (NASDAQ: FLDR) reported financial results
for the second quarter ended June 30, 2009.
Flanders Corporation's Chairman, president and CEO Harry Smith
said: "Our second quarter results build upon our achievements and
prove the steps taken to improve our business are paying off. As a
result of better sales and marketing efforts, we grew second
quarter 2009 revenue 2.5%, compared to the same period last year,
even though a nationwide drop in June temperatures caused orders to
be softer than originally expected. Our backlog for the third
quarter is strong, and we are excited about the second half of
2009. We also continue to make great strides in our research and
development efforts to improve our current products, introduce new
technology and expand our product line with existing
customers."
"In addition, we are excited to welcome Tom Justice as our new
COO. Bringing his 28 years of diverse experience in the air
filtration industry to the team, Tom will play an integral role to
achieve operational excellence and to develop innovative new
products," added Smith.
Financial Summary - Second Quarter 2009
Revenue for the second quarter 2009 was $58.7 million, compared
to $57.3 million in the second quarter 2008. Gross margin for the
first quarter was 21%, compared to 15% in the second quarter 2008.
The second quarter 2009 net income was $2.4 million, or $0.09 per
diluted share. This compares to the second quarter of 2008 net
income of $6.9 million, which included a $6.8 million gain for
extraordinary items, or $0.26 per diluted share. EBITDA for the
second quarter 2009 was $5.6 million, compared to $2.1 million in
the second 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
delivered revenue increases even during the recession, and we are
poised to grow in the second half. Equally important, our
procurement and procedural measures continue to post results.
Second quarter gross margins increased 600 basis points and EBITDA
grew $3.4 million to $5.6 million, compared to second quarter 2008.
Looking ahead, we are adjusting our guidance to reflect continuing
economic conditions in commercial & industrial. Nonetheless, we
are still quite optimistic about growth and profitability in
2009."
Financial Summary - Six Months Ended June 30, 2009
Revenue for the six months ended June 30, 2009 was $106.7
million, compared to $106.5 million for the same period a year ago.
Gross margin for the period was 21%, compared to 16% for the same
period a year ago. Year-to-date net income was $4.2 million, or
$0.16 per diluted share, compared to net income of $9.3 million,
which included an $8.3 million gain for extraordinary items, or
$0.35 per diluted share for the same period a year ago. EBITDA for
the period was $10.0 million, compared to $5.8 million for the same
period a year ago.
Financial Outlook - Full Year 2009
Management continues to expect the company to be profitable and
deliver positive EBITDA for 2009. The company adjusted its 2009
revenue guidance to be between $225 million and $240 million, from
the previous expectations provided on May 4th, 2009, of revenue
between $235 million and $246 million.
Recent Corporate Highlights
-- Appointed Tom Justice as Chief Operating Officer in July. A 28-year
veteran of the air filtration industry, with tremendous experience in
operations management and product development.
-- Acquired certain assets from Wildwood Industries, Inc. in May, for
$3.6 million in cash. Flanders retained the furnace filter equipment and
inventory and immediately sold the unrelated assets to R.P.S. Products,
Inc. for $2.2 million in cash.
-- Awarded its second purchase agreement from Shaw AREVA MOX Services,
LLC in June. Flanders will produce 24 glove box assemblies during 2010 and
2011 for approximately $3.5 million.
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 July 30, 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 16845808. A telephone replay will be available until
midnight Eastern Time on August 3rd by dialing (800) 642-1687 or
(706) 645-9291 and entering pass code 16845808.
Safe Harbor Statement
The statements made in this press release regarding Flanders (1)
results building upon its achievements and proving steps taken to
improve our business are paying off; (2) having better sales and
marketing; (3) being excited about the second half of 2009, (4)
making great strides in research and development efforts,
introducing new technology and expanding its product line with
existing customers, (5) Tom Justice playing an integral role to
achieve operational excellence and to develop innovative new
products, (6) procurement and procedural measures continuing to
post results, and (7) being optimistic about growth and
profitability in 2009 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, and Form 10-Q for the
period ended March 30, 2009. 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.
