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SL Industries Second Quarter Results, 2005August 10, 2005 SL Industries, Inc. Announces Financial Results for Its Second Quarter Ended June 30, 2005 MT. LAUREL, N.J.--(BUSINESS WIRE)--Aug. 10, 2005--SL INDUSTRIES, INC. (AMEX & PHLX:SLI) announced today that net sales for the second quarter ended June 30, 2005 were $31,259,000, compared to $30,508,000 for the second quarter last year, an increase of $751,000, or 2.5%. Net income from continuing operations was $1,358,000, or $0.24 per diluted share, compared to net income from continuing operations of $1,559,000, or $0.26 per diluted share, for the same period in 2004. Net sales from continuing operations for the six months ended June 30, 2005 were $63,715,000, compared to net sales of $57,150,000 for the six months ended June 30, 2004, an increase of $6,565,000, or 11.5%. Net income from continuing operations for the six months ended June 30, 2005 was $3,327,000, or $0.58 per diluted share, compared to net income from continuing operations of $2,244,000, or $0.37 per diluted share, for the same period last year. Net income for the six months ended June 30, 2005 was $3,026,000, or $0.53 per diluted share, compared to net income of $4,720,000, or $0.79 per diluted share, for the same period in 2004. Included in net income for 2004 was income from discontinued operations of $2,516,000, net of tax, relating to the receipt of settlement fees in connection with the Company's dismissed lawsuit with American Power Conversion Corporation. The settlement fees were recorded in the first quarter of 2004. Results for the Company's four business segments were favorable over the first six months of 2005. Condor D.C. Power Supplies, Inc. recorded net sales of $22,384,000 and operating income of $2,428,000, as compared to net sales of $19,523,000 and operating income of $1,400,000 for the same period in 2004. Teal Electronics Corp. recorded net sales of $15,237,000 and operating income of $2,135,000, as compared to net sales of $14,801,000 and operating income of $2,428,000 for the same period last year. SL Montevideo Technologies, Inc. recorded net sales of $13,680,000 and operating income of $1,824,000, as compared to net sales of $11,783,000 and operating income of $1,259,000 for the first six months of 2004. RFL Electronics Inc. recorded net sales of $12,414,000 and operating income of $1,316,000, as compared to net sales of $11,043,000 and operating income of $836,000 for the same period last year. Engineering and product development expenses for the first six months of 2005 increased by $193,000, or approximately 4%, as compared to the same period last year. Increased research and development costs were recorded at each of the Company's subsidiaries, except RFL which had incurred significant expenditures in 2004 related to its development of several new products. The Company reported net new orders of $32.4 million in the second quarter of 2005, compared to net new orders of $32.0 million in the second quarter of 2004. Backlog at June 30, 2005 was $42.7 million, as compared to $44.1 million a year earlier. Commenting on the results, Warren Lichtenstein, Chairman and Chief Executive Officer of SL Industries, Inc. said, "We achieved solid financial results for the period in all of the Company's business segments. In the Power Electronics Group, strong demand by medical equipment manufacturers drove increased sales at Teal and Condor. Teal experienced lower profitability due to higher prices for certain raw materials, resulting in lower income from operations on slightly higher sales. We expect margin improvements at Teal over the second half of the year, as it begins to realize cost savings from several initiatives implemented in the second quarter. "SL-MTI continues to perform well. Defense related aerospace bookings have been increasing at a steady rate. Strong sales to new medical customers also contributed to the six-month results. Bookings in the commercial aerospace segment continue to be sluggish." Lichtenstein continued, "RFL Electronics experienced increased demand for each of its product lines, except teleprotection equipment, in the first quarter. During the second quarter, the domestic market experienced weak business activity. We believe this trend will reverse itself with the recent enactment of the federal energy legislation, which should attract new investment capital into RFL's domestic market. Additionally, in the second half of the year RFL should benefit from industry acceptance of several new products that were introduced in the first quarter. In the interim, RFL has taken steps to contain its cost structure to be in line with current sales activity." "Corporate and other expenses, which relate to corporate administration, strategic management and oversight, capital financing, risk management, corporate governance and controls, legal and litigation activities and public reporting expenses were $2,876,000 for the six months ended June 30, 2005, as compared to $2,440,000 for the same period in 2004. The increase of $436,000 is primarily attributable to the salaries of the Company's chief operating officer and tax manager, who were added to the corporate staff in mid-2004, and to expenses related to stock-based compensation for certain senior executives." Lichtenstein added, "On August 3, the Company entered into a new revolving loan facility with Bank of America, which provides for borrowings of up to $25 million, and under certain circumstances up to $30 million, and continues for a term of three years. The new loan agreement requires that the Company comply with certain financial covenants, including a maximum ratio of total funded debt to EBITDA, minimum levels of interest coverage and net worth and limitations on capital expenditures, as defined therein. The terms of the new credit facility will provide the Company with greater financial flexibility. More importantly, we believe that Bank of America will be a valuable partner to the Company, as we move forward to execute our multi-year strategic plan." Lichtenstein concluded, "On May 25, the Company held its Annual Shareholders Meeting, at which time shareholders re-elected all of the directors standing for re-election by margins exceeding 96%. On behalf of the entire Board of Directors, we thank our shareholders for their continued support." About SL Industries, Inc. SL Industries, Inc. designs, manufactures and markets power electronics, power motion, power protection, teleprotection and communications equipment and systems that is used in a variety of medical, aerospace, computer, datacom, industrial, telecom, transportation and electric power utility applications. For more information about SL Industries, Inc. and its products, please visit the Company's web site at www.slindustries.com. Forward-Looking Statements This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: the effectiveness of the cost reduction initiatives undertaken by the Company, changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, constraints on supplies of critical components, excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.
