EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO   

Company Contact:

John Oakley, CFO

Flanders Corporation

(252) 946-8081

   

Investor Relations Contacts:

Kirsten Chapman/ Tim Dien

Lippert / Heilshorn & Associates

(415) 433-3777 or tdien@lhai.com

     
     
     

Flanders Corporation Reports Second Quarter 2009 Financial Results

- Grew revenue 2.5% compared to second quarter 2008 -

- Increased gross margins 600 basis points compared to second quarter 2008 -

- Delivered $5.6 million in EBITDA, more than doubling second quarter 2008 -

WASHINGTON, NC – July 30, 2009 – Flanders Corporation (NASDAQ: FLDR) reported financial results for the second quarter ended June 30, 2009.

Flanders Corporation’s Chairman, president and CEO Harry Smith said: “Our second quarter results build upon our achievements and prove the steps taken to improve our business are paying off. As a result of better sales and marketing efforts, we grew second quarter 2009 revenue 2.5%, compared to the same period last year, even though a nationwide drop in June temperatures caused orders to be softer than originally expected. Our backlog for the third quarter is strong, and we are excited about the second half of 2009. We also continue to make great strides in our research and development efforts to improve our current products, introduce new technology and expand our product line with existing customers.”

“In addition, we are excited to welcome Tom Justice as our new COO. Bringing his 28 years of diverse experience in the air filtration industry to the team, Tom will play an integral role to achieve operational excellence and to develop innovative new products,” added Smith.

Financial Summary – Second Quarter 2009

Revenue for the second quarter 2009 was $58.7 million, compared to $57.3 million in the second quarter 2008. Gross margin for the first quarter was 21%, compared to 15% in the second quarter 2008. The second quarter 2009 net income was $2.4 million, or $0.09 per diluted share. This compares to the second quarter of 2008 net income of $6.9 million, which included a $6.8 million gain for extraordinary items, or $0.26 per diluted share. EBITDA for the second quarter 2009 was $5.6 million, compared to $2.1 million in the second quarter of 2008.

Management uses some measures not in accordance with generally accepted accounting principles (GAAP) to evaluate the results of the company’s operations and believes earnings before interest, taxes, extraordinary items, depreciation and amortization (EBITDA) provides a useful measure of operations.

Flanders’ Chief Financial Officer John Oakley said: “We delivered revenue increases even during the recession, and we are poised to grow in the second half. Equally important, our procurement and procedural measures continue to post results. Second quarter gross margins increased 600 basis points and EBITDA grew $3.4 million to $5.6 million, compared to second quarter 2008. Looking ahead, we are adjusting our guidance to reflect continuing economic conditions in commercial & industrial. Nonetheless, we are still quite optimistic about growth and profitability in 2009.”

 

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Financial Summary – Six Months Ended June 30, 2009

Revenue for the six months ended June 30, 2009 was $106.7 million, compared to $106.5 million for the same period a year ago. Gross margin for the period was 21%, compared to 16% for the same period a year ago. Year-to-date net income was $4.2 million, or $0.16 per diluted share, compared to net income of $9.3 million, which included an $8.3 million gain for extraordinary items, or $0.35 per diluted share for the same period a year ago. EBITDA for the period was $10.0 million, compared to $5.8 million for the same period a year ago.

Financial Outlook – Full Year 2009

Management continues to expect the company to be profitable and deliver positive EBITDA for 2009. The company adjusted its 2009 revenue guidance to be between $225 million and $240 million, from the previous expectations provided on May 4th, 2009, of revenue between $235 million and $246 million.

Recent Corporate Highlights

 

  •  

Appointed Tom Justice as Chief Operating Officer in July. A 28-year veteran of the air filtration industry, with tremendous experience in operations management and product development.

 

  •  

Acquired certain assets from Wildwood Industries, Inc. in May, for $3.6 million in cash. Flanders retained the furnace filter equipment and inventory and immediately sold the unrelated assets to R.P.S. Products, Inc. for $2.2 million in cash.

 

  •  

Awarded its second purchase agreement from Shaw AREVA MOX Services, LLC in June. Flanders will produce 24 glove box assemblies during 2010 and 2011 for approximately $3.5 million.