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
June 30, December 31,
------------ ------------
2009 2008
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 690 $ 404
Receivables:
Trade, less allowance: $3,297 and $3,683
at June 30, 2009 and December 31, 2008,
respectively 45,642 37,682
Other 897 280
Inventories 35,615 31,549
Deferred taxes 3,716 4,285
Income taxes 7,447 10,048
Other current assets 4,150 4,714
------------ ------------
Total current assets 98,157 88,962
Property and equipment, less accumulated
depreciation: $56,345 and $55,520
at June 30, 2009 and December 31, 2008,
respectively 65,052 57,156
Intangible assets, less accumulated
amortization: $1,479 and $1,449
at June 30, 2009 and December 31, 2008,
respectively 304 295
Notes receivable and other assets 14,730 14,604
------------ ------------
Total assets $ 178,243 $ 161,017
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 1,098 $ 1,307
Accounts payable 24,659 22,795
Accrued expenses 17,063 13,517
Other current liabilities 6,179 6,179
------------ ------------
Total current liabilities 48,999 43,798
Long-term capital lease obligations, less
current maturities 190 554
Long-term debt, less current maturities 37,918 29,611
Long-term liabilities, other 3,821 4,286
Deferred taxes - -
Commitments and contingencies
------------ ------------
Total liabilities 90,928 78,249
Stockholders' equity:
Preferred stock, $.001 par 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 June 30, 2009 and
December 31, 2008, respectively 26 26
Additional paid-in capital 87,298 87,253
Accumulated other comprehensive loss (966) (1,231)
Retained earnings (deficit) 957 (3,280)
------------ ------------
Total stockholders' equity 87,315 82,768
------------ ------------
Total liabilities and stockholders'
equity $ 178,243 $ 161,017
============ ============
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net sales $ 58,727 $ 57,269 $ 106,747 $ 106,463
Cost of goods sold 46,129 48,773 84,244 89,243
--------- --------- --------- ---------
Gross profit 12,598 8,496 22,503 17,220
Operating expenses 8,559 9,313 16,094 18,589
--------- --------- --------- ---------
Operating income (loss) 4,039 (817) 6,409 (1,369)
Nonoperating income (expense):
Other income, net 148 1,442 902 4,045
Interest expense (318) (492) (585) (1,125)
--------- --------- --------- ---------
Total nonoperating income
(expense) (170) 950 317 2,920
--------- --------- --------- ---------
Earnings before income
taxes and extraordinary
items 3,869 133 6,726 1,551
Provision for income taxes 1,432 53 2,489 620
--------- --------- --------- ---------
Income before extraordinary
item 2,437 80 4,237 931
Extraordinary gain on Fire
(net of taxes) - 6,802 - 8,335
--------- --------- --------- ---------
Net earnings $ 2,437 $ 6,882 $ 4,237 $ 9,266
========= ========= ========= =========
Basic earnings per share:
Income before extraordinary
item $ 0.10 $ 0.00 $ 0.17 $ 0.04
Extraordinary item - 0.27 - 0.32
--------- --------- --------- ---------
Net earnings per share $ 0.10 $ 0.27 $ 0.17 $ 0.36
========= ========= ========= =========
Diluted earnings per share:
Income before extraordinary
item $ 0.09 $ 0.00 $ 0.16 $ 0.03
Extraordinary item - 0.26 - 0.32
--------- --------- --------- ---------
Net earnings per share $ 0.09 $ 0.26 $ 0.16 $ 0.35
========= ========= ========= =========
Weighted average common shares
outstanding:
Basic 25,524 25,725 25,524 25,724
========= ========= ========= =========
Diluted 25,887 26,203 25,845 26,185
========= ========= ========= =========
FLANDERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash provided by
operating activities $ 860 $ 1,818 $ 2,665 $ 5,468
-------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Disposal, net of cash acquired - - - (11)
Purchase of property and
equipment (6,060) (3,192) (9,910) (5,237)
Proceeds from sale of property
and equipment 205 7 254 10
Proceeds from insurance claim on
building and equipment 466 - 466 -
Decrease in other assets 478 479 647 678
-------- -------- -------- --------
Net cash used in investing
activities (4,911) (2,706) (8,543) (4,560)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal payments on long-term
borrowings (943) (228) (1,133) (373)
Net proceeds from (payments on)
revolving credit agreement 5,233 596 7,387 (406)
Payment of debt issuance costs - - (90) -
Purchase and retirement of common
stock - (53) - (334)
Proceeds from sales of common
stock - - - 56
-------- -------- -------- --------
Net cash provided by (used in)
financing activities 4,290 315 6,164 (1,057)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 239 (573) 286 (149)
CASH AND CASH EQUIVALENTS BEGINNING
OF PERIOD 451 922 404 498
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS END OF
PERIOD $ 690 $ 349 $ 690 $ 349
======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 179 $ 743 $ 241 $ 793
Interest 411 558 612 1,122
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Sale of equipment for note
receivable $ 249 $ 332 $ 415 $ 415
Purchase of building with debt 1,480 - 1,480 -
Sale of building for note
receivable 200 - 200 -
Cashless exercise of common
stock (net) - (100) - (370)
Offset of accrued expenses
against trade accounts
receivable 2,412 1,614 5,839 8,825
Note receivable in lieu of
account receivable trade - 677 - 677
Offset of accrued expenses
against other receivables - 900 - 900
DISPOSAL OF COMPANIES
Working capital surplus disposed,
net of cash and cash equivalents
disposed $ - $ 959 $ - $ 1,425
Fair value of other assets
disposed, principally property
and equipment - 8,518 - 8,637
Goodwill disposed - - - 589
Minority interest - - - 141
-------- -------- -------- --------
$ - $ 9,477 $ - $ 10,792
======== ======== ======== ========
FLANDERS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO EBITDA
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
--------- -------- --------- --------
Net Earnings $ 2,437 $ 6,882 $ 4,237 $ 9,266
Extraordinary items - (6,802) - (8,335)
Interest 318 492 585 1,125
Taxes 1,432 53 2,489 620
Depreciation and amortization 1,364 1,516 2,731 3,125
--------- -------- --------- --------
EBITDA $ 5,551 $ 2,141 $ 10,042 $ 5,801
========= ======== ========= ========
Company Contact: John Oakley, CFO Flanders Corporation (252)
946-8081 Investor Relations Contacts: Kirsten Chapman/ Tim Dien
Lippert / Heilshorn & Associates (415) 433-3777 or Email
Contact
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