Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - SPARTON CORP | d533187dex991.htm |
| 8-K - FORM 8-K - SPARTON CORP | d533187d8k.htm |
 May 8, 2013
Fiscal 2013 Third Quarter
Financial Results
Conference Call
Exhibit 99.2 |
 2
Safe Harbor Statement
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.
Related to Onyx, adjusted gross profit and adjusted operating income exclude the gross profit effect
of capitalized profit in inventory from acquisition and unusual write-downs of inventory
and accounts receivable related to an Onyx customer (“Augustine”) which was excluded
from the acquisition. Adjusted EBITDA related to Onyx represents operating income before
depreciation and amortization as adjusted for the gross profit effect of capitalized profit in
inventory from acquisition and unusual write-downs of inventory and accounts receivable related to
an Onyx customer (“Augustine”) which was excluded from the acquisition. |
 •
3 Quarter Highlights
•
Fiscal 2013 YTD Financial Results
•
3 Quarter Segmented Operating Results
•
Liquidity & Capital Resources
•
Outlook
•
Q & A
Today’s Agenda
rd
rd
3 |
 •
Awarded 18 new business programs during the third quarter of fiscal
2013 with estimated annual revenue of $11.3 million.
•
Sales backlog of approximately $208.8 million, including approximately
$32.2 million from the Company’s newly acquired business; a 42%
increase over a year ago. Net of the Onyx acquisition, a 20% increase
over a year ago.
•
The acquired Sparton Onyx business resulted in incremental net sales
of $12.0 million, operating income of $0.1 million and adjusted EBITDA
of $1.1 million for the quarter.
3 Quarter Highlights
4
rd |
 5
Consolidated Financial Results
Fiscal
2013
YTD
(Adjusted)
(Adjusted)
(Adjusted)
2013
2012
2013
2012
Net Sales
$ 178,879
$ 162,251
$ 178,879
$ 162,251
$ 16,628
$ 18,089
$ (1,461)
Gross Profit
28,663
26,241
29,229
26,135
3,094
2,435
659
16.0%
16.2%
16.3%
16.1%
13.5%
Selling and Administrative Expense
19,650
16,455
19,650
16,455
(3,195)
1,665
(1,530)
11.0%
10.1%
11.0%
10.1%
Internal R&D Expense
889
963
889
963
74
-
74
Amortization of intangible assets
984
330
984
330
(654)
688
34
Restructuring/impairment charges
-
(59)
-
-
-
-
Other operating expense, net
16
74
16
74
58
-
58
Operating Income
7,124
8,478
7,690
8,313
(623)
82
(705)
4.0%
5.2%
4.3%
5.1%
0.5%
Income Before Provision For Income Tax
7,108
8,502
7,674
8,210
(536)
105
(641)
Provision For Income Taxes
271
3,046
2,526
2,941
415
35
380
Net Income
$ 6,837
$ 5,456
$ 5,148
$ 5,269
$ (121)
$ 70
$ (191)
3.8%
3.4%
2.9%
3.2%
Income per Share (Basic)
$ 0.67
$ 0.53
$ 0.50
$ 0.52
$ (0.02)
$ (0.02)
Income per Share (Diluted)
$ 0.67
$ 0.53
$ 0.50
$ 0.51
$ (0.01)
$ (0.01)
($ in 000’s, except per share)
(adjusted removes certain gains and charges, including imputing taxes at 32%
effective rates for FY2013 and FY2012, respectively) Onyx
Legacy YoY
Variance
(Reported)
(Adjusted)
9 months ended Mar. 31,
9 months ended Mar. 31,
Total YoY
Variance
- |
