Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal
2011 first quarter ended September 30, 2010 of $44.5 million, up
10.4% from $40.3 million for the first quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income
for the first quarter of fiscal 2011 was $4.1 million, or $0.28 per
diluted share, up 41% from $2.9 million, or $0.19 per diluted share
for the first quarter of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation and intangible amortization, was $0.35 for the
first quarter of fiscal 2011, up 46% compared to non-GAAP earnings
per share of $0.24 for the first quarter of fiscal 2010.
GAAP operating income for the first quarter of fiscal 2011 was
$6.2 million, or 13.9% of net sales, up 48% from $4.2 million, or
10.4% of net sales for the first quarter of last year. Non-GAAP
operating income for the first quarter of fiscal 2011, which
excludes non-cash equity based compensation and acquisition related
intangible amortization was $7.6 million, or 17.0% of net sales, up
45% from $5.2 million, or 12.9% of net sales for the first quarter
of fiscal 2010.
Income taxes for the first quarter of fiscal 2011 were $2.0
million, representing an effective tax rate of 32.8% compared to
income tax expense of $1.3 million for the first quarter of fiscal
2010, representing an effective tax rate of 31.3%. The
projected effective tax rate for fiscal 2011, absent one-time
events, is expected to be approximately 33.0%.
Lawrence A. Sala, Anaren's Chairman, President and CEO, said,
"We enjoyed robust demand for our standard component products in
the Wireless Group throughout the first quarter. This demand,
coupled with continuing favorable mix of shipments in our Space
& Defense business, drove improved gross and operating margins
for the quarter."
During the first quarter of fiscal 2011, the Company generated
$5.9 million in operating cash flow compared to $5.6 million in the
first quarter of fiscal 2010. Additionally, in the current quarter
the Company repurchased approximately 40,000 shares of its common
stock for a total of $0.7 million, used $10.0 million to make the
required July payment on its revolving line of credit, and expended
$1.4 million for capital additions. Cash, cash equivalents and
marketable debt securities at September 30, 2010 were $67.7
million, down $6.0 million from $73.7 million at June 30, 2010.
Wireless Group
Wireless Group net sales for the quarter were $15.5 million, up
7.7% from the first quarter of fiscal 2010, driven by continuing
strong demand for standard component products for basestation
applications.
Demand for consumer and infrastructure standard component
products was strong throughout the quarter and customer forecasts
remain robust. New product investments for the quarter
included the continuing expansion of the Xinger III, consumer
component and lower cost high power resistor product lines, as well
as the continuing development of the new low power wireless Anaren
Integrated Radio (AIR) module product line. During the
quarter, the Group formally introduced the AIR product line and the
initial market response has been very favorable. The AIR
family of FCC certified low power wireless transceiver modules
exclusively integrate semiconductors manufactured by Texas
Instruments, Incorporated and were developed to provide a "plug and
play" RF solution for electronic engineers challenged with adding
wireless capability to new or existing products.
Customers that generated greater than 10% of Wireless Group net
sales for the quarter were E.G. Components, Richardson, and
Huawei.
Space & Defense Group
Space & Defense Group net sales for the quarter were $29.0
million, up 11.9% from the first quarter of fiscal 2010. The
continuing higher quarterly sales volume, a favorable sales mix and
improved execution and efficiencies on production programs
positively impacted the Group's profitability for the
quarter.
New orders for the quarter totaled $18.3 million and
included contracts for shipborne radar as well as airborne radar
and jamming applications. Space & Defense Group order
backlog at September 30, 2010 was $78.9 million. The Group
continues to experience a robust opportunity environment and is
benefiting from the expanded technology base resulting from the
acquisitions of M. S. Kennedy and Unicircuit.
Customers that generated greater than 10% of Space & Defense
Group net sales for the quarter were Lockheed Martin, Raytheon and
SRCTec, Inc.
Non-GAAP Financial Measures
In addition to presenting financial results calculated in
accordance with GAAP, Anaren's earnings release contains non-GAAP
financial measures including: non-GAAP gross profit, non-GAAP
operating income, non-GAAP net income and non-GAAP net income per
diluted share. These non-GAAP measures are each adjusted from GAAP
results to exclude certain non-cash items including equity based
compensation and acquisition related intangible amortization.
