WEB NEWS Acquisition Activity
CHESHIRE, Conn., April 8, 2013 /PRNewswire / -- EDAC Technologies Corporation (NASDAQ: EDAC), a diversified designer, manufacturer and servicer of precision components for aerospace and industrial applications, today announced that on April 7, 2013, MidOcean Associates SPC, an affiliate of MidOcean Partners, and Public Sector Pension Investment Board, or PSP, informed EDAC that they were withdrawing their previously- announced unsolicited proposal to acquire all of the outstanding shares of EDAC common stock at $18.25 per share.
As previously announced, on March 26, 2013, GB Aero Engine Merger Sub Inc. commenced a cash tender offer for all of the outstanding shares of common stock of EDAC at a price of $17.75 per share. On that same day, the board of directors of EDAC unanimously recommended that EDAC's shareholders accept the offer by GB Aero Engine Merger Sub Inc. and tender their shares of EDAC common stock pursuant to such tender offer. On March 28, 2013, the board of directors of EDAC received MidOcean's and PSP's unsolicited acquisition proposal. On March 29, 2013, EDAC announced that it intended to engage in discussions with MidOcean and PSP regarding their acquisition proposal in order to more fully evaluate their proposal with a view to establishing whether it constituted a superior proposal. As a result of MidOcean's and PSP's withdrawal, EDAC is no longer in discussions with MidOcean and PSP regarding their acquisition proposal.
The board of directors of EDAC continues to unanimously recommend that EDAC's shareholders accept the offer by GB Aero Engine Merger Sub Inc. for all of the outstanding shares of common stock of EDAC at a price of $17.75 per share and tender their shares of EDAC common stock pursuant to such tender offer. The tender offer and withdrawal rights are scheduled to expire at midnight, New York City time, on Tuesday, April 23, 2013, unless extended or earlier terminated in accordance with the terms of the merger agreement.
Stifel, Nicolaus & Company, Incorporated is serving as exclusive financial advisor and Robinson & Cole LLP and Godfrey & Kahn S.C. are serving as legal counsel to EDAC Technologies Corporation.
Comments & Business Outlook
Second Quarter 2012 Results
Sales for the second quarter of fiscal 2012 were a record $26.5 million , an increase of 21% from the second quarter of fiscal 2011.
Net income for the second quarter of 2012 increased 48% to $1.4 million , or $0.26 per diluted share, compared with $977,000 , or $0.19 per diluted share, reported for the second quarter of 2011.
Summary and Outlook
Dominick Pagano , President and Chief Executive Officer, stated: "Our second quarter was a very strong quarter for EDAC, with continued record sales and profitability, even before including the benefit of our acquisition of EBTEC. The diversity of the programs and customers we serve, the depth of our manufacturing capabilities, and the expanded range of products we are reliably delivering to customers have been major drivers of our sales growth over the past several quarters. Our profitability is continuing to strengthen with the further implementation of advanced manufacturing best practices company-wide combined with our increased sales level.
"EBTEC is proving to be an ideal fit for our business, with the addition of its advanced welding and other high energy beam capabilities strengthening our position with our aerospace customers and increasing their confidence in our ability to further ramp-up to meet the growing demand in aerospace. EBTEC is also benefiting from the addition of our core competency in turning, which expands their portfolio of services, increases their ability to ramp-up and is adding to the confidence of their customers as well. Thus far, we have seamlessly integrated EBTEC into our operations. It was accretive to our second quarter results.
"We continued to maintain a very strong level of backlog even after a quarter of record sales. Our plan is to only add to it with LTAs that fully meet our profitability objectives. A group of potential LTAs is being bid in the third and fourth quarters.
"To support the ramp-up required to meet our current backlog, we recently announced the purchase of Pratt & Whitney's world class manufacturing facility in Cheshire, Conn. , where we intend to consolidate all of our Connecticut operations. The Cheshire facility will not only alleviate our current capacity constraints, but also enable us to add state-of-the-art manufacturing equipment and optimally configure the facility to deploy lean processes, cellular manufacturing and centers of excellence. We have already started to move equipment to Cheshire in line with our facility integration plan and expect to complete the plan by the end of 2013. We also are very grateful for the State of Connecticut 's support, in the form of financing incentives for this project that is essential for our Company's continued growth.