 Consolidated Financial Results
Adjusted EBITDA
6
2013
2012
Net Income
$ 6,837
$ 5,456
$ 1,381
Interest expense
390
522
(132)
Interest income
(99)
(73)
(26)
Provision for income taxes
271
3,046
(2,775)
Depreciation and amortization
3,036
1,272
1,764
Restructuring/impairment charges
-
(59)
59
Gross profit effect of acquisition
1
566
-
566
Gross profit effect of acquisition
2
-
(106)
106
Gain on sale of investment
-
(127)
127
Adjusted EBITDA
$ 11,001
$ 9,931
$ 1,070
6.1%
6.1%
Onyx adjusted EBITDA
$ 1,562
$
- $ 1,562
Adjusted EBITDA without Onyx
$ 9,439
$ 9,931
$ (492)
5.9%
6.1%
1 -
Gross profit effect of capitalized profit in inventory from acquisition
2 -
Gross profit effect of acquisition contingency settlement
9 months ended Mar. 31,
YoY
Variance |
 7
Sales Results
Sales Results
Medical
Medical
SEGMENT
2013
% of Total
2012
% Change
2013
% of Total
2012
% Change
Medical
(with Onyx)
$ 39,139
61%
$ 27,046
45%
$ 102,002
57%
$ 82,533
24%
Complex Systems
$ 16,482
26%
$ 12,812
29%
$ 42,888
24%
$ 37,921
13%
DSS
12,918
20%
19,363
-33%
47,526
27%
53,126
-11%
Eliminations
(4,659)
-7%
(4,173)
12%
(13,537)
-8%
(11,329)
20%
Totals
$ 63,880
100%
$ 55,048
16%
$ 178,879
100%
$ 162,251
10%
SEGMENT
2013
% of Total
2012
% Change
2013
% of Total
2012
% Change
Medical
(without Onyx)
$ 27,165
52%
$ 27,046
0%
$ 83,913
52%
$ 82,533
2%
Complex Systems
$ 16,482
32%
$ 12,812
29%
$ 42,888
27%
$ 37,921
13%
DSS
12,918
25%
19,363
-33%
47,526
29%
53,126
-11%
Eliminations
(4,659)
-9%
(4,173)
12%
(13,537)
-8%
(11,329)
20%
Totals
$ 51,906
100%
$ 55,048
-6%
$ 160,790
100%
$ 162,251
-1%
($ in 000’s)
SALES
(with Onyx)
3 Months Ended March 31,
9 Months Ended March 31,
SALES
(without Onyx)
3 Months Ended March 31,
9 Months Ended March 31, |
 8
Gross Profit Results
Gross Profit Results
Medical
Medical
SEGMENT
2013
GP %
2012
GP %
2013
GP %
2012
GP %
Medical
(with Onyx)
$ 5,339
13.6%
$ 3,593
13.3%
$ 14,443
14.2%
$ 11,090
13.4%
Complex Systems
1,890
11.5%
933
7.3%
4,414
10.3%
3,327
8.8%
DSS
2,813
21.8%
4,635
23.9%
10,372
21.8%
11,824
22.3%
Totals
$ 10,042
15.7%
$ 9,161
16.6%
$ 29,229
16.3%
$ 26,241
16.2%
SEGMENT
2013
GP %
2012
GP %
2013
GP %
2012
GP %
Medical
(without Onyx)
$ 3,771
13.9%
$ 3,593
13.3%
$ 12,008
14.3%
$ 11,090
13.4%
Complex Systems
1,890
11.5%
933
7.3%
4,414
10.3%
3,327
8.8%
DSS
2,813
21.8%
4,635
23.9%
10,372
21.8%
11,824
22.3%
Totals
$ 8,474
16.3%
$ 9,161
16.6%
$ 26,794
16.7%
$ 26,241
16.2%
($ in 000’s)
ADJUSTED GROSS MARGIN
(with Onyx)
3 Months Ended March 31,
9 Months Ended March 31,
GROSS MARGIN
(without Onyx)
3 Months Ended March 31,
9 Months Ended March 31, |
 Sales
& Gross Profit Results Sales & Gross Profit Results
Complex Systems
Complex Systems
SEGMENT
2013
% of Total
2012
% Change
2013
% of Total
2012
% Change
Medical
(with Onyx)
$ 39,139
61%
$ 27,046
45%
$ 102,002
57%
$ 82,533
24%
Complex Systems
16,482
26%
12,812
29%
42,888
24%
37,921
13%
DSS
12,918
20%
19,363
-33%
47,526
27%
53,126
-11%
Eliminations
(4,659)
-7%
(4,173)
12%
(13,537)
-8%
(11,329)
20%
Totals
$ 63,880
