Freshpet Inc (FRPT)

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Force Protection Announces Financial Results for 2010 Fourth Quarter and Full Year Business Wire   "Press Releases - English"

Wednesday, March 09 2011 4:20 PM, EST

~Reports 2010 Fourth Quarter Revenue of $207.7 Million and EPS of $0.16~

~Ends 2010 with Approximately $562 Million in Funded Backlog~

~Board of Directors Authorizes $20 Million Open Market Share Repurchase~

LADSON, S.C. --(BUSINESS WIRE)-- Force Protection, Inc. (NASDAQ: FRPT) today reported financial results for the three and twelve months ended December 31, 2010 .

Fourth Quarter

In the fourth quarter of 2010, the Company reported net sales of $207.7 million versus $289.0 million in the fourth quarter of 2009. Contributing to the decrease were lower vehicle and spares and sustainment sales, which were partially offset by increased modernization revenues.

Gross margin for the 2010 fourth quarter was 20.7 percent, as compared to 18.1 percent in the fourth quarter of 2009.

The Company reported operating income of $15.9 million in the fourth quarter of 2010 as compared to operating income of $28.1 million in the prior year period. Net income for the fourth quarter of 2010 was $11.2 million , or $0.16 per diluted share, as compared to net income of $18.4 million , or $0.27 per diluted share, for the 2009 fourth quarter.

Michael Moody , Chairman and Chief Executive Officer of Force Protection,Inc., said, We were pleased to end 2010 with quarterly results that were the strongest of the year. In addition to continued deliveries of our existing vehicle platforms and an increase in spares and sustainment sales from the third quarter of 2010, highlights of the 2010 fourth quarter included modernization revenues of $140.7 million and a gross margin in excess of 20 percent. Of course, the most significant highlight of the quarter was the $280 million contract award we secured for the delivery of 200 vehicles under the United Kingdom Ministry of Defences Light Protected Patrol Vehicle, or LPPV, program.

Full Year

For the twelve months ended December 31, 2010 , the Company reported net sales of $656.0 million versus $977.1 million for the twelve months ended December 31, 2009 . Contributing to the decrease were lower spares and sustainment and vehicle sales, which were partially offset by increased modernization revenues.

Gross margin for the full year of 2010 was 20.4 percent, as compared to 14.5 percent for the 2009 full year. Impacting the 2009 gross margin was a $19.3 million write-down of the Companys Cheetah inventory and other associated costs recorded in the third quarter of 2009. Excluding this charge, the 2009 full year non-GAAP adjusted gross margin was 16.5 percent(1). The increase in gross margin for the 2010 full year was attributed to a favorable product mix and enhancements in the Companys program cost management and control systems. The reconciliations of adjusted gross margin and gross margin are included at the end of this press release.

Operating income was $23.4 million for the twelve months ended December 31, 2010 as compared to $43.3 million in the prior year period. Contributing to the year-over-year decrease in operating income was the 2010 third quarter $8.5 million charge associated with the net impact of the approved settlement of the federal shareholder class action and proposed settlements related to the derivative actions that began in early 2008. Adjusted operating income(1) for the twelve months ended December 31, 2010 was $31.9 million , which excludes the litigation settlements. For the twelve months ended December 31, 2009 , the Company recorded adjusted operating income(1) of $62.6 million , which excludes the aforementioned $19.3 million write-down of the Companys Cheetah inventory and other associated costs. The reconciliations of adjusted operating income and operating income are included at the end of this press release.

Net income for the full year of 2010 was $15.2 million , or $0.22 per diluted share, as compared to $29.5 million , or $0.43 per diluted share, for the comparable prior year period. The Company recorded adjusted net income(1) of $20.7 million , or $0.30 per diluted share, in the 2010 full year, as compared to adjusted net income(1) of $42.4 million , or $0.61 per diluted share, in 2009. Adjusted net income excludes the litigation settlements and Cheetah expenses in their respective periods. The reconciliations of adjusted net income and adjusted net income per share to net income and net income per share are included at the end of this press release.

