Attached files
| file | filename |
|---|---|
| 8-K - 8-K - SPARTON CORP | d668963d8k.htm |
| EX-99.1 - EX-99.1 - SPARTON CORP | d668963dex991.htm |
 Second Quarter Financial
Results Conference Call
February 4, 2014
Exhibit 99.2 |
 2
Safe Harbor Statement
Certain
statements
herein
constitute
forward-looking
statements
within
the
meaning
of
the
Securities
Act
of
1933,
as
amended
and
the
Securities
Exchange
Act
of
1934,
as
amended.
When
used
herein,
words
such
as
“believe,”
“expect,”
“anticipate,”
“project,”
“plan,”
“estimate,”
“will”
or
“intend”
and
similar
words
or
expressions
as
they
relate
to
the
Company
or
its
management
constitute
forward-looking
statements.
These
forward-looking
statements
reflect
our
current
views
with
respect
to
future
events
and
are
based
on
currently
available
financial,
economic
and
competitive
data
and
our
current
business
plans.
The
Company
is
under
no
obligation
to,
and
expressly
disclaims
any
obligation
to,
update
or
alter
its
forward-looking
statements
whether
as
a
result
of
such
changes,
new
information,
subsequent
events
or
otherwise.
Actual
results
could
vary
materially
depending
on
risks
and
uncertainties
that
may
affect
our
operations,
markets,
prices
and
other
factors.
Important
factors
that
could
cause
actual
results
to
differ
materially
from
those
forward-looking
statements
include
those
contained
under
the
heading
of
risk
factors
and
in
the
management’s
discussion
and
analysis
contained
from
time-to-time
in
the
Company’s
filings
with
the
Securities
and
Exchange
Commission.
Adjusted
EBITDA
and
related
reconciliation
presented
here
represents
earnings
before
interest,
taxes,
depreciation
and
amortization
as
adjusted
for
restructuring/impairment
charges,
gross
profit
effects
of
capitalized
profit
in
inventory
from
acquisition
and
acquisition
contingency
settlement,
and
gain
on
sale
of
investment.
The
Company
believes
Adjusted
EBITDA
is
commonly
used
by
financial
analysts
and
others
in
the
industries
in
which
the
Company
operates
and,
thus,
provides
useful
information
to
investors.
The
Company
does
not
intend,
nor
should
the
reader
consider,
Adjusted
EBITDA
an
alternative
to
net
income,
net
cash
provided
by
operating
activities
or
any
other
items
calculated
in
accordance
with
GAAP.
The
Company's
definition
of
Adjusted
EBITDA
may
not
be
comparable
with
Adjusted
EBITDA
as
defined
by
other
companies.
Accordingly,
the
measurement
has
limitations
depending
on
its
use. |
 3
•
2
nd
Quarter Highlights
•
2
nd
Quarter Segmented Operating Results
•
Liquidity & Capital Resources
•
Acquisition Update
•
Fiscal 2014 Outlook
•
Q & A
Today’s Agenda |
 4
•
Quarterly
revenue
grew
26%
to
$85
million
as
compared
to
the
same
quarter
of
the
prior
year
–
Organic growth, net of acquisitions, increased 5% from the same quarter of the
prior year
•
Adjusted
EBITDA
grew
28%
in
the
quarter
and
51%
YTD
as
compared
to
the
prior
year
periods
•
17
new
business
programs
awarded
with
potential
annualized
sales
of
$7.4
million
•
Completed
the
acquisition
of
Beckwood
Services,
Inc.
