LaBarge reports sales and earnings increase sharply in Q1

Sales increase 26%, net earnings increase 19%, backlog grows 15%, reaches record high

LaBarge, Inc. (AMEX: LB) reported sharply higher sales and earnings for its fiscal 2007 first quarter ended October 1, 2006 versus the comparable period a year earlier. The financial results exceeded the Company's recent guidance.
 
Fiscal 2007 first-quarter net sales were $49,900,000, up 26 percent from $39,639,000 in the fiscal 2006 first quarter. Fiscal 2007 first-quarter net earnings increased 19 percent to $2,411,000, or $.15 per diluted share, compared with $2,031,000, or $.13 per diluted share, in the fiscal 2006 first quarter.

Gross margin in the fiscal 2007 first quarter was 21.4 percent, compared with 24.0 percent in the fiscal 2006 first quarter and 20.4 percent in the fourth quarter of the previous fiscal year. The 24.0 percent gross margin in last year's comparable quarter was above the high end of the Company's historical range. Typically, LaBarge's gross margins run in a range of 20 percent to 23 percent, with the margins varying primarily based on the mix of shipments during the period.

Selling and administrative expense declined as a percentage of sales to 12 percent in the fiscal 2007 first quarter, compared with 14 percent a year earlier. In actual dollars, fiscal 2007 first-quarter selling and administrative expense increased 7 percent from the fiscal 2006 first quarter, in contrast to the 26 percent increase in sales volume. Interest expense in the fiscal 2007 first quarter was $651,000, compared with $404,000 in the fiscal 2006 first quarter. This increase reflected higher interest rates and higher borrowings in the current-year quarter.

Cash flow from operations was $10.4 million in the fiscal 2007 first quarter, compared with a negative $1.5 million in the fiscal 2006 first quarter. As a result of this strong cash flow, total debt declined 19 percent to $33,809,000 at October 1, 2006, compared with $41,668,000 at July 2, 2006. Stockholders' equity was $67,635,000 at October 1, 2006, up 4 percent from $64,834,000 at July 2, 2006.

Outlook
Mr. LaBarge concluded, "Based on the continued strength of our backlog, the pipeline of new business opportunities and the currently strong business climate in certain of the markets we serve, we believe LaBarge is well-positioned to expand sales and earnings throughout the 2007 fiscal year. Further, we expect fiscal 2007 second-quarter results will compare favorably with the comparable period a year earlier."