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Tel-Instrument Electronics Corp. Reports Financial Results For Third Quarter FY 2023

. Posted in About Us

Tel-Instrument Electronics Corp. Reports Financial Results
For Third Quarter FY 2023

East Rutherford, NJ – February 13, 2023 – Tel-Instrument Electronics Corp. (“Tel-Instrument,” “TIC,” or the “Company”) (OTCQB: TIKK), a leading designer and manufacturer of avionics test and measurement solutions, today reported a net income of $393K ($0.10 per basic and $0.08 per diluted share) on revenues of $2.3 million for the third quarter of 2023 fiscal year, ended December 31, 2022.

Notes On Third Quarter:

·   Revenues for the third quarter were $2.3 million, a 27% decline from $3.2 million in the year ago quarter.
·   Gross margin percentage declined to 38% versus 44% in the year ago quarter. This decline was mainly volume related.
·   Operating expenses decreased by $156K, a 14% decline versus the year ago quarter.
·   Operating loss was $66K as compared to an operating profit of $293K in the year ago quarter.
·   Other income (expense) was $563K income as compared to $51K expense in the prior year ago quarter. The third quarter results included       a $628K Employee Retention Tax Credit (“ERTC”).
·   Net income was $393K or $0.10 per share, compared to net income of $195K or $0.04 per share in the year-ago quarter.
·   Backlog increased to $5.6 million at the end of the third quarter, a $2.3 million increase from the prior quarter-end.
·   Low-rate initial production of the SDR/OMNI commenced in December 2022.
·   Aeroflex appeal hearing is set for March 30, 2023.

Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “This has been the fourth consecutive quarter that has been negatively impacted by parts shortages. Due to the chip shortage situation, vendor lead times have tripled to as long as nine months in some cases. This prevented us from shipping certain high dollar orders in the last quarter. We have been ordering additional components from our vendors to mitigate the impact of extended lead times. This has resulted in an inventory increase of almost $500K since the start of the year. We expect to have sufficient parts on hand to reach normal production levels starting in the first quarter of Fiscal Year 2024 which starts in April. We also have several major contracts pending. including a large AN/USM-708 order for the F-35 program and a follow-on T-4530i order from Germany. With the commencement of SDR/OMNI shipments, we are projecting a return to solid profitability next fiscal year and strong revenue and profitability growth once we start shipping Navy CRAFT ECP Upgrade KITS.

We are extremely excited by the prospects of the SDR/OMNI which commenced initial low-rate production in December. We continue to conduct product demonstrations with the major Primes (“major customers”) and airlines. The reaction from all customers has been extremely positive. We expect to ship $300K of these test sets in the fourth quarter. The SDR/OMNI is the only multi-purpose avionic test set in the market that meets Class 1 military environmental specification. We believe that this will be a strong competitor in both commercial and military avionic and communication test set markets.

The CRAFT ECP contract will be critical for the Company as this is expected to generate millions of dollars of annual production revenues, starting when the engineering work is completed. The CRAFT engineering effort is a funded $2.9 million program and is expected to take two years to complete. The next major milestone is the Critical Design Review (“CDR”) which is scheduled to take place in April 2023. This will generate almost $700K of non-recurring engineering revenues. The Lockheed Martin F-35 MADL Test Set development program has been completed. This is expected to generate ongoing production revenues in the $600K-$700K range. Finally, we have been in negotiations with the U.S. Army on a software upgrade for the TS-4530A product to include new functionality such as Mode 5 Level 2B and compatibility with European CCI (“COMSEC Controlled Item”) devices. This software upgrade effort is expected to result in a funded engineering program.

The Aeroflex appeal hearing has been set for March 30, 2023 with a final decision expected this summer. We believe that we have excellent arguments to reduce or reverse the judgment. Regardless of the outcome, we look forward to resolving this case and stopping the accrual of judgment interest.”

About Tel-Instrument Electronics Corp.


Tel-Instrument is a leading designer and manufacturer of avionics test and measurement solutions for the global commercial air transport, general aviation, and government/military aerospace and defense markets. Tel-Instrument provides instruments to test, measure, calibrate, and repair a wide range of airborne navigation and communication equipment. For further information please visit our website at www.telinstrument.com.

This press release includes statements that are not historical in nature and may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits, and synergies of the combined companies, statements concerning the Company’s outlook, pricing trends, and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies, and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and, accordingly, actual results could differ materially. Among the factors which could cause a difference are:  changes in the general economy; changes in demand for the Company’s products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances.  A number of these factors are discussed in the Company’s previous filings with the U.S. Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 (the “Act”) protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

Contact:

Pauline Romeo



Tel-Instrument Electronics Corp.



