Sensus Announces Fiscal Fourth Quarter and Full Year 2008 Financial Results

RALEIGH, N.C., May 20 /PRNewswire/ -- Sensus Metering Systems, a leading provider of high-value metering system solutions to utilities worldwide, today announced financial results for the fiscal quarter and year ended March 31, 2008.

Highlights
-- Adjusted Net Sales(1) increased 9% to $204.8 million from the same
quarter a year ago and reached a record of $725.6 million for the full
year, up 15% from a year ago.
-- Total backlog reached a record level of $114.4 million, up 46% from a
year ago, while long-term AMI revenue under contract (excluding the
portion in backlog) totaled approximately $437 million at March 31,
2008.
-- Cash flow from operations totaled $50.5 million for the full year, up
74% from a year ago.
-- Total debt was reduced by $23.0 million during the year through the
early repayment of a portion of the outstanding term loans.
-- Cash-on-hand totaled $36.9 million as of March 31, 2008 and net debt
was reduced to $411.3 million.

Fiscal Fourth Quarter Results

For the fiscal fourth quarter ended March 31, 2008, Adjusted Net Sales(1) and Adjusted EBITDA(1) (non-GAAP measures), which include $20.0 million of net sales and $3.1 million of EBITDA under long-term AMI contracts that have been deferred, were $204.8 million and $26.3 million, respectively, representing an increase of 9% and a decrease of 16% compared with the same quarter of last year.

The increase in Adjusted Net Sales(1) reflects continued growth in AMR applications, the initial deployment of AMI solutions, expansion into new metering markets in Europe and China, strengthening economies in Central Europe and South America and higher sales volumes of residential gas meters. Growth in these products and areas was partially offset by the weak housing and ailing U.S. automotive markets, which impacted our Smith-Blair pipe clamp and coupling and Precision Die Casting businesses. Results for the current quarter also reflect the continued investment in infrastructure costs, such as sales and marketing, project management and operations as well as engineering and technical personnel to support the rapidly growing AMI business. These costs, together with increased material costs and higher non-operating expenses, contributed to the decline in Adjusted EBITDA(1).

The net loss for the fourth quarter of fiscal 2008 was $0.6 million compared to net income of $8.9 million in the same quarter a year ago reflecting the aforementioned items as well as a higher income tax provision in the fourth quarter of this year.

Fiscal Year Results

For fiscal 2008, Adjusted Net Sales(1) and Adjusted EBITDA(1) (non-GAAP measures), including $31.4 million of net sales and $5.1 million of EBITDA under long-term AMI contracts that have been deferred, were $725.6 million and $83.8 million, respectively. Adjusted Net Sales(1) reflected an increase of 15% compared with fiscal 2007, while Adjusted EBITDA(1) was essentially flat for the same period. The strong growth in Adjusted Net Sales(1) was driven by the previously mentioned items for the fourth quarter of fiscal 2008. Adjusted EBITDA(1) reflects growth in net sales offset by higher costs, including the investment in AMI infrastructure, increased material costs and higher non- operating expenses.

The net loss for fiscal 2008 was $10.1 million compared to $8.0 million in the prior fiscal year reflecting the previously mentioned items and increased minority interest in the current fiscal year.

Capital Resources and Liquidity

Cash flow from operations reached $50.5 million in fiscal 2008, an increase of 74% compared with $29.0 million in the prior fiscal year. This increase primarily reflected improved working capital levels as well as the positive cash flow generated from the growth in our AMI business, a large portion of which was deferred for income statement recognition.

Capital expenditures totaled $22.8 million for fiscal 2008, or 3.1% of Adjusted Net Sales(1), compared with $17.3 million, or 2.7% of Adjusted Net Sales(1) in the prior fiscal year.

During the year, debt was reduced by $23.0 million through the early repayment of a portion of the Company's outstanding term loans. As of March 31, 2008, cash-on-hand totaled $36.9 million and net debt was reduced to $411.3 million compared with $440.6 million a year ago.

The Company's Form 10-K for the year ended March 31, 2008, which includes annual financial statements and related notes together with management's discussion and analysis of such results, is now available.

A conference call with analysts to discuss these results will be held on May 23, 2008 at 11:00 AM (EDT). To access the conference call, please dial 888-339-2688 (domestic access) or 617-847-3007 (international access) and reference Passcode: 31487344. It is recommended that you dial in five to ten minutes prior to the call to allow time for processing participant information. A replay of the call will be available until May 30, 2008 by dialing 888-286-8010 (domestic access) or 617-801-6888 (international access) and referencing Passcode: 94315859.

About Sensus Metering Systems

The Sensus Metering Systems companies are leading world-class providers of high-value metering, Automatic Meter Reading ("AMR") and Advanced Metering Infrastructure ("AMI") system solutions for water, gas, electric and heat utilities as well as sub-metering entities globally. Additional linked businesses include Smith-Blair a leading provider of pipe clamp and coupling products for the water, gas and industrial markets, and Sensus Precision Die Casting which produces complex, high quality die-castings. For more information, please visit the company's web site at www.sensus.com .

