PALO ALTO, Calif. - August 7, 2013 - CPI International Holding Corp., the parent company of CPI International, Inc. (CPI), today announced financial results for its third quarter of fiscal year 2013 ended June 28, 2013. For the third consecutive quarter, CPI's orders, sales, net income and adjusted EBITDA results increased in comparison to the same quarter of the prior fiscal year.
"In the third quarter, CPI's strong operational and financial performance continued. We generated our highest quarterly sales rate ever, recorded our highest quarterly backlog level ever, and also set new highs for our sales and orders for the first nine months of a fiscal year. In addition, in comparison to last year's third quarter, our orders and sales grew in each of our largest end markets, and our profitability measures increased," said Joe Caldarelli, chief executive officer. "Market conditions continue to be generally favorable, our investments in our communications business and solid-state offerings are driving positive results and we look forward to continued positive momentum in the coming quarters."
During the first nine months of fiscal 2013, CPI booked orders totaling $386 million, an increase of 37 percent from the $282 million booked in the same period of the previous year. In particular, orders for radar and military communications programs increased during the recent period.
For the 12-month period ending on June 28, 2013, CPI's book-to-bill ratio was 1.18. As of that date, the company's order backlog totaled $324 million.
In comparison to the same period of the previous fiscal year, in the first nine months of fiscal 2013, CPI's orders in its largest end markets were as follows:
In the third quarter of fiscal 2013, CPI generated total sales of $110 million, an increase of 13 percent from the $97.2 million recorded in the same quarter of the previous year. In comparison to the year-ago quarter, in the third quarter of fiscal 2013, CPI's sales in its largest end markets were as follows:
Net Income and Adjusted EBITDA
CPI's net income in the third quarter of fiscal 2013 totaled $6.2 million, an increase from the $2.9 million recorded in the previous year's third quarter. The increase in net income was primarily due to higher total sales and sales of products with higher margins in the most recent quarter. Net income also benefited from a decrease in intangible asset amortization related to the acquisition of CPI by The Veritas Capital Fund IV, L.P. in February 2011.
Adjusted EBITDA equaled $22.0 million, or 20.1 percent of sales, in the third quarter of fiscal 2013, an increase from the $19.0 million, or 19.5 percent of sales, in the same quarter of the prior year. This increase was primarily due to higher total sales and sales of products with higher margins in the most recent quarter.
As of June 28, 2013, CPI had cash and cash equivalents totaling $61.3 million. For the 12-month period ending on that date, CPI's cash flow from operating activities was $41.2 million, its free cash flow was $36.3 million and its adjusted free cash flow was $35.3 million.
Fiscal 2013 Outlook
"Due to CPI's excellent financial performance in fiscal 2013 to date, we are tightening and raising our guidance for the remainder of the year," said Caldarelli. For fiscal 2013, CPI expects:
The effective tax rate for fiscal 2013 is expected to be approximately 37 percent, excluding discrete tax adjustments.
Financial Community Conference Call
In conjunction with this announcement, CPI will hold a conference call on Thursday, August 8, 2013 at 11:00 a.m. (EDT) that simultaneously will be broadcast live over the Internet on the company's Web site. To participate in the conference call, please dial (800) 649-5127, or (253) 237-1144 for international callers, enter conference ID 24504565 and ask for the CPI International Third Quarter Fiscal 2013 Financial Results Conference Call. To access the call via the Internet, please visit http://investor.cpii.com and click "Events."
About CPI International Holding Corp.
CPI International Holding Corp., headquartered in Palo Alto, California, is the parent company of CPI International, Inc., which is the parent company of Communications & Power Industries LLC, a leading provider of microwave, radio frequency, power and control solutions for critical defense, communications, medical, scientific and other applications. Communications & Power Industries LLC develops, manufactures and distributes products used to generate, amplify, transmit and receive high-power/high-frequency microwave and radio frequency signals and/or provide power and control for various applications. End-use applications of these systems include the transmission of radar signals for navigation and location; transmission of deception signals for electronic countermeasures; transmission and amplification of voice, data and video signals for broadcasting, Internet and other types of commercial and military communications; providing power and control for medical diagnostic imaging; and generating microwave energy for radiation therapy in the treatment of cancer and for various industrial and scientific applications.
Non-GAAP Supplemental Information
EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow presented here are non-generally accepted accounting principles (GAAP) financial measures. EBITDA represents earnings before net interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to exclude certain non-recurring, non-cash, unusual or other items. EBITDA margin represents EBITDA divided by sales. Adjusted EBITDA margin represents adjusted EBITDA divided by sales. Free cash flow represents net cash provided by operating activities minus capital expenditures and patent application fees. Adjusted free cash flow represents free cash flow further adjusted to exclude certain non-recurring, unusual or other items.
CPI believes that GAAP-based financial information for leveraged businesses, such as the company's business, should be supplemented by EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow so that investors better understand the company's operating performance in connection with their analysis of the company's business. In addition, CPI's management team uses EBITDA and adjusted EBITDA to evaluate the company's operating performance, to monitor compliance with its senior credit facility, to make day-to-day operating decisions and as a component in the calculation of management bonuses. Other companies may define EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow differently and, as a result, the company's measures may not be directly comparable to EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow of other companies. Because EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, free cash flow and adjusted free cash flow do not include certain material costs, such as interest and taxes in the case of EBITDA-based measures, necessary to operate the company's business, when analyzing the company's business, these non-GAAP measures should be considered in addition to, and not as a substitute for, net income (loss), net cash provided by (used in) operating activities, net income margin or other statements of income or statements of cash flows data prepared in accordance with GAAP.
Certain statements included above constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations, beliefs or forecasts of future events. Forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual events or results to differ materially from the results projected, expected or implied by these forward-looking statements. These factors include, but are not limited to, competition in our end markets; our significant amount of debt; changes or reductions in the U.S. defense budget; currency fluctuations; goodwill impairment considerations; customer cancellations of sales contracts; U.S. Government contracts; export restrictions and other laws and regulations; international laws; changes in technology; the impact of unexpected costs; the impact of a general slowdown in the global economy; the impact of environmental laws and regulations; and inability to obtain raw materials and components. These and other risks are described in more detail in our periodic filings with the Securities and Exchange Commission. As a result of these uncertainties, you should not place undue reliance on these forward-looking statements. All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We undertake no duty or obligation to publicly revise any forward-looking statement to reflect circumstances or events occurring after the date hereof or to reflect the occurrence of unanticipated events or changes in our expectations.
Amanda Mogin, Communications & Power Industries, investor relations, 650.846.3998, firstname.lastname@example.org