09 May 11. FORCE PROTECTION, INC. (NASDAQ:FRPT) today reported financial results for the three months ended March 31, 2011, including increased revenues as compared to the first quarter of 2010. In addition, as a result of its funded backlog at March 31, 2011, and the significant contract awards it has secured in the 2011 second quarter, the Company announced solid visibility on its expectation of revenue and earnings growth for the 2011 full year. Finally, the Company continues to make important progress on its business development initiatives and has added additional resources designed to promote its long-term success.
In the first quarter of 2011, the Company reported net sales of $141.4m versus $134.8m in the first quarter of 2010. Contributing to the increase were higher vehicle and modernization sales, which were partially offset by lower spares and sustainment revenues.
Gross margin for the 2011 first quarter was 18.1 percent, as compared to 18.8 percent in the first quarter of 2010. Contributing to the decrease was $9.5m of revenue in the current year related to a claim settlement and a development contract, with both having minimal associated gross profit. Also contributing to the decrease was $1.3m related to a workforce reduction during 2011. The combination of these two factors negatively impacted the gross margin for the 2011 first quarter by approximately 200 basis points.
The Company reported operating income of $150,000 in the first quarter of 2011 as compared to operating income of $1.8m in the prior year period. Contributing to the decrease was $2.3m in workforce reduction and severance related costs in 2011, which includes the aforementioned $1.3m impact to cost of sales. Net loss for the first quarter of 2011 was $49,000, or breakeven results per share, as compared to net income of $1.1m, or $0.02 per diluted share, for the 2010 first quarter.
On March 9, 2011, the Company announced that its board of directors had authorized the Company to repurchase up to $20m of its common stock in the open market or in private transactions. During the first quarter, the Company repurchased 228,125 shares of its common stock in the open market at a cost of $1.1m.
Michael Moody, Chairman and Chief Executive Officer of Force Protection, Inc., said, “While our 2011 first quarter results were impacted by the timing of contract awards, we were pleased to end the quarter with more than $500m in funded backlog. Combined with the significant contract awards we have received to date during the second quarter of 2011, we are in a strong position to grow both revenue and earnings for the full year. In addition, given our expectation for additional awards related to our currently fielded vehicle fleet and the progress we are making on our significant business development initiatives, we expect continued growth beyond 2011 levels.”
Financial Position, Backlog and Recent Significant Contract Awards
Net cash used in operating activities during the 2011 first quarter was $5.6m, as compared to $10.5m during the first quarter of 2010. The Company ended the first quarter of 2011 with cash of $141.2m, inventories of $72.5m, and accounts payable of $50.9m. In addition, accounts receivable was $96.7m, including $49.4m of earned but unbilled receivables. Contributing to the $8.8m decrease in the Company’s cash balance during the 2011 first quarter was payments of $7.5m for 2010 estimated federal income tax and $1.1 m for the repurchase of Company stock on the open market.
Also at March 31, 2011, the Company had approximately $501m in funded backlog, the majority of which is expected to be delivered during the final nine months of 2011. The Company also noted that its funded backlog at the end of the 2011 first quarter was significantly higher than its approximate $214m funded backlog balance as of March 31, 2010.
Since the end of the 2011 first quarter, the Company h