MRO Magazine

Park Electrochemical Corp.  Reports Fourth Quarter and Fiscal Year Results

By Business Wire News   



MELVILLE, N.Y.

Park Electrochemical Corp. (NYSE:PKE) reported net sales of $36,241,000 for the fourth quarter ended March 1, 2015 compared to net sales of $38,151,000 for the fourth quarter ended March 2, 2014. Park’s net sales for the fiscal year ended March 1, 2015 were $162,086,000 compared to net sales of $165,764,000 for the fiscal year ended March 2, 2014.

Park reported net earnings before special items of $4,977,000 for the fourth quarter ended March 1, 2015 compared to net earnings before special items of $4,364,000 for the fourth quarter of last fiscal year. In the fourth quarter ended March 1, 2015, the Company recorded a pre-tax charge of $206,000 related to a modification of previously issued employee stock options resulting from the special cash dividend paid by the Company in February 2015 and pre-tax restructuring charges of $193,000 related to the closure in fiscal year 2013 of the Company’s Nelco Technology (Zhuhai FTZ) Ltd. facility located in the Free Trade Zone in Zhuhai, China and the closure in fiscal year 2009 of its New England Laminates Co., Inc. facility located in Newburgh, New York. In the fourth quarter ended March 2, 2014, the Company recorded a non-cash charge of $63,958,000 for the accrual of U.S. income taxes on the undistributed earnings of the Company’s subsidiary in Singapore. In addition, during the fourth quarter ended March 2, 2014, the Company recorded pre-tax charges of $1,208,000 related to a modification of previously issued employee stock options resulting from the special cash dividend paid by the Company in February 2014, a fee in connection with the previously announced retention of Bank of America Merrill Lynch for financial advisory services and the closure of the Company’s facility in Zhuhai, China mentioned above. Accordingly, the net earnings for the fourth quarter ended March 1, 2015 were $4,841,000 compared to a net loss of $60,024,000 for the fourth quarter ended March 2, 2014.

For the fiscal year ended March 1, 2015, Park reported net earnings before special items of $21,004,000 compared to net earnings before special items of $20,197,000 for the prior fiscal year. The current fiscal year included pre-tax charges of $1,645,000 related to a modification of previously issued employee stock options mentioned above, additional fees incurred in connection with the 2014 fiscal year-end audit, cost reduction initiatives in the United States and the facility closures mentioned above. The prior fiscal year included the charge of $63,958,000 related to the U.S. income tax on the undistributed earnings of the Company’s subsidiary in Singapore mentioned above, a tax benefit of $2,181,000 in connection with a tax refund related to amended federal income tax returns and pre-tax charges of $1,527,000 related to the stock option modification, the retention fee and the Zhuhai facility closure mentioned above. Accordingly, net earnings for the fiscal year ended March 1, 2015 were $20,043,000 compared to a net loss of $42,329,000 for the fiscal year ended March 2, 2014.

Park reported basic and diluted earnings per share before special items of $0.24 for the fourth quarter ended March 1, 2015 compared to basic and diluted earnings per share before special items of $0.21 for last year’s fourth quarter. Basic and diluted earnings per share were $0.23 for the fourth quarter ended March 1, 2015 compared to a basic and diluted loss per share of $2.88 for last year’s fourth quarter.

Park reported basic and diluted earnings per share before special items of $1.00 for the fiscal year ended March 1, 2015 compared to basic and diluted earnings per share before special items of $0.97 for the prior fiscal year. Basic and diluted earnings per share were $0.96 for the fiscal year ended March 1, 2015 compared to a basic and diluted loss per share of $2.03 for the prior fiscal year.

The Company will conduct a conference call to discuss its financial results at 11:00 a.m. EDT today. Forward-looking and other material information may be discussed in this conference call. The conference call dial-in number is (844) 466-4114 in the United States and Canada and (765) 507-2654 in other countries and the required passcode is 34497367.

For those unable to listen to the call live, a conference call replay will be available from approximately 2:00 p.m. EDT today through 11:59 p.m. EDT on Tuesday, May 5, 2015. The conference call replay can be accessed by dialing (855) 859-2056 in the United States and Canada and (404) 537-3406 in other countries and entering passcode 34497367 or on the Company’s web site at www.parkelectro.com/investor/investor.html.

Any additional material financial or statistical data disclosed in the conference call will also be available at the time of the conference call on the Company’s web site at www.parkelectro.com/investor/investor.html.

Park believes that an evaluation of its ongoing operations would be difficult if the disclosure of its financial results were limited to accounting principles generally accepted in the United States of America (“GAAP”) financial measures, which include special items, such as stock option modification, restructuring, tax, financial advisory services fee and audit fee charges and tax benefits. Accordingly, in addition to disclosing its financial results determined in accordance with GAAP, Park discloses non-GAAP operating results that exclude special items in order to assist its shareholders and other readers in assessing the Company’s operating performance, since the Company’s on-going, normal business operations do not include such special items. The detailed operating information presented below reconciles the non-GAAP operating results before special items to earnings determined in accordance with GAAP. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP.

Park Electrochemical Corp. is a global advanced materials company which develops and manufactures high-technology digital and RF/microwave printed circuit materials principally for the telecommunications and internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies and low-volume tooling for the aerospace markets. Park’s core capabilities are in the areas of polymer chemistry formulation and coating technology. The Company’s manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company also maintains R&D facilities in Arizona, Kansas and Singapore.

Additional corporate information is available on the Company’s web site at www.parkelectro.com

                 

Performance table, including non-GAAP information (in thousands, except per share amounts – unaudited):

 
13 Weeks Ended 52 Weeks Ended
       
  3/1/15     3/2/14     11/30/14     3/1/15     3/2/14  
Sales

$

36,241

$ 38,151 $ 34,679 $ 162,086 $ 165,764
 
Net Earnings before Special Items1 $ 4,977 $ 4,364 $ 2,433 $ 21,004 $ 20,197
Special Items, net of Tax:
Restructuring Charges (139 ) (227 ) (402 ) (805 ) (546 )
Modification of Stock Options 3 (47 ) 3 (47 )
Audit and Advisory Fees (156 ) (159 ) (156 )
Deferred Tax on Repatriation (63,958 ) (63,958 )
Tax Benefit                   2,181  
Net Earnings $ 4,841   $ (60,024 ) $ 2,031   $ 20,043   $ (42,329 )
 
Basic and Diluted Earnings per Share:
Basic Earnings before Special Items1 $ 0.24 $ 0.21 $ 0.12 $ 1.00 $ 0.97
Special Items:
Restructuring Charges (0.01 ) (0.01 ) (0.02 ) (0.03 ) (0.03 )
Modification of Stock Options
Audit and Advisory Fees (0.01 ) (0.01 ) (0.01 )
Deferred Tax on Repatriation (3.07 ) (3.06 )
Tax Benefit                   0.10  
Basic Earnings (Loss) per Share $ 0.23   $ (2.88 ) $ 0.10   $ 0.96   $ (2.03 )
 
Diluted Earnings before Special Items1 $ 0.24 $ 0.21 $ 0.12 $ 1.00 $ 0.97
Special Items:
Restructuring Charges (0.01 ) (0.01 ) (0.02 ) (0.03 ) (0.03 )
Modification of Stock Options
Audit and Advisory Fees (0.01 ) (0.01 ) (0.01 )
Deferred Tax on Repatriation (3.07 ) (3.06 )
Tax Benefit                   0.10  
Diluted Earnings (Loss) per Share $ 0.23   $ (2.88 ) $ 0.10   $ 0.96   $ (2.03 )
 
Weighted Average Shares Outstanding:
Basic 20,896 20,873 20,947 20,912 20,849
Diluted 20,937 20,873 20,989 20,986 20,849
 

1 Refer to “Reconciliation of non-GAAP financial measures” below for information regarding Special Items.

 
               

Comparative balance sheets (in thousands):

 

  3/1/2015       3/2/2014  

Assets

Current Assets
Cash and Marketable Securities $ 272,133 $ 270,356
Accounts Receivable, Net 21,431 22,881
Inventories 14,439 13,871
Prepaid Expenses and Other Current Assets   5,256   4,132
Total Current Assets 313,259 311,240
 
Fixed Assets, Net 26,537 29,674
Restricted Cash 25,000
Other Assets   10,886   11,179
Total Assets $ 350,682 $ 377,093
 

Liabilities and Shareholders’ Equity

Current Liabilities
Current Portion of Long-Term Debt $ 10,000 $ 10,000
Accounts Payable 6,882 6,109
Accrued Liabilities 4,767 5,139
Income Taxes Payable 4,141 2,995
Current Deferred Income Taxes   3,934  
Total Current Liabilities 29,724 24,243
 
Long-Term Debt 84,000 94,000
Deferred Income Taxes 54,155 58,124
Other Liabilities   1,204   183
Total Liabilities 169,083 176,550
 
