Point Blank’s Ballistic apparel sales rise in Q1
May 13, 2008 - United States Of America
Point Blank Solutions Inc a leader in the field of protective body armor, announced its results of operations and financial position as of and for the first quarter ended March 31, 2008.
For the quarter ended March 31, 2008, net sales were $49.9 million, compared to net sales of $92.1 million in the quarter ended March 31, 2007.
As has been previously announced, the Company responded to several solicitations for which the contract award dates were extended, including for the Improved Outer Tactical Vests (IOTV) bridge buy, the IOTV base buy, Deltoid Auxiliary Protective System (DAPS) and Modular Lightweight Load-carrying Equipment (MOLLE).
The decline in net sales for the comparable periods is related specifically to the continuing delays in the awarding of these solicitations.
Gross profit for the quarter ended March 31, 2008 was approximately $8.7 million (17.5% of net sales), as compared to approximately $18.7 million for the three months ended March 31, 2007 (20.3% of net sales).
The decline in gross profit margin as a percentage of net sales is due primarily to lower volume as a result of delays in contract awards, constraints on price increases due to the competitive market and higher raw material costs.
The Company expects that its joint venture, LifeStone Materials, which was created in March 2008, will improve gross margins and profitability.
Specifically, as ballistic apparel sales increase, theCompany believes its relationship with LifeStone Materials will enable it to reduce material costs, and more competitively price its products to increase sales and improve bottom-line performance.
For the quarter ended March 31, 2008, total operating costs were $10.3 million, a decrease of 15.0% compared to total operating costs of $12.2 million reported in the comparable 2007 period.
This decline was related primarily to a decrease in selling, general and administrative expenses of $1.1 million (principally due to reductions in legal and professional fees) and a $0.8 million reduction in litigation and cost of investigation expenses.
The Company reported an operating loss of $1.6 million for the first quarter of 2008 compared to operating income of $6.5 million in the comparable 2007 period.
The net loss was $1.0 million ($0.02 per share both basic and diluted) for the quarter ended March 31, 2008 compared to net income of $3.8 million ($0.07 per share both basic and diluted) for the first quarter of 2007.
On April 16, 2008, the statute of limitations expired for a significant portion of the Company’s employment tax withholding obligation that was originally recorded during 2004. As a result, the $25.9 million charge and related liability will be reversed during the second quarter of 2008.
As reported earlier, the Company initiated a process to consider strategic alternatives, including a possible sale. The Company is working actively with Wachovia Securities in this process.
Commenting on first quarter results and the Company’s future outlook, Larry Ellis, President and CEO stated, “Our results this quarter were significantly impacted by the ongoing delays in body armor procurements within the U.S. Military.
With the recent requests to extend the IOTV Bridge-Buy up to 45 days and the MOLLE award until May 31, 2008, we anticipate our second quarter will be lower, and have taken steps to reduce our overhead accordingly.
We have made inroads in international operations, having recently been awarded a $13.5 million contract to supply protective solutions to the Iraqi Defense Forces.
I believe Point Blank will see improvements in the second half of the year and into 2009 and will be in a better position to post increases in top and bottom-line results, especially as our weaving joint venture becomes fully operational.”
Ellis continued, “We are actively engaged in several solicitations, both domestically and internationally and I remain confident in our future prospects.”
2008 First Quarter Teleconference and Webcast:
The Company will be hosting a teleconference and webcast to discuss its 2008 first quarter financial results on Tuesday, May 13, 2008 at 11:00 a.m. Eastern Time.