WHITE PLAINS, N.Y., May 9 /PRNewswire-FirstCall/ -- K & F Industries Holdings, Inc. (NYSE: KFI) today reported its financial results for the first quarter ended March 31, 2007 .
Results for First Quarter 2007 Compared with First Quarter 2006
-- Sales rose by 20% to $109 million:
-- Aircraft Braking Systems (ABSC) sales increased $14 million, or 18%
to $90 million
-- Engineered Fabrics (EFC) sales rose $4 million, or 26% to $19
million
-- Adjusted EBITDA increased 20% to $43 million or 40% of revenues,
compared to $36 million or 40% of revenues a year ago.
-- Net interest expense was $14 million compared to $13 million a year
ago.
-- Net income was $9 million, or $0.22 per diluted share, compared to $10
million or $0.26 per diluted share in the prior year.
-- Excluding the nonrecurring charges associated with the company's
pending merger with Meggitt-USA, Inc. ('Merger-Related Expenses'),
earnings per diluted share would have increased by $0.12.
-- Bookings increased 11% to $136 million and backlog grew 71% to a record
$324 million.
-- First quarter consolidated market sector revenue performance was as
follows:
-- Commercial transport sales rose 15% to $54 million
-- Military sales increased 29% to $32 million
-- General aviation sales were up 18% to $23 million
-- Cash and cash equivalents was $12 million and senior term loans were
reduced by $10 million during the quarter.
See the attached tables for a reconciliation of net income to EBITDA and Adjusted EBITDA for the 2007 and 2006 periods.
Recent Highlights
Engineered Fabrics to Expand Manufacturing Facilities
-- Driven by strong demand for its products from the military sector, EFC
plans to construct a new facility at its Rockmart, Georgia
headquarters. The 60,000 square foot plant will support the increased
production of the company's de-icing equipment and helicopter interior
upholstery product lines, and accommodate the future requirements of
new flexible bladder fuel tank programs. The $5 million cost of the
plant will be funded by K & F with in kind support by the City of
Rockmart and the Polk County Commission. Construction began in April
2007 and is expected to conclude in early 2008.
Merger Update
-- On March 6, 2007, K & F announced that it had entered a definitive
merger agreement with Meggitt-USA, Inc., a wholly owned subsidiary of
Meggitt plc. Under the merger agreement, Meggitt has agreed to acquire
K & F for $27 per share in cash. Subsequent to the March 6
announcement, several key terms and conditions of the agreement have
been satisfied including approval by both K & F's stockholders and
Meggitt plc's shareholders. Closing of the transaction remains subject
to and is scheduled to occur following receipt of all necessary
domestic and certain foreign regulatory approvals, including under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the U.S. Exon-
Florio regulations.
Conference Call
In light of K & F's pending merger with Meggitt, the company does not intend to host a conference call regarding its first quarter financial results.
About K&F Industries Holdings, Inc.
K & F Industries Holdings, Inc. is a worldwide leader in the manufacture of braking equipment for commercial transport, general aviation and military aircraft through its Aircraft Braking Systems Corporation subsidiary. K & F manufactures a wide range of braking equipment including antiskid, auto brake, brake by wire systems, and brake temperature monitoring systems as well as main and nose wheels, carbon and steel brakes, and ancillary equipment. Its products are installed on approximately 25,000 aircraft worldwide, more than any other supplier. In addition, K & F's subsidiary, Engineered Fabrics Corporation, is a leading producer of aircraft fuel tanks, de-icing equipment and specialty coated fabrics used for storage, shipping, environmental and rescue applications for the commercial and military markets.
