Southwall Announces Earnings in Q1 2006
PALO ALTO, Calif.--May 1, 2006--Southwall Technologies Inc. (OTCBB:SWTX) released its financial results for the first quarter of 2006 following the close of market on May 1, 2006.Selected First Quarter Financial Highlights
-- First quarter revenues of $10.0 million decreased 36% from $15.6 million in the first quarter of 2005 and decreased 16% from $11.9 million in the fourth quarter of 2005.
-- First quarter 2006 gross margin was 37%, an increase of 9% from the first quarter 2005 gross margin of 28% and a 6% increase from the fourth quarter 2005 gross margin of 31%.
-- First quarter 2006 net loss was $1.3 million, a decrease from the first quarter 2005 net income of $1.7 million and a decrease from fourth quarter 2005 net income of $0.2 million.
-- First quarter 2006 net loss per fully diluted share was $0.05, a decrease from first quarter 2005 net income per fully diluted share of $0.05 and a decrease from fourth quarter of 2005 net income per fully diluted share of $0.01.
"Southwall's first quarter revenues were very soft. However, we managed to beat our gross profit target as a result of good operational performance in Palo Alto," commented Thomas G. Hood, President and CEO. "As we've announced, the Palo Alto plant closed its operations at the end of April and this should further improve our margins for the rest of the year. We expect to return to profitability in the second half of 2006."
The Company will hold a teleconference at 2:00 p.m. PT / 5:00 p.m. ET today to discuss the results in more detail.
This call will be open to all investors via a webcast accessible at www.southwall.com and by phone. Both phone and webcast replays will be available for approximately one week after the teleconference, beginning approximately two hours after the call ends.
How to Access the Webcast
Go to the Investor Relations page of the Southwall website at www.southwall.com and click on the CCBN webcast icon. From here, you can listen to the teleconference, assuming that your computer system is configured properly.
How to Access the Call
Using access code #7758868, domestic U.S. callers can dial (877) 481-7179, while international callers can dial (706) 634-7186. The phone replay will be accessible at (800) 642-1687 or (706) 645-9291, access code # 7758868.
About Southwall Technologies Inc.
Southwall Technologies Inc. designs and produces thin film coatings that selectively absorb, reflect or transmit light. Southwall products are used in a number of automotive, electronic display and architectural glass products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall is an ISO 9001:2000-certified manufacturer and sells advanced thin film coatings to over 25 countries around the world. Southwall's customers include Audi, BMW, DaimlerChrysler, DuPont, Hitachi, Mitsui Chemicals, Peugeot-Citroen, Philips, Pilkington, Renault, Saint-Gobain Sekurit, and Volvo.
This press release may contain forward-looking statements, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented. These risks include the possibility that the Company's expected future results will be materially worse than estimated, that the Company may not return to profitability in the second half of 2006 or may not be able to achieve future long-term growth, that there will be a decline in one or more portions of our business in 2006 or thereafter, that the Company will not be successful in improving operations performance or controlling costs, that the Company will suffer a decline in manufacturing or financial effectiveness, that the Company's new product development will not be successful, and that the Company will not be able to secure additional financing if required, as well as risks associated with its failure to meet potential covenant requirements under future credit facilities. Further risks are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 29, 2005, and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006, which we expect will be filed on or about May 1, 20065, 2006.
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended
March 31, April 3,
2006 2005
Net revenues $ 10,034 $ 15,647
Cost of revenues 6,366 11,270
Gross profit 3,668 4,377
Operating expenses:
Research and development 1,646 696
Selling, general and administrative 2,562 2,026
Impairment recoveries for long-lived assets - (170)
Restructuring costs 452 -
Total operating expenses 4,660 2,552
Income (loss) from operations (992) 1,825
Interest expense, net (192) (271)
Other income (loss), net 150 292
Income (loss) before provision for income taxes (1,034) 1,846
Provision for income taxes 293 147
Net income (loss) (1,327) 1,699
Deemed dividend on preferred stock 122 123
Net income (loss) attributable to common
stockholders $ (1,449)$ 1,576
Net income (loss) per share:
Basic $ (0.05)$ 0.06
Diluted $ (0.05)$ 0.05
Weighted average shares used in computing net
income (loss) per share:
Basic 26,825 26,613
Diluted 26,825 33,181
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $ 5,117 $ 6,600
Restricted cash 398 402
Accounts receivable, net 6,293 6,780
Inventories, net 7,258 5,879
Other current assets 909 982
Total current assets 19,975 20,643
Property, plant and equipment, net 16,929 16,857
Restricted cash loans 1,021 995
Other assets 1,126 1,146
Total assets $ 39,051 $ 39,641
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt and
capital leases $ 1,171 $ 1,317
Short term obligations 2,996 2,996
Accounts payable 2,551 1,402
Accrued compensation 990 1,161
Other accrued liabilities 4,518 5,076
Total current liabilities 12,226 11,952
Term debt and capital leases 8,728 8,790
Government grants advanced 398 396
Other long term liabilities 2,585 2,564
Total liabilities 23,937 23,702
Series A, convertible preferred stock 4,810 4,810
Stockholders' equity:
Common stock 27 27
Capital in excess of par value 78,007 77,828
Accumulated other comprehensive income:
Translation gain on subsidiary 2,856 2,532
Accumulated deficit (70,586) (69,258)
Total stockholders' equity 10,304 11,129
Total liabilities, preferred stock
and stockholders' equity $ 39,051 $ 39,641