The Company believes these non-GAAP financial measures provide
useful information to both management and investors to help
understand and compare business trends among reporting periods on a
consistent basis. Additionally, these non-GAAP financial
measurements are one of the primary indicators management uses for
planning and forecasting in future periods. The presentation
of this additional information should not be considered in
isolation or as a substitute for results prepared in accordance
with GAAP.
Outlook
For the second quarter of fiscal 2011, we anticipate a decline
in sales for the Wireless Group and comparable sales for the Space
& Defense Group compared to first quarter levels. As a result,
we expect net sales to be in the range of $41 to $45 million.
We expect GAAP net earnings per diluted share to be in the
range of $0.23 - $0.28, using an anticipated tax rate of
approximately 33.0% and inclusive of approximately $0.06 per share
related to expected equity based compensation expense and
acquisition related amortization of intangibles. Non-GAAP net
earnings per diluted share are expected to be in the range of $0.29
- $0.35 for the second quarter.
Forward-Looking Statements
The statements contained in this news release which are not
historical information are "forward-looking
statements." These, and other forward-looking
statements, are subject to business and economic risks and
uncertainties that could cause actual results to differ materially
from those discussed. The risks and uncertainties described
below are not the only risks and uncertainties facing our
Company. Additional risks and uncertainties not presently
known to us or that are currently deemed immaterial may also impair
our business operations. If any of the following risks
actually occur, our business could be adversely affected, and the
trading price of our common stock could decline, and you may lose
all or part of your investment.
These known risks and uncertainties include, but are not limited
to: the Company's long term debt (originally $50 million, currently
$30 million outstanding), and the unanticipated loss of key
management or technical employees. The Company also could
experience an impairment of goodwill which increased as the result
of the Company's two acquisitions in fiscal 2009 as well as
acquisitions made in previous years. Other non-acquisition
related risks and uncertainties include: the Company's ability to
timely ramp up to meet some of our customers' increased demands;
unanticipated delays in successfully completing customer orders
within contractually required timeframes; unanticipated penalties
resulting from failure to meet contractually imposed delivery
schedules; unanticipated costs and damages resulting from
replacement or repair of products found to include latent defects;
increased pricing pressure from our customers; decreased capital
expenditures by wireless service providers; the possibility that
the Company may be unable to successfully execute its business
strategies or achieve its operating objectives, generate revenue
growth or achieve profitability expectations; successfully securing
new design wins from our limited number of OEM customers, reliance
on key component suppliers, unpredictable difficulties or delays in
the development of new products particularly the Wireless Group's
Xinger III, high power resistor, and AIR product lines; the
expected need to relocate the Company's Suzhou, China facility in
fiscal year 2011 due to the expansion of China's mass transit
system; order cancellations or extended postponements; the risks
associated with any technological shifts away from the Company's
technologies and core competencies; the possibility that the
Company may not be able to recruit sufficient number of RF
engineers and other technical personnel; unanticipated impairments
of assets including investment values; declines in defense budgets
or diversion of defense spending away from the Company's products
and or technologies; and litigation involving antitrust,
intellectual property, environmental, product warranty, product
liability, and other issues. You are encouraged to review
Anaren's 2010 Annual Report on Form 10-K for the fiscal year ended
June 30, 2010 and exhibits to those Reports filed with the
Securities and Exchange Commission to learn more about the various
risks and uncertainties facing Anaren's business and their
potential impact on Anaren's revenue, earnings and stock price.
Unless required by law, Anaren disclaims any obligation to update
or revise any forward-looking statement.
Conference Call
Anaren will host a live teleconference, open to the public, on
the Anaren Investor Info, Live Webcast Web Site
(http://www.anaren.com) on Thursday, October 28 at 5:00 p.m.
EDT. A replay of the conference call will be available at 8:00
p.m. (EDT) beginning October 28, 2010 through midnight November 1,
2010. To listen to the replay, interested parties may dial in
the U.S. at 1-800-642-1687 and International at
1-706-645-9291. The access code is 15656526. If you are
unable to access the Live Webcast, the dial in number for the U.S.
is 1-877-734-4580 and International is 1-678-905-9378.
Company Background
Anaren designs, manufactures and sells complex microwave
components and subