Herley Industries Inc. (HRLY, Financial) filed Quarterly Report for the period ended 2009-02-01.
Herley Industries Inc. is engaged in the design development and manufacture of flight instrumentation components and systems and microwave products sold primarily to the U.S. government foreign governments and aerospace companies. Flight instrumentation products include command and control systems transponders flight termination receivers telemetry transmitters and receivers pulse code modulator encoders and scoring systems. Herley Industries Inc. has a market cap of $151.7 million; its shares were traded at around $11.19 with and P/S ratio of 0.9.
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Key performance metrics
Net sales $39,974 $32,167 24 % $75,318 $64,705 16 %
Gross profit $9,671 $5,441 78 % $16,274 $14,753 10 %
Gross profit percentage 24.2% 16.9% 21.6% 22.8%
Operating income (loss) $2,579 ($2,507) $1,919 ($6,825)
Backlog $177,760 $142,431 25 % $177,760 $142,431 25 %
During the second quarter, we completed the divestiture of ICI which is reported
as discontinued operations. The table above and discussion which follows
excludes the performance results of ICI. During the first quarter we completed
the acquisition of Eyal Microwave in Israel and its results are included within
the results from continuing operations beginning in September of fiscal 2009.
The closure of our manufacturing operation at Farmingdale is essentially
complete following the transition of its business to four other Herley
manufacturing locations.
Income from continuing operations before income taxes for the twenty-six weeks
ended February 1, 2009 was $0.9 million, versus an operating loss of $6.3
million for the twenty-seven weeks ended February 3, 2008, an improvement of
$7.2 million. The results of operations in the first half of fiscal 2008 include
$7.1 million of litigation related costs versus legal costs of $0.6 million in
fiscal 2009. The financial results of Eyal in the current fiscal year
contributed $0.3 million to operating income.
Other (expense) income for the twenty-six weeks ended February 1, 2009 was a net
expense of $1.1 million, versus net income of $0.5 million in the twenty-seven
weeks ended February 3, 2008, a net change of $1.5 million. Investment income
declined by $0.8 million versus the same period of the prior year mostly due to
a reduction in cash balances. Interest expense of $0.7 million reflects an
increase of $0.4 million over the first half of the previous fiscal year
primarily due to debt incurred for the purchase of Eyal. Currency exchange
transaction losses of $0.4 million recognized in the first half of fiscal year
2009 were $0.3 million higher than the prior fiscal year, reflecting a further
weakening of the United States dollar.
As is customary in the defense industry, inventory is partially financed by
progress payments. In addition, it is customary for us to receive advanced
payments from customers on major contracts at the time a contract is entered
into. The unliquidated balance of progress payments was approximately $1.4
million at February 1, 2009 and $0.7 million at August 3, 2008. The balance of
advanced payments was approximately $13.3 million at February 1, 2009 and $8.1
million at August 3, 2008. The increase relates to a contract at Herley
Lancaster for approximately $4.0 million and a contract at MSI for approximately
$1.4 million.
Net cash provided by operating activities during the twenty-six weeks ended
February 1, 2009 was approximately $3.4 million as compared to $0.2 million
during the first half of the prior year, a net increase of approximately $3.2
million. We had net income in the first half of the current fiscal year of $0.8
million versus a loss of $6.4 million in the prior year first half, an
improvement of approximately $7.2 million. The first half of fiscal 2008 was
impacted by the litigation settlement and related costs of approximately $7.1
million.
Net cash provided by financing activities of $11.9 million includes borrowings
under our bank line of credit of $4.0 million for working capital; and $20.0
million under the credit line plus $10.0 million from a new term loan in Israel
to fund the acquisition of Eyal. Payments of $21.5 million and $0.8 million were
made relating to our bank line of credit and long-term debt, respectively; and a
quarterly payment of approximately $0.3 million was made on the loan in Israel.
Read the The complete ReportHRLY is in the portfolios of Third Avenue Management, Michael Price of MFP Investors LLC.