Shareholders’ Equity   181,599   200,543
 
Total Liabilities and Shareholders’ Equity $ 350,682 $ 377,093
 

Additional information

Equity per Share$8.69$9.60
Total Cash, Restricted Cash and Marketable Securities$272,133$295,356
 
                   

Comparative statements of operations (in thousands):

 
13 Weeks Ended (unaudited) 52 Weeks Ended
           

March 1,
2015

March 2,
2014

November 30,
2014

March 1,
2015

March 2,
2014

 
Net Sales $ 36,241 $ 38,151 $ 34,679 $ 162,086 $ 165,764
 
Cost of Sales   24,986     27,701     26,081     113,133     117,664  
 
Gross Profit 11,255 10,450 8,598 48,953 48,100
% of net sales 31.1 % 27.4 % 24.8 % 30.2 % 29.0 %
 

Selling, General & Administrative Expenses

5,771 6,465 5,754 24,373 25,168
 
Restructuring Charge   193     227     636     1,179     546  
 
Earnings from Operations 5,291 3,758 2,208 23,401 22,386
 
Interest:
Interest Income 232 176 222 827 460
 
Interest Expense   364     221     361     1,438     764  
 
Net Interest Expense   (132 )   (45 )   (139 )   (611 )   (304 )
 
Earnings before Income Taxes 5,159 3,713 2,069 22,790 22,082
 
Income Tax Provision 318 63,737 38 2,747 64,411
         
Net Earnings $ 4,841   $ (60,024 ) $ 2,031   $ 20,043   $ (42,329 )
 
                   

Reconciliation of non-GAAP financial measures (in thousands – unaudited):

 
13 Weeks Ended

March 1, 2015

13 Weeks Ended

March 2, 2014

13 Weeks Ended

November 30, 2014

           
GAAP

Specials
Items

Before
Special
Items

GAAP

Specials
Items

Before
Special
Items

GAAP

Specials
Items

Before
Special
Items

 

Selling, General & Administrative Expenses

5,771 (206 ) 5,565 6,465 (981 ) 5,484 5,754 5,754
% of net sales 15.9 % 15.4 % 16.9 % 14.4 % 16.6 % 16.6 %
 
Restructuring Charge 193 (193 ) 227 (227 ) 636 (636 )
% of net sales 0.5 % 0.0 % 0.6 % 0.0 % 1.8 % 0.0 %
 
Earnings from Operations 5,291 399 5,690 3,758 1,208 4,966 2,208 636 2,844
% of net sales 14.6 % 15.7 % 9.9 % 13.0 % 6.4 % 8.2 %
 
Earnings before Income Taxes 5,159 399 5,558 3,713 1,208 4,921 2,069 636 2,705
% of net sales 14.2 % 15.3 % 9.7 % 12.9 % 6.0 % 7.8 %
 
Income Tax Provision 318 263 581 63,737 (63,180 ) 557 38 234 272
Effective Tax Rate 6.2 % 10.5 % 1716.6 % 11.3 % 1.8 % 10.1 %
 
Net Earnings 4,841 136 4,977 (60,024 ) 64,388 4,364 2,031 402 2,433
% of net sales 13.4 % 13.7 % -157.3 % 11.4 % 5.9 % 7.0 %
 
               

Reconciliation of non-GAAP financial measures (in thousands – unaudited), continued:

 
52 Weeks Ended

March 1, 2015

52 Weeks Ended

March 2, 2014

               
GAAP

Specials
Items

Before
Special
Items

    GAAP

Specials
Items

Before
Special
Items

 

Selling, General & Administrative Expenses

24,373 (466 ) 23,907 25,168 (981 ) 24,187
% of net sales 15.0 % 14.7 % 15.2 % 14.6 %
 
Restructuring Charge 1,179 (1,179 ) 546 (546 )
% of net sales 0.7 % 0.0 % 0.3 % 0.0 %
 
Earnings from Operations 23,401 1,645 25,046 22,386 1,527 23,913
% of net sales 14.4 % 15.5 % 13.5 % 14.4 %
 
Earnings before Income Taxes 22,790 1,645 24,435 22,082 1,527 23,609
% of net sales 14.1 % 15.1 % 13.3 % 14.2 %
 
Income Tax Provision 2,747 684 3,431 64,411 (60,999 ) 3,412
Effective Tax Rate 12.1 % 14.0 % 291.7 % 14.5 %
 
Net Earnings 20,043 961 21,004 (42,329 ) 62,526 20,197
% of net sales 12.4 % 13.0 % -25.5 % 12.2 %
 

Park Electrochemical Corp.
Martina Bar Kochva, 631-465-3600

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