Orbit International Corp. Reports 2024 Third Quarter Results

Rhea-AI Summary

Orbit International Corp. (OTC PINK:ORBT) reported mixed results for Q3 2024. Net income decreased to $558,000 ($0.17 per share) from $762,000 ($0.23 per share) in Q3 2023. Net sales increased to $8,414,000 from $8,192,000. For the nine months ended September 30, 2024, the company reported a net loss of $394,000 compared to a loss of $808,000 in the prior year period. Backlog decreased to $16.8 million from $17.4 million at year-end 2023. The company's Simulator Product Solutions (SPS) showed improved performance, while the Orbit Instrument division experienced lower sales and margins.

Positive

• Net sales increased to $21,190,000 from $20,383,000 for nine months 2024
• Gross margin improved to 32.8% from 32.2% for nine months 2024
• Net loss reduced to $394,000 from $808,000 for nine months 2024
• VPX power supplies bookings increased by 97.6% for ten months ended October 2024

Negative

• Q3 2024 net income declined to $558,000 from $762,000 year-over-year
• Q3 2024 gross margin decreased to 36.8% from 39.4% year-over-year
• Backlog decreased by 3.4% to $16.8M from $17.4M at year-end 2023
• Selling, general and administrative expenses increased by $543,000 for nine months 2024

Third Quarter 2024 Net Income of $558,000 ($0.17 per diluted share) v. Net Income of 762,000 ($0.23 per diluted share) in Prior Year Period

Third Quarter 2024 EBITDA, As Adjusted, of $749,000 ($0.22 per diluted share) v. $924,000 ($0.28 per diluted share) in Prior Year Period

Nine Months 2024 Net Loss of $394,000 ($0.12 loss per share) v. Net Loss of $808,000 ($0.24 loss per share) in Prior Year Period.

Nine Months 2024 EBITDA, As Adjusted, was a loss of $199,000 ($0.06 loss per share) v. a loss of $179,000 ($0.05 loss per share) in Prior Year Period.

HAUPPAUGE, N.Y., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Orbit International Corp. (OTC PINK:ORBT) today announced results for the third quarter and nine months ended September 30, 2024.

Third Quarter 2024 vs. Third Quarter 2023

• Net sales were $8,414,000, as compared to $8,192,000.
• Gross margin was 36.8%, as compared to 39.4%.
• Net Income was $558,000 ($0.17 per diluted share), as compared to net income of $762,000 ($0.23 diluted share).
• Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liabilities and other non-current liability, and stock-based compensation (EBITDA, as adjusted) was $749,000 ($0.22 per diluted share), as compared to $924,000 ($0.28 per diluted share).

Nine Months 2024 vs. Nine Months 2023

• Net sales were $21,190,000, as compared to $20,383,000.
• Gross margin was 32.8%, as compared to 32.2%.
• Net loss was $394,000 ($0.12 loss per share), as compared to net loss of $808,000 ($0.24 loss per share),
• Earnings before interest, taxes, depreciation and amortization, fair value adjustment on contingent liabilities and other non-current liability, and stock-based compensation (EBITDA, as adjusted) was a loss of $199,000 ($0.06 loss per share), as compared to a loss of 179,000 ($0.05 loss per share).
• Backlog at September 30, 2024 was $16.8 million compared to $20.6 million at June 30, 2024 and $17.4 million at December 31, 2023.

Mitchell Binder, President and CEO of Orbit International, commented, “Our net loss for the nine months ended September 30, 2024, was $394,000 ($0.12 loss per share) compared to a net loss of $808,000 ($0.24 loss per share) for the prior comparable period. EBITDA, as adjusted, for the nine months ended September 30, 2024, was a loss of $199,000 ($0.06 loss per share) compared to a loss of $179,000 ($0.05 loss per share) in the prior comparable period. The results for the nine months ended September 30, 2024, were positively impacted by improved operating results during the third quarter as compared to the first six months of the current year. Net income for the three months ended September 30, 2024, was $558,000 ($0.17 per diluted share) compared to $762,000 (0.23 per diluted share) in the comparable prior year period. Operating income during the current quarter was positively affected by higher sales and improved gross profit at our Simulator Product Solutions LLC (“SPS”) subsidiary. The higher sales and improved gross profit resulted from significantly higher bookings at SPS during the prior twelve months ended December 31, 2023. SPS is part of our Orbit Electronics Group (“OEG”). Operating income during the prior year three-month period was positively impacted by higher sales and gross profit at our Orbit Instrument division, which is part of our Orbit Electronics Group (“OEG”), as a significant amount of engineering deliverables were recorded during the period.”

