BETHEL, Conn., Feb. 8 /PRNewswire-FirstCall/ -- Memry Corporation reported today that revenues for the second fiscal quarter ended December 31, 2006 were $12,506,000, compared with $12,649,000 reported in the comparable quarter a year ago, a reduction of 1% percent. The company reported a net loss of $280,000, or $0.01 per diluted share, compared with a net loss of $236,000, or $0.01 per diluted share, in the comparable quarter of last fiscal year. The net loss in the comparable quarter a year ago included separation charges of $1,130,000. The company reported an operating loss of $299,000 versus an operating loss of $12,000 in last year’s second quarter.
Revenues for the first six months of the 2007 fiscal year were up 4% to $26,336,000 from $25,316,000 in the first six months of FY ’06. Net income in FY ’07 increased $470,000 in the first six months, to $735,000, or $0.02 per diluted share, compared with $265,000, or $0.01 per diluted share, for the same period in FY ’06. Operating income for the first six months of FY ’07 was $1,562,000, compared with $1,165,000 in the first six months of FY ’06.
Memry Chief Executive Officer Robert Belcher said, “As expected, weakness in our Nitinol operations resulted in a 1% drop in second fiscal quarter revenues. We experienced declines in revenues from superelastic tubing and tube-based stent components reflecting both pricing pressure and a decline in units shipped. Our business is being affected by a loss of market share as our largest customer has moved to develop an additional source of tube-based stent components. Partially offsetting this, we recorded increased revenues from Nitinol prototype development and R&D activities as well as a boost in revenues for a new Nitinol catheter product.”
“Increased shipments of catheter products to several customers helped produce a 7.8% improvement in Polymer division revenues even though we continued to be adversely affected by inventory adjustments from a major customer. Our polymer business, which has a higher gross margin than our Nitinol business, accounted for 34% of total revenues in the quarter, up from 31% of total revenues for the same period a year earlier.
“As we communicated last quarter, we expect a decline in our Nitinol business for the remainder of the fiscal year and continuing pressure on margins. Our polymer business continues to be strong. Our ongoing investment in the manufacturing growth of our polymer operations will affect near term profitability, but we expect such investment to enable us to continue to grow polymer revenues over the next several years.
“Despite the current difficulties, we believe that our longer term outlook is positive. New product initiatives, which have experienced some delays, are expected to begin to produce top and bottom line results late in calendar year 2007. Our balance sheet continues to be strong and the company continues to generate positive cash flows from operations, which provide us with resources to fund additional growth opportunities. Net debt (total debt, less cash) was $235,000 as of December 31, 2006, a reduction from $3,026,000 at June 30, 2006. Adjusted EBITDA as a percentage of revenues was 8.6% in the quarter compared with 16.2% in the comparable quarter a year ago. The Adjusted EBITDA performance indicates our sensitivity to short term sales volume in our highly engineered Nitinol products segment.”
A copy of the financial statements follows.
The company will host a conference call with CEO Robert Belcher and senior members of the management team on Friday, February 9 at 11 a.m. Eastern. The call will cover Memry’s second quarter fiscal 2007 earnings. Robert Belcher will open the conference call, followed by a question-and-answer session.
To participate in this call, dial (877) 407-8031 any time after 10:55 a.m. Eastern on February 9. International callers should dial (201) 689-8031.
About Memry Corporation
Memry Corporation provides design, engineering, development and manufacturing services to the medical device and other industries using the company’s proprietary shape memory alloy and polymer extrusion technologies. Medical device products include stent components, catheter components, guidewires, laparoscopic surgical sub-assemblies and orthopedic instruments as well as complex, multi-lumen, multi-layer polymer extrusions used for guidewires, catheters, delivery systems and various other high-end interventional medical devices.
An investment profile on Memry may be found at http://www.hawkassociates.com/mryprofile.aspx.
For more information, contact Memry Chief Financial Officer and Treasurer Richard F. Sowerby at (203) 739-1100, e-mail: Richard_Sowerby@Memry.com, or Frank Hawkins or Julie Marshall, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com. Detailed information about Memry Corporation can be found at http://www.memry.com. Copies of Memry Corporation press releases, SEC filings, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com and http://www.americanmicrocaps.com.
This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the company’s control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the company’s periodic filings with the Securities and Exchange Commission. In this release, the company refers to EBITDA and Adjusted EBITDA, financial measures that are not recognized under accounting principles generally accepted in the United States of America (GAAP). The company defines EBITDA as earnings before income taxes, interest expense, net, depreciation and amortization. The company defines Adjusted EBITDA as EBITDA further adjusted to exclude material non-cash items and items that may be infrequent in occurrence or, in management’s view, not indicative of the company’s continuing operating performance and cash flows. EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than, net income, operating income, cash flows from operations or other traditional indications of a company’s operating performance or liquidity that are derived in accordance with GAAP. In addition, the company’s calculations of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures being disclosed by other companies, limiting their usefulness as comparative measures. The company discloses EBITDA and Adjusted EBITDA as each is a commonly referred to financial metric used in the investing community to evaluate the performance of companies in our industry. The company believes that disclosure of EBITDA and Adjusted EBITDA is helpful to those reviewing its performance, as EBITDA and Adjusted EBITDA provide information on the company’s ability to meet debt service, capital expenditure and working capital requirements, and management believes that EBITDA and Adjusted EBITDA are also useful indicators of the company’s operating performance. We present Adjusted EBITDA as a percentage of revenues because management believes it is a useful indicator of the company’s operating performance.
