Point Blank reports 2008 Q2 results
Point Blank Solutions Inc announced its results of operations and financial position as of and for the second quarter ended June 30, 2008.
For the quarter ended June 30, 2008, net sales were $11.1 million, compared to net sales of $93.5 in the quarter ended June 30, 2007. The decline in net sales is primarily due to reductions in military and federal sales of $77.5 million. Quarterly net sales were significantly impacted by delays in awarding military contracts.
As previously announced, the Company responded to several solicitations for which the contract award dates were delayed, including for the Improved Outer Tactical Vest (IOTV) bridge buy, the IOTV base buy, which includes Deltoid Auxiliary Protective Systems (DAPS), and others.
The Company also experienced lower sales to the Domestic/Distributor market of $4.7 million. This decline was primarily due to uncertainties in the transition to new National Institute of Justice standards for soft body armor, as well as higher fuel costs, which had a direct impact on state and local governments' spending.
In June 2008, the Company was awarded a $13.5 million contract from the U.S. Department of the Army, Joint Contracting Command-Iraq to produce 42,500 concealable, ballistic vests and approximately 85,000 Level IV plates. In addition, in July 2008 the Company won the $86.2 million IOTV Bridge Buy award to provide the U.S. Military with the Improved Outer Tactical Vest (IOTV). This contract calls for the production of 150,000 vests beginning in August 2008 and is expected to be concluded in approximately six months.
With these awards and others from each of the Company's subsidiaries, backlog as of July 1, 2008 grew to approximately $108 million. The Company also responded to other solicitations that have closed with award dates expected by September 30, 2008 and believes there will be additional solicitations from the U.S. Military and Federal Government and International, in the third and fourth quarters of 2008.
Gross profit for the 2008 second quarter was $(0.3) million, or (2.5)% of net sales, as compared to $16.8 million, or 18.0% of net sales for the comparable prior year period. Gross margins were impacted by the delays in contract awards, which significantly limited the Company from leveraging operating efficiencies in manufacturing and production.
Constraints on price increases due to the competitive market and higher raw material costs also adversely impacted gross profits and margins in the 2008 periods as compared to the same periods in 2007. The Company believes its gross profit levels will improve in the second half of the year, as a result of its increased sales volume and expectations for the future.
Total operating costs were $(17.9) million or (162)% of net sales for the 2008 quarter as compared to $11.8 million or 12.7% of net sales for the comparable 2007 period. Operating costs in the current quarter include a credit of $26.1 million, as the statue of limitations for the major portion of the 2004 employment tax withholding obligations expired, resulting in the reversal of the charge recorded in 2004.