Binder added, “Our current third quarter operating results were positively affected by the results from SPS but were partially offset by lower operating income at our Orbit Instrument division. Operating income at our Orbit Instrument division, reflected lower sales and gross margins during the quarter. Gross margins were affected by lower sales and product mix as well as the previously noted engineering deliverables made during the prior year comparable period. Our Orbit Instrument division has historically been our best performing operating unit with great operating leverage. The Orbit Power Group (“OPG”), which makes up the remainder of our legacy business, recorded slightly improved operating results during the quarter in comparison to the prior year comparable period. The improved operating results of SPS during the current quarter were attributable to higher sales and improved gross margins. General and administrative costs have stabilized for the quarter, as we incurred significant infrastructure costs to support the increase in sales and bookings from 2023 as well as the increase in sales expected for 2024. At the time of the SPS acquisition in January 2022, we anticipated the need to invest in infrastructure and internal controls in order to bring SPS up to the standards of a public company. We believe that our cost structure at SPS is now aligned to support our growth.”

Mr. Binder added, “Our sales for the nine months ended September 30, 2024, increased to $21,190,000 compared to $20,383,000 from the prior comparable period. This increase in sales was primarily attributable to increased SPS and OPG sales. The sales increase was partially offset by a decrease in sales from our OEG attributable to our legacy businesses and exclusive of SPS.”

Mr. Binder further added, “Our gross margin for the nine months ended September 30, 2024, increased to 32.8% compared to 32.2% in the prior year comparable period. This increase in gross margin during the nine months ended September 30, 2024, was attributable to a higher SPS gross margin due to operating leverage from increased sales and product mix and a higher OPG gross margin due to higher sales. This increase in gross margin occurred despite a lower OEG gross margin(exclusive of SPS) due to lower sales in the current period and the engineering deliverables made in the prior year period.”

Mr. Binder added, “Our improved operating results for the nine months ended September 30, 2024, were adversely affected by higher selling, general and administrative expenses in the current period. For the current nine months ended September 30, 2024, compared to the prior comparable period, selling, general and administrative expenses increased by $543,000, primarily due to higher expenses from SPS as well as higher corporate expenses due to certain expenses related to the non-renewal of an employment contract of a senior officer, higher accounting fees and increased payroll costs. Selling, general and administrative expenses at SPS increased during the current period principally because of additional administrative personnel that were needed and hired during 2022 and 2023, as well as higher commissions that were earned during the first half of 2024, resulting from a significant increase in bookings in the first quarter of 2024 compared to the comparable period of the prior year. Selling, general and administrative expenses at our OEG (exclusive of SPS), and our OPG did not materially change.”

Mr. Binder continued, “Backlog at September 30, 2024, was approximately $16,800,000 compared to approximately $17,400,000 at December 31, 2023, a decrease of approximately $600,000 or approximately 3.4%. The slight decrease in backlog is reflective of a general decrease in bookings from our OEG, inclusive of SPS and despite improved bookings from our OPG. In particular, for the OPG, bookings for our VPX power supplies for the ten months ended October 31, 2024, increased by 97.6% over the prior comparable period and have exceeded the amount of VPX bookings in any previous full calendar year. Bookings for our OEG, inclusive of SPS, are expected to improve as many anticipated follow-on awards expected in the third quarter are now expected to be received by year end. Contract delays are an inherent part of doing business with the U.S. Government.”

David Goldman, Chief Financial Officer, noted, “At September 30, 2024, our cash and cash equivalents aggregated approximately $0.3 million and our financial condition continued to remain solid as evidenced by our 2.6 to 1 current ratio. We have access to a $4,000,000 line of credit (“LOC”) with our bank and have borrowed $1,000,000 under the LOC as of September 30, 2024. Our book value per share at September 30, 2024 was $5.41, which compares to $5.24 at June 30, 2024 and $5.54 at December 31, 2023. (Note: book value per share does not include any additional value for our remaining reserved deferred tax asset.) To offset future federal and state taxes resulting from profits, we have approximately $3.6 million and $0.5 million in available federal and New York State net operating loss carryforwards, respectively.”

Mr. Binder added, “Because our revenues are tied to delivery schedules specified in our contracts, it is often difficult to judge our performance on a quarterly basis. Our operating results for the first nine months of 2024 reflect an improvement from our weak operating results in the comparable period of the prior year. These results reflect an increase in operating income from SPS due to an increase in sales and gross profit and despite an increase in infrastructure costs, as well as an increase from our OPG due to an increase in sales. However, despite the improvement from SPS and our OPG, our operating results were negatively impacted by lower sales from our Orbit Instrument division, which negatively impacted operating results for the nine-month period. This was primarily the result of weak bookings in the first half of 2023.Bookings from this division improved in the second half of 2023 and into 2024. However, this division is again experiencing contract delays for follow-on business that was expected in the third and fourth quarter of 2024. As previously mentioned, our Orbit Instrument division has historically been our most profitable operating unit. Furthermore, for the first quarter ended March 31, 2024, as previously reported, we reported a very strong start to the 2024 year with consolidated bookings of approximately $12,700,000, which included strong bookings from both SPS and our legacy businesses. However, consolidated bookings have cooled off in the second and third quarters, principally due to contract delays, but we expect bookings for these delayed contracts to be received either in the fourth quarter of 2024 or the first quarter of 2025.”

