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Tel-Instrument Electronics Reports Net Income of $908k for Third Quarter 2020

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Tel-Instrument Electronics Reports Net Income of $908k for Third Quarter 2020

East Rutherford, NJ – February 13, 2020 – Tel-Instrument Electronics Corp. (“Tel”, or the “Company”) (OTCQB: TIKK), a leading designer and manufacturer of avionics test and measurement solutions, today reported net income of $908k ($0.25 basic income per common share) on revenues of $4.7 million for the third quarter of fiscal year 2020 ending December 31, 2019.

Highlights include:

·   Revenues increased 19% from last year’s third quarter and have reached $16 million over the last 12 months.

·   Gross margins remained solid at 46.7% due to manufacturing efficiencies, tight cost controls, and product mix.

·   Quarterly operating expenses remained constant at $1.2 million despite increased revenues and profit-sharing accruals.

·   Operating income increased to $1 million for the current quarter as compared to 758k in the year ago quarter.

·   Net income for the quarter increased to a $908k, or $0.25 basic income per share and $0.18 per share fully-diluted.

·   Nine-month net income improved to $1.7 million, or $0.45 basic income per share and $0.35 per share fully-diluted.

·   Trailing 12-month EBITDA improved to $2.7 million.

·   Shareholders Equity improved to $1.6 million as compared to a negative $83k at the start of the fiscal year.

·   Bookings for the quarter were $3.0 million (excludes a $1.87 million order received in the first week of January 2020).

Mr. Jeffrey O’Hara, Tel-Instrument’s President and CEO commented, “We are pleased to report strong operating results for the third quarter on revenues of $4.7 million. The increase in revenues has been driven by growing international sales, which accounted for over 50% of our revenues in the latest quarter. The Company continues to do an excellent job at managing operating expenses, which resulted in quarterly operating profits of just over $1 million. Net income for the quarter increased to $908k, or $0.18 per common share on a fully diluted basis. The Company has now recorded strong profitability for five consecutive fiscal quarters and we expect that this trend will continue for the remainder of the 2020 fiscal year and beyond. We are particularly pleased to have secured the $1.87 million T-47/M5 order from Muirhead Aerospace, our European distributor, for the U.K. military subsequent to the end of the third quarter. We expect the international Mode 5 test set business and orders for the F-35 program to remain strong for the next several years. We also continue to work with the U.S. Military and the major prime contractors on new programs, and we are in discussions with the U.S. military on an upgrade program that could generate revenues starting as early as the next fiscal year.

Our near-term goal is to capture the lion’s share of the Mode 5 test set market and continue strengthening our balance sheet and to set-aside sufficient cash to fully discharge the Aeroflex damage award in the event that we are unsuccessful with our pending legal appeal. We are well on our way to achieving this milestone with total liquid assets at December 31, 2019 increasing to $6.48 million ($3.67 million of cash and restricted cash plus $2.8 million of account receivables). Since the start of the current fiscal year, Tel’s net working capital position has improved from negative $152k to a positive $1.41 million. Shareholders Equity has also improved to $1.6 million as of the end of the latest fiscal quarter.

To meet the standards for the next generation of military applications, we are upgrading the design of our 4.5-pound SDR/OMNI hand-held test set to include a much faster processor with improved video graphics processing capability. This change will likely move the initial product introduction for the commercial avionics market into the middle of this calendar year, but we expect it will better position the Company for high dollar military contracts, which will be critical to our long-term growth in revenues and profitability. The goal of this new test set is to recapture market share in the commercial avionics test set business and expand into the much larger secure communications radio test market.

With respect to the Aeroflex litigation, the Company has appealed the $4.9 million judgement and has set aside $2 million in restricted cash to support an appeal bond. The appeal submissions are now complete. We continue to believe that the trial judge erred in his legal ruling on standing and other issues during the trial and that we have strong grounds for the award to be vacated or reduced.”

Conference Call Information

The Company will host an earnings conference call today, Thursday February 13, 2020 at 10:00 a.m. to discuss its third quarter results. To access the live webcast, log on to the Tel-Instrument Electronics website at www.telinstrument.com and click on “Investor Relations”. To participate in the call by phone, dial (877) 407-8035 approximately five minutes prior to the scheduled start time. International callers please dial (201) 689-8035.

A replay of the teleconference will be available until March 13, 2020 and may be accessed by dialing (877) 481-4010. International callers may dial (919) 882-2331. Callers should use conference ID: 59115.


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.

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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:

Joseph P. Macaluso



Tel-Instrument Electronics Corp.



(201) 933-1600



John Nesbett/Jennifer Belodeau

IMS Investor Relations

203.972.9200

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