Sequentially, revenue increased by $4.2 million as revenue from Alfamation and improvements in defense/aerospace, life sciences, and security more than offset the $4.8 million decline in the semi market.
Gross margin was 40.6% in the second quarter, a 560-basis point contraction compared with the prior-year period primarily due to product mix, including the impact of the acquisition, and lower volume in the organic business affecting absorption rates. Operating expenses increased over the prior-year period primarily because of $2.4 million of incremental expenses attributable to Alfamation, including $0.4 million of amortization. Excluding the acquisition, operating expenses were down approximately $0.7 million reflecting lower bonus accruals, lower commission expense, cost reduction efforts and reduced corporate development expenses.
Higher interest expense from increased borrowings was somewhat offset by higher other income. Net earnings for the quarter were $0.2 million, or $0.02 per diluted share. Adjusted net earnings (Non-GAAP)3 were $1.0 million, or $0.08 adjusted EPS (Non-GAAP) 2.
| ___________________________ |
3 Adjusted net earnings, adjusted EPS, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures. Further information can be found under “Non-GAAP Financial Measures.” See also the reconciliations of GAAP financial measures to non-GAAP financial measures that accompany this press release. |
Balance Sheet and Cash Flow Review
During the quarter, the Company used $5.1 million in cash from operations which included annual bonus payments and higher cash tax requirement. Cash and cash equivalents at the end of the second quarter of 2024 were $20.4 million, down $6.9 million at the end of the first quarter of 2024. Capital expenditures were $0.3 million in the second quarter of 2024, similar to the prior-year period.
At quarter end, total debt was $21.1 million, up $9.1 million from December 31, 2023. The increase from year end reflects the incremental debt inherited with the acquisition. The Company repaid approximately $1.1 million in debt in the quarter. At June 30, 2024, the Company had $30 million available under its delayed draw term loan facility and no borrowings under the $10 million revolving credit facility. On May 2, 2024, the Company extended the maturity of its delayed draw term loan and revolving credit facility to May 2, 2031. In addition, the allowed window to draw on the term loan was extended to May 2, 2026.
Second Quarter 2024 Orders and Backlog1 (see orders by market in accompanying tables)
|
Three Months Ended |
|||||||||||||||
($ in 000s) |
|
|
Change |
|
Change |
|||||||||||
|
6/30/2024 |
6/30/2023 |
$ |
% |
3/31/2024 |
$ |
% |
|||||||||
Orders |
$ |
26,182 |
$ |
31,431 |
$ |
(5,249 |
) |
-16.7 |
% |
$ |
22,799 |
$ |
3,383 |
|
14.8 |
% |
Backlog (at quarter end) |
$ |
47,672 |
$ |
44,578 |
$ |
3,094 |
|
6.9 |
% |
$ |
55,481 |
$ |
(7,809 |
) |
-14.1 |
% |