Mr. Moody continued, As we look back at last year, it is clear to me that 2010 marked an important and successful year for Force Protection that puts us on a solid foundation to grow the Company going forward. One key indicator of our success in 2010 was the more than $1 billion in new orders that allowed us to enter 2011 with more than $560 million in funded backlog. Approximately three-quarters of this amount is expected to be recognized in 2011.

Enhanced Financial Position

During 2010, the Company generated cash from operations of $37.4 million , which contributed to its December 31, 2010 cash balance of $150.0 million . Also at December 31, 2010 , accounts receivable was $124.8 million , including $53.8 million of earned but unbilled receivables, inventories were $90.1 million , and accounts payable was $94.6 million .

During the 2010 fourth quarter, the Company definitized a number of contracts that resulted in the net collection of approximately $32 million during the period. The Company is focused on resolving all remaining undefinitized contracts over the coming months, which should further increase its cash position.

Significant Business Development Initiatives

Since late November 2010 , after securing the contract award for the LPPV program, the Company has begun to stand up the necessary infrastructure and requirements to perform under the contract. The primary focus over the coming months is associated with performing reliability growth trials and critical design reviews with the United Kingdoms Ministry of Defence . The Company anticipates that vehicle deliveries will begin in the fall of this year and conclude in the spring of 2012.

The Company is also making important progress with the Ocelot in the Manufactured and Supported in Australia , or MSA, option for the Land 121 Phase 4 program, including the delivery of two prototype variants to the customer in February 2011 . The more than $1.3 billion Land 121 program is designed to provide approximately 1,300 vehicles and trailers, as well as related long-term support, for Australias core fleet of military assets. In addition to the MSA option, the Australian government has collaborated with the U.S. government on the development of the Joint Light Tactical Vehicle, or JLTV. The evaluation for the MSA option in the Land 121 program is currently scheduled to conclude later in 2011, at which point the Australian government is expected to make a decision on whether to continue with stage two MSA prototyping, JLTV, or a combination of both options.

The Companys Cougar 4x4 and 6x6 variants were down-selected in 2010 as potential solutions for Canadas TAPV program, which requires procurement for up to 600 vehicles and related long-term support services. Consistent with the LPPV and the MSA Land 121 requirements, the more than $1 billion TAPV program requires that primary manufacturing and supportability be completed in the host country. The formal Request for Proposal, or RFP, for the program is expected within the next 60 days, followed by a multi-step evaluation process by the customer. A contract award to the final selected bidder is expected as early as the end of 2011.

Complementing its new vehicle program efforts, as part of an experienced team, the Company is pursuing the U.S. Armys Route Clearance Vehicle MRAP Contractor Logistics Support Service program requirement for the maintenance of its thousands of related vehicles. The Company anticipates the issuance of the formal RFP for the program by this summer, with a selection as to the preferred provider by late 2011.

Outlook

Randy Hutcherson , Chief Operating Officer of Force Protection commented, We believe that there will be a continued high-level of operational tempo in Afghanistan throughout 2011, which will provide additional vehicle sales as well as continued operational support through modernization, spares and sustainment services. However, we expect that we will be challenged to show a profit through the first six months of the year primarily due to the timing of orders and one-time costs associated with a recent workforce reduction.

As we look to the remainder of the year, we continue to anticipate the generation of significant cash from operations and growth of our 2011 full year revenue and earnings over 2010 levels. Contributing to this view is current backlog that includes deliveries under the LPPV program beginning in the second half of 2011, as well as future orders from both domestic and international customers.

Authorization of $20 Million Open Market Share Repurchase Program

Separately, the Company announced today that its board of directors has authorized the Company to repurchase up to $20 million of its common stock. The repurchase program calls for shares to be purchased in the open market or in private transactions. The Company may suspend or discontinue the program at any time.

The Company may repurchase shares from time to time depending upon market conditions, the market price of the Companys common stock, and managements assessment of liquidity and cash flow needs. The Company currently expects to finance any repurchases from cash-on-hand.

Mr. Moody concluded, As we consider the strategic use of our cash, we are employing a balanced strategy that provides the necessary working capital to run the business and flexibility to pursue our critical internal and external growth initiatives. In addition, we continue to evaluate opportunities to broaden the Company through strategic acquisitions and investments.

