SL Industries, Inc. Announces Financial Results for Its Second Quarter Ended June 30, 2007
MT. LAUREL, N.J.–(BUSINESS WIRE)–SL INDUSTRIES, INC. (AMEX & PHLX:SLI) announced today that net sales for the second quarter ended June 30, 2007 were $52,730,000, compared to $43,114,000 for the second quarter last year, an increase of $9,616,000, or 22%. Income from continuing operations was $3,236,000, or $0.56 per diluted share, compared to income from continuing operations of $2,107,000, or $0.36 per diluted share, for the same period in 2006. Second quarter results include the financial performance of MTE Corporation (“MTE”), which was acquired on October 31, 2006. Net sales of MTE for the second quarter were $5,060,000, with income from operations of $682,000.
Net sales from continuing operations for the six months ended June 30, 2007 were $101,057,000, compared to net sales of $82,399,000 for the six months ended June 30, 2006, an increase of $18,658,000, or 23%. Income from continuing operations for the six months ended June 30, 2007 was $5,275,000, or $0.91 per diluted share, compared to income from continuing operations of $3,340,000, or $0.58 per diluted share, for the same period last year. Net sales of MTE for the six month period ended June 30, 2007 were $9,564,000, with income from operations of $1,192,000.
Loss from discontinued operations, net of tax, was $789,000 for the first six months of 2007, compared to a loss from discontinued operations, net of tax, of $297,000 for the same period last year. Loss from discontinued operations, net of tax, increased as a result of higher legal and consulting fees associated with certain environmental matters. As a result, for the six-month period ended June 30, 2007, the Company recorded net income of $4,486,000, or $0.78 per diluted share, compared to net income of $3,043,000, or $0.52 per diluted share, for the same period last year.
The Company’s four business segments recorded strong results for the first six months of 2007. SL Power Electronics Corp. recorded net sales of $47,255,000 and operating income of $4,192,000, as compared to net sales of $41,162,000 and operating income of $3,343,000 for the same period in 2006. The results of SL Power Electronics Corp. includes six months performance of the Ault business, which was acquired on January 26, 2006, compared to five months performance in 2006. The High Power Group recorded net sales of $28,822,000 and operating income of $3,791,000, as compared to net sales of $17,792,000 and operating income of $2,835,000 for the same period last year. The High Power Group includes the results of MTE. SL Montevideo Technology, Inc. recorded net sales of $14,065,000 and operating income of $1,701,000, as compared to net sales of $12,688,000 and operating income of $501,000 for the first six months of 2006. RFL Electronics Inc. recorded net sales of $10,915,000 and operating income of $849,000, as compared to net sales of $10,757,000 and operating income of $710,000 for the same period last year.
Engineering and product development expenses for the first six months of 2007 increased by $183,000, or approximately 3%, as compared to the same period last year. Not including MTE, engineering and product development expenses decreased $251,000, or 4%. This decrease was primarily attributable to a 21% decrease at SL-MTI, as that division incurred unusually large product development expenses last year.
The Company reported net new orders of $51.9 million in the second quarter of 2007, compared to net new orders of $49.2 million in the second quarter of 2006. Backlog at June 30, 2007 was $55.9 million, as compared to $58.0 million a year earlier.
Commenting on the results, James Taylor, President and Chief Executive Officer of SL Industries, said, “I am very pleased with the Company’s performance this year. In 2006 we initiated changes throughout the organization to more effectively align resources to prevail in select market niches and to implement lean manufacturing principles. These initiatives are now yielding results. SL Power Electronics recorded a 9% increase in bookings and a 15% increase in sales, largely as a result of several new program awards. Income from operations improved 25% due to improved sourcing and operational efficiencies. The sharp improvement of the High Power Group was attributable to the performance of MTE, which has been an excellent addition to the Company’s power electronics business. The other member of the High Power Group, Teal Electronics, recorded lower profitability on slightly higher sales as a result of higher raw materials costs, unfavorable product mix and inefficiencies incurred while transferring production to its new facility in Tecate, Mexico. I expect margin at Teal to rebound in the second half.”
Taylor stated, “SL Montevideo Technology continued its third consecutive quarter of improvement since we initiated operational changes a year ago. Commercial and military aerospace programs have driven consistent bookings and sales growth over the period, while lean manufacturing principles have increased margin and decreased working capital. We believe further improvement at SL-MTI is readily achievable.”
Taylor continued, “RFL Electronics recorded stable bookings and sales for the first half, as we have seen no change in overall market activity since our last report. Margin improved due to a favorable product mix for the period. Over the first six months of 2007, demand for power protection products increased and orders for communications products decreased, compared to the same period last year.”
“We continue to believe that large scale investment is necessary to upgrade the country’s electric power transmission infrastructure. In April, RFL received an award from the Utilities Telecommunications Council for Best Telecom Product of 2007 with respect to its GARD 8000 product line. The GARD 8000, which was judged with the products of several leading industry competitors, achieved this award in recognition of its integrated teleprotection, powerline carrier, Ethernet and multiplexing capabilities. We are proud of RFL’s accomplishment and will continue to invest to develop new innovative products to meet the future needs of the utility industry.”
Taylor added, “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 $2,510,000 for the six month period ended June 30, 2007, as compared to $2,356,000 for the same period in 2006. Corporate expenses decreased to 2% of net sales for the first half of 2007, as compared to 3% of net sales for the same period last year.”
In closing, Taylor said, “I’d like to take this opportunity to note that the Company was named by Forbes Small Business one of the 100 fastest growing small public companies in the United States, based upon its growth over the past three-year period. The Company’s success is a validation of the strategy we set in 2003. We are proud of our dedicated employees that made this achievement possible.”
Taylor concluded, “On May 16, the Company held its Annual Shareholder’s Meeting, at which time shareholders re-elected all of the directors standing for re-election by margins exceeding 90%. On behalf of the entire Board of Directors, we thank our shareholders for their continued support.”
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.
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.
David Nuzzo, Chief Financial Officer
Phone: 856-727-1500, ext. 5515
Source: SL Industries, Inc.