LaBarge, Inc. Reports Fiscal 2010 First-Quarter Results

LaBarge, Inc. (NYSE Amex: LB) today reported financial results for the fiscal 2010 first quarter ended Sept. 27, 2009.

"As anticipated, fiscal 2010 first-quarter sales were down from fiscal 2009 fourth-quarter levels. Also, as expected, bookings of new orders strengthened during the first quarter resulting in modest backlog growth from fiscal 2009 year-end, and the pipeline of new business opportunities remains strong. Thus, we believe our business is trending up from recent quarters. Our healthy financial condition, proven business strategy and outstanding operational performance continue to be tremendous assets in this challenging business environment,” said Craig LaBarge, chief executive officer and president.

Net sales in the fiscal 2010 first quarter were $63,155,000, compared with $68,192,000 in the comparable period a year earlier and $64,753,000 in the fiscal 2009 fourth quarter. Fiscal 2010 first-quarter net sales included $10,138,000 contributed by the Company’s Appleton, Wis., operation, which was acquired in December 2008.

Net earnings in the fiscal 2010 first quarter were $3,103,000, or $0.19 per diluted share, compared with $3,669,000, or $0.23 per diluted share, in the comparable period a year earlier and $2,608,000, or $0.16 per diluted share, in the fiscal 2009 fourth quarter. Fiscal 2010 first-quarter net earnings included an after-tax loss of $84,000, or $0.01 per diluted share, from the Appleton operation and a one-time positive adjustment of $0.04 per diluted share resulting from management’s review of various state tax requirements related to prior fiscal years. The Company expects a tax rate of 36 to 37 percent for the remainder of fiscal 2010.

Gross margin in the fiscal 2010 first quarter was 19.4 percent, down from 20.9 percent in the comparable period a year earlier, primarily due to the lower sales volume in the fiscal 2010 quarter.

Selling, general and administrative (SG&A) expense was $8,090,000 in the fiscal 2010 first quarter, versus $8,270,000 in the comparable period a year earlier. Included in fiscal 2010 first-quarter SG&A is approximately $912,000 attributable to the Appleton operation.

As a percentage of sales, operating income (defined as net sales less cost of sales and SG&A) was 6.6 percent in the fiscal 2010 first quarter, versus 8.8 percent in the comparable period a year earlier.

Interest expense in the fiscal 2010 first quarter was $508,000, compared with $158,000 in the comparable period a year earlier, reflecting an increase in total debt in the fiscal 2010 period related to the December 2008 Appleton acquisition.

Net cash from operating activities in the fiscal 2010 first quarter was $6,262,000, compared with $7,260,000 in the comparable period a year earlier.

Total debt at Sept. 27, 2009, was $45,449,000, compared with $45,488,000 at June 28, 2009, and $8,252,000 at Sept. 28, 2008. Net debt (defined as total debt less cash and cash equivalents) at Sept. 27, 2009, was $37,657,000, down $3,534,000 from June 28, 2009.

Stockholders’ equity at Sept. 27, 2009, was $105,804,000, compared with $103,151,000 at June 28, 2009, and $95,896,000 at Sept. 28, 2008.

Business Overview

Including the Appleton acquisition, shipments to customers in the defense, natural resources, industrial and medical market sectors comprised 93 percent of LaBarge’s fiscal 2010 first-quarter net sales. The Appleton acquisition added significant new customers and expands LaBarge's presence in the medical, natural resources and industrial market sectors.

Shipments to defense customers represented the largest portion of fiscal 2010 first-quarter net sales at 49 percent, compared with 46 percent in the fiscal 2009 first quarter. In actual dollars, fiscal 2010 first-quarter sales from the defense market sector were flat with the comparable period a year earlier.

Shipments to natural resources customers represented 16 percent of net sales in both the fiscal 2010 and fiscal 2009 first quarters. In actual dollars, fiscal 2010 first-quarter sales from the natural resources market sector declined 11 percent from the comparable period a year earlier. The decline was largely due to continued weakness in the oil and gas sector which was partially offset by shipments to a new wind-power generation customer gained through the Appleton acquisition. Approximately 34 percent of fiscal 2010 first-quarter net sales to the natural resources market sector was attributable to the Appleton acquisition.

Shipments to industrial customers represented 17 percent of fiscal 2010 first-quarter net sales versus 21 percent in the fiscal 2009 first quarter. In actual dollars, fiscal 2010 first-quarter sales from the industrial market sector declined 25 percent from the comparable period a year earlier. The decline was due to overall weakness in the sector which was partially offset by the addition of new customers from the Appleton acquisition. Approximately 17 percent of fiscal 2010 first-quarter net sales to the industrial sector was attributable to the Appleton acquisition.

Shipments to medical customers represented 11 percent of fiscal 2010 first-quarter net sales versus 7 percent in the fiscal 2009 first quarter. In actual dollars, fiscal 2010 first-quarter sales from the medical sector grew 44 percent, compared with the fiscal 2009 first quarter, due to the Appleton acquisition which contributed approximately 52 percent of fiscal 2010 first-quarter medical sector sales.

Backlog at Sept. 27, 2009, was $171,712,000, compared with $168,008,000 at June 28, 2009, and $218,365,000 a year earlier. "During the fiscal 2010 first quarter, orders increased 41.8 percent from the weak fiscal 2009 fourth quarter level and 2.4 percent from the fiscal 2009 first quarter. Strengthened bookings caused backlog at the end of the current-year first quarter to increase 2.2 percent from last fiscal year-end. Backlog at the end of the fiscal 2009 first quarter included orders of $39,566,000 removed in the fiscal 2009 second quarter due to the bankruptcy filing of Eclipse Aviation Corporation, a former customer,” said Mr. LaBarge.

Commentary and Outlook

"Based on current visibility, we believe first-quarter net sales will be the weakest quarterly results of the 2010 fiscal year. While we are cautious about the pace of the economic recovery, we do believe that strengthening orders will drive gradual improvement in our performance as the year advances. LaBarge’s excellent financial health and strong pipeline of new business opportunities sustain our confidence in our Company’s excellent long-term business and financial prospects,” said Mr. LaBarge.

Today’s Conference Call Webcast

Today, at 11 a.m. Eastern Time, LaBarge will host a live audio webcast of its discussion with the investment community regarding financial results for the Company’s fiscal 2010 first quarter. The webcast can be accessed on the Internet through http://viavid.net/dce.aspx?sid=00006B11 and the investor relations calendar area of http://www.labarge.com. Following the live discussion, a replay of the webcast will be available at the same locations on the Internet. Any financial or statistical information presented during the call, including any non-GAAP financial measures, the most directly comparable GAAP measures and reconciliation to GAAP results, can be accessed via the news and events area of http://www.labarge.com.

About LaBarge, Inc.

LaBarge, Inc. is a broad-based provider of electronics to technology-driven companies in diverse industrial markets. The Company provides its customers with sophisticated electronic and electromechanical products through contract design and manufacturing services. Headquartered in St. Louis, LaBarge has operations in Arkansas, Missouri, Oklahoma, Pennsylvania, Texas and Wisconsin. The Company’s Web site address is http://www.labarge.com.

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This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and involve a number of risks and uncertainties. Actual results may differ materially from such statements due to a variety of factors that could adversely affect LaBarge, Inc.'s operating results. These risks and factors are set forth in documents LaBarge, Inc. files with the Securities and Exchange Commission, specifically in the Company's most recent Annual Report on Form 10-K and other reports it files from time to time. These forward-looking statements speak only as of the date such statements were made, or as of the date of the report or document in which they are contained, and the Company undertakes no obligation to update such information.