Complementing reinvestment in the business, we view share repurchase as an appropriate use of capital. With our strong cash balance at the end of 2010 and expectations for the generation of additional operating cash flow in 2011, we believe it is an appropriate time to repurchase shares. We also believe that the size of the repurchase program provides us with the necessary flexibility to continue to invest in our internal initiatives and external strategies to broaden our business.

Conference Call Information

The Company will hold a conference call today at 4:30 p.m. Eastern Time to discuss its results. The call will include comments from Michael Moody , Chairman and Chief Executive Officer; Charles Mathis , Chief Financial Officer; and, Randy Hutcherson , Chief Operating Officer. A question and answer session will follow the management commentary portion of the call.

To listen to the call, dial 866.825.3308 (for international, dial 617.213.8062) five to ten minutes prior to the scheduled start time and provide passcode 18151996. A live Webcast will also be available at that time on the Companys website, www.forceprotection.net, under the Investor Relations section. Please visit the website at least 15 minutes prior to the call to register for the webcast and download any necessary software. A replay will be available two hours after the end of the call through midnight Wednesday, March 23, 2011 . To access the replay, dial 888.286.8010 (for international, dial 617.801.6888) and enter passcode 30715227, or visit the Investor Relations section of the Companys website.

About Force Protection,Inc.

Force Protection, Inc. is a leading designer, developer and manufacturer of survivability solutions, including blast- and ballistic-protected wheeled vehicles currently deployed by the U.S. military and its allies to support armed forces and security personnel in conflict zones. The Companys specialty vehicles, including the Buffalo, Cougar, Ocelot and related variants, are designed specifically for reconnaissance and urban operations and to protect their occupants from landmines, hostile fire, and improvised explosive devices (commonly referred to as roadside bombs). Complementing these efforts, the Company is designing, developing and marketing the JAMMA, a new vehicle platform that provides increased modularity, transportability, speed and mobility. The Company also develops, manufactures, tests, delivers and supports products and services aimed at further enhancing the survivability of users against additional threats. In addition, the Company provides long-term life cycle support services of its vehicles that involve development of technical data packages, supply of spares, field and depot maintenance activities, assignment of skilled field service representatives, and advanced driver and maintenance training programs. For more information on Force Protection and its products and services, visit www.forceprotection.net.

Safe Harbor Statement

This press release contains forward looking statements that are not historical facts, including statements about our beliefs and expectations. These statements are based on beliefs and assumptions of Force Protections management, and on information currently available to management. These forward looking statements include, among other things: the growth, demand and interest for Force Protections services and products, including the Buffalo, Cougar, Ocelot and JAMMA vehicles; current backlog; anticipated awards and expected deliveries of Ocelot vehicles; the effect of the LPPV award for future growth; expectations for future programs, including Land 121, TAPV and GAARV and the timing of proposals and awards; modernization and spares and sustainment contracts and the effect of operations in Afghanistan ; the ability to meet current and future requirements; the Companys execution of its business strategy and strategic transformation, including its development initiatives and opportunities to broaden its platform; the effect of the Companys undefinitized contracts; the Companys expected financial and operating results, including its revenues, cash flow and margins, for future periods; and, the Companys share repurchase program. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Examples of these factors include, but are not limited to, the ability to effectively manage the risks in the Companys business; the ability to win future awards and finalize contracts; the ability to develop new technologies and products and the acceptance of these technologies and products; and the other risk factors and cautionary statements listed in the Companys periodic reports filed with the Securities and Exchange Commission , including the risks set forth in the Companys Annual Report on Form 10-K for the year ended December 31, 2010 .

(1) Use of Non-GAAP Financial Measures

Certain disclosures in this press release include non-GAAP financial measures. A non-GAAP financial measure is defined as a numerical measure of a companys financial performance, financial position or cash flows that excludes or includes amounts so as to be different from the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP). The Company defines adjusted gross margin, adjusted operating income, adjusted net income and adjusted net income per share as gross margin, operating income, net income and net income per share as reported under GAAP less the impact of the charge for the approved settlement of federal shareholder class action and proposed settlements related to derivative actions in 2010 and the one-time write-down of the Companys Cheetah inventory and other associated costs in 2009. By excluding these charges, management is able to compare the Companys ongoing operations to prior periods and to the ongoing operations of other companies in its industry. Management believes that excluding the charges related to the legal settlements and Cheetah expenses is useful to investors because it is more representative of the ongoing business of the Company and reflects the financial indicators used by management to evaluate the Companys financial results.

