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

SOURCE Sensus Metering Systems

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