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TMCNet:  Park Electrochemical Corp. Reports Fourth Quarter Results

[May 16, 2014]

Park Electrochemical Corp. Reports Fourth Quarter Results

MELVILLE, N.Y. --(Business Wire)--

Park Electrochemical Corp. (NYSE-PKE) reported net sales of $38,151,000 for the fourth quarter ended March 2, 2014 compared to net sales of $42,675,000 for the fourth quarter ended March 3, 2013. Park's net sales for the fiscal year ended March 2, 2014 were $165,764,000 compared to net sales of $176,416,000 for the fiscal year ended March 3, 2013. Please note that the fourth quarter ended March 2, 2014 was a 13-week period compared to the fourth quarter ended March 3, 2013, which was a 14-week period, and that the fiscal year ended March 2, 2014 was a 52-week period compared to the fiscal year ended March 3, 2013, which was a 53-week period.

Park reported net earnings before special items of $4,364,000 for the fourth quarter ended March 2, 2014 compared to net earnings before special items of $4,524,000 for the fourth quarter of last fiscal year. In the fourth quarter ended March 2, 2014, the Company recorded a non-cash charge of $63,958,000 for the accrual of U.S. income taxes on the undistributed earnings of the Company's subsidiary in Singapore. The charge included $34,404,000 related to the U.S. income tax that would be payable if the Company were to repatriate funds in an after-tax amount necessary to repay the Company's existing $104,000,000 principal amount bank loan from PNC Bank and $29,554,000 relating to the remainder of the undistributed earnings of the Company's subsidiary in Singapore. The Company has no current intention of repatriating the undistributed earnings of its subsidiary in Singapore. In addition, during the fourth quarter ended March 2, 2014, the Company recorded pre-tax charges of $1,208,000 related to a modification of previously issued employee stock options resulting from the special cash dividend paid by the Company in February 2014, to a fee related to the previously announced retention of Bank of America Merrill Lynch for financial advisory services and to the closure of the Company's Nelco Technology (Zhuhai FTZ) Ltd. facility located in the Free Trade Zone in Zhuhai, China. In the fourth quarter of last fiscal year, the Company recorded pre-tax charges of $608,000 in connection with the closure of its Zhuhai facility and its Park Advanced Composite Materials, Inc. facility located in Waterbury, Connecticut. Accordingly, the net loss for the fourth quarter ended March 2, 2014 was $60,024,000 compared to net earnings of $4,072,000 for the fourth quarter ended March 3, 2013.

For the fiscal year ended March 2, 2014, Park reported net earnings before special items of $20,197,000 compared to net earnings before special items of $20,344,000 for the prior fiscal year. The current fiscal year included the charge of $63,958,000 related to the U.S. income tax on the undistributed earnings of the Company's subsidiary in Singapore as mentioned above, a tax benefit of $2,181,000 in connection with a tax refund related to amended federal income tax returns and pre-tax charges of $1,527,000 related to the stock option modification, the retention fee and the Zhuhai facility closure mentioned above. The prior fiscal year included pre-tax charges of $3,703,000 related primarily to the facility closures in China and Connecticut mentioned above. Accordingly, the net loss for the fiscal year ended March 2, 2014 was $42,329,000 compared to net earnings of $16,961,000 for the fiscal year ended March 3, 2013.

Park reported basic and diluted earnings per share before special items of $0.21 for the fourth quarter ended March 2, 2014 compared to basic and diluted earnings per share before special items of $0.22 for last year's fourth quarter. Basic and diluted earnings per share was a loss of $2.88 for the fourth quarter ended March 2, 2014 compared to basic and diluted earnings per share of $0.20 for last year's fourth quarter.

Park reported basic and diluted earnings per share before special items of $0.97 for the fiscal year ended March 2, 2014 compared to basic and diluted earnings per share before special items of $0.98 for the prior fiscal year. Basic and diluted earnings per share was a loss of $2.03 for the fiscal year ended March 2, 2014 compared to basic earnings per share of $0.82 and diluted earnings per share after special items of $0.81 for the prior fiscal year.

The Company will conduct a conference call to discuss its financial results at 11:00 a.m. EDT today. Forward-looking and other material information may be discussed in this conference call. The conference call dial-in number is (855) 454-7959 in the United States and Canada and (253) 214-3052 in other countries and the required passcode is 43027639.

