QualMark Corporation Reports Third Quarter Financial Results
DENVER--Oct. 2, 20055, 2005--| '...Total Revenue Grew 29% and Profits Grew 56% over the Prior Year Quarter...' |
QualMark Corporation (OTCBB: QMRK), a world leader in designing, manufacturing and marketing HALT (Highly Accelerated Life Testing), HASS (Highly Accelerated Stress Screening) and electrodynamic systems, today announced results for the third quarter and nine months ended September 30, 2005.
For the quarter (three months ended September 30, 2005):
Revenue --
The Company reported revenue for the quarter of $3,509,000 versus revenue of $2,717,000 from the third quarter of 2004. Charles Johnston, President and CEO of QualMark, stated: "Our total revenue grew 29% and core business revenue grew 13% as compared to the prior year quarter, as prior period investments in marketing programs have begun to materialize. This is outstanding as historically the third quarter represents our slowest period." Mr. Johnston continued: "During the quarter, we closed an order that approached $600,000, which represented the largest single order the Company has ever received. This order was in addition to multiple Typhoon chambers that were purchased by the same customer throughout 2005. The sale represents the growing importance and dependency of HALT and HASS technology in the avionics industries. QualMark ACG revenue remained consistent. We have implemented specific sales and marketing initiatives that we expect to capitalize on in the fourth quarter of this year in the ACG electrodynamic vibration market."
Net Income --
The Company reported a net income for the quarter of $331,000 versus a net income of $212,000 from the third quarter of 2004. "The close of this quarter is significant for QualMark, as it marks the ninth consecutive quarter of profitability. Our net income for the quarter grew 56% as compared to a year ago due to our commitment to business fundamentals," continued Mr. Johnston.
Earnings per share --
The Company reported diluted income per share for the quarter of $0.03 as compared to diluted income per share of $0.02 for the third quarter of 2004. The primary dilution for the Company is attributable to certain financial securities that are convertible into common stock.
For the year (nine months ended September 30, 2005):
Revenue --
The Company reported revenue for the year of $10,936,000 versus revenue of $8,777,000 from 2004. Mr. Johnston stated, "Year to date, we have grown 25% as compared to the prior year." According to Mr. Johnston, "the primary drivers for our growth are attributed to our dominant presence in the international marketplace, our ability to penetrate new markets, both vertically and horizontally, and the recurring revenue stream achieved through our QualMark ACG subsidiary."
Net Income --
The Company reported a net income for the year of $984,000 versus a net income of $808,000 from 2004. "We are delighted with the continued growth and profitability of our business. Our net income for the year grew 22% as compared to a year ago due to our commitment to business fundamentals," Mr. Johnston concluded.
Earnings per share --
The Company reported diluted income per share for the year of $0.12 as compared to diluted income per share of $0.09 from 2004. The primary dilution for the Company is attributable to certain financial securities that are convertible into common stock. The Company does not anticipate any additional dilution at this time. However, the Company may enter into financial transactions to assist with financing additional acquisitions or provide capital for future growth, which may further impact dilution.
QualMark's quarterly conference call to discuss third quarter 2005 results will be held today, October 25, 2005, at 11:00 a.m. Eastern time.
To participate via conference call, dial 888-318-6430 (if calling from within the U.S.) no later than 10:50 a.m. EDT on October 25. The leader name is Charles Johnston. The QualMark security code to access this earnings call is QUALMARK.
Quarter to Date Year to Date
September 30, September 30,
2005 2004 2005 2004
-------------------------------------------------
Systems revenue $2,863,000 $2,422,000 $8,429,000 $7,841,000
ARTC service revenue 218,000 295,000 830,000 936,000
ACG revenue 428,000 -- 1,677,000 --
-------------------------------------------------
Total revenue 3,509,000 2,717,000 10,936,000 8,777,000
-------------------------------------------------
Gross profit 1,584,000 1,240,000 4,883,000 4,168,000
Gross profit margin 45.2% 45.6% 44.6% 47.5%
-------------------------------------------------
Income from
operations 379,000 235,000 1,111,000 886,000
Net income 331,000 212,000 984,000 808,000
=================================================
Earnings Per Share:
Basic:
Net income 331,000 212,000 984,000 808,000
Preferred stock
dividends (58,000) (54,000) (171,000) (158,000)
Accretion of
redeemable
preferred stock (127,000) (54,000) (227,000) (164,000)
-------------------------------------------------
Net income available
to common
shareholders 146,000 104,000 586,000 486,000
=================================================
Basic earnings per
share $0.03 $0.03 $0.14 $0.13
=================================================
Basic weighted
average shares
outstanding 4,344,000 3,610,000 4,216,000 3,610,000
=================================================
Diluted:
Net income available
to common
shareholders -
Diluted 166,000(a)(b) 158,000 1,044,000(a) 644,000
=================================================
Diluted earnings per
share $0.03 $0.02 $0.12 $0.09
=================================================
Diluted weighted
average shares
outstanding 5,188,000(c) 7,341,000 8,817,000 7,199,000
=================================================
(a) Includes adjustment for interest expense from convertible debt.
(b) Does not include adjustment for preferred stock dividends and
accretion, as the effect would be anti-dilutive for the quarter.
(c) Does not include common shares obtainable upon conversion of
preferred stock, as the effect would be anti-dilutive for the
quarter.
QualMark Corporation, headquartered in Denver, Colorado, is the leader in designing, marketing, and manufacturing accelerated life-testing systems providing the world's largest corporations with solutions that improve product reliability and allow them to get to market faster. The Company has installed more than 600 of its proprietary testing systems in 25 countries. The Company operates and partners with ten testing facilities worldwide.
The Company also offers electrodynamic vibration solutions through its subsidiary, QualMark ACG Corporation.
QualMark ACG Corporation, headquartered in West Haven, Connecticut, is the leader in supplying electrodynamic systems, components, and service to the worldwide vibration test equipment market. For over 30 years, QualMark ACG (formerly ACG Dynamics, Inc.) has been supplying quality replacement parts and field service for most brands of vibration equipment.
The statements included in this press release concerning predictions of economic performance and management's plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, factors detailed in the Company's Securities and Exchange Commission filings; downturns in the Company's primary markets; variability of order flow, future economic conditions; competitive products and pricing; new product development; disruptions in the Company's operations from acts of God or extended maintenance; transportation difficulties; or the delivery of product under existing contracts and other factors.