(Source: Business Wire)Breeze-Eastern Corporation (NYSE Amex:BZC) today reported that net income for the 2010 fiscal first quarter was $358 thousand versus $765 thousand in the same prior year period, a decrease of 53% or $.04 per diluted share compared to $.08 in the same period last year. Operating income for the first quarter of fiscal 2010 decreased 43% to $1.0 million from $1.8 million for the first quarter of fiscal 2009. Sales of $13.4 million in the first fiscal quarter of 2010 represented a decrease of 4% compared to the $14.0 million in the same period in the prior year. Adjusted EBITDA, as described under "Non-GAAP Financial Measures" in this press release, for the first quarter of fiscal 2010 decreased 34% to $1.4 million from $2.1 million in the same prior year period. New orders received during the 2010 fiscal first quarter were $15.6 million compared to $23.0 million in the 2009 fiscal first quarter. The Company's book-to-bill ratio for the fiscal 2010 first quarter was 1.2 compared with 1.6 for last year's fiscal first quarter.

Robert L. G. White, President and Chief Executive Officer of the Company, said, "The decrease in sales in the first quarter of fiscal 2010 compared to the same period last year was principally due to delays in the receipt of customer orders that the Company expected to process and ship in the quarter. The decrease in operating income and Adjusted EBITDA for the first fiscal quarter of 2010 was attributable to several factors, including a decrease in overall sales volume, and lower gross profit in both new production and overhaul and repair. We reported a gross margin in the quarter of 39%, versus 43% for the same period last year. The lower overall gross margin for the quarter was due to a lower overall total sales volume along with an unfavorable mix of cargo hook new production and hoist and winch overhaul and repair shipments."

Mr. White continued, "For the 2010 fiscal first quarter, our general, administrative and selling expenses were essentially equal to those in the prior year period. Our debt, net of cash on hand at June 28, 2009, was $18.3 million, a decrease of $0.4 million from the end of fiscal 2009. The decrease was muted somewhat by a build up of inventory levels due to the order delays mentioned above. Working capital decreased to $31.9 million in the first quarter of fiscal 2010 from $32.3 million in the fiscal fourth quarter of 2009. The Company also experienced a decrease in interest expense of $0.2 million in the 2010 fiscal first quarter versus the same period last year, which was attributable to the placement of a new senior credit facility during the second quarter of fiscal 2009 and lower debt levels. The backlog of $133.3 million at the end of the first fiscal quarter of 2010 reflects an increase of $2.3 million from $131.0 million at the end of fiscal 2009 as we continue to have a book-to-bill ratio in excess of 1.0."

Outlook

Mr. White stated, "At the end of fiscal 2009 we saw, for the first time, some indications that the global economic slowdown was beginning to affect our markets as certain customers have requested extensions of delivery dates for certain products and have also asked for extended payment terms. Since then we have seen some resetting of priorities that will affect shipments of certain of our products. For example, the Future Combat Systems Program for which we were developing new equipment was terminated. While we expect that the termination of this program will have a relatively minor impact on our fiscal 2010 operating results, this action by the U.S. Government is contributing to a degree of uncertainty."

Mr. White concluded, "The cost reduction program initiated at the end of fiscal 2009 was further enhanced by workforce reductions during the fiscal 2010 first quarter. First quarter results included a charge of $0.3 million related to these reductions, but we anticipate over $1 million of cost savings by the end of fiscal 2010. These actions were taken to position the Company to address any further indications of a slowdown while still maintaining a staffing level necessary to handle the work load. We expect sales levels in fiscal 2010 to be slightly higher than fiscal 2009 with an attendant slight increase in Adjusted EBITDA. In recent fiscal years, our revenues in the second half of the fiscal year have generally exceeded revenues in the first half. We anticipate that this trend will continue in fiscal 2010. As previously announced, we expect to initiate a relocation to a more efficient facility in Whippany, N.J. during the third quarter, and complete it in the fourth quarter, of fiscal 2010 that is better suited to our current and expected needs.