SL Industries Inc (SLI, Financial) filed Quarterly Report for the period ended 2009-09-30.
SL Industries designs, manufactures and markets power and data quality equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. The company is comprised of six business segments: Power Supplies, Power Conditioning and Distribution Units, Motion Control Systems, Electric Utility Equipment Protection Systems, Surge Suppressors and Other. Sl Industries Inc has a market cap of $47.1 million; its shares were traded at around $7.765 with a P/E ratio of 26.7 and P/S ratio of 0.3. Sl Industries Inc had an annual average earning growth of 20.5% over the past 5 years.
The net cash provided by operating activities from continuing operations during the nine-month period ended September 30, 2009 was $6,630,000, as compared to net cash provided by operating activities from continuing operations during the nine-month period ended September 30, 2008 of $4,127,000. The sources of cash from operating activities for the nine-month period ended September 30, 2009 were a decrease in accounts receivable of $3,409,000 and a decrease in inventories of $1,997,000. The decrease in accounts receivable was primarily related to reduced sales at most entities. The reduced accounts receivable were $575,000 at SLPE, $658,000 at Teal, $866,000 at MTE, $496,000 at SL-MTI and $799,000 at RFL. Days sales outstanding (defined as current accounts receivable divided by the average of the last three months sales) were 54.5 days at September 30, 2009, compared to 50.3 days at December 31, 2008. These sources of cash were primarily offset by a decrease in accounts payable of $2,116,000 and a decrease in accrued liabilities of $1,966,000. Of the decreased accounts payable $1,566,000 was attributable to SLPE and $192,000 was attributable to Teal. Legal and consulting payables of $370,000 related to environmental matters were charged to discontinued operations. The increase in prepaid expenses was primarily related to the renewal of certain insurance policies in the first quarter. The sources of cash from operating activities for the nine-month period ended September 30, 2008 were income from continuing operations of $4,218,000, decreased accounts receivable of $1,856,000 and increased accrued income taxes of $1,419,000. These sources of cash were primarily offset by a decrease in accrued liabilities of $2,103,000, an increase in inventory of $2,514,000 and a decrease in accounts payable of $1,447,000.
During the nine-month period ended September 30, 2009, net cash provided by financing activities was $38,000, which is related to treasury stock activity, offset by the payment of deferred financing costs. During the nine-month period ended September 30, 2008, net cash used in financing activities was $1,482,000, which was primarily related to borrowings under the Companys previous credit facility in the amount of $17,828,000, offset by payments thereunder of $19,710,000.
The Company has experienced continued pressure on sales and income due to the current global economic downturn. Given the nature of the global economic weakness and its effects on the Companys end markets, the Company has taken action to reduce its cost structure and align its capacity with lower business levels and has postponed all non-essential capital investment. During the three months ended September 30, 2009, the Company recorded restructuring charges of $1,000 at SLPE and $15,000 at MTE. Year to date charges of $535,000 were incurred at SLPE and $15,000 were incurred at MTE. For additional information on the restructuring charges, see Restructuring Charges in the Results of Operations Three and Nine months ended September 30, 2009, compared with the three and nine months ended September 30, 2008 in the detail that follows.
Consolidated net sales for 2009 decreased by $9,863,000, or 21%, when compared to the same period in 2008. When compared to 2008, net sales of the Power Electronics Group decreased by $9,038,000, or 27%; net sales of SL-MTI increased by $1,038,000, or 17%; and net sales of RFL decreased by $1,863,000, or 28%. All of the operating entities reported income from operations in 2009.
Income from continuing operations was $1,876,000 (includes other income and expense cost and the tax provision), or $0.31 per diluted share, in the third quarter of 2009, compared to income from continuing operations of $872,000, or $0.15 per diluted share, for the same period in 2008. Income from continuing operations was approximately 5% of net sales in 2009, compared to income from continuing operations of 2% of net sales in 2008. The Companys business segments and the components of operating expenses are discussed more fully in the following sections.
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SL Industries designs, manufactures and markets power and data quality equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. The company is comprised of six business segments: Power Supplies, Power Conditioning and Distribution Units, Motion Control Systems, Electric Utility Equipment Protection Systems, Surge Suppressors and Other. Sl Industries Inc has a market cap of $47.1 million; its shares were traded at around $7.765 with a P/E ratio of 26.7 and P/S ratio of 0.3. Sl Industries Inc had an annual average earning growth of 20.5% over the past 5 years.