For those unable to listen to the call live, a conference call replay will be available from approximately 2:00 p.m. EDT today through 11:59 p.m. EDT on Thursday, May 22, 2014. The conference call replay can be accessed by dialing (855) 859-2056 in the United States and Canada and (404) 537-3406 in other countries and entering passcode 43027639 or on the Company's web site at www.parkelectro.com/investor/investor.html.

Any additional material financial or statistical data disclosed in the conference call will also be available at the time of the conference call on the Company's web site at www.parkelectro.com/investor/investor.html.

Park believes that an evaluation of its ongoing operations would be difficult if the disclosure of its financial results were limited to accounting principles generally accepted in the United States of America ("GAAP") financial measures, which include special items, such as tax charges and benefits and facility closure charges. Accordingly, in addition to disclosing its financial results determined in accordance with GAAP, Park discloses non-GAAP operating results that exclude special items in order to assist its shareholders and other readers in assessing the Company's operating performance, since the Company's on-going, normal business operations do not include such special items. The detailed operating information presented below reconciles the non-GAAP operating results before special items to earnings determined in accordance with GAAP. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP.

Park Electrochemical Corp. is a global advanced materials company which develops and manufactures high-technology digital and RF/microwave printed circuit materials principally for the telecommunications and internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies for the aerospace markets. Park's core capabilities are in the areas of polymer chemistry formulation and coating technology. The Company's manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company also maintains R&D facilities in Arizona, Kansas and Singapore.

Additional corporate information is available on the Company's web site at www.parkelectro.com

Performance table, including non-GAAP information (in thousands, except per share amounts -unaudited):




               
13 Weeks Ended 14 Weeks Ended 13 Weeks Ended 52 Weeks Ended 53 Weeks Ended
 
3/2/14 3/3/13 12/1/13 3/2/14 3/3/13
Sales $ 38,151 $ 42,675 $ 39,678 $ 165,764 $ 176,416
 
Net Earnings before Special Items1 $ 4,364 $ 4,524 $ 4,721 $ 20,197 $ 20,344
Special Items net of Tax $ (64,388 ) $ (452 ) $ - $ (62,526 ) $ (3,383 )
Net Earnings $ (60,024 ) $ 4,072   $ 4,721 $ (42,329 ) $ 16,961  
 
Basic and Diluted Earnings per Share:
Basic Earnings before Special Items1 $ 0.21 $ 0.22 $ 0.23 $ 0.97 $ 0.98
Special Items $ (3.09 ) $ (0.02 ) $ - $ (3.00 ) $ (0.16 )
Basic Earnings per Share $ (2.88 ) $ 0.20   $ 0.23 $ (2.03 ) $ 0.82  
 
Diluted Earnings before Special Items1 $ 0.21 $ 0.22 $ 0.23 $ 0.97 $ 0.98
Special Items $ (3.09 ) $ (0.02 ) $ - $ (3.00 ) $ (0.17 )
Diluted Earnings per Share $ (2.88 ) $ 0.20   $ 0.23 $ (2.03 ) $ 0.81  
 
Weighted Average Shares Outstanding:
Basic 20,873 20,806 20,857 20,849 20,801
Diluted 20,873 20,822 20,917 20,849 20,823
 

1

 

Refer to "Detailed operating information" below for information regarding Special Items.

Comparative balance sheets (in thousands):

       
  3/2/14   3/3/2013

Assets

Current Assets
Cash and Marketable Securities * $ 270,356 $ 275,216
Accounts Receivable, Net 22,881 25,878
Inventories 13,871 12,918
Other Current Assets   4,132   6,662
Total Current Assets 311,240 320,674
 
Fixed Assets, Net 29,674 32,187
Restricted Cash * 25,000 -
Other Assets   11,179   16,797
Total Assets $ 377,093 $ 369,658
 

Liabilities and Shareholders' Equity

Current Liabilities
Accounts Payable $ 6,109 $ 6,485
Accrued Liabilities 5,139 6,016
Current Portion of Long-Term Debt 10,000 -
Income Taxes Payable   2,995   4,177
Total Current Liabilities 24,243 16,678
 
Long-Term Debt 94,000 52,000
Deferred Income Taxes 58,124 812
Other Liabilities   183   246
Total Liabilities 176,550 69,736
 
Shareholders' Equity   200,543   299,922
 
Total Liabilities and Shareholders' Equity $ 377,093 $ 369,658
 
Equity per Share $ 9.60 $ 14.40
 
* Total Cash, Restricted Cash and Marketable Securities $ 295,356 $ 275,216
 

Detailed operating information (in thousands - unaudited):

