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Sparton Corporation today announced results for the fourth quarter of fiscal 2015 ended June 30, 2015. The Company reported fourth quarter sales of $126.4 million, or an increase of 35% from $93.5 million for the fourth quarter of fiscal 2014. Operating income for the fourth quarter of fiscal 2015 was $8.8 million, which included $2.8 million for the L-3 settlement and associated legal costs to that matter incurred in that quarter. This compares to operating income of $5.0 million in the fourth quarter of fiscal 2014, which included recognition of $4.2 million of environmental remediation expense. Net income for the fourth quarter of fiscal 2015 was $5.1 million or $0.52 per basic share, and $0.51 per diluted share compared to net income of $3.0 million, or $0.29 per share, basic and diluted, in the same quarter a year ago.
Cary Wood, President & CEO, commented, “Given the headwinds we faced going into fiscal 2015, we are very pleased with the final results for the year. We finished the year at an adjusted earnings per share of $1.30, revenue increased 14%, gross margins improved for the sixth straight year and adjusted EBITDA was $34.3 million, approximately the same as compared to the same prior year period. Consolidated legacy revenues decreased 4% or $12.6 million for the year, primarily due to the MDS segment’s 15% reduction in revenues led by the Fenwal rebalancing activities of $19 million as well as fluctuations in customer demand due to program cancellations, governmental funding and customer design related delays, partially offset by the ECP segment’s growth of 20% or $19.0 million led by increased production requirements of the new U.S. Navy sonobuoy contract. The seven acquisitions completed in the year added approximately $84.2 million of revenue, representing 22% of fiscal 2015’s revenue. Our gross margin improvements continue to be realized through the deployment of the Sparton Business System, a collection of benchmarked best practices that are implemented through employee led lean events. Adjusted EBITDA for the year came in at 9.0% of sales, 100 basis points below our objective, due to SG&A expenses, primarily from the increased M&A activity of completing seven transactions as compared to three in the prior year, fourth quarter integration activities related to the Hunter acquisition and other key investments in preparation of executing our 2020 Vision. In the fourth quarter, with the Fenwal rebalancing behind us, we realized 12% growth in our base business over the prior year’s quarter, with ECP and MDS growing at 27% and 2% respectively, indicating the positive health of our legacy business as we enter fiscal 2016. The results have continued to reflect the successful execution and completion of our 2010 Strategic Growth Plan, in particular our new business development process and our approach to adding complementary acquisitions; however, in fiscal 2015, the impact from the loss of certain Fenwal programs, coupled with multiple customer initiated production delays, were greater than the increased new business we launched throughout the course of the year.”
Hunter Technology Corporation
On April 14, 2015, the Company completed the acquisition of Hunter Technology Corporation ("Hunter"), an $80.5 million (unaudited) annual revenue business, with operations located in Milpitas, CA (San Jose) and Lawrenceville, GA (Atlanta), in a $55.0 million all-cash transaction. Hunter, which is part of the Company's MDS segment, was founded in 1968 and was one of the first electronic contract manufacturing providers specializing in military and aerospace applications. Today, Hunter is one of the few suppliers in the Silicon Valley region providing engineering design, new product introduction (NPI) and full-rate production manufacturing solutions working with major defense and aerospace companies, test and measurement suppliers, secure networking solution providers, medical device manufacturers and a wide variety of industrial customers.
About Sparton Corporation
Sparton Corporation (NYSE:SPA), now in its 116th year, is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, industrial design, design and manufacturing engineering, production, distribution, field service and refurbishment. The primary markets served are Medical & Biotechnology, Military & Aerospace and Industrial & Commercial. Headquartered in Schaumburg, IL, Sparton currently has fifteen manufacturing locations and engineering design centers worldwide.