100%
$ 55,048
16%
$ 178,879
100%
$ 162,251
10%
SEGMENT
2013
GP %
2012
GP %
2013
GP %
2012
GP %
Medical (with Onyx)
$ 5,339
13.6%
$ 3,593
13.3%
$ 14,443
14.2%
$ 11,090
13.4%
Complex Systems
1,890
11.5%
933
7.3%
4,414
10.3%
3,327
8.8%
DSS
2,813
21.8%
4,635
23.9%
10,372
21.8%
11,824
22.3%
Totals
$ 10,042
15.7%
$ 9,161
16.6%
$ 29,229
16.3%
$ 26,241
16.2%
($ in 000’s)
3 Months Ended March 31,
3 Months Ended March 31,
9 Months Ended March 31,
9 Months Ended March 31,
SALES
ADJUSTED GROSS MARGIN
9 |
 Sales
& Gross Profit Results Sales & Gross Profit Results
Defense & Security Systems
Defense & Security Systems
10
SEGMENT
2013
% of Total
2012
% Change
2013
% of Total
2012
% Change
Medical
(with Onyx)
$ 39,139
61%
$ 27,046
45%
$ 102,002
57%
$ 82,533
24%
Complex Systems
16,482
26%
12,812
29%
42,888
24%
37,921
13%
DSS
12,918
20%
19,363
-33%
47,526
27%
53,126
-11%
Eliminations
(4,659)
-7%
(4,173)
12%
(13,537)
-8%
(11,329)
20%
Totals
$ 63,880
100%
$ 55,048
16%
$ 178,879
100%
$ 162,251
10%
SEGMENT
2013
GP %
2012
GP %
2013
GP %
2012
GP %
Medical
(with Onyx)
$ 5,339
13.6%
$ 3,593
13.3%
$ 14,443
14.2%
$ 11,090
13.4%
Complex Systems
1,890
11.5%
933
7.3%
4,414
10.3%
3,327
8.8%
DSS
2,813
21.8%
4,635
23.9%
10,372
21.8%
11,824
22.3%
Totals
$ 10,042
15.7%
$ 9,161
16.6%
$ 29,229
16.3%
$ 26,241
16.2%
($ in 000’s)
3 Months Ended March 31,
3 Months Ended March 31,
9 Months Ended March 31,
9 Months Ended March 31,
SALES
ADJUSTED GROSS MARGIN |
 Liquidity & Capital Resources
Liquidity & Capital Resources
0
25,000
50,000
11
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.42
22,959
0.16
14,572
1,917
1,796
1,669
0.03
0.02
0.02
Jun-09
Jun-10
Jun-11
Jun-12
Mar-13
($ in '000)
Mar-12
Jun-12
Sep-12
Dec-12
Mar-12
Cash and equivalents
26,682
46,950
43,096
6,066
4,358
LOC Availability
16,469
16,277
16,012
51,000
52,000
Total
43,151
63,227
59,108
57,066
56,358
($ in '000)
Mar-12
Jun-12
Sep-12
Dec-12
Mar-12
Credit Revolver
-
-
-
14,000
13,000
IRB (Ohio)
1,702
1,669
1,637
1,604
1,572
Total
1,702
1,669
1,637
15,604
14,572
($ in '000)
Mar-12
Jun-12
Sep-12
Dec-12
Mar-12
Net Inventory
39,252
35,102
38,467
45,367
46,928
Cash Availability
Debt
Inventory |
 •
Implementation of the strategic growth plan
–
Continue
to
gain
traction
on
a
nationally
focused
direct
selling
effort
–
Further leverage Viet Nam as a low cost country alternative and in-region
provider –
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
•
Focus on sustained profitability
–
Continue margin improvements in Complex Systems
–
Increase capacity utilization
–
Improve the working capital turnover rate
–
Continue additional improvements in operating performance through lean and quality
efforts •
Initiate a $3.0 million company stock buyback plan
Fiscal 2013 Outlook
Fiscal 2013 Outlook
We remain highly optimistic for fiscal 2013 and continue to expect
year-over-year increases
in
revenue
and
profitability
from
our
legacy
business,
only
to
be
enhanced by the inclusion of the Onyx acquisition.
12 |
 Q
& A 13 |