SL INDUSTRIES, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2005 2004
------------ ------------
(Unaudited)
------------
ASSETS
Cash and cash equivalents $4,308 $2,659
Marketable securities 639 -
Accounts and notes receivables, net 17,725 15,734
Inventories, net 15,349 15,839
Other current assets 3,984 3,758
------------ ------------
Total current assets 42,005 37,990
------------ ------------
Property, plant and equipment, net 8,421 8,509
Intangible assets, net 11,443 11,512
Other assets 4,455 5,073
------------ ------------
Total assets $66,324 $63,084
============ ============
Long term debt due within one year $1,688 $559
Other current liabilities 17,036 17,935
Long term debt, less portion due within
one year - 1,456
Other liabilities 5,304 5,447
Shareholders' equity 42,296 37,687
------------ ------------
Total liabilities and shareholders'
equity $66,324 $63,084
============ ============
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three-Months Ended Six-Months Ended
June 30, June 30,
2005 2004 2005 2004
-------- --------- -------- ---------
Net sales $31,259 $ 30,508 $63,715 $ 57,150
Cost and expenses:
Cost of products sold 19,830 19,120 40,425 36,165
Engineering and product
development 2,454 2,376 4,777 4,584
Selling, general and
administrative 6,388 6,256 12,715 11,976
Depreciation and
amortization 497 468 971 942
-------- --------- -------- ---------
Total costs and expenses 29,169 28,220 58,888 53,667
-------- --------- -------- ---------
Income from operations 2,090 2,288 4,827 3,483
Other income (expense):
Amortization of deferred
financing costs (112) (112) (224) (224)
Interest income 38 18 67 61
Interest expense (61) (59) (149) (148)
-------- --------- -------- ---------
Income from continuing
operations before income taxes 1,955 2,135 4,521 3,172
Income tax provision 597 576 1,194 928
-------- --------- -------- ---------
Income from continuing
operations 1,358 1,559 3,327 2,244
Income (loss) from discontinued
operations (net of tax) (231) 20 (301) 2,476
-------- --------- -------- ---------
Net income $ 1,127 $ 1,579 $ 3,026 $ 4,720
======== ========= ======== =========
Basic net income (loss) per
common share *
Income from continuing
operations $ 0.25 $ 0.27 $ 0.60 $ 0.38
Income (loss) from
discontinued operations
(net of tax) (0.04) 0.00 (0.05) 0.42
-------- --------- -------- ---------
Net income $ 0.20 $ 0.27 $ 0.55 $ 0.80
======== ========= ======== =========
Diluted net income (loss) per
common share *
Income from continuing
operations $ 0.24 $ 0.26 $ 0.58 $ 0.37
Income (loss) from
discontinued operations
(net of tax) (0.04) 0.00 (0.05) 0.41
-------- --------- -------- ---------
Net income $ 0.20 $ 0.26 $ 0.53 $ 0.79
======== ========= ======== =========
Shares used in computing basic
net income (loss) per common
share 5,533 5,880 5,503 5,909
Shares used in computing diluted
net income (loss) per common
share 5,763 5,984 5,699 6,007
* Earnings per share does not add due to rounding.
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(unaudited)
Three-Months Ended Six-Months Ended
June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Net income $1,127 $1,579 $3,026 $4,720
Other comprehensive income
(net of tax):
Unrealized gain on
securities 34 - 47 -
--------- --------- --------- ---------
Comprehensive income $1,161 $1,579 $3,073 $4,720
========= ========= ========= =========
Contact: SL Industries, Inc. Source: SL Industries, Inc.
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