Herley Industries Inc. is engaged in the design development and manufacture of flight instrumentation components and systems and microwave products sold primarily to the U.S. government foreign governments and aerospace companies. Flight instrumentation products include command and control systems transponders flight termination receivers telemetry transmitters and receivers pulse code modulator encoders and scoring systems. Herley Industries Inc. has a market cap of $151.7 million; its shares were traded at around $11.19 with and P/S ratio of 0.9.
Highlight of Business Operations:
2009 2008 % Change 2009 2008 % Change- -
Key performance metrics
Net sales $39,974 $32,167 24 % $75,318 $64,705 16 %
Gross profit $9,671 $5,441 78 % $16,274 $14,753 10 %
Gross profit percentage 24.2% 16.9% 21.6% 22.8%
Operating income (loss) $2,579 ($2,507) $1,919 ($6,825)
Backlog $177,760 $142,431 25 % $177,760 $142,431 25 %
During the second quarter, we completed the divestiture of ICI which is reported
as discontinued operations. The table above and discussion which follows
excludes the performance results of ICI. During the first quarter we completed
the acquisition of Eyal Microwave in Israel and its results are included within
the results from continuing operations beginning in September of fiscal 2009.
The closure of our manufacturing operation at Farmingdale is essentially
complete following the transition of its business to four other Herley
manufacturing locations.
Income from continuing operations before income taxes for the twenty-six weeks
ended February 1, 2009 was $0.9 million, versus an operating loss of $6.3
million for the twenty-seven weeks ended February 3, 2008, an improvement of
$7.2 million. The results of operations in the first half of fiscal 2008 include
$7.1 million of litigation related costs versus legal costs of $0.6 million in
fiscal 2009. The financial results of Eyal in the current fiscal year
contributed $0.3 million to operating income.
Other (expense) income for the twenty-six weeks ended February 1, 2009 was a net
expense of $1.1 million, versus net income of $0.5 million in the twenty-seven
weeks ended February 3, 2008, a net change of $1.5 million. Investment income
declined by $0.8 million versus the same period of the prior year mostly due to
a reduction in cash balances. Interest expense of $0.7 million reflects an
increase of $0.4 million over the first half of the previous fiscal year
primarily due to debt incurred for the purchase of Eyal. Currency exchange
transaction losses of $0.4 million recognized in the first half of fiscal year
2009 were $0.3 million higher than the prior fiscal year, reflecting a further
weakening of the United States dollar.
As is customary in the defense industry, inventory is partially financed by
progress payments. In addition, it is customary for us to receive advanced
payments from customers on major contracts at the time a contract is entered
into. The unliquidated balance of progress payments was approximately $1.4
million at February 1, 2009 and $0.7 million at August 3, 2008. The balance of
advanced payments was approximately $13.3 million at February 1, 2009 and $8.1
million at August 3, 2008. The increase relates to a contract at Herley
Lancaster for approximately $4.0 million and a contract at MSI for approximately
$1.4 million.
Net cash provided by operating activities during the twenty-six weeks ended
February 1, 2009 was approximately $3.4 million as compared to $0.2 million
during the first half of the prior year, a net increase of approximately $3.2
million. We had net income in the first half of the current fiscal year of $0.8
million versus a loss of $6.4 million in the prior year first half, an
improvement of approximately $7.2 million. The first half of fiscal 2008 was
impacted by the litigation settlement and related costs of approximately $7.1
million.
Net cash provided by financing activities of $11.9 million includes borrowings
under our bank line of credit of $4.0 million for working capital; and $20.0
million under the credit line plus $10.0 million from a new term loan in Israel
to fund the acquisition of Eyal. Payments of $21.5 million and $0.8 million were
made relating to our bank line of credit and long-term debt, respectively; and a
quarterly payment of approximately $0.3 million was made on the loan in Israel.
Read the The complete ReportHRLY is in the portfolios of Third Avenue Management, Michael Price of MFP Investors LLC.
