Message #21 From:
Stock News Bot Date: October 24, 2006 03:00:00 AM
QMRK News Qualmark Corporation Reports Third Quarter Financial Results
DENVER--(BUSINESS WIRE)--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 third quarter ended September 30, 2006.
For the quarter (three months ended September 30, 2006):
Revenue-
The Company reported total revenue for the quarter of $3,638,000 versus
total revenue of $3,509,000 from the comparable period in 2005. Charles
Johnston, Qualmark’s President and CEO,
stated, “We are pleased with the substantial
growth of our sales backlog during the third quarter. Moving into the
fourth quarter, our sales backlog approached $1 million, which is the
most significant amount of backlog in Qualmark’s
history.” The Company’s
shipments for the quarter were less than expected due to customers
having extended delivery requirements and the Company anticipating the
arrival of necessary exportation licenses from the United States
Department of Commerce, which are estimated to be received in the fourth
quarter. Johnston continued, “We continue to
see market growth in both of our business segments, which is
substantiated by the amount of backlog that we are bringing into the
fourth quarter. The HALT/HASS segment experienced approximately 40% of
its business from new customers during the quarter and the
Electro-dynamic segment (Ling Electronics) began to penetrate the key,
west coast market.”
During the quarter, the HALT/HASS segment shipped its first Typhoon
chamber to the largest military supplier in France, who will utilize the
equipment to test electronic components in aircraft navigation and
optical devices within military applications. The HALT/HASS segment also
operated in additional markets during the third quarter, which included:
avionics, aerospace, consumer electronics and hardware, contract
manufacturers and telecommunications.
Our Electro-dynamic business segment (Ling Electronics) continued to
sell in the aerospace, avionics and military markets during the third
quarter.
Income-
The Company reported net income of $192,000, which included an
additional $28,000 expense related to the fair value of stock options
and a $93,000 credit for the reversal of estimated income tax due to a
change in the Company’s estimated annual
effective tax rate, for the quarter, versus net income of $331,000 for
the comparable period in 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, which may be adjusted from time to time to
more accurately reflect income tax expense. The Company continues to
have net operating loss carry-forwards to apply to actual taxable
income; therefore any income tax expenses do not have an impact on cash.
Earnings per share-
The Company reported diluted income per share for the quarter of $0.01,
as compared to diluted income per share of $0.03 for the third quarter
ended 2005. During the quarter, the primary holder of the Company’s
preferred stock elected to convert all of the outstanding preferred
shares into common shares. This conversion results in a more transparent
equity structure and eliminates the continuous preferred stock dilution,
dividend cost and debt overhang. 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 (nine months ended September 30, 2006):
Revenue-
The Company reported total revenue for the nine months ended September
30, 2006 of $12,124,000 versus total revenue of $10,936,000 from the
comparable period in 2005. “Year over year,
total revenue grew 11%. Our HALT/HASS business segment grew 7% as
compared to 2005 and our Electro-dynamic business segment grew 34% as
compared to 2005.”
Johnston commented, “We have recently made
significant changes to our sales management team and modified our
distribution channels, in order to more effectively serve our current
customers and expand our geographic reach. At our corporate office, Mr.
Jeffery Hale joined the team as the newly appointed Vice President of
Sales and Marketing. Mr. Hale brings a rich blend of sales, marketing
and technical expertise to Qualmark. He has over 15 years of management
experience in creating and implementing sales, market and product
strategies for domestic and international markets. Mr. Hale holds a
Master of Science degree in Electrical Engineering from Stanford
University, as well as Master of Business Administration and Bachelor of
Science in Electrical Engineering degrees from the University of New
Mexico. In the field, we have hired an additional Regional Sales Manager
with extensive accelerated testing experience, as well as engaged
several new sales representatives that have experience in both
accelerated testing (HALT/HASS) and electro-dynamic systems (Ling).”
Income-
For the nine months ended September 30, 2006, the Company reported net
income of $722,000, which included an additional $86,000 expense related
to the fair value of stock options and $30,000 expense for estimated
income tax, for the year, versus net income of $984,000 for the
comparable period in 2005.
Earnings per share-
For the nine months ended September 30, 2006, the Company reported
diluted income per share of $0.08, as compared to diluted income per
share of $0.12 for the nine months ended 2005. During the quarter, the
primary holder of the Company’s preferred
stock elected to convert all of the outstanding preferred shares into
common shares. This conversion results in a more transparent equity
structure and eliminates the continuous preferred stock dilution,
dividend cost and debt overhang. 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 third quarter 2006 results will be held today, October 24, 2006
at 11:00 a.m. Eastern Time.
To participate via conference call dial 888-318-6430 no later than
10:50 a.m. EDT on October 24th.
The leader name is Charles Johnston.The Qualmark security code
to access this earnings call is QUALMARK.
Quarter to Date
Year to Date
September 30
September 30
2006
2005
2006
2005
HALT/HASS segment revenue
$2,931,000
$3,081,000
$9,884,000
$9,259,000
Electro-dynamic segment revenue
707,000
428,000
2,240,000
1,677,000
Total revenue
3,638,000
3,509,000
12,124,000
10,936,000
Gross profit
1,388,000
1,584,000
5,096,000
4,883,000
Gross profit margin
38.2%
45.2%
42.0%
44.6%
Income from operations
183,000
379,000
986,000
1,111,000
Pretax income
99,000
350,000
752,000
1,010,000
Net income
192,000
331,000
722,000
984,000
Earnings Per Share:
Basic:
Net income
192,000
331,000
722,000
984,000
Preferred stock dividends
(34,000)
(58,000)
(156,000)
(171,000)
Accretion of redeemable preferred stock
(109,000)
(127,000)
(183,000)
(227,000)
Net income available to common shareholders
49,000
146,000
383,000
586,000
Basic earnings per share
$0.01
$0.03
$0.08
$0.14
Basic weighted average shares outstanding
6,240,000
4,344,000
5,050,000
4,216,000
Diluted:
Net income
192,000
331,000
722,000
984,000
Preferred stock dividends
(34,000)
(58,000)
(156,000)
Accretion of redeemable preferred stock
(109,000)
(127,000)
(183,000)
Interest expense from convertible debt
19,000
20,000
55,000
60,000
Net income available to common shareholders - Diluted
68,000
166,000
438,000
1,044,000
Diluted earnings per share
$0.01
$0.03
$0.08
$0.12
Diluted weighted average shares outstanding
6,931,000(a)
5,188,000(a)
5,799,000(a)
8,817,000
(a)Does not include common shares obtainable upon conversion
of preferred stock, as the effect would be anti-dilutive.
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
subsidiary, Ling Electronics.
Ling Electronics, headquartered in West Haven, Connecticut, is
the leader 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.
