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Tel-Instrument Electronics Corp. Reports Net Income of $410,000 or $0.13 Per Share for the First Quarter of Fiscal 2017Tel-Instrument Electronics Corp. ("Tel", "Tel-Instrument" or the "Company") (NYSE MKT:TIK), a leading designer and manufacturer of avionics test and measurement solutions, today reported its financial results for the first quarter ended June 30, 2016. Highlights for First Quarter of Fiscal Year 2017
Revenues for the three months ended June 30, 2016 decreased 8.6% to $5,342,369 from $5,845,919 for the three months ended June 30, 2015. The decrease in revenues is mostly attributed to the decrease in shipment of the TS-4530A KITS, as that contract has now been completed, and lower sales of the T-760/T-76 test sets partially offset by increased shipments of the TS-4530A SETS. Gross margin increased $61,358 or 3.4% to $1,876,653 for the three months ended June 30, 2016 as compared to $1,815,295 for the three months ended June 30, 2015. This increase is mostly attributed to increased prices on CRAFT units offset partially by lower sales volume. Gross margin percentage for the three months ended June 30, 2016 was 35.1%, as compared to 31.1% for the three months ended June 30, 2015. Selling, general and administrative expenses increased by $46,056 (5.3%) to $911,744 for the three months ended June 30, 2016, as compared to $865,688 for the three months ended June 30, 2015. This increase was primarily attributable to a $73,000 increase in legal expenses associated with the Aeroflex (News - Alert) Wichita, Inc. ("Aeroflex") litigation compared to the year-ago quarter. Total litigation costs for the quarter were $143,000 as the Company incurred higher costs in preparation for the summary judgment hearing that is scheduled to be heard on August 25, 2016. Engineering, research and development expenses increased $92,745 (18.8%) to $584,877 for the three months ended June 30, 2016, as compared to $492,132 for the three months ended June 30, 2015. This increase is almost completely related to the new hand-held avionics and radio test set now under development. Mr. Jeffrey O'Hara, President and CEO of Tel, stated, "We reported solid revenues and improved profitability for the first quarter of fiscal year 2017. Revenues decreased as a result of the successful completion of the TS-4530A KITS production program. The Navy portion of the ITATS program was also substantially completed in the first quarter. Both of these programs were won on competitive bids and generated very low gross margins. We are focused on capturing the lion's share of the international Mode 5 market. The international Mode 5 test equipment markets have also been picking up with recent activity in both the Far East and European markets, and we believe our current product offerings, plus the new T-47M5, will be very competitive. We believe that Tel is well positioned for this business as our CRAFT and TS-4530A flight-line test sets have been endorsed by the U.S. military and we have already delivered test sets into 18 international markets. The new T-47M5 product is also being offered as a retro-fit kit for our large base of installed Mode 4 IFF test sets. We are also seeing increased market interest in our other military and commercial test sets including the ITATS TACAN bench test set and our new TR-36 Nav/Com product. These sales should be at attractive margins as we look to return to our traditional 50% gross margin levels starting next fiscal year. We continue to work on our next generation multi-purpose hand-held test set with the initial product currently scheduled to be introduced in the fourth quarter of the current fiscal year. This product will be the hardware platform that will have the capabilities that address both our current avionic test set market as well as the much larger radio test set market. We believe that this new product family will be extremely competitive and will help drive the long term growth of our business. The BCA warrants have been a drag on Tel's profitability for the last several years, and we believe that their exercise will result in a cleaner balance sheet and more predictable financial reporting going forward. We expect to pay off the entire $720,000 negotiated amount this quarter. "We are excited and optimistic about our near and long-term prospects," Mr. O'Hara concluded. The Company encourages investors to read its full results of operations as contained in our Quarterly Report on Form 10-Q filed on August 18, 2016 at www.sec.gov. Conference Call The Company will host a conference call and webcast today, Thursday, August 18, 2016 at 9:00 a.m. Eastern Time to discuss the Company's fiscal first quarter 2017 results. To access the live webcast, log onto Tel-Instrument's website at: https://www.telinstrument.com/learn-about-telinstrument/investor-relations.html. To participate in the call by phone, dial (877) 407-8035 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8035. A replay of the teleconference will be available until September 18, 2016 and may be accessed by dialing (877) 660-6853. International callers may dial (201) 612-7415. Callers should use conference ID: 13643708. About Tel-Instrument Electronics Corp Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com. This press release includes statements that are not historical in nature and may be characterized as "forward-looking statements," including those related to future financial and operating results, benefits, and synergies of the combined companies, statements concerning the Company's outlook, pricing trends, and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies, and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ materially. Among the factors which could cause a difference are: changes in the general economy; changes in demand for the Company's products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances. A number of these factors are discussed in the Company's previous filings with the U.S. Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 (the "Act") protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
The term EBITDA consists of net income (loss) plus interest, taxes, depreciation and amortization, amortization of debt discount and deferred financing charges, change in fair value of warrants, and non-cash stock-based compensation. EBITDA is not a measure of financial performance under generally accepted accounting principles, and should not be considered in isolation from, or as a substitute for net income or cash flow measures prepared in accordance with generally accepted accounting principles, or as a measure of profitability or liquidity. Additionally, EBITDA may not be comparable to other similarly titled measures of other companies. The Company has included EBITDA as a supplemental disclosure because its management believes that EBITDA provides useful information regarding our ability to service debt, and to fund capital expenditures, and provides investors a helpful measure for analyzing its operating performance. The table above sets forth a reconciliation of EBITDA to net income (loss), which is the most directly comparable measure of financial performance, calculated under generally accepted accounting principles.
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