Henry Bros. Electronics, Inc.

HENRY BROS. ELECTRONICS, INC. REPORTS THIRD QUARTER 2008 RESULTS

Thursday 13 November 2008

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Company Expects Operating Margins of 4-5% on $65 million of Annual Revenue
 
FAIR LAWN, N.J., November 13, 2008 -- Henry Bros. Electronics, Inc.(Nasdaq: HBE),a turnkey provider of technology-based integrated electronic security solutions,today announced results for the third quarter ended September 30, 2008.
The Company reported revenue of $12.3 million for the third quarter of 2008 compared to $15.9 million for the same period a year ago. The decline in revenue in the recent third quarter is primarily due to a decrease in revenue from the New Jersey subsidiary, as work on a number of contracts for several large public agencies in the New York Metropolitan area began to wind down. The Company also experienced a decline in revenue from its California integration operations.
The Company reported net income of $210,782, or $0.04 per diluted share, for the third quarter ended September 30, 2008, compared to net income of $328,040 or $0.05 per diluted share, in the comparable period of 2007. The Company’s reduced net income is a result of a combination of increased fuel costs and an increase in the net charge for bad debt as the prior year third quarter reflected a reduction in such expenses.
Revenue for the nine-month period ended September 30, 2008 was $43.3 million, representing an increase of 7.5% over revenue of $40.3 million for the nine months ended September 30, 2007. Net income for the 2008 nine-month period was $832,000, or $0.14 per diluted share, compared to a net loss of $(342,331), or $(0.06) per diluted share, for the 2007 nine-month period.
Backlog as of September 30, 2008 was $23.7 million, compared to $17.6 million reported at June 30, 2008. Booked orders increased 33.2% to $18.4 million in the third quarter of 2008 as compared to $13.8 million in the third quarter of 2007.
Jim Henry, CEO of Henry Bros. Electronics, commented, “As evidenced by our growing backlog and orders booked during the most recent quarter, our business remains strong and we expect continued growth in many of the vertical markets in which we operate, even during a much weakened economy. While we did see a decline in both our top and bottom-line in the recent quarter, we are encouraged by our proposal flow and believe a number of growth opportunities lie ahead. In response, we are increasing the size of our sales force as both an offensive and defensive move given the current economy. 
 
 
 
“The continued increase in our gross profit margins reflects the continued refinement in the business processes used in executing our projects. We have doubled our line of credit with TD Bank, N.A. and extended its term until June 2010, which we believe addresses the immediate market uncertainty of financing our organic growth and ability to take on new large-scale projects.”
 
Henry concluded, “While we are optimistic, there still remains a financial crisis that leaves many unknown variables and much uncertainty. Therefore, the timing of projects may shift and plans may be altered. However, the diversity of projects and the size of jobs we are working on, which may not be reflected in our present backlog, such as the Tactical Video Capture System (“TVCS”) project, give us a basis for our enthusiastic view of the quarters ahead.”
 
The Company has updated its guidance for the 2008 fiscal year and is projecting an operating margin between 4% and 5% on $65 million revenue versus the previously stated operating margin of 4% on $65 million revenue. This updated guidance is now inclusive of $5 million revenue from the TVCS project and compares to an essentially breakeven operating margin in 2007 on $57.8 million revenue.
 
 
Conference Call Information:
 
Henry Bros. Electronics will be hosting a conference call on Thursday, November 13, 2008, at 11:00 a.m. ET. To participate on the call, please use the following number and conference code:
(888) 562-3356 (Domestic)
(973) 582-2700 (International)
Conference code: 69282818
 
A replay of the call will be available from Thursday, November 13, 2008 at 11:00 a.m., ET, through Friday, December 12, 2008 at 23:59 p.m., ET. To access the replay, please call (800) 642-1687 in the United States or (706) 645-9291outside the United States. To access the replay, users will need to enter the following code: 69282818.
 
About Henry Bros. Electronics, Inc.
 
Henry Bros. Electronics (Nasdaq: HBE) provides technology-based integrated electronic security systems, services and emergency preparedness consultation to commercial enterprises and government agencies. The Company has offices in Arizona, California, Colorado, Maryland, New Jersey, New York, Texas and Virginia.
 
For more information, visit http://www.hbe-inc.com.
 
Safe Harbor Statement:Certain statements in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. In particular, there can be no assurance that the Company will achieve revenues of $65 million or a 4-5% operating profit in 2008. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained under the heading of risk factors listed in the Company's filings with the U.S. Securities and Exchange Commission. Henry Bros. Electronics Inc. does not assume any obligation to update the forward-looking information.
 
Investor Contacts:
Todd Fromer / Erika Kay                                   Jim Henry, Chairman & Chief Executive Officer
KCSA Strategic Communications                       Henry Bros. Electronics, Inc.
212-896-1215 / 212-896-1208                             201-794-6500
tfromer@kcsa.com / ekay@kcsa.com                jhenry@hbe-inc.com
 
 
 
 
Tables follow
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HENRY BROS. ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
(Unaudited)
 
Nine months ended September 30,
 
Three months ended September 30,
 
2008
 
2007
 
2008
 
2007
Revenue
 $      43,292,368
 
 $      40,253,738
 
 $      12,262,372
 
 $      15,861,239
Cost of revenue
         32,629,023
 
         31,346,671
 
           8,762,627
 
         12,390,627
 Gross profit
         10,663,345
 
           8,907,067
 
           3,499,745
 
           3,470,612
Operating expenses:
 
 
 
 
 
 
 
Selling, general & administrative expenses
           8,980,836
 
           9,046,176
 
           3,092,127
 
           2,800,023
Operating profit (loss)
           1,682,509
 
            (139,109)
 
              407,618
 
              670,589
 
 
 
 
 
 
 
 
Interest income
                73,732
 
                36,093
 
                20,751
 
                14,820
Other expense (income)
                  9,656
 
                (4,288)
 
                  1,408
 
                   (919)
Interest expense
            (209,211)
 
            (258,296)
 
               (66,483)
 
              (91,107)
Income (loss) before tax expense
           1,556,686
 
            (365,600)
 
              363,294
 
              593,383
Tax expense (benefit)
              724,686