Forward Looking Statements
Some statements and information contained herein are not historical facts, but are 'forward-looking statements,' as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition, the company or its representatives have made and may continue to make forward-looking statements, orally, in writing or in other contexts, such as in reports filed with the SEC or in press releases. These forward-looking statements may be identified by the use of forward-looking terminology, such as 'believes,' 'expects,' 'may,' 'should' or the like, the negative of these words or other variations of these words or comparable words, or discussion of strategy that involves risk and uncertainties. We caution you that these forward-looking statements are only predictions, and actual events or results may differ materially as a result of a wide variety of factors and conditions, many of which are beyond our control. Risks related to the merger with Meggitt include, but are not limited to, (i) the failure to obtain the necessary antitrust clearance and certain other governmental approvals in a timely manner or at all, (ii) the failure, under certain circumstances, of Meggitt to meet the conditions set forth in its equity and debt financing documents and (iii) the satisfaction of various other closing conditions contained in the definitive merger agreement. Other potential risks and uncertainties are discussed in K&F's reports and other documents filed with the SEC from time to time, and these factors and conditions include: (i) government or regulatory changes, (ii) dependence on our subsidiary, Aircraft Braking Systems Corporation, for operating income, (iii) competition in the market for our products, and (iv) our substantial indebtedness. For more information see the section entitled 'Risk Factors' contained in our Form 10-K and information in our other periodic reports filed with the SEC. We undertake no obligation to revise these statements following the date of this press release.
K & F INDUSTRIES HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands except per share data)
Three Months
Ended
March 31,
2007 2006
Net Sales $108,952 $91,062
Cost of Sales 58,276 49,201
Gross Profit 50,676 41,861
Independent Research and Development Costs 4,736 4,039
Selling, General and Administrative Expenses 9,387 7,142
Amortization of Intangible Assets 1,462 1,710
Merger-related expenses 5,250 --
Operating Income 29,841 28,970
Interest Income 576 321
Interest Expense (14,926) (13,436)
Income Before Income Taxes 15,491 15,855
Income Tax Provision (6,678) (5,556)
Net Income $8,813 $10,299
Basic Earnings Per Share $.22 $.26
Basic Weighted Average Common 39,643 39,603
Shares Outstanding
Diluted Earnings Per Share $.22 $.26
Diluted Weighted Average Common
Shares Outstanding 40,471 40,245
K & F INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL DATA
(UNAUDITED)
(In thousands)
Three Months
Ended
March 31,
2007 2006
Capital Expenditures $1,637 $6,296
Bookings 135,662 122,403
Backlog 324,098 189,105
Cash and Cash Equivalents 12,358 29,240
Accounts Receivable 57,018 45,633
Inventory 81,906 63,498
Accounts Payable 18,795 17,542
Capital Lease Obligation 11,027 --
Notes Payable 7,627 --
Senior Term Loans 382,000 438,000
7-3/4% Senior Subordinated Notes 315,000 315,000
9-5/8% Senior Subordinated Notes -- 577
Stockholders' Equity 405,704 335,271
K & F INDUSTRIES HOLDINGS, INC.
RECONCILIATION OF NET INCOME TO NON-GAAP EARNINGS BEFORE
INTEREST EXPENSE, INCOME TAXES, DEPRECIATION AND AMORTIZATION, STOCK-BASED
COMPENSATION AND MERGER-RELATED EXPENSES
(ADJUSTED EBITDA)
(UNAUDITED)
(In thousands)
Three Months
Ended
March 31,
2007 2006
Adjusted EBITDA $43,311 $36,036
Less Adjustments:
Merger-Related Expenses 5,250 --
Stock-Based Compensation 279 312
EBITDA 37,782 35,724
Less:
Depreciation and Amortization 7,941 6,754
Operating Income 29,841 28,970
Less:
Income Tax Provision 6,678 5,556
Interest Expense, net 14,350 13,115
Net Income $8,813 $10,299
EBITDA represents net income before interest expense, net, income taxes and depreciation and amortization. Adjusted EBITDA is EBITDA as further adjusted to exclude stock-based compensation and merger-related expenses. These definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Neither of these calculations is a measure of financial performance under accounting principles generally accepted in the United States of America. We believe they provide a basis to measure our operating performance, apart from the expenses associated with our physical plant or capital structure, but neither should be considered in isolation or as a substitute for operating income, cash flows from operating activities or other measures of performance. A reconciliation of EBITDA and Adjusted EBITDA is presented above.
SOURCE K & F Industries Holdings, Inc.