2
nd
Quarter
Highlights |
 5
Consolidated Financial Results
Consolidated Financial Results
Fiscal 2014 YTD
Fiscal 2014 YTD
(Adjusted)
2013
2012
2013
2012
Net Sales
$ 158,760
$ 118,055
$ 158,760
$
118,055
$
40,705
Gross Profit
27,171
20,095
27,279
20,661
6,618
17.1%
17.0%
17.2%
17.5%
Selling and Administrative Expense
16,332
12,847
16,332
12,847
(3,485)
10.3%
10.9%
10.3%
10.9%
Internal R&D Expense
791
548
791
548
(243)
Amortization of intangible assets
1,234
375
1,234
375
(859)
Restructuring/impairment charges
188
-
-
-
-
Other operating expense, net
(8)
(6)
(8)
(6)
2
Operating Income
8,634
6,331
8,930
6,897
2,033
5.4%
5.4%
5.6%
5.8%
Income Before Provision For Income Tax
8,613
6,297
8,909
6,863
2,046
Provision For (Benefit From) Income Taxes
2,843
(1)
2,941
2,254
(687)
Net Income
$ 5,770
$ 6,298
$ 5,968
$
4,609
$
1,359
3.6%
5.3%
3.8%
3.9%
Income per Share (Basic)
$ 0.57
$ 0.62
$ 0.59
$
0.45
$ 0.14
Income per Share (Diluted)
$ 0.57
$ 0.62
$ 0.59
$
0.45
$ 0.14
($ in 000’s, except per share)
(adjusted removes certain gains and charges)
(Reported)
(Adjusted)
6 months ended Dec 31,
6 months ended Dec 31,
Total YoY
Variance |
 6
Consolidated Financial Results
Consolidated Financial Results
Adjusted EBITDA
Adjusted EBITDA
2013
2012
2013
2012
Variance
Net Income
$
3,484
$
4,841
$
5,770
$
6,298
$
(528)
Interest expense
202
173
360
254
106
Interest income
-
(23)
(2)
(51)
49
Provision for (benefit from) income taxes
1,736
(732)
2,843
(1)
2,844
Depreciation and amortization
1,919
993
3,640
1,472
2,168
Restructuring/impairment charges
-
-
188
-
188
Capitalized profit in inventory from acquisition
108
566
108
566
(458)
Adjusted EBITDA
$
7,449
$
5,818
$
12,907
$
8,538
$
4,369
8.8%
8.7%
8.1%
7.2%
3 months ended Dec 31,
6 months ended Dec 31, |
 7
Operating Results
Operating Results
Revenue & Gross Profit
Revenue & Gross Profit
SEGMENT
2013
% of Total
2012
% Change
2013
% of Total
2012
% Change
Medical
$ 44,316
52%
$ 34,804
27%
$ 86,324
54%
$ 62,863
37%
Complex Systems
18,304
22%
14,059
30%
36,569
23%
26,406
38%
DSS
26,078
31%
22,677
15%
43,971
28%
37,664
17%
Inter-company
(4,136)
-5%
(4,286)
-3%
(8,104)
-5%
(8,878)
-9%
Totals
$ 84,562
100%
$ 67,254
26%
$ 158,760
100%
$ 118,055
34%
SEGMENT
2013
GP %
2012
GP %
2013
GP %
2012
GP %
Medical
$ 6,824
15.4%
$ 4,344
12.5%
$ 13,802
16.0%
$ 8,538
13.6%
Complex Systems
1,944
10.6%
1,428
10.2%
3,812
10.4%
2,524
9.6%
DSS
6,209
23.8%
6,323
27.9%
9,557
21.7%
9,033
24.0%
Totals
$ 14,977
17.7%
$ 12,095
18.0%
$ 27,171
17.1%
$ 20,095
17.0%
($ in 000’s)
3 months ended Dec 31,
3 months ended Dec 31,
6 months ended Dec 31,
6 months ended Dec 31,
REVENUE
GROSS PROFIT |
 8
Liquidity & Capital Resources
Liquidity & Capital Resources
($ in '000)
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Cash and equivalents
6,066
4,358
6,085
2,719
1,009
LOC Availability*
86,000
87,000
90,000
71,000
75,000
Total
92,066
91,358
96,085
73,719
76,009
* Includes a $35 million accordian feature as part of the existing credit
facility. ($ in '000)
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Credit Revolver
14,000
13,000
10,000
28,500
25,000
IRB (Ohio)
1,604
1,572
1,539
1,506
1,472
Total
15,604
14,572
11,539
30,006
26,472
($ in '000)
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Net Inventory
45,367
46,928
46,334
55,658
52,393
Cash Availability
Debt
Inventory |
 9
•
Beckwood Services
–
Closed transaction on December 11, 2013
–
Located in Plaistow, NH (one hour north of Boston)
–
Contract services business of manufacturing electronic or electro-mechanical
controls and electronic assemblies
–
Customer profiles includes international Fortune 1000 manufacturers of industrial
control
systems,
analytical
instruments,
measuring
and
detecting
equipment,
and
military, defense and Homeland Security equipment
–
$18 million of revenue
–
Financials reported within Complex Systems segment
–
Minimal integration activities required
–
Accretive to earnings within 12 months
Acquisition Update
Acquisition Update |
 10
•
Implementation of the strategic growth plan
–
Continue to grow organically
–
Maintain our level of investment in internal research & development to
commercially extend our product lines
–
Continue to enable our engineering workforce to develop new and innovative
proprietary solutions for our end markets
–
Continue to seek out complementary and compatible acquisitions
–
Further leverage Viet Nam as a low cost country alternative and in-region
provider •
Focus on sustained profitability
–
Continue margin improvements across the entire company
–
Increase capacity utilization
–
Continue additional improvements in operating performance through lean and quality
efforts
•
Complete the integration of Aydin Displays & Beckwood Services
Fiscal 2014 Outlook
Fiscal 2014 Outlook |
 11
Q & A |