These amounts are not measures of financial performance under GAAP. They should be considered supplemental to and not a substitute for financial performance in accordance with GAAP. These non-GAAP measures should not be considered measures of the Companys liquidity. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Companys definition of adjusted gross margin, adjusted operating income, adjusted net income and adjusted net income per share may differ from similar measures used by other companies and may differ from period to period. Subject to the review and approval of the Companys audit committee, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period and may modify adjusted gross margin, adjusted operating income, adjusted net income and adjusted net income per share by excluding these expenses and gains. This information should not be construed as an alternative to the reported results, which have been determined in accordance with GAAP. A reconciliation of adjusted gross margin, adjusted operating income, adjusted net income and adjusted net income per share with gross margin, operating income, net income and net income per share are included in the accompanying financial data.


Force Protection, Inc. and Subsidiaries


Consolidated Statements of Operations






































For the three months ended



For the twelve months ended




December 31,



December 31,






2010







2009







2010







2009






(In Thousands, Except Share and Per Share Data)


Net sales

$

207,722





$

289,037





$

655,973





$

977,051




Cost of sales



164,636







236,692







522,241







835,555




Gross profit



43,086







52,345







133,732







141,496




General and administrative expenses



21,218







17,833







86,950







78,052




Research and development expenses



5,920







6,364







23,365







20,100




Operating income



15,948







28,148







23,417







43,344




Other income, net



323







588







398







645




Interest expense, net



(77

)





(22

)





(293

)





(101

)


Income before income tax expense



16,194







28,714







23,522







43,888




Income tax expense



(5,030

)





(10,290

)





(8,309

)





(14,428

)


Net income

$

11,164





$

18,424





$

15,213





$

29,460




Earnings per common share:
















Basic

$

0.16





$

0.27





$

0.22





$

0.43




Diluted

$

0.16





$

0.27





$

0.22





$

0.43




Weighted average common shares outstanding:
















Basic



68,942







68,532







68,828







68,450




Diluted



69,747







69,261







69,786







69,066





Force Protection, Inc. and Subsidiaries


Consolidated Balance Sheets

















As of December 31,








2010







2009






(In Thousands)


Assets










Current assets:










Cash and cash equivalents



$

149,965





$

147,254


Accounts receivable, net





124,831







143,480


Inventories





90,110







74,075


Deferred income tax assets





12,336







16,235


Income taxes receivable





-







1,352


Other current assets





41,520







3,031


Total current assets





418,762







385,427


Property and equipment, net





60,422







58,918


Investment in unconsolidated joint ventures





2,815







2,541


Other assets





705







202


Total assets



$

482,704





$

447,088













Liabilities and Shareholders Equity










Current liabilities:










Accounts payable



$

94,593





$

86,588


Due to United States government





1,331







25,965


Advance payments on contracts





5,875







1,164


Other current liabilities





50,943







21,044


Total current liabilities





152,742







134,761


Deferred income tax liabilities





973







1,236


Other long-term liabilities





562







-








154,277







135,997


Commitments and contingencies





















Shareholders equity:










Common stock





71







70


Additional paid-in capital





262,451







260,112


Accumulated other comprehensive (loss) income





(88

)





129


Retained earnings





65,993







50,780


Total shareholders equity





328,427







311,091


Total liabilities and shareholders equity



$

482,704





$

447,088



Force Protection, Inc. and Subsidiaries


Consolidated Statements of Cash Flows




























For the year ended December 31,








2010







2009








(In Thousands)


Cash flows from operating activities:










Net income



$

15,213





$

29,460




Adjustments to reconcile net income to net cash provided by operating activities










Depreciation and amortization





16,197







13,969




Deferred income tax provision (benefit)





3,358







(2,639

)


Income tax effect realized from stock transactions





219







(206

)