Memry Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) December 31, June 30, 2006 2006 ASSETS Current assets Cash and cash equivalents 8,365,000 $6,965,000 Accounts receivable, less allowance for doubtful accounts 6,780,000 8,156,000 Inventories 5,351,000 5,418,000 Deferred tax asset 1,663,000 1,663,000 Prepaid expenses and other current assets 516,000 41,000 Total current assets 22,675,000 22,243,000 Property, plant and equipment 23,807,000 22,588,000 Less accumulated depreciation (14,712,000) (13,592,000) 9,095,000 8,996,000 Other assets Intangible assets, less accumulated amortization 6,836,000 7,171,000 Goodwill 14,146,000 14,146,000 Deferred financing costs, less accumulated amortization 300,000 355,000 Investment 409,000 409,000 Deferred tax asset 1,383,000 1,821,000 Deposits and other assets 156,000 159,000 Total other assets 23,230,000 24,061,000 TOTAL ASSETS $55,000,000 $55,300,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $4,701,000 $5,478,000 Notes payable 2,080,000 2,173,000 Income tax payable 108,000 215,000 Total current liabilities 6,889,000 7,866,000 Notes payable, less current maturities 6,520,000 7,818,000 Other non-current liabilities 120,000 116,000 Stockholders’ equity Common stock 297,000 291,000 Additional paid-in capital 56,176,000 54,946,000 Accumulated deficit (15,002,000)(15,737,000) Total stockholders’ equity 41,471,000 39,500,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $55,000,000 $55,300,000 Memry Corporation and Subsidiaries Condensed Consolidated Statements of Operations For the Three Months and Six Months Ended December 31, 2006 and 2005 (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2006 2005 2006 2005 Revenues $12,506,000 $12,649,000 $26,336,000 $25,316,000 Cost of revenues 9,078,000 7,694,000 17,185,000 15,612,000 Gross profit 3,428,000 4,955,000 9,151,000 9,704,000 Operating expenses Research and development 337,000 602,000 830,000 1,067,000 General, selling and administration, including separation charges of $1,130,000 in 2005 3,272,000 4,239,000 6,532,000 7,220,000 Amortization of intangible assets 126,000 126,000 252,000 252,000 Other (8,000) --- (25,000) --- 3,727,000 4,967,000 7,589,000 8,539,000 Operating income (loss) (299,000) (12,000) 1,562,000 1,165,000 Interest Expense (266,000) (331,000) (572,000) (652,000) Income 106,000 55,000 198,000 98,000 (160,000) (276,000) (374,000) (554,000) Income (loss) before income taxes (459,000) (288,000) 1,188,000 611,000 Provision for (benefit from) income taxes (179,000) (52,000) 453,000 346,000 Net income (loss) $(280,000) $(236,000) $735,000 $265,000 Net income (loss) per common share Basic $(0.01) $(0.01) $0.03 $0.01 Diluted $(0.01) $(0.01) $0.02 $0.01 Weighted average common shares used in calculation Basic 29,601,754 28,754,707 29,357,145 28,695,084 Diluted 29,601,754 28,754,707 29,854,376 29,465,545 Memry Corporation and Subsidiaries Condensed Segment Data For the Three Months and Six Months Ended December 31, 2006 and 2005 (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2006 2005 2006 2005 Revenues Nitinol Products $ 8,334,000 $ 8,839,000 $ 17,754,000 $ 18,054,000 Polymer Products 4,198,000 3,895,000 8,615,000 7,375,000 Corporate items and eliminations (26,000) (85,000) (33,000) (113,000) Consolidated $ 12,506,000 $ 12,649,000 $ 26,336,000 $ 25,316,000 Gross profit Nitinol Products $ 1,894,000 $ 3,090,000 $ 5,651,000 $ 6,307,000 Polymer Products 1,534,000 1,865,000 3,500,000 3,397,000 Consolidated $ 3,428,000 $ 4,955,000 $ 9,151,000 $ 9,704,000 Memry Corporation and Subsidiaries EBITDA and Adjusted EBITDA For the Three Months and Six Months Ended December 31, 2006 and 2005 (Unaudited) Three Months Ended Six Months Ended December 31, December 31, 2006 2005 2006 2005 Revenues $ 12,506,000 $ 12,649,000 $ 26,336,000 $ 25,316,000 Net Income (Loss) $ (280,000)$ (236,000)$ 735,000 $ 265,000 Income Taxes (179,000) (52,000) 453,000 346,000 Interest Expense, Net 160,000 276,000 374,000 554,000 Depreciation 528,000 558,000 1,123,000 1,055,000 Amortization (a) 169,000 168,000 336,000 335,000 EBITDA 398,000 714,000 3,021,000 2,555,000 CEO Separation Charges --- 1,130,000 --- 1,130,000 Stock-based Compensation (b) 205,000 202,000 381,000 392,000 Incremental Professional Fees (c) 468,000 --- 596,000 --- Adjusted EBITDA $ 1,071,000 $ 2,046,000 $ 3,998,000 $ 4,077,000 Adjusted EBITDA as a % of Revenues 8.6% 16.2% 15.2% 16.1% a) Amortization excludes the amortization of deferred financing costs, which is included in interest expense, net. b) Stock-based compensation represents non-cash items. Effective July 1, 2005, the Company adopted SFAS No. 123( R ), ‘Share-Based Payment.’ c) Incremental professional fees are 1) excess litigation fees and 2) professional fees related to the voluntary implementation of Sarbanes- Oxley Section 404 compliance.
Memry Corporation
CONTACT: Richard F. Sowerby, Chief Financial Officer and Treasurer ofMemry Corporation, +1-203-739-1100, or Richard_Sowerby@Memry.com; or FrankHawkins or Julie Marshall of Hawk Associates, +1-305-451-1888, orinfo@hawkassociates.com
