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ATCA/Standard Servers

PT Reports Q2 Profit

ROCHESTER, N.Y. -- Performance Technologies, Inc. (NASDAQ:PTIX) , a leading provider of innovative communications solutions, today announced its financial results for the second quarter 2008.

Financial Summary

Revenue in the second quarter 2008 amounted to $11.2 million, compared to $9.6 million in the second quarter 2007. Revenue for the six months ended June 30, 2008 amounted to $22.2 million, compared to $19.0 million during the corresponding period in 2007.

Net income in the second quarter 2008 amounted to $.6 million, or $.05 per diluted share, including stock-based compensation expense of $.2 million, or $.01 per share, based on 11.7 million shares outstanding. Net (loss) in the second quarter 2007 amounted to $(0.4) million, or $(.03) per basic share, and included stock-based compensation expense of $.2 million, or $.01 per share; write-off of software development costs amounting to $.5 million, or $.04 per share; restructuring charges of $.2 million, or $.02 per share; a recovery on a note receivable of $.5 million, or $.02 per share; and discrete income tax charges totaling $.3 million, or $.03 per share, based on 12.9 million shares outstanding.

Net income for the six months ended June 30, 2008 amounted to $1.2 million, or $.10 per diluted share, including stock-based compensation expense of $.3 million, or $.02 per share, based on 11.7 million shares outstanding. Net (loss) for the six months ended June 30, 2007 amounted to $(1.0) million, or $(.08) per basic share, including a write-off of software development costs amounting to $.5 million, or $.04 per share; restructuring charges of $.2 million, or $.02 per share; a recovery on a note receivable of $.5 million, or $.02 per share; and discrete income tax charges totaling $.3 million, or $.03 per share, based on 13.0 million shares outstanding.

The Company had 11.6 million common shares outstanding at June 30, 2008. The decline in number of common shares outstanding is primarily attributable to the Company repurchasing .2 million and 1.3 million common shares over the past three and twelve month periods, respectively, for an aggregate purchase price of $1.0 million and $6.2 million, respectively. Cash and investments amounted to $34.0 million at June 30, 2008, or $2.93 per share, and the Company had no long-term debt.

"We are pleased with our second quarter financial results, which again exceeded the upper end of our earnings guidance," said John Slusser, president and chief executive officer. "Our focus on key 2008 initiatives of market diversification, investment in our signaling products and organization, and emphasis on gross margin generated tangible results during the first half. During the second half of 2008, we will continue this focus and execution of our strategies for long-term growth while pursuing near-term business objectives, recognizing challenging economic conditions exist in some of our end markets."

Business Overview and Guidance

The Company targets three vertical markets for its communications products -- telecommunications, aerospace and defense, and commercial. The OEM telecommunications market, which is historically our largest vertical market, continues to be very challenging with investments in broad-based next-generation infrastructure by carriers and service providers being relatively limited. Second quarter sales to aerospace and defense customers grew substantially over the first quarter and we are now seeing aerospace and defense opportunities in Europe. The commercial market is seeing some sluggishness due to current turmoil in applications such as those for the financial markets. Demand for our signaling systems products continues to rise as carriers and service providers respond to the worldwide explosive growth in text messaging and the cost saving benefits of migrating to IP-based networks.

Overall the Company's forward-looking visibility of customer orders continues to be very limited. This lack of customer visibility makes it challenging to forecast revenue and generally results in a substantial portion of the Company's revenue being derived from orders placed within a quarter and shipped in the final month of the same quarter.

The Company provides guidance only on earnings per share expected in the next quarter. Management anticipates earnings per share in the third quarter 2008 to be in the range of $.00 to $.05 per share. These per share estimates include a $.02 per share discrete income tax benefit and exclude stock-based compensation expense of $.01 per share and restructuring charges (if any).

Performance Technologies Inc. (Nasdaq: PTIX)

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