(201) 933-1600 (Ext 309)

 

TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS





December 31,

2022





March 31,

2022







(unaudited)











ASSETS



































Current assets:

















Cash



$

3,292,547





$

4,949,690



Accounts receivable, net





1,270,353







1,049,040



Inventories, net





3,311,159







2,820,497



Restricted cash to support appeal bond





2,011,050







2,011,050



Prepaid expenses and other current assets





967,612







244,040



Total current assets





10,852,721







11,074,317





















Equipment and leasehold improvements, net





81,921







115,338



Operating lease right-of-use assets





1,575,377







1,720,921



Deferred tax asset, net





2,584,036







2,499,587



Other long-term assets





35,109







35,109



Total assets



$

15,129,164





$

15,445,272





















LIABILITIES & STOCKHOLDERS’ EQUITY



































Current liabilities:

















Operating lease liabilities – current portion



$

200,148





$

194,370



Accounts payable





563,414







406,489



Deferred revenues - current portion





167,672







119,835



Accrued expenses ‚Äźvacation pay, payroll and payroll withholdings





217,461







410,538



Accrued legal damages





6,291,226







6,097,273



Accrued expenses - other





270,107







174,145



Total current liabilities





7,710,028







7,402,650





















Operating lease liabilities – long-term





1,375,229







1,526,551



Deferred revenues – long-term





195,814







289,071





















Total liabilities





9,281,071







9,218,272





















Commitments and contingencies



































Stockholders’ equity:

















Preferred stock, 1,000,000 shares authorized, par value $0.10 per share

















Preferred stock, 500,000 shares 8% Cumulative Series A Convertible Preferred

authorized, issued and outstanding, par value $0.10 per share





3,815,998







3,695,998



Preferred stock, 166,667 shares 8% Cumulative Series B Convertible Preferred

authorized, issued and outstanding, par value $0.10 per share





1,187,367







1,147,367



Common stock, 7,000,000 shares authorized, par value $0.10 per share,

3,255,887 and 3,255,887 shares issued and outstanding, respectively





325,586







325,586



Additional paid-in capital





6,797,056







7,018,353



Accumulated deficit





(6,277,914

)





(5,960,304

)

Total stockholders’ equity





5,848,093







6,227,000



Total liabilities and stockholders’ equity



$

15,129,164





$

15,445,272




TEL-INSTRUMENT ELECTRONICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)





Three Months Ended





Nine Months Ended







December 31,

2022





December 31,

2021





December 31,

2022





December 31,

2021





































Net sales



$

2,328,254





$

3,171,532





$

6,594,768





$

10,914,787



Cost of sales





1,434,547







1,763,739







4,312,405







5,824,341





































Gross margin





893,707







1,407,793







2,282,363







5,090,446





































Operating expenses:

































Selling, general and administrative





578,077







523,966







1,613,021







1,674,618



Litigation expenses





10,860







17,145







12,102







21,545



Engineering, research, and development





370,795







574,118







1,502,534







1,950,545



Total operating expenses





959,732







1,115,229







3,127,657







3,646,708





































(Loss) income from operations





(66,025

)





292,564







(845,294

)





1,443,738





































Other income (expense):

































Interest income





5,664







996







8,787







2,977



Other income





628,400







-







628,400







35,854



Gain on forgiveness of PPP loan





-







-







-







722,577



Interest expense – judgement





(71,016

)





(52,490

)





(193,952

)





(156,901

)

Total other net income (expense)





563,048







(51,494

)





443,235







604,507





































Income (loss) before income taxes





497,023







241,070







(402,059

)





2,048,245





































Income tax expense (benefit)





104,396







46,448







(84,449

)





278,446





































Net income (loss)





392,627







194,622







(317,610

)





1,769,799





































Preferred dividends





(80,000

)





(80,000

)





(240,000

)





(240,000

)



































Net income (loss) attributable to common shareholders



$

312,627





$

114,622





$

(557,610

)



$

1,529,799





































Basic net income (loss) per common share



$

0.10





$

0.04





$

(0.17

)



$

0.47



Diluted net income (loss) per common share



$

0.08





$

0.04





$

(0.17

)



$

0.35





































Weighted average shares outstanding:

































Basic





3,255,887







3,255,887







3,255,887







3,255,887



Diluted





5,155,665







5,095,665







3,255,887







5,095,665





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