Conference Call

Chairman, president and CEO Harry Smith and CFO John Oakley are scheduled to conduct a conference call and simultaneous webcast at 11:00 a.m. ET on July 30, 2009 to review these results in more detail. To access the call in the U.S., please dial (866) 425-6192, and for international callers dial (973) 409-9253 approximately 10 minutes prior to the start of the conference call. The conference ID will be 16845808. A telephone replay will be available until midnight Eastern Time on August 3rd by dialing (800) 642-1687 or (706) 645-9291 and entering pass code 16845808.

Safe Harbor Statement

The statements made in this press release regarding Flanders (1) results building upon its achievements and proving steps taken to improve our business are paying off; (2) having better sales and marketing; (3) being excited about the second half of 2009, (4) making great strides in research and development efforts, introducing new technology and expanding its product line with existing customers, (5) Tom Justice playing an integral role to achieve operational excellence and to develop innovative new products, (6) procurement and procedural measures continuing to post results, and (7) being optimistic about growth and profitability in 2009 are based on the current expectations and beliefs of the management of Flanders and are subject to a

 

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number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a more detailed discussion of risk factors that may affect Flanders’ operations, please refer to the Company’s Form 10-K for the year ended December 31, 2008, and Form 10-Q for the period ended March 30, 2009. These forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update such forward-looking statements, except as required by law.

About Flanders

Flanders is a leading air filtration products manufacturer. Flanders’ products are utilized by many industries, including those associated with commercial and residential heating, ventilation and air conditioning systems, semiconductor manufacturing, ultra-pure materials, biotechnology, pharmaceuticals, synthetics, nuclear power and nuclear materials processing.

For further information on Flanders and its products, visit its web site at http://www.flanderscorp.com/ or contact Kirsten Chapman or Tim Dien at (415) 433-3777.

–Tables Follow–

 

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FLANDERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

 

     June 30,
2009		     December 31,
2008		  
     (Unaudited)        

ASSETS

     

Current assets:

     

Cash and cash equivalents

    $ 690      $ 404   

Receivables:

     

Trade, less allowance: $3,297 and $3,683 at June 30, 2009 and December 31, 2008, respectively

      45,642        37,682   

Other

      897        280   

Inventories

      35,615        31,549   

Deferred taxes

      3,716        4,285   

Income taxes

      7,447        10,048   

Other current assets

      4,150        4,714   
                

Total current assets

      98,157        88,962   

Property and equipment, less accumulated depreciation: $56,345 and $55,520 at June 30, 2009 and December 31, 2008, respectively

      65,052        57,156   

Intangible assets, less accumulated amortization: $1,479 and $1,449 at June 30, 2009 and December 31, 2008, respectively

      304        295   

Notes receivable and other assets

      14,730        14,604   
                

Total assets

    $ 178,243      $ 161,017   
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Current maturities of long-term debt and capital lease obligations

    $ 1,098      $ 1,307   

Accounts payable

      24,659        22,795   

Accrued expenses

      17,063        13,517   

Other current liabilities

      6,179        6,179   
                

Total current liabilities

      48,999        43,798   

Long-term capital lease obligations, less current maturities

      190        554   

Long-term debt, less current maturities

      37,918        29,611   

Long-term liabilities, other

      3,821        4,286   

Deferred taxes

      —          —     

Commitments and contingencies

     
                

Total liabilities

      90,928        78,249   

Stockholders’ equity:

     

Preferred stock, $.001par value, 10,000 shares authorized; none issued

      —          —     

Common stock, $.001 par value; 50,000 shares authorized; issued and outstanding: 25,524 and 25,524 shares at June 30, 2009 and December 31, 2008, respectively

      26        26   

Additional paid-in capital

      87,298        87,253   

Accumulated other comprehensive loss

      (966 )      (1,231 ) 

Retained earnings (deficit)

      957        (3,280 ) 
                

Total stockholders’ equity

      87,315        82,768   
                

Total liabilities and stockholders’ equity

    $ 178,243      $ 161,017   
                

 

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FLANDERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2009     2008     2009     2008  

Net sales

    $ 58,727      $ 57,269      $ 106,747      $ 106,463   

Cost of goods sold

      46,129        48,773        84,244        89,243   
                                

Gross profit

      12,598        8,496        22,503        17,220   

Operating expenses

      8,559        9,313        16,094        18,589   
                                

Operating income (loss)

      4,039        (817 )      6,409        (1,369 ) 

Nonoperating income (expense):

         

Other income, net

      148        1,442        902        4,045   

Interest expense

      (318 )      (492 )      (585 )      (1,125 ) 
                                

Total nonoperating income (expense)

