Tel-Instrument Electronics Corp announced that third quarter results continue to reflect the improvement in the Company's operations.
In a release on Feb. 15, the Company is also announcing the receipt of $4.1 million of additional orders for the U.S. Army TS- 4530A program bringing the total backlog on this program to $19.7 million.
For the nine months ended Dec. 31, 2013, sales increased $5,401,327 (91.2 percent) to $11,323,585 as compared to $5,922,258 for the nine months ended Dec. 31, 2012. This increase is mostly attributed the shipment of limited rate production shipment of sSets and kits for the TS-4530A program, resumption of shipments on the craft program as well as an increase in revenues for the Company's legacy products. For the nine months ended Dec. 31, 2013, the Company recorded operating income of $456,589 as compared to an operating loss of $2,196,354 for the nine months ended Dec. 31, 2012. For the nine months ended Dec. 31, 2013, the Company recorded a loss before taxes of $252,336 as compared to a loss before taxes of $2,559,585 for the nine months ended Dec. 31, 2012. Excluding the non-cash loss on the change in the valuation of the common stock warrants, the Company would have recorded a profit before taxes of $20,163 for the first three fiscal quarters. The Company expects to improve on these results for the fourth quarter due in part to the sale of the ITATS Intellectual Property. Management believes that going forward, revenues and profits should further improve based on the expected near-term receipt of a production release on the TS- 4530A program, projected increases in craft deliveries, and the commencement of ITATS production this summer.
The Company continues to work with the U.S. Army for a production release. The current U.S. Army schedule calls for a production release in March 2014 but it is possible that this date could slip into the first quarter of the next fiscal year. The Company has shipped most of the sets and kits required under the initial limited rate production release and it is critical that the Company receives this production release in a timely manner to continue to build on the growth and profitability it is starting to achieve.
The Company also previously announced that it had negotiated a $2.14 million contract modification on the ITATS program. The ITATS product is an automated TACAN test set for use in U.S. Navy Intermediate Level repair locations. This contract modification entails the sale of the IP to the U.S. Navy plus the sale of ancillary test support equipment and a modest increase in the recurring price to reflect several product enhancements. A portion of the IP sale proceeds will go to the Company's subcontractor on this program.
The Company said this contract modification is expected to result in a pre-tax benefit of about $1.2 million over the next two fiscal quarters. Management believes that the sale of the IP for the ITATS program should have no impact on sales of these units to the U.S. Navy or other customers, and should improve the Company's balance sheet and liquidity position and help facilitate the commencement of the ITATS full rate production this summer.
Jeff O'Hara, President and CEO, said: "The Company has made great strides over the last year in improving its liquidity and looks forward to the commencement of full rate production on the TS-4530A program in the near term. The Company is also making solid progress in working down its inventory of craft "ship in place" units which has been limiting new production builds of craft. It is expected that the craft ship in place units will all be upgraded by this summer which should result in an increase in craft production levels. The Company may also explore opportunities to secure lower cost commercial financing to replace its expensive existing debt this summer. Looking ahead, we are excited by our prospects for a strong conclusion to the current fiscal year and further growth in fiscal year 2015 and years to come. The Company also plans to begin earnings conference calls starting with the filing of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, in June 2014."
Tel-Instrument is a designer and manufacturer of avionics test and measurement solutions.
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