About FlexNet(R)

FlexNet(R) provides the utility industry's most reliable and flexible two- way AMI fixed network. Utility customers benefit from the dependable, mission- critical performance of a dedicated, primary-use, FCC licensed and protected communications network combined with ANSI compliant metering, IP-based wide area communications, open standards home area networking, advanced smart grid products, and IP-based information systems. Sensus delivers timely and accurate AMI communications through crystal-clear and massively redundant RF data paths with double the RF power of competing systems. This empowers utilities to communicate with a complete range of endpoint devices including smart water, gas and electric meters, intelligent home devices, and distribution automation equipment in any mix of rural and urban terrain. Forward-thinking utilities confidently choose FlexNet(R) to provide a single- technology solution that reduces cost, mitigates technology risk, enables pricing flexibility and demand response, and improves operational efficiency through reliable performance, industry standards, cross-vendor compatibility, system scalability and future-proof operation.

All statements in this release, other than historical facts, are made in reliance on the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are subject to change at any time. These statements reflect the Company's current expectations regarding its financial position, revenues, cash flow and other operating results, business strategy, financing plans, forecasted trends related to the markets in which the Company operates, legal proceedings and similar matters. The Company's expectations expressed or implied in these forward-looking statements may turn out to be incorrect. The Company's actual results could be materially different from its expectations because of various risks. These risks, some of which are discussed under the caption "Risk Factors" in the Company's Annual Report on Form 10-K (SEC File No. 333-113658) for the fiscal year ended March 31, 2008 as filed with the Securities and Exchange Commission on May 20, 2008, include its dependence on new product development and intellectual property, and its dependence on independent distributors and third-party contract manufacturers, automotive vehicle production levels and schedules, its substantial financial leverage, debt service and other cash requirements, liquidity constraints and risks related to future growth and expansion. Other important risks that could cause actual events or results to differ from those contained or implied in the forward- looking statements include, without limitation, the Company's ability to integrate acquired companies, general economic and business conditions, competition, adverse changes in the regulatory or legislative environment in which the Company operates, and other factors beyond the Company's control.

(1) Non-GAAP Measures

During the fiscal fourth quarter, Sensus Metering Systems continued the deployment of its new, advanced FlexNet(R) AMI solutions under long-term contracts executed with several North American electric and gas utilities. These contracts, which extend up to 20 years and cover 6.6 million electric and gas endpoints, contain significant hardware and software components as well as ongoing customer support. As discussed in the previous quarter, due to the significant advanced technology and software and the absence of stand- alone customer support sales prices, revenues and incremental direct costs related to these long-term contracts are required to be deferred for income statement recognition purposes and amortized ratably over the life of the contracts. This deferral has no impact on cash flow since billings to customers occur as the network infrastructure and related endpoints are deployed and the associated costs are incurred, generally over the first several years of the contract term.

To enhance the comparability and usefulness of its financial information, the Company provides certain Non-GAAP measures to more fully describe the results of its underlying business. Specifically, the Company utilizes the measures of Adjusted Net Sales, EBITDA and Adjusted EBITDA, which are defined as follows:

-- Adjusted Net Sales is defined as net sales as determined under U.S.
GAAP adjusted to add back revenue (net of amortization) related to
long-term, multi-element contracts that has been deferred under the
provisions of SOP 97-2.
-- EBITDA is defined as earnings before interest expense, depreciation and
amortization, minority interest and income taxes.
-- Adjusted EBITDA is defined as EBITDA plus revenue less the associated
incremental direct costs (both net of amortization) related to long- term, multi-element contracts that have been deferred under SOP 97-2.

Information regarding Adjusted Net Sales, EBITDA and Adjusted EBITDA is provided because management considers these measures important in evaluating and understanding its operating and financial performance. Management believes these measures provide useful information for investors in trending, analyzing and benchmarking the performance and value of the business. However, these metrics for measuring the Company's financial results may be different from comparable information provided by other companies and should not be used as an alternative to the Company's operating and other financial information as determined under U.S. GAAP.

A reconciliation of each of these Non-GAAP measures to its most closely related U.S. GAAP measure is set out in the table below (in millions):

Fiscal Fiscal
Quarter Quarter Year Year
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2008 2007 2008 2007
Net sales $184.8 $188.4 $694.2 $632.9
Revenue from long-term
contracts deferred
under SOP 97-2 (net
of amortization) 20.0 - 31.4 - Adjusted Net Sales $204.8 $188.4 $725.6 $632.9

Fiscal Fiscal
Quarter Quarter Year Year
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2008 2007 2008 2007
Net (loss) income $(0.6) $8.9 $(10.1) $(8.0)
Depreciation and
amortization 12.1 12.1 47.7 48.1
Interest expense, net 10.4 11.0 41.8 42.4
Income tax provision
(benefit) 0.8 (0.8) (2.6) 1.0
Minority interest 0.5 0.2 1.9 0.5
EBITDA $23.2 $31.4 $78.7 $84.0
Revenue less
incremental direct
costs from long-term
contracts deferred
under SOP 97-2 (net
of amortization) 3.1 - 5.1 - Adjusted EBITDA $26.3 $31.4 $83.8 $84.0
Gain from discontinued
operations - - - (0.1)
Adjusted EBITDA
(excluding discontinued
operations) $26.3 $31.4 $83.8 $83.9

First Call Analyst:
FCMN Contact:

Source: Sensus Metering Systems

CONTACT: Investor: Alfred C. Giammarino, Chief Financial Officer,
+1-919-845-4033, al.giammarino@sensus.com; James J. Hilty, Vice President,
Business Development, +1-919-845-4007, jim.hilty@sensus.com, both of Sensus
Metering Systems

Web site: http://www.sensus.com/

2008-05-20 18:45:48 0367188 PRNEWSWIRE