      (170 )      950        317        2,920   
                                

Earnings before income taxes and extraordinary items

      3,869        133        6,726        1,551   

Provision for income taxes

      1,432        53        2,489        620   
                                

Income before extraordinary item

      2,437        80        4,237        931   

Extraordinary gain on Fire (net of taxes)

      —          6,802        —          8,335   
                                

Net earnings

    $ 2,437      $ 6,882      $ 4,237      $ 9,266   
                                

Basic earnings per share:

         

Income before extraordinary item

    $ 0.10      $ 0.00      $ 0.17      $ 0.04   

Extraordinary item

      —          0.27        —          0.32   
                                

Net earnings per share

    $ 0.10      $ 0.27      $ 0.17      $ 0.36   
                                

Diluted earnings per share:

         

Income before extraordinary item

    $ 0.09      $ 0.00      $ 0.16      $ 0.03   

Extraordinary item

      —          0.26        —          0.32   
                                

Net earnings per share

    $ 0.09      $ 0.26      $ 0.16      $ 0.35   
                                

Weighted average common shares outstanding:

         

Basic

      25,524        25,725        25,524        25,724   
                                

Diluted

      25,887        26,203        25,845        26,185   
                                

 

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FLANDERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2009     2008     2009     2008  

CASH FLOWS FROM OPERATING ACTIVITIES:

         

Net cash provided by operating activities

    $ 860      $ 1,818      $ 2,665      $ 5,468   
                                

CASH FLOWS FROM INVESTING ACTIVITIES:

         

Disposal, net of cash acquired

      —          —          —          (11 ) 

Purchase of property and equipment

      (6,060 )      (3,192 )      (9,910 )      (5,237 ) 

Proceeds from sale of property and equipment

      205        7        254        10   

Proceeds from insurance claim on building and equipment

      466        —          466        —     

Decrease in other assets

      478        479        647        678   
                                

Net cash used in investing activities

      (4,911 )      (2,706 )      (8,543 )      (4,560 ) 
                                

CASH FLOWS FROM FINANCING ACTIVITIES:

         

Principal payments on long-term borrowings

      (943 )      (228 )      (1,133 )      (373 ) 

Net proceeds from (payments on) revolving credit agreement

      5,233        596        7,387        (406 ) 

Payment of debt issuance costs

      —          —          (90 )      —     

Purchase and retirement of common stock

      —          (53 )      —          (334 ) 

Proceeds from sales of common stock

      —          —          —          56   
                                

Net cash provided by (used in) financing activities

      4,290        315        6,164        (1,057 ) 
                                

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

      239        (573 )      286        (149 ) 

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD

      451        922        404        498   
                                

CASH AND CASH EQUIVALENTS END OF PERIOD

    $ 690      $ 349      $ 690      $ 349   
                                

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

         

Cash paid during the period for:

         

Income taxes

    $ 179      $ 743      $ 241      $ 793   

Interest

      411        558        612        1,122   

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

         

Sale of equipment for note receivable

    $ 249      $ 332      $ 415      $ 415   

Purchase of building with debt

      1,480        —          1,480        —     

Sale of building for note receivable

      200        —          200        —     

Cashless exercise of common stock (net)

      —          (100 )      —          (370 ) 

Offset of accrued expenses against trade accounts receivable

      2,412        1,614        5,839        8,825   

Note receivable in lieu of account receivable trade

      —          677        —          677   

Offset of accrued expenses against other receivables

      —          900        —          900   

DISPOSAL OF COMPANIES

         

Working capital surplus disposed, net of cash and cash equivalents disposed

    $ —        $ 959      $ —        $ 1,425   

Fair value of other assets disposed, principally property and equipment

      —          8,518        —          8,637   

Goodwill disposed

      —          —          —          589   

Minority interest

      —          —          —          141   
                                
   $ —        $ 9,477      $ —        $ 10,792   
                                

 

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FLANDERS CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET EARNINGS TO EBITDA

(In thousands)

(Unaudited)

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2009    2008     2009    2008  

Net Earnings

    $ 2,437    $ 6,882      $ 4,237    $ 9,266   

Extraordinary items

      —        (6,802 )      —        (8,335 ) 

Interest

      318      492        585      1,125   

Taxes

      1,432      53        2,489      620   

Depreciation and amortization

      1,364      1,516        2,731      3,125   
                              

EBITDA

    $ 5,551    $ 2,141      $ 10,042    $ 5,801   
                              

 

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