Sparton Corporation Reports Fiscal 2019 Second Quarter Results
Summary
SCHAUMBURG, Ill.--( BUSINESS WIRE )--Sparton Corporation (NYSE:SPA) today announced results for the second quarter of fiscal year 2019 ended December 30, 2018. The Company intends to restructure this facility upon its expiration in September 2019, or sooner as conditions dictate, to provide for appropriate ongoing liquidity. Consummation of the Merger is subject to the satisfaction or (to the extent permitted by law) waiver of specified closing conditions, including (i) the adoption of the Merger Agreement by the affirmative vote of the holders of at least two-thirds of all the outstanding Shares entitled to vote thereon at a special meeting of the Companys shareholders (the "Shareholders Meeting") to be held on March 1, 2019, as more fully described in the proxy statement of the Company, filed with the SEC on January 23, 2019 (the "Proxy Statement"), (ii) the absence of any law, executive order, ruling, injunction or other order ("Orders") that restrains, enjoins or otherwise prohibits the consummation of the Merger (the "No Order Condition"), (iii) the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") which expired on January 22, 2019, (such condition, the "HSR Act Condition"), (iv) any agreement with a governmental authority not to consummate the Merger, which agreement shall have been entered into with the prior written consent of both the Company and Parent, shall have expired or been terminated (the "Governmental Authority Agreement Condition") and (v) other customary closing conditions, including the accuracy of each partys representations and warranties and each partys compliance with its covenants and agreements contained in the Merger Agreement (subject in the case of this clause (v) to certain qualifications as to materiality). Although these events are reflected in our GAAP financial statements, these transactions may limit the comparability of our fundamental operations with prior and future periods. December 30, 2018July 1, 2018 ($ in thousands) Assets Cash and cash equivalents $ 1,385 $ 1,160 Accounts receivable, net 47,280 60,454 Inventories 86,295 72,406 Legal settlements - insurance receivable — 4,500 Prepaid and other current assets 8,131 3,944 Property, plant and equipment, net 31,969 32,790 Goodwill 12,663 12,663 Other intangible assets, net 17,797 21,108 Other assets 19,202 22,977 Total assets $ 224,722 $ 232,002 Liabilities and Shareholders’ Equity Accounts payable $ 45,682 $ 28,636 Accrued expenses and other current liabilities 34,223 32,986 Accrued legal settlements — 5,500 Credit facility 64,100 84,500 Environmental remediation 4,598 4,866 Pension liability 633 690 Other non-current liabilities — 1,220 Shareholders’ Equity 75,486 73,604 Total Liabilities and Shareholders’ Equity $ 224,722 $ 232,002 RECONCILIATION OF NON-GAAP MEASURESEBITDA Reconciliation (Non-GAAP) - For the Second Quarter of Fiscal Year 2019(Dollars in thousands)CorporateMDSECPTotal Net income $ (8,684 ) $ 1,662 $ 8,939 $ 1,917 Interest expense, net 1,800 (9 ) (1 ) 1,790 Income tax expense 1,404 87 — 1,491 Amortization of intangible assets — 1,351 290 1,641 Depreciation 604 565 195 1,364 Selling and administrative - Corp allocations (3,451 ) 2,301 1,150 — EBITDA, excluding corporate allocation (8,327 ) 5,957 10,573 8,203 Adjustments for nonrecurring operating expenses: Stock-based compensation 60 — — 60 Costs related to potential sale of Company 2,389 — — 2,389 Adjusted EBITDA, before corporate allocation $ (5,878 ) $ 5,957 $ 10,573 $ 10,652 Adjusted EBITDA, after corporate allocation $ (2,427 ) $ 3,656 $ 9,423 $ 10,652 Adjusted EBITDA margin 10.1 % EBITDA Reconciliation (Non-GAAP) - For the Second Quarter of Fiscal Year 2018(Dollars in thousands)CorporateMDSECPTotal Net income (loss) $ (18,064 ) $ (226 ) $ 10,206 $ (8,084 ) Interest expense, net 1,507 — — 1,507 Income tax expense 11,666 37 — 11,703 Amortization of intangible assets — 1,554 339 1,893 Depreciation 565 693 196 1,454 Selling and administrative - Corp allocations (3,138 ) 2,101 1,037 — EBITDA, excluding corporate allocation (7,464 ) 4,159 11,778 8,473 Adjustments for nonrecurring operating expenses: Stock-based compensation 10 — — 10 Costs related to potential sale of company 1,367 — — 1,367 Adjusted EBITDA, before corporate allocation $ (6,087 ) $ 4,159 $ 11,778 $ 9,850 Adjusted EBITDA, after corporate allocation $ (2,949 ) $ 2,058 $ 10,741 $ 9,850 Adjusted EBITDA margin 10.1 % Adjusted EPS (Non-GAAP)