SL Industries, Inc. Announces Financial Results for Its Third Quarter Ended September 30, 2007
MT. LAUREL, NEW JERSEY, November 13, 2007 . . . SL INDUSTRIES, INC. (AMEX & PHLX: SLI) announced today that net sales for the third quarter ended September 30, 2007 were $50,652,000, compared to $45,165,000 for the third quarter last year, an increase of $5,487,000, or 12%. Income from continuing operations was $2,467,000, or $0.42 per diluted share, compared to income from continuing operations of $1,806,000, or $0.31 per diluted share, for the same period in 2006. Third quarter results include the financial performance of MTE Corporation (“MTE”), which was acquired on October 31, 2006. Net sales of MTE for the third quarter of 2007 were $5,588,000, with operating income of $962,000.
Net sales from continuing operations for the nine months ended September 30, 2007 were $151,709,000, compared to net sales of $127,564,000 for the nine months ended September 30, 2006, an increase of $24,145,000, or 19%. Income from continuing operations for the nine months ended September 30, 2007 was $7,741,000, or $1.33 per diluted share, compared to income from continuing operations of $5,146,000, or $0.88 per diluted share, for the same period last year. Results for the nine months ended September 30, 2007 include the financial performance of MTE. Net sales of MTE for the nine month period ended September 30, 2007 were $15,152,000, with operating income of $2,154,000.
Each of the Company’s four business segments reported increased sales and earnings, compared to the first nine months of the prior year. SL Power Electronics Corp. recorded net sales of $69,622,000 and operating income of $6,209,000, as compared to net sales of $65,065,000 and operating income of $5,631,000 for the same period in 2006. The results of SL Power Electronics Corp. include nine months performance of the Ault business, which was acquired on January 26, 2006. The High Power Group recorded net sales of $44,512,000 and operating income of $6,189,000, as compared to net sales of $26,976,000 and operating income of $4,100,000 for the same period last year. The High Power Group includes the results of MTE. SL Montevideo Technology, Inc. recorded net sales of $20,865,000 and operating income of $2,352,000, as compared to net sales of $18,825,000 and operating income of $818,000 for the first nine months of 2006. And RFL Electronics Inc. recorded net sales of $16,710,000 and operating income of $1,725,000, as compared to net sales of $16,698,000 and operating income of $1,417,000 for the same period last year.
Engineering and product development expenses for the first nine months of 2007 increased by $459,000, or approximately 5%, as compared to the same period last year. The acquisition of MTE accounted for $701,000 of engineering expenses. Other than SL Montevideo Technology, all of the Company’s business segments increased or maintained their engineering and product development expenditures in 2007. SL Montevideo Technology decreased product development expenses by $486,000, as it incurred significant costs in 2006 related to the development of several new product designs and applications.
The Company reported net new orders of $51.1 million in the third quarter of 2007, compared to net new orders of $41.5 million in the third quarter of 2006. Net new orders for the nine-month period ended September 30, 2007 increased $22.8 million from the same period last year. Backlog at September 30, 2007 was $56.0 million, as compared to $53.8 million a year earlier.
Commenting on the results, James Taylor, Chief Executive Officer and President of SL Industries, Inc. said, “SL Power Electronics Corp. reported robust bookings and new program awards from OEM customers, but experienced weak demand in the distribution market segment. SLPE did achieve a significant milestone during the period by implementing an integrated enterprise resource planning (“ERP”) system to combine the Ault and Condor business lines. This project drew on the talents and dedication of employees throughout the subsidiary, who overcame significant language, training, cultural and time zone challenges to succeed. With its new ERP system in place, SL Power Electronics will be able to increase its productivity and improve customer responsiveness in the future. In addition, SLPE will now be able to take full advantage of its manufacturing, engineering and sales capabilities in the People’s Republic of China.”
“The High Power Group continued to benefit from the excellent performance of MTE. Strong orders from medical and mineral resource recovery equipment manufacturers, offset weaker demand in the semiconductor and construction markets. Teal Electronics, the other member of the High Power Group, continued to experience declining margins due to increasing raw materials costs and production inefficiencies. Both MTE and Teal accelerated the process of transferring production to Mexico and China during the quarter.”
Taylor continued, “SL Montevideo Technology continued to record improved results, since the subsidiary renewed its focus on targeted market niches and lean manufacturing improvements. Strong order activity during the quarter was recorded from customers in the commercial aerospace industry.”
“RFL Electronics recorded stable bookings and sales over the first nine months of the year. RFL’s margin continued to be excellent due to strong productivity and favorable product mix. Since the end of the third quarter, RFL has experienced an increase in order activity, but it is too early to determine if this signals an improvement in overall market demand.”
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 $4,568,000 for the nine months ended September 30, 2007, as compared to $4,150,000 for the same period in 2006. Expenses attributable to a deferred executive compensation plan were $886,000 for the period, versus $390,000 for the first nine months of last year. The value of the plan is based on the market price of the Company’s common stock, which appreciated rapidly at the end of the third quarter.”
Taylor concluded, “On July 30, Don Klein joined the Company as President of the High Power Group. Don has an extensive background in the power electronics industry, including 13 years with Artesyn Technologies. At Artesyn, he held several executive positions, which included Vice President of Finance, Vice President of Operations and General Manager of High Power Products. We are excited to have Don join the team and are confident that he will play an important role executing our power strategy.”
About SL Industries
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.
David Nuzzo, Chief Financial Officer
Phone: 856-727-1500, ext. 5515
Source: SL Industries, Inc.