Highlight of Business Operations:
Significant management judgment is required in determining the provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. The net deferred tax assets as of September 30, 2009 and December 31, 2008 were $12,073,000 and $11,705,000, respectively, net of valuation allowances of $421,000 and $2,018,000, respectively. The net deferred tax assets and valuation allowances as of September 30, 2009 were reduced by $356,000 due to expiring state net operating losses. The carrying value of the Companys net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions. Valuation allowances are attributable to uncertainties related to the Companys ability to utilize certain deferred tax assets prior to expiration. These deferred tax assets primarily consist of loss carryforwards. The valuation allowance is based on estimates of taxable income, expenses and credits by the jurisdictions in which the Company operates and the period over which deferred tax assets will be recoverable. In the event that actual results differ from these estimates or these estimates are adjusted in future periods, the Company may need to establish an additional valuation allowance that could materially impact its consolidated financial position and results of operations. Each quarter, management evaluates the ability to realize the deferred tax assets and assesses the need for additional valuation allowances.The net cash provided by operating activities from continuing operations during the nine-month period ended September 30, 2009 was $6,630,000, as compared to net cash provided by operating activities from continuing operations during the nine-month period ended September 30, 2008 of $4,127,000. The sources of cash from operating activities for the nine-month period ended September 30, 2009 were a decrease in accounts receivable of $3,409,000 and a decrease in inventories of $1,997,000. The decrease in accounts receivable was primarily related to reduced sales at most entities. The reduced accounts receivable were $575,000 at SLPE, $658,000 at Teal, $866,000 at MTE, $496,000 at SL-MTI and $799,000 at RFL. Days sales outstanding (defined as current accounts receivable divided by the average of the last three months sales) were 54.5 days at September 30, 2009, compared to 50.3 days at December 31, 2008. These sources of cash were primarily offset by a decrease in accounts payable of $2,116,000 and a decrease in accrued liabilities of $1,966,000. Of the decreased accounts payable $1,566,000 was attributable to SLPE and $192,000 was attributable to Teal. Legal and consulting payables of $370,000 related to environmental matters were charged to discontinued operations. The increase in prepaid expenses was primarily related to the renewal of certain insurance policies in the first quarter. The sources of cash from operating activities for the nine-month period ended September 30, 2008 were income from continuing operations of $4,218,000, decreased accounts receivable of $1,856,000 and increased accrued income taxes of $1,419,000. These sources of cash were primarily offset by a decrease in accrued liabilities of $2,103,000, an increase in inventory of $2,514,000 and a decrease in accounts payable of $1,447,000.
During the nine-month period ended September 30, 2009, net cash provided by financing activities was $38,000, which is related to treasury stock activity, offset by the payment of deferred financing costs. During the nine-month period ended September 30, 2008, net cash used in financing activities was $1,482,000, which was primarily related to borrowings under the Companys previous credit facility in the amount of $17,828,000, offset by payments thereunder of $19,710,000.
The Company has experienced continued pressure on sales and income due to the current global economic downturn. Given the nature of the global economic weakness and its effects on the Companys end markets, the Company has taken action to reduce its cost structure and align its capacity with lower business levels and has postponed all non-essential capital investment. During the three months ended September 30, 2009, the Company recorded restructuring charges of $1,000 at SLPE and $15,000 at MTE. Year to date charges of $535,000 were incurred at SLPE and $15,000 were incurred at MTE. For additional information on the restructuring charges, see Restructuring Charges in the Results of Operations Three and Nine months ended September 30, 2009, compared with the three and nine months ended September 30, 2008 in the detail that follows.
Consolidated net sales for 2009 decreased by $9,863,000, or 21%, when compared to the same period in 2008. When compared to 2008, net sales of the Power Electronics Group decreased by $9,038,000, or 27%; net sales of SL-MTI increased by $1,038,000, or 17%; and net sales of RFL decreased by $1,863,000, or 28%. All of the operating entities reported income from operations in 2009.
Income from continuing operations was $1,876,000 (includes other income and expense cost and the tax provision), or $0.31 per diluted share, in the third quarter of 2009, compared to income from continuing operations of $872,000, or $0.15 per diluted share, for the same period in 2008. Income from continuing operations was approximately 5% of net sales in 2009, compared to income from continuing operations of 2% of net sales in 2008. The Companys business segments and the components of operating expenses are discussed more fully in the following sections.
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