Mr. Binder concluded, “As a result of our stock being moved to the OTC Expert Market on May 16, 2023, our Board moved to suspend our existing repurchase program until the Company is reinstated onto the OTC Pink Market. On March 11, 2024, we filed our 2022 Annual Report with the OTC and filed our 2023 Annual Report on April 16, 2024. On October 4, 2024, we were reinstated by FINRA, and are again trading on the OTC Pink Market. However, our Board of Directors has not yet determined to reinstate our buyback program. Through May 15, 2023, we had purchased approximately 188,185 shares under the existing program.”

The Company also announced today that it has hired PKF O’Connor Davies, LLP to perform the audit of its financial statements for the 2024 fiscal year and that its Board of Directors has extended the employment contract of Mitchell Binder, President and CEO through December 31, 2026.

The Company also reported that the matter related to its termination of Nabil Radi Abdou, the President of SPS is ongoing. As part of the acquisition by Orbit in January 2022, Mr. Abdou, through a corporation owned by him, currently owns 19.9% of SPS. His ownership interest, based on a formula in the Operating Agreement signed at that time, is subject to mandatory repurchase by Orbit for $1,300,000 upon termination of Mr. Abdou’s employment. This amount is reflected as a liability on Orbit’s balance sheet. Mr. Abdou contends he was wrongfully dismissed and has claimed certain amounts he believes are due him under both his Employment Agreement and in connection with the Company’s mandatory repurchase obligation under the Operating Agreement. Orbit believes it has abided by the terms of both the Employment Agreement and Operating Agreement and has valid offsets against amounts due to Mr. Abdou because of damages suffered by Orbit as a result of Mr. Abdou’s conduct. The parties continue to conduct discussions in an attempt to avoid litigation.

Orbit International Corp., through its Electronics Group, is involved in the development and manufacture of custom electronic device and subsystem solutions for military, industrial and commercial applications through its production facilities in Hauppauge, NY and Carson, CA. Orbit’s Power Group, also located in Hauppauge, NY, designs and manufactures a wide array of power products including AC power supplies, frequency converters, inverters, VME/VPX power supplies as well as various COTS power sources.

Certain matters discussed in this news release and oral statements made from time to time by representatives of the Company including, statements regarding our expectations of Orbit International Corp’s operating plans, deliveries under contracts and strategies generally; statements regarding our expectations of the performance of our business; expectations regarding costs and revenues, future operating results, additional orders, future business opportunities and continued growth, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. Although Orbit International Corp. believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.

Forward-looking information is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Many of these factors are beyond Orbit International Corp.’s ability to control or predict. Important factors that may cause actual results to differ materially and that could impact Orbit International Corp. and the statements contained in this news release can be found in Orbit's reports posted with the OTC Disclosure and News service. For forward-looking statements in this news release, Orbit claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Orbit assumes no obligation to update or supplement any forward-looking statements whether as a result of new information, future events or otherwise.

CONTACT                                
David Goldman                        
Chief Financial Officer                
631-435-8300                                
                

(See Accompanying Tables)

Orbit International Corp.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
			2024			2023			2024				2023
Net sales		$	8,414		$	8,192		$	21,190			$	20,383
Cost of sales			5,319			4,968			14,250				13,814
Gross profit			3,095			3,224			6,940				6,569
Selling general and administrative expenses			2,524			2,444			7,698				7,155
Interest expense			19			3			33				5
Other income (expense), net			6			9			433				(163	)
Income (loss) before income taxes			558			786			(358	)			(754	)
Income tax provision			-			24			36				54
Net income (loss)		$	558		$	762		$	(394	)		$	(808	)
Basic earnings (loss) per share		$	0.17		$	0.23		$	(0.12	)		$	(0.24	)
Diluted earnings (loss) per share		$	0.17		$	0.23		$	(0.12	)		$	(0.24	)
Weighted average number of shares outstanding:
Basic			3,346			3,345			3,345				3,346
Diluted			3,349			3,347			3,345				3,346

