« Previous | Next » | All Messages |  SLI Message Board Home | recommend post |  Ignore Poster

SLI News SL Industries, Inc. Announces Financial Results for Its Third Quarter Ended September 30, 2006

MT. LAUREL, N.J.--(BUSINESS WIRE)--SL INDUSTRIES, INC. (AMEX & PHLX: SLI) announced today that net sales for the third quarter ended September 30, 2006 was $45,165,000, compared to $32,098,000 for the third quarter last year, an increase of $13,067,000, or 41%. Net income from continuing operations was $1,806,000, or $0.31 per diluted share, compared to net income from continuing operations of $2,552,000, or $0.44 per diluted share, for the same period in 2005. Third quarter results for 2006 include the financial performance of Ault Incorporated (“Ault”), which was acquired on January 26, 2006. Ault’s results prior to its acquisition are not included in any of the Company’s results. Net sales of Ault for the third quarter were $13,743,000, with income from operations of $1,624,000.

Net sales from continuing operations for the nine months ended September 30, 2006 were $127,564,000, compared to net sales of $95,813,000 for the nine months ended September 30, 2005, an increase of $31,751,000, or 33%. Net income from continuing operations for the nine months ended September 30, 2006 was $5,146,000, or $0.88 per diluted share, compared to net income from continuing operations of $5,879,000, or $1.03 per diluted share, for the same period last year. Results for the nine months ended September 30, 2006 include the financial performance of Ault since January 26, 2006. Net sales of Ault for the nine month period ended September 30, 2006 were $34,672,000, with income from operations of $3,071,000.

The Company’s four business segments encountered differing economic conditions in their respective served markets and reported corresponding mixed results, compared to the first nine months of the prior year. SL Power Electronics Corp. (which was created through the consolidation of Condor D.C. Power Supplies, Inc. and Ault) recorded net sales of $65,065,000 and operating income of $5,631,000, as compared to net sales of $33,001,000 and operating income of $3,260,000 for the same period in 2005. The results of SL Power Electronics Corp. include the results of Ault from the acquisition date of January 26, 2006. Teal Electronics Corp. recorded net sales of $26,976,000 and operating income of $4,100,000, as compared to net sales of $24,077,000 and operating income of $3,725,000 for the same period last year. SL Montevideo Technology, Inc. recorded net sales of $18,825,000 and operating income of $818,000, as compared to net sales of $21,120,000 and operating income of $2,941,000 for the first nine months of 2005. And RFL Electronics Inc. recorded net sales of $16,698,000 and operating income of $1,417,000, as compared to net sales of $17,615,000 and operating income of $1,862,000 for the same period last year.

Engineering and product development expenses for the first nine months of 2006 increased by $2,076,000, or approximately 29%, as compared to the same period last year. The acquisition of Ault accounted for $2,015,000 of the increased engineering expenses. Other than RFL Electronics, all of the Company’s business segments increased or maintained their engineering and product development expenditures in 2006. RFL Electronics decreased product development expenses $102,000, or 7%, as it incurred significant costs in 2005 related to the development of several new product designs and applications.

The Company reported net new orders of $41.5 million in the third quarter of 2006, compared to net new orders of $29.7 million in the third quarter of 2005. Net new orders for the nine-month period ended September 30, 2006 increased $38.2 million from the same period last year. Backlog at September 30, 2006 was $53.8 million, as compared to $40.0 million a year earlier.

Commenting on the results, James Taylor, Chief Executive Officer and President of SL Industries, Inc. said, “For the most part, the Company’s business segments showed steady progress in executing their strategic objectives, after starting the year under a challenging business environment. Increased sales at the Power Electronics Group, comprised of SL Power Electronics Corp. and Teal Electronics Corp., were driven by strong demand from semiconductor and medical equipment manufacturers, as well as increased business activity from electronics distributors. While the successful integration of Ault improved its financial performance in the third quarter, gross margins for the Group declined over the period as a result of increased raw materials prices. We have been working with our customers and suppliers to address this concern.”

Taylor continued, “The Company’s results have been strongly impacted by the difficulties of SL Montevideo Technology, its motion controls division. The sharp decline in orders for certain military/aerospace products had a disproportionate effect on results of operations, as these programs typically involve high-volume production runs. The rapid shift in SL-MTI’s business to low-volume, high-mix production runs caused significant manufacturing inefficiencies at its plants. In addition, SL-MTI incurred down-sizing expenses of approximately $370,000 over the past two quarters. Given the new complexion of SL-MTI’s business, we are now working to reduce overhead and transform its operations to efficiently manufacture a more diverse product mix.”

“RFL Electronics recorded operating income in the third quarter that basically equaled its results for the entire first half of the year. Increased international sales and growing market recognition of its new line of teleprotection products drove RFL’s strong performance. We expect continued improvement at RFL Electronics, although we have not yet seen the large scale capital investment anticipated to upgrade the nation’s electric utility infrastructure.”

Taylor added, “Corporate and other expenses, which relate to corporate administration, strategic management and oversight, capital financing, risk management, corporate governance and controls, legal and litigation activities and public reporting expenses were $4,150,000 for the nine months ended September 30, 2006, as compared to $3,619,000 for the same period in 2005. Expenses attributable to a deferred executive compensation plan amounted to $390,000 for the period, versus $12,000 for the first nine months of last year. The value of the plan is based on the market price of the Company’s common stock, which appreciated rapidly at the end of the third quarter.”

Taylor concluded, “On November 1, SL Industries announced the acquisition of MTE Corporation, a leading provider of electromagnetic products used to condition power for industrial and commercial facilities. The addition of MTE will allow the Power Electronics Group to address an attractive and growing niche and take advantage of operational synergies. We believe this acquisition will advance the Company’s strategy to penetrate new markets for profitable growth. We look forward to working with MTE’s dedicated employees to expand our customer base and increase our shareholder value.”

About SL Industries, Inc.

SL Industries, Inc. designs, manufactures and markets power electronics, power motion, power protection, teleprotection and communications equipment and systems that is used in a variety of medical, aerospace, computer, datacom, industrial, telecom, transportation and electric power utility applications. For more information about SL Industries, Inc. and its products, please visit the Company’s web site at www.slindustries.com.

Forward-Looking Statements

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: the effectiveness of the cost reduction initiatives undertaken by the Company, changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, constraints on supplies of critical components, excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.