DRS TECHNOLOGIES REPORTS RECORD FIRST QUARTER RESULTS
09 Aug 07. DRS Technologies, Inc. (NYSE: DRS) today reported financial results for the first quarter of fiscal 2008, which ended June 30, 2007. For the three-month period, the company posted record first quarter revenues, reflecting strong organic growth, and record first quarter bookings. As announced on
July 27, 2007, profitability for the quarter was impacted by a $36.8m pre-tax charge on the company’s Thermal Weapon Sights II (TWS II) program, due primarily to the cost of procuring new material following recent design modifications and the write-off of existing inventory that can no longer be used on the program. The company said it is committed to satisfying the requirements of the customers and users of this product. DRS expects to resume product shipments of the TWS II during its fiscal second quarter ending September 30, 2007.
Consolidated revenues for the first quarter of fiscal 2008 were $735.6m, 17 percent higher than revenues of $630.3m for the same quarter last fiscal year. The increase was attributable entirely to organic revenue growth, with higher sales reported in each of the company’s operating segments.
Fiscal 2008 first quarter operating income of $31.3m includes the $36.8m pre-tax charge discussed above. The operating margin (operating income as a percentage of revenues) for the fiscal 2008 three-month period was 4.3 percent after giving effect to the charge. Without the adverse impact from the pre-tax charge, the company would have reported operating income of $68.1m and an operating margin of 9.3 percent for the first quarter of fiscal 2008, compared with last year’s first quarter operating income of $65.0 million and operating margin of 10.3 percent.
“Before giving effect to the charge, DRS generated strong first quarter operating income of $68.1m and diluted earnings per share (EPS) of $0.60, 15 percent above diluted EPS for the same quarter last year,” said Mark S. Newman, DRS Technologies’ chairman, president and chief executive officer. “Coupled with record first quarter revenues in each of operating segments, strong demand for our products and services, and a healthy level of funded backlog, results excluding the TWS II provision demonstrate the overall strength and diversity of our business base.”
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $49.3m for the fiscal 2008 first quarter, compared with EBITDA of $83.6m for the
first quarter a year earlier. EBITDA as a percentage of revenues was 6.7 percent, compared with 13.3 percent a year ago, reflecting the impact of the pre-tax charge. Interest and related expenses for the first quarter of fiscal 2008 were $28.7m (2006: $29.9m). The decrease was due to lower average borrowings outstanding associated with financing the Engineered Support Systems acquisition, completed in the last quarter of fiscal 2006.
The effective income tax rate for the initial quarter of fiscal 2008 was approximately 37 percent, compared with approximately 39 percent for the same period last fiscal year. Net earnings of $1.7m for the first three months of fiscal 2008 were reduced by the TWS II charge discussed earlier, which amounted to $23.2m after taxes. Excluding the after-tax charge, the company would have reported net earnings of $24.9m for the first quarter of fiscal 2008, 17 percent higher than net earnings of $21.3m for the same period in fiscal 2007. Diluted EPS of $0.04 for the fiscal 2008 first quarter was based on 41.3 million weighted average diluted shares outstanding. Without the effect of the after-tax charge, the company would have reported diluted EPS of $0.60 for the fiscal 2008 first quarter, a 15 percent improvement over diluted EPS of $0.52 on 40.7 million weighted average diluted shares outstanding for same period a year earlier.
Net cash provided by operating activities for the first quarter of fiscal 2008 was $0.5m, a 102 percent improvem