Message #16 From:
Stock News Bot Date: July 25, 2006 03:00:00 AM
QMRK News QualMark Corporation Reports Second Quarter Financial Results
DENVER--(BUSINESS WIRE)--July 25, 2006--
"...Our business continues to grow, as total revenue has expanded 14% over the second quarter of 2005 ..."
QualMark Corporation (OTCBB: QMRK), a world leader in designing, manufacturing and marketing HALT (Highly Accelerated Life Testing), HASS (Highly Accelerated Stress Screening) and electro-dynamic systems, today announced results for the second quarter ended June 30, 2006.
For the quarter (three months ended June 30, 2006):
Revenue-
The Company reported total revenue for the quarter of $4,288,000 versus total revenue of $3,769,000 from 2005. Charles Johnston, QualMark's President and CEO stated: "We are excited with the continued growth and profitability of our business during the second quarter. For the quarter, total revenue expanded 14% as compared to the prior year quarter. Our HALT/HASS business segment, which consists of our core, accelerated testing products and services grew 10% as compared to 2005 and our Electro-dynamic business segment, which consists of electro-dynamic products and services (Ling Electronics), grew 36% as compared to 2005."
During the quarter, the HALT/HASS segment shipped its first Typhoon chamber to Toshiba, who will utilize the equipment to test electronic components to be incorporated into Toyota automobiles. The HALT/HASS segment also operated in additional markets that helped drive second quarter revenue, which included; avionics, consumer electronics (LCD), power supplies and electromagnetic relays. The HALT/HASS segment expanded its presence in the consumer electronics market to include the testing of cable connectors used on various types of televisions and continued to ship multiple Typhoon chambers to a first tier Airbus supplier.
Our Electro-dynamic business segment (Ling Electronics), continued to sell in the aerospace, military, telecommunications and test lab markets, which helped drive second quarter revenue. During the quarter, the Electro-dynamic segment shipped a specialized electro-dynamic amplifier to a first tier U.S. military supplier. The use of this equipment is a continuing trend for U.S. military applications, as the Electro-dynamic business segment shipped similar equipment to an additional first tier U.S. military supplier during the first quarter of 2006. The Company is focusing its efforts on expanding its international presence. "The potential for market expansion and revenue growth in our Electro-dynamic business is exponential in Asia Pacific," commented Johnston.
Income-
The Company reported operating income of $398,000, pre tax income of $320,000 and net income of $261,000, which included an additional $27,000 expense related to the fair value of stock options and $59,000 expense for estimated income tax, for the quarter, versus operating income of $377,000, pre tax income of $338,000 and net income of $335,000 for 2005. The Company will be recording non-cash expenses related to the fair value of stock options and estimated income tax throughout the remainder of the year. These changes from 2005 reflect the Company's adoption of SFAS 123R in 2006 and a change in the Company's effective tax rate for 2006. The Company continues to have net operating loss carry-forwards to apply to actual taxable income; therefore these income tax expenses do not have an impact on cash. "On a comparative basis, our income for the quarter was $347,000, which excludes the additional expense related to the fair value of stock options and estimated income tax, versus a net income of $335,000 for 2005," Johnston stated.
Earnings per share-
The Company reported diluted net income per share for the quarter of $0.03, which included additional non-cash expenses related to the fair value of stock options and estimated income tax, as compared to diluted income per share of $0.04 for 2005. "On a comparative basis, excluding the non-cash expenses related to the fair value of stock options and estimated income tax, diluted income per share for the quarter would have been $0.04," commented Johnston. The primary dilution for the Company is attributable to certain financial securities that are convertible into common stock. The Company does not anticipate any additional dilution at this time. However, the Company may enter into financial transactions to assist with financing additional acquisitions or provide capital for future growth, which may further impact dilution.
For the year (six months ended June 30, 2006):
Revenue-
The Company reported total revenue for the six months ended June 30, 2006 of $8,486,000 versus total revenue of $7,427,000 from 2005. "Year over year, total revenue grew 14%. Our HALT/HASS business segment grew 13% as compared to 2005 and our Electro-dynamic business segment grew 23% as compared to 2005."
"The consumer electronic, international automotive, avionics and military markets continue to thrive for QualMark. We have recognized noticeable revenue increases in both of our business segments. Sales opportunities for our Electro-dynamic business segment, Ling Electronics, continue to increase. We are working on expanding the geographic markets that the Electro-dynamic segment reaches, as well as the closure rate on potential business. Our sales and marketing efforts have been able to propel our HALT/HASS business segment into new markets and new applications for existing markets. This success is attributed to our leading edge technology and our extensive product and application knowledge that far exceed any of our competitors," Johnston concluded.
