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Article Excerpt
OPERATOR: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Allied Defense Group fourth quarter and year-end results conference call. Today's call is being recorded. At this time all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue for questions. I would now like to turn the conference to Geoff Grande of FD. Please go ahead, sir.
GEOFF GRANDE, IR, FD ASHTON PARTNERS: Thank you. Good morning, and again welcome to the Allied Defense Group's fourth quarter and year end 2008 financial results conference call. A copy of our complete press release, issued late yesterday, can be found in the investor relations section of our website at www.allieddefensegroup.com. We are joined this morning by Major General Retired John Marcello, CEO and President of the Allied Defense Group, and Debbie Ricci, CFO of the Company. Before I turn the call over to John, I would like to draw your attention to the following: first we'll make reference to certain non-GAAP financial measures on today's call. Reconciliations of those measures to the most directly comparable GAAP results are included in the press release issued late yesterday.
Additionally, certain matters discussed on this conference call will constitute forward-looking statements within the meaning of the US securities laws. These statements reflect our current views, with respect to future events or financial performance, and are based on management's current assumptions and information currently available. Actual results in the timing of certain events could differ materially from those projected or contemplated by the forward-looking statements due to numerous factors, including but not limited to the factors set forth in our press release issued yesterday, as well as the other risk factors disclosed in the Company's reports filed with the US Securities and Exchange Commission. We recommend you review these risk factors as you make your investment decisions.
With that, let me turn the call over to John Marcello, our Chief Executive Officer, John?
JOHN MARCELLO, PRESIDENT, CEO, THE ALLIED DEFENSE GROUP, INC.: Thank you, Geoff. And thank you all for joining us this morning. Hopefully you have had a chance to review the press release we issued last evening. Debbie and I would like to go over the information in the release, provide some additional insight, and a little color into the results, and then we'll open up the call for your questions.
Let me begin with some key financial highlights for 2008. Our 2008 revenue was $144.4 million, an increase of 274% over 2007. Our EBITDA, from continuing operations of $6.4 million, was up significantly from a negative $18.6 million in 2007. Our funded, committed backlog of $185.9 million at year end 2008 was an increase of 71% over 2007. And in 2009, very significantly, we repaid all of our convertible bonds and bank debt.
We also continued to execute on the transformation of the Company in 2008 to focus on our ammunition core competency. We completed the sale of Global Microwave Systems for $26 million and Titan Dynamic Systems for $4.8 million. And late in the year the Company committed to a formal plan to divest the last remaining noncore business, NS Microwave. The Allied Defense Group is now realigned into two core operating segments, Mecar SA and Mecar USA. Our transformation strategy is a strategy based on three factors. First, we fundamentally believe based on what we know and where we have for specific expertise is the appropriate course of strategic action. Second, we are positioning the Company to address geographical markets and specific types of ammunition that have a specific growth potential, and faster growth than the industry as a whole. Third, and this is actually related to the second factor, we are also positioning the Company to align with the future direction of Military spending, specifically, the continued transformation of the US Military and others away from large weapons systems and toward smaller, more agile weapon systems, exactly the kind of systems that our ammunition addresses. Hopefully, you can see why we are pleased with where we stand.
Before Debbie takes you through the details of the quarter and the year, I would like to comment briefly on two items. The technical issue that we shared with you earlier in the quarter, and our liquidity position. As we disclosed a few weeks ago, our results were negatively impacted by a technical issue at Mecar SA, specifically, the failure of a third party component in a new product delayed the shipment of a single lot. This particular lot failed to meet strict customer specifications, and as such, was not shipped.
There are three important points that I want to share with you about this issue. First, it was an isolated incident. These types of incidents are extremely infrequent. But when they do occur, we feel it is important to acknowledge them. You can understand the sensitivity of doing so. But it is also one of the reasons that our customers trust us and continue to do business with us.
Second, our suppliers are top quality. And this particular supplier has stepped up to the plate to resolve the issue. It is completely behind us and we are moving forward. Third, and most importantly, the issue has been resolved to the satisfaction of the customer. The end result is that we fully expect to fulfill the remaining portion of the order. We had already delivered on just under half of the contract with no issues.
Now onto the issue of liquidity. As I mentioned a few moments ago, we have a very large funded and committed backlog, that's really good news. Of course, converting this backlog into revenues requires significant working capital, and more than we can fund internally. Therefore we require financing, and we are making good progress on arranging it. As we indicated in our 10-K filing last evening, we have signed a commitment letter for a new $10 million credit facility with the USBank. This facility significantly improves our liquidity position, and represents the achievement of a significant milestone in our 2009 funding plan. I look forward to sharing more on this topic as we secure additional financing.
In addition, our financial position, and specifically our improved liquidity, gave our orders the comfort necessary to...
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