Stock-based compensation





2,533







2,886




Provision for litigation settlement





7,833







-




Provision for asset impairment





-







748




Provision for inventory





5,864







20,700




Other





31







(4

)


(Increase) decrease in assets










Accounts receivable





9,773







(44,277

)


Inventories





(20,773

)





(6,273

)


Income taxes receivable





1,352







(1,352

)


Other current assets





(2,381

)





(613

)


Increase (decrease) in liabilities










Accounts payable





7,010







38,799




Due to United States government





(15,758

)





(2,133

)


Advance payments on contracts





4,711







(11

)


Other current liabilities





2,235







467




Total adjustments





22,204







20,061




Net cash provided by operating activities





37,417







49,521




Cash flows from investing activities:










Capital expenditures





(16,168

)





(11,235

)


Purchases of marketable securities





-







(9,985

)


Proceeds from maturity of marketable securities





-







9,985




Other





(18,180

)





(2,149

)


Net cash used in investing activities





(34,348

)





(13,384

)


Cash flows from financing activities:










Proceeds from issuance of common stock





49







80




Income tax effect realized from stock transactions





(219

)





206




Other





-







(139

)


Net cash (used in) provided by financing activities





(170

)





147




Effect of foreign currency rate changes on cash





(188

)





(31

)


Increase in cash and cash equivalents





2,711







36,253




Cash and cash equivalents at beginning of year





147,254







111,001




Cash and cash equivalents at end of year



$

149,965





$

147,254




GAAP to Non-GAAP Reconciliation of Gross Margin, Operating Income, Net Income and Net Income Per Share

The following financial information is presented below using other than U.S. generally accepted accounting principles ("non-GAAP"), and is reconciled to comparable information presented using GAAP. See Footnote (1) for further discussion.

The adjustments relate to:


For 2010, the estimated settlements of federal shareholder class action and related derivative actions that began in early 2008.

For 2009, the write-down of the Companys Cheetah inventory and other associated costs.


Each of these adjustments were recorded in the fiscal third quarter of their respective periods.


Force Protection, Inc. and Subsidiaries Reconciliation


(In Thousands, Except Per Share Data)





























For the year ended December 31,



For the year ended December 31,




2010



2009




Reported Basis (GAAP)

Litigation settlements

Comparable Basis (Adjusted)

Reported Basis (GAAP)

Cheetah-Related Expenses

Comparable Basis (Adjusted)








(Unaudited)



(Unaudited)







(Unaudited)



(Unaudited)



























Net sales

$

655,973





$

-





$

655,973





$

977,051





$

-





$

977,051




Cost of sales



522,241







-







522,241







835,555







19,264







816,291




Gross profit



133,732







-







133,732







141,496







(19,264

)





160,760





Gross margin




20.4

%









20.4

%





14.5

%









16.5

%


General and administrative expenses



86,950







8,500







78,450







78,052







-







78,052




Research and development expenses



23,365







-







23,365







20,100







-







20,100




Operating income (loss)



23,417







(8,500

)





31,917







43,344







(19,264

)





62,608




Other income, net



398







-







398







645







-







645




Interest expense, net



(293

)





-







(293

)





(101

)





-







(101

)


Income (loss) before income tax expense



23,522







(8,500

)





32,022







43,888







(19,264

)





63,152




Income tax expense



(8,309

)





3,029







(11,338

)





(14,428

)





6,357







(20,785

)


Net income (loss)

$

15,213





$

(5,471

)



$

20,684





$

29,460





$

(12,907

)



$

42,367




Earnings (loss) per common share:
























Basic

$

0.22





$

(0.08

)



$

0.30





$

0.43





$

(0.19

)



$

0.62




Diluted

$

0.22





$

(0.08

)



$

0.30





$

0.43





$

(0.19

)



$

0.61




Weighted average common shares outstanding:
















































Basic



68,828







68,828







68,828







68,450







68,450







68,450




Diluted



69,786







69,786







69,786







69,066







69,066







69,066



Force Protection, Inc. Investor Relations Contact: Wes Harris , 843-574-3892 Director, Investor Relations [e-mail] or Media Contact: Tommy Pruitt , 843-574-3866 Senior Director, Communications [e-mail]

Source: Force Protection, Inc.

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