Income-
For the six months ended June 30, 2006, the Company reported operating income of $803,000, pre tax income of $652,000 and net income of $530,000, which included an additional $58,000 expense related to the fair value of stock options and $122,000 expense for estimated income tax, for the year, versus operating income of $732,000, pre tax income of $660,000 and net income of $653,000 for 2005. "On a comparative basis, our income for the six months ended June 30, 2006 was $710,000, which excludes the additional expense related to the fair value of stock options and estimated income tax, versus a net income of $653,000 for 2005," Johnston stated.
Earnings per share-
For the six months ended June 30, 2006, the Company reported diluted net income per share of $0.06, which included additional non-cash expenses related to the fair value of stock options and estimated income tax, as compared to diluted income per share of $0.08 for 2005. "On a comparative basis, excluding the non-cash expenses related to the fair value of stock options and estimated income tax, diluted income per share for the quarter would have been $0.08," commented Johnston. The primary dilution for the Company is attributable to certain financial securities that are convertible into common stock. The Company does not anticipate any additional dilution at this time. However, the Company may enter into financial transactions to assist with financing additional acquisitions or provide capital for future growth, which may further impact dilution.
QualMark's quarterly conference call to discuss second quarter 2006 results will be held today, July 25, 2006, at 11:00 a.m. Eastern Time.
To participate via conference call dial 888-318-6430 no later than 10:50 a.m. EST on July 25. The leader name is Charles Johnston. The QualMark security code to access this earnings call is QUALMARK.
Quarter to Date Year to Date
June 30 June 30
2006 2005 2006 2005
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HALT/HASS segment revenue $3,545,000 $3,222,000 $6,953,000 $6,178,000
Electro-dynamic segment
revenue 743,000 547,000 1,533,000 1,249,000
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Total revenue 4,288,000 3,769,000 8,486,000 7,427,000
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Gross profit 1,939,000 1,690,000 3,709,000 3,299,000
Gross profit margin 45.2% 44.8% 43.7% 44.4%
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Income from operations 398,000 377,000 803,000 732,000
Pretax income 320,000 338,000 652,000 660,000
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Net income 261,000 335,000 530,000 653,000
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Earnings Per Share:
Basic:
Net income 261,000 335,000 530,000 653,000
Preferred stock dividends (62,000) (57,000) (122,000) (113,000)
Accretion of redeemable
preferred stock (37,000) (50,000) (74,000) (100,000)
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Net income available to
common shareholders 162,000 228,000 334,000 440,000
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Basic earnings per share $0.04 $0.06 $0.08 $0.11
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Basic weighted average
shares outstanding 4,474,000 4,167,000 4,456,000 4,152,000
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Diluted:
Net income 261,000 335,000 530,000 653,000
Interest expense from
convertible debt 21,000 20,000 36,000 40,000
--------------------------------------------
Net income available to
common shareholders -
Diluted 282,000 355,000 566,000 693,000
============================================
Diluted earnings per share $0.03 $0.04 $0.06 $0.08
============================================
Diluted weighted average
shares outstanding 9,354,000 9,094,000 9,288,000 8,983,000
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QualMark Corporation, headquartered in Denver, Colorado, is the leader in designing, marketing, and manufacturing accelerated life-testing systems (HALT and HASS) providing the world's largest corporations with solutions that improve product reliability and allow them to get to market faster. The Company has installed more than 600 of its proprietary testing systems in 30 countries. The Company operates and partners with ten testing facilities worldwide.
The Company also offers electrodynamic vibration solutions through its subsidiaries, QualMark Ling Electronics and QualMark ACG Corporation.
QualMark Ling Electronics and ACG Corporation, headquartered in West Haven, Connecticut, are the leaders in supplying electro-dynamic systems, components, and service to the worldwide vibration test equipment market.
The statements included in this press release concerning predictions of economic performance and management's plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, factors detailed in the Company's Securities and Exchange Commission filings; downturns in the Company's primary markets; variability of order flow, future economic conditions; competitive products and pricing; new product development; disruptions in the Company's operations from acts of God or extended maintenance; transportation difficulties; or the delivery of product under existing contracts and other factors.