Orbit International Corp.
Consolidated Statements of Operations
(in` thousands, except per share data)
(unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
			2024			2023			2024				2023
EBITDA (as adjusted) Reconciliation
Net income (loss)		$	558		$	762		$	(394	)		$	(808	)
Income tax expense			-			24			36				54
Depreciation and amortization			169			123			503				364
Interest expense			19			3			33				5
Fair value adj-contingent liabilities & other non-current liability			-			5			(387	)			229
Stock-based compensation			3			7			10				(23	)
EBITDA (as adjusted) (1)		$	749		$	924		$	(199	)		$	(179	)
EBITDA (as adjusted) Per Diluted Share Reconciliation
Net income (loss)		$	0.17		$	0.23		$	(0.12	)		$	(0.24	)
Income tax expense			0.00			0.01			0.01				0.02
Depreciation and amortization			0.05			0.04			0.15				0.11
Interest expense			0.00			0.00			0.01				0.00
Fair value adj-contingent liabilities & other non-current liability			0.00			0.00			(0.11	)			0.07
Stock-based compensation			0.00			0.00			0.00				(0.01	)
EBITDA (as adjusted), per diluted share (1)		$	0.22		$	0.28		$	(0.06	)		$	(0.05	)

(1) The EBITDA (as adjusted) tables presented are not determined in accordance with accounting principles generally accepted in the United States of America. Management uses EBITDA (as adjusted) to evaluate the operating performance of its business. It is also used, at times, by some investors, securities analysts and others to evaluate companies and make informed business decisions. EBITDA (as adjusted) is also a useful indicator of the income generated to service debt. EBITDA (as adjusted) is not a complete measure of an entity's profitability because it does not include costs and expenses for interest, depreciation and amortization, income taxes, fair value adj.-contingent liabilities and other non-current liability and stock-based compensation. EBITDA (as adjusted) as presented herein may not be comparable to similarly named measures reported by other companies.

		Nine Months Ended September 30,
Reconciliation of EBITDA, as adjusted, to cash flows (used in) provided by operating activities (1)			2024					2023
EBITDA (as adjusted)		$	(199	)			$	(179	)
Income tax expense			(36	)				(54	)
Interest expense			(33	)				(5	)
Fair value adj-contingent liabilities and other non-current liability			387					(229	)
Stock-based compensation			22					59
Net change in operating assets and liabilities			(1,574	)				(2,361	)
Cash flows (used in) provided by operating activities		$	( 1,433	)			$	(2,769	)

Orbit International Corp.
Consolidated Balance Sheet

	September 30, 2024 (unaudited)		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$ 309,000		$ 1,265,000
Accounts receivable, less allowance for credit losses	4,781,000		3,648,000
Inventories	10,394,000		10,034,000
Contract assets	512,000		384,000
Other current assets	391,000		445,000
Total current assets	16,387,000		15,776,000
Property and equipment, net	1,003,000		1,221,000
Right of use assets, operating leases	2,248,000		2,722,000
Right of use assets, financing leases	86,000		-
Goodwill	3,515,000		3,515,000
Intangible assets, net	2,383,000		2,564,000
Deferred tax asset	545,000		545,000
Other assets	53,000		53,000
Total assets	$ 26,220,000		$ 26,396,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 1,416,000		$ 1,116,000
Accrued expenses	985,000		1,124,000
Dividend payable	-		33,000
Notes payable	47,000		55,000
Lease liabilities, operating leases	660,000		618,000
Lease liabilities, financing leases	37,000		-
Contingent liabilities	19,000		565,000
Customer advances	824,000		662,000
Other current liability	1,300,000		-
Line of credit	1,000,000		-
Total current liabilities	6,288,000		4,173,000
Notes payable, net of current portion	57,000		92,000
Contingent liabilities	24,000		-
Other non-current liability	-		1,434,000
Lease liability, operating lease	1,682,000		2,184,000
Lease liability, financing lease	51,000		-
Total liabilities	8,102,000		7,883,000
Stockholders’ Equity
Common stock	354,000		353,000
Additional paid-in capital	17,264,000		17,233,000
Treasury stock	(1,224,000	)	(1,224,000	)
Retained earnings	1,724,000		2,151,000
Stockholders’ equity	18,118,000		18,513,000
Total liabilities and stockholders’ equity	$ 26,220,000		$ 26,396,000

FAQ

What was Orbit International's (ORBT) net income for Q3 2024?

Orbit International reported net income of $558,000 ($0.17 per diluted share) for Q3 2024, compared to $762,000 ($0.23 per diluted share) in Q3 2023.

How much was ORBT's backlog as of September 30, 2024?

ORBT's backlog as of September 30, 2024, was $16.8 million, down from $17.4 million at December 31, 2023.

What was Orbit International's (ORBT) net sales for the first nine months of 2024?

ORBT's net sales for the nine months ended September 30, 2024, were $21,190,000, compared to $20,383,000 in the same period of 2023.