American Pacific Corporation (APFC)
F2Q2011 (Qtr End 03/31/2011) Earnings Call
May 12, 2011 04:30 pm ET
Linda Ferguson - VP, Administration and Corporate Secretary
Joe Carleone - President & CEO
Dana Kelley - VP, CFO and Treasurer
Previous Statements by APFC
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» American Pacific Corp.Q2 2010 Earnings Call Transcript
I would now like to turn the conference over to Ms. Linda Ferguson, Vice President and Corporate Secretary. You may proceed.
Good afternoon, everyone. Welcome to our review of the financial results for the fiscal year 2011 second quarter. Joe Carleone, Chief Executive Officer and Dana Kelley, Chief Financial Officer, will each provide remarks. Following their remarks, we will be happy to take your questions.
Today’s call includes forward-looking statements. You can identify these statements by the fact that they use words such as will, expect, anticipate, believe, and other words and terms of similar meaning. These forward-looking statements are not historical facts and are subject to risks and uncertainties.
Our actual results may differ materially. For a description of the factors that may cause actual results to differ materially from our forward-looking statements, please refer to the risk factors forward-looking statements section of our earnings release furnished today to the SEC on Form 8-K, our most recent quarterly report on Form 10-Q and our other filings made with the SEC. All forward-looking statements are made as of the date hereof and we assume no obligation to update these statements except as required by law.
In addition, we will be referring to both GAAP and non-GAAP financial measures. Our recently published earnings release contains definitions of these non-GAAP measures and a reconciliation of these non-GAAP measures to the most comparable GAAP measures. Our earnings release can be found in the news release section of our website at apfc.com. I will now turn the call over to Joe.
Thank you, Linda and good afternoon, ladies and gentlemen, and thank you for joining our conference call. Consistent with our expectations, and as we discussed with you in February, our second quarter results are not where we would like them to be.
The good news however is that our yearend guidance has not changed. We continue forecast $195 million of fiscal 2011 sales and an EBITDA of $29 million. Second half sales will approach $120 million with more than 50% of that in quarter four. This implies the quarter four will be a major quarter for AMPAC. It is important to note that $30 million of the second half sales is currently in deferred revenue.
Profits will be more concentrated in quarter four because of the product mix. Of course as with any plant, it has high concentration at the end of the fiscal year, a small timing slip could move some sales into the following fiscal period. As described in our last call 2010 was a year of repositioning our company, we are continuing this year of transition back to an improved profitability level by the end of the year.
We are building upon our core products which have come back considerably from last year. We are adding new products and customers especially in our Fine Chemicals segment. These activities will strengthen our company and secure a growth profile for the future. Let us now discuss each of the business segments beginning with our Fine Chemicals segment.
The major near-term focus is to return this segment to industry profitability levels. At the present time, the plant is nearly full and will remain so for the rest of the fiscal year with the likelihood of that situation continuing into fiscal 2012. This should provide EBITDA improvement in quarter four as many of the products manufactured currently will be sold in quarter four. All core product orders for the year are in hand. In addition, many of the development product orders are in hand. We continue to expect development product sales to represent 20% or more of the total annual revenue for the segment.
The Drug Enforcement Agency has recently alerted us, their application for facility approval has move forward to the next step. This step is to publish their intent to approve AMPAC Fine Chemicals as a manufacturer of Schedule 2 Products in the Federal Register for comments.
Our other new products initiatives remain on track. For example, we are near a firm multi-million dollar contract for continued development of a drug substance to support anti-terrorism activities.
Now moving on to the Specialty Chemicals segment. The production team in our Utah operations have adapted well to the diminished demand for Ammonium Perchlorate caused by lack of orders for NASA-related projects. Product quality and efficiencies have remained exceptional despite the plant running at volumes one thought nearly impossible. The Department of Defense remains the primary and consistent user of Rocket-Grade Ammonium Perchlorate.
Production in 2011 is primarily for tactical missiles and strategic missiles in rockets. The latest news on NASA-related solid rockets is positive, in that Congress funded the development of the new heavy-lift vehicle and designated the ATK Five-Segment Rocket Motor as a significant component of the base line for this new effort. In fact, NASA placed a spending floor of $1.8 million against the heavy lift vehicles for fiscal 2011. This action will help solidify the role of solid rocket boosters and enhance perchlorate in future space exploration.