Edac Technologies Corp. Reports Operating Results (10-Q)

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Oct 30, 2009
Edac Technologies Corp. (EDAC, Financial) filed Quarterly Report for the period ended 2009-10-03.

EDAC TECHNOLOGIES CORP. currently offers design and manufacturing services for the aerospace industry in areas such as special tooling equipment and gauges and components used in themanufacture assembly and inspection of jet engines. Edac also offers design and manufacturing services for the medical instruments industry in such areas as components used in the manufacture of medical instruments and special tooling. Edac also designs and manufactures specialized machines for a variety of other applications. Edac Technologies Corp. has a market cap of $17 million; its shares were traded at around $3.49 with a P/E ratio of 2.4 and P/S ratio of 0.4.

Highlight of Business Operations:

Sales for the Precision Aerospace product line increased $5,638,000, or 101.8%, and $8,261,000, or 50.7%, for the three and nine month periods ended October 3, 2009, respectively, as compared to the three and nine month periods ended September 27, 2008. The increases were due primarily to the Companys May 27th acquisition of AERO which contributed $5,386,000 and $7,755,000, for the three and nine month periods ended October 3, 2009, respectively. Additionally, shipments of certain jet engine parts to our major aerospace customers increased slightly.

As of October 3, 2009, the Companys total sales backlog was approximately $134,000,000 compared to $52,400,000, as of January 3, 2009. Backlog consists of accepted purchase orders and long-term contracts that are cancelable by the customer without penalty, except for payment of costs incurred. The Company presently expects to complete approximately $14,000,000 of its October 3, 2009 backlog during the remainder of the 2009 fiscal year. The remaining $120,000,000 of backlog is deliverable in fiscal year 2010 and beyond. The increase in backlog was mainly due to the acquisition of AERO.

Other Income. The Company recognized a gain on the acquisition of AERO in the amount of $11,875,000. The gain has been offset by acquisition related expenses in the amount of $232,000, ($96,000 of which was recognized in third quarter) as is reflected in Other income for the nine month period.

Impacting cash flow for the first nine months of 2009 was cash provided by working capital items in the amount of $211,000. Exclusive of the Companys acquisitions, working capital cash was primarily provided by accounts payable/accrued expenses, accounts receivable and income tax refunds in the amounts of $1,742,000, $1,041,000, and $525,000, respectively, while cash was used in inventory in the amount of $3,186,000.

Cash flows provided by financing activities primarily reflect $9.5 million of new debt to finance the Companys business acquisition. Also, during the nine months ended October 3, 2009, payments of $1,968,000 against term debt were partially offset by net borrowings on the lines of credit totaling $216,000. Amounts advanced on the equipment line of credit will convert to a term note on July 31, 2010, unless converted earlier at the option of the Company.

As of October 3, 2009, $500,000 and approximately $1,391,000 were outstanding on the revolving line of credit and the equipment line of credit, respectively with $4,500,000 and approximately $3,309,000 available for additional borrowings on the revolving line of credit and the equipment line of credit, respectively.

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