                     
13 Weeks Ended

March 2, 2014

14 Weeks Ended

March 3, 2013

13 Weeks Ended

December 1, 2013

GAAP  

Specials
Items

Before
Special
Items

GAAP  

Specials
Items

Before
Special
Items

GAAP

Specials
Items

Before
Special
Items

Net Sales $ 38,151 $ 38,151 $ 42,675 $ 42,675 $ 39,678 $ 39,678
Cost of Sales 27,701 27,701 30,840 30,840 28,640 28,640

  %

72.6 % 72.6 % 72.3 % 72.3 % 72.2 % 72.2 %
 
Gross Profit 10,450 10,450 11,835 11,835 11,038 11,038

  %

27.4 % 27.4 % 27.7 % 27.7 % 27.8 % 27.8 %
 
Selling, General & Administrative

Expenses

6,465 (981 ) 5,484 6,583 6,583 6,106 6,106

  %

16.9 % 14.4 % 15.4 % 15.4 % 15.4 % 15.4 %
 
Restructuring Charge 227 (227 ) - 608 (608 ) - - - -

  %

0.6 % 0.0 % 1.4 % 0.0 % 0.0 % 0.0 %
 
Earnings from Operations 3,758 1,208 4,966 4,644 608 5,252 4,932 - 4,932

  %

9.9 % 13.0 % 10.9 % 12.3 % 12.4 % 12.4 %
 
Interest Income 176 176 127 - 127 139 139

  %

0.5 % 0.5 % 0.3 % 0.3 % 0.4 % 0.4 %
 
Interest Expense 221 221 14 14 187 187

  %

0.6 % 0.6 % 0.0 % 0.0 % 0.5 % 0.5 %
 
Net Interest (Expense) Income (45 ) (45 ) 113 113 (48 ) (48 )

  %

-0.1 % -0.1 % 0.3 % 0.3 % -0.1 % -0.1 %
 
Earnings before Income Taxes 3,713 1,208 4,921 4,757 608 5,365 4,884 - 4,884

  %

9.7 % 12.9 % 11.1 % 12.6 % 12.3 % 12.3 %
 
Income Tax Provision 63,737 (63,180 ) 557 685 156 841 163 - 163
Effective Tax Rate 1716.6 % 11.3 % 14.4 % 15.7 % 3.3 % 3.3 %
 
Net Earnings (60,024 ) 64,388 4,364 4,072 452 4,524 4,721 - 4,721

  %

-157.3 % 11.4 % 9.5 % 10.6 % 11.9 % 11.9 %
 

Detailed operating information (in thousands - unaudited), continued:

             
52 Weeks Ended

March 2, 2014

53 Weeks Ended

March 3, 2013

GAAP  

Specials
Items

Before
Special
Items

GAAP  

Specials
Items

Before
Special
Items

Net Sales $ 165,764 $ 165,764 $ 176,416 $ 176,416
Cost of Sales 117,664 117,664 125,866 125,866

  %

71.0 % 71.0 % 71.3 % 71.3 %
 
Gross Profit 48,100 48,100 50,550 50,550

  %

29.0 % 29.0 % 28.7 % 28.7 %
 
Selling, General & Administrative

Expenses

25,168 (981 ) 24,187 26,595 26,595

  %

15.2 % 14.6 % 15.1 % 15.1 %
 
Restructuring Charge 546 (546 ) - 3,703 (3,703 ) -

  %

0.3 % 0.0 % 2.1 % 0.0 %
 
Earnings from Operations 22,386 1,527 23,913 20,252 3,703 23,955

  %

13.5 % 14.4 % 11.5 % 13.6 %
 
Interest Income 460 460 647 647

  %

0.3 % 0.3 % 0.4 % 0.4 %
 
Interest Expense 764 764 14 14

  %

0.5 % 0.5 % 0.0 % 0.0 %
 
Net Interest (Expense) Income (304 ) (304 ) 633 633

  %

-0.2 % -0.2 % 0.4 % 0.4 %
 
Earnings before Income Taxes 22,082 1,527 23,609 20,885 3,703 24,588

  %

13.3 % 14.2 % 11.8 % 13.9 %
 
Income Tax Provision 64,411 (60,999 ) 3,412 3,924 320 4,244
Effective Tax Rate 291.7 % 14.5 % 18.8 % 17.3 %
 
Net Earnings (42,329 ) 62,526 20,197 16,961 3,383 20,344

  %

-25.5 % 12.2 % 9.6 % 11.5 %


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