Mr. Pagano concluded: "The sales achieved in our legacy EDAC business in the 2012 second quarter were in line with our budget and our growth plan. Based on current shipment schedules, we continue to expect that legacy sales in the remaining two quarters of the year will be in line with the first quarter of 2012, as we previously forecasted. EBTEC's monthly sales should continue at the level achieved in June and therefore will be additive to our sales each quarter. With 20% sales growth achieved through the first half of 2012 and our positive outlook for the second half of the year, we are well on track to meet or exceed $100 million in sales for full year 2012. Our strategic initiatives in the second quarter position us for further growth in the future."
GeoSpecial Notes
On 10/26/2011 we added EDAC to the GeoSpecial list @ $10.00
Catalyst : Strong third quarter 2011 results and bullish outlook.
We are now removing EDAC from the GeoSpecial List @ $13.92
Current road block : Referencing analysts estimates and company comments, quarterly year over year (YOY) EPS comps may be challenged for the next three quarters. Although a strong backlog and a bullish Seeking Alpha article calling for better growth than analyst estimates will force us to keep a close eye on the story.
Comments & Business Outlook
First Quarter 2012 Results
Sales for the first quarter of fiscal 2012 reached a record $24.0 million , an increase of 19% from the first quarter of fiscal 2011.
Gross profit for the first quarter of 2012 increased 55% from the first quarter of 2011 to $4.4 million , and represented 18.1% of first quarter 2012 sales versus 13.9% in the first quarter of 2011.
Operating income rose 144% to $2.1 million from the 2011 first quarter, yielding an operating margin of 8.8% of sales compared with 4.3% in the first quarter of 2011.
Net income for the first quarter of 2012 increased to $1.3 million , or $0.23 per diluted share, a 208% increase from $408,000 , or $0.08 per diluted share, reported for the first quarter of 2011.
EDAC noted that the sharp increase in profitability versus the 2011 first quarter primarily reflected improved cost absorption due to the increased sales level, a favorable sales mix with a higher percentage of shipments by EDAC AERO of fully developed and spare parts, where the production process has been optimized, and productivity gains due to the continued implementation of lean manufacturing practices company-wide.
Backlog
Total sales backlog at March 31, 2012 reached a record $310.4 million , compared with $252.1 million at year-end 2011. The higher backlog was achieved even after record first quarter 2012 sales and includes three recently announced multi-year agreements totaling $58 million – one with Volvo Aero, another with a division of GE Aviation, and a third with Rolls-Royce Canada.
Summary and Outlook
"The continued growth in our sales, profitability and backlog in the first quarter of 2012 reflects the further execution of our strategic plan. In fact, each of our product lines achieved sales and gross profits on target with or above their budgets in the quarter.
"We have been able to increase our share of the substantial opportunity in aerospace through the reliability and quality of the complex products we produce and through our focus on emerging aircraft engine programs and on offering a wider range of parts to an expanded customer base. At the end of the first quarter, we made an initial shipment of engine components under a program with a major European customer, although we continue to expect the fuller ramp-up of deliveries under that program, as well as some of our other new long-term agreements, to begin at the end of the second quarter and then increasingly through the year and beyond.
"At APEX Machine Tool, we have successfully broadened our focus on more complex power generation parts. We won orders in the first quarter for additional power generation system stages. EDAC Machinery continues to benefit from adding full precision grinding systems to its portfolio in addition to its recognized expertise in spindles. Recent marketing initiatives are also proving to be very successful.
"As we have discussed before, some aerospace contracts require us to be responsible for more of the material content. While material content is a pass-through cost, our margins are lower on the material content portion of sales. Therefore, to continue to improve our overall margins, we must earn a higher profit on the value-added portion of our sales. In the first quarter of 2012, we saw an increase in both material content and outside processing costs. Even so, we were able to improve our gross profit dollars and gross margin because of a favorable product mix and our improved production efficiencies.
Mr. Pagano concluded: "We will continue to execute our growth plan during the balance of 2012. In finalizing shipment schedules over the remainder of the year, we currently expect that our sales level will be relatively consistent with this year's first quarter, although we expect the second quarter to show the strongest sales of the year. For full year 2012, we are continuing to target sales growth to meet or exceed the aerospace industry's projected growth of 7%. We also will continue to fully focus on further strengthening the profitability of our operations."
Comments & Business Outlook
FARMINGTON, Conn. , March 13, 2012 /PRNewswire / -- EDAC Technologies Corporation (NASDAQ: EDAC), a diversified designer, manufacturer and servicer of precision components for aerospace and industrial applications, today announced three long-term agreements (LTAs) representing total projected sales of approximately $58 million . The addition of these agreements has increased EDAC's backlog to a record of approximately $310 million at March 12, 2012 , up from $252 million at the end of fiscal 2011.
EDAC entered into a five-year agreement with Volvo Aero to produce rotating disks, compressor hubs and other components for an engine program used in Boeing aerial refueling tanker aircraft and wide body commercial aircraft, as well as another engine used in European fighter jets. Based on projected volumes, the agreement is valued at approximately $29 million through 2017.
In addition, EDAC has entered into a four-year agreement with a division of GE Aviation to provide booster cases for two engines used on aircraft such as the Boeing 747 and Airbus A330. Based on projected volumes, this agreement is valued at approximately $13 million through 2015.
The Company also said that Rolls-Royce Canada has renewed for an additional five years an agreement under which EDAC is producing rotating components for ground-based turbines used in power generation. Based on projected volumes, the extension of the agreement is valued at approximately $16 million through 2016.
EDAC expects to begin recognizing additional revenue from the ground-based turbine contract in 2012, while production ramp-up for the other two contracts is expected later this year with shipments to begin in 2013. The Company expects to deliver approximately $260 million to $280 million of its current $310 million backlog within the next three to five years.
"With these LTAs, our backlog has reached a milestone, breaking through the $300 million level for the first time. Winning these contracts reflects our focus in recent years on expanding our precision manufacturing platform, developing the capacity to produce a wider range of parts, and diversifying our relationships with Prime and Tier 1 customers. We have demonstrated that EDAC is well-positioned to benefit from the strong demand in the aerospace sector, while also applying our skills to opportunities in industrial markets such as power generation. I especially want to recognize our EDAC AERO team members, who have earned the confidence of our customers through their dedication to quality and service," said Dominick A. Pagano , President and Chief Executive Officer of EDAC Technologies Corporation.
Comments & Business Outlook
Fourth Quarter 2011 Results
Sales for the fourth quarter of fiscal 2011 reached a record $22.7 million , an increase of 27% from the fourth quarter of fiscal 2010.
Net income for the 2011 fourth quarter increased to $1.2 million , or $0.21 per diluted share, a substantial increase from $56,000 , or $0.01 per diluted share, reported for the fourth quarter of 2010.
"Our strong fourth quarter capped a year of important progress for EDAC as measured by the substantial growth in our sales, operating profitability and backlog," commented Dominick A. Pagano , EDAC's President and Chief Executive Officer.
"To drive sales, we continued to leverage our core competency in designing and manufacturing complex precision parts in each of our product lines, while also expanding the number of parts we produce for a full range of aircraft engine programs, including all emerging programs. The improving economy along with the growing order books of airplane manufacturers added favorable tailwinds over the past year.
"To increase profitability, we remained focused on improving production processes and efficiency across all product lines, while continuing to migrate to lean manufacturing. We recently added a vice president of lean manufacturing to accelerate that process.
"Investing in our operations, including the addition of state-of-the-art manufacturing equipment, has been a major factor in both our sales growth and improving profitability. It also has strengthened our ability to continue to win long-term agreements with top-tier customers. In 2011, we won a total of $92 million of new LTAs, which contributed to our record backlog of $252 million at year end, nearly double the level at year-end 2010. To support both this higher level of business activity and future opportunities, we recently announced our purchase of a new facility to consolidate several of our manufacturing operations and relieve current capacity constraints as well as give us a larger, more flexible and more cost-efficient platform for growth."
Mr. Pagano concluded: "We are focused on continuing to execute our growth plan in fiscal 2012. Delivery of engine components under some of our newer long-term agreements will begin to ramp up at the end of the second quarter and then increasingly through the year. As a result, while we expect first quarter 2012 sales and profitability to show improvement over the first quarter of 2011, sequential sales growth is expected to be moderate and consistent with normal customer demand trends in the quarter. For full year 2012, we are targeting sales growth to meet or exceed the aerospace industry's projected growth of 7% and we remain fully focused on further strengthening the profitability of our operations."
Backlog
Total sales backlog at December 31, 2011 was $252.1 million , compared with $213.5 million at the end of the 2011 third quarter and $138.3 million at year-end fiscal 2010. The higher backlog partially reflects several multi-year agreements announced in 2011 to produce components for commercial and military aircraft engine platforms as well as receipt of additional orders under existing programs.
Comments & Business Outlook
FARMINGTON, Conn. , Feb. 17, 2012 /PRNewswire / -- EDAC Technologies Corporation (NASDAQ: EDAC ), a diversified designer, manufacturer and servicer of precision components for aerospace and industrial applications, announced today that it has entered into an agreement to purchase a 181,000 square foot manufacturing facility in Plainville, Conn. , in a move to consolidate operations currently housed in four separate locations. The 15-acre site, located four miles from most of EDAC's current facilities, formerly housed part of GE Industrial Solutions, a business unit of General Electric Company.
Dominick A. Pagano , EDAC's President and Chief Executive Officer, commented: "The Plainville facility will give us a larger, more flexible and more cost-efficient platform for growth. It will relieve current capacity constraints and allow us to add state-of-the-art manufacturing equipment to support both our record backlog and future opportunities with our leading aerospace and industrial customers. In addition to deriving benefits from consolidating our plants, we will be able to further deploy lean processes, cellular manufacturing, and an integrated 'center of excellence' approach to design and production, all of which will improve our efficiency. The combination of expanded production capacity and greater cost effectiveness is essential to our plan to drive further profitable growth."
EDAC plans to relocate to the Plainville site its four facilities located in Farmington, Conn. , which include several aerospace product lines as well as its APEX Machine Tool and EDAC Machinery product lines. The closing of the purchase is subject to typical closing contingencies and is expected to occur in April 2012. Relocation is expected to take place over the next 18 months. EDAC's rotating engine components product line will continue to be based in Newington, Conn. , and will not be affected by the relocation.
The purchase price $2.65 million for the Plainville facility is expected to be financed by a mortgage loan on the property. In addition, EDAC plans to increase capital expenditures by approximately $3.8 million to fund improvements to the property. The Company expects to recoup most of the purchase price from the net proceeds of the eventual sale of the current Farmington properties. EDAC also noted that it is in discussions with Connecticut government agencies regarding the availability of financial incentives related to its proposed relocation and expansion.
GeoSpecial Notes
GeoNuggets® - Quick Check List Highlighting Undiscovered Opportunities
On October 26, 2011 we coded EDAC as a GeoSpecial @ $9.12 because it satisfied 7 out of 10 GeoBargain/Special requirements.
On November 3, 2011 , when the stock was $9.12, we released a GeoNugget explaining our rationale for the decision to be bullish on the stock, an alert that was first available to premium members.
This morning, the stock hit a new 52-wk high of $10.58 , reaffirming our belief that EDAC may be able to achieve its potential valuations cited in our GeoNugget.
Our original commentary is now available to all members.
Comments & Business Outlook
Third Quarter 2011 Results
Sales for the third quarter of fiscal 2011 were $21.8 milli on , an increase of 18% from the third quarter of fiscal 2010.
Net income for the 2011 third quarter was $1.0 million , or $0.19 per diluted share, a substantial increase from $ 84,000 , or $0.02 per diluted share, reported for the third quarter of 2010.
Total sales backlog at October 1, 2011 was approximately $213.5 million , compared with $168.0 million at the end of the 2011 second quarter and $133.6 million at October 2, 2010 . The higher backlog partially reflects several multi-year agreements announced earlier this year to produce components for commercial and military aircraft engine platforms.
"EDAC produced record operating income for the third quarter of 2011 on sales that nearly equaled the all-time high we reported in this year's second quarter. We have expanded our customer relationships, invested in the capacity to produce additional components, and improved production processes and efficiency across each of our product lines, which have enabled us to deliver higher year-over-year sales and enhanced gross margins. We believe that our strong sales levels and increased profitability throughout the first three quarters of 2011 clearly demonstrate our potential to sustain and enhance our performance in the future," said Dominick A. Pagano , EDAC's President and Chief Executive Officer.
"We expect the 2011 fourth quarter to be the strongest period of the year in terms of sales, based on our backlog and the pattern of customer demand. Looking toward 2012, we expect to ramp up the delivery of engine components under some of our newer long-term agreements, putting the Company on track for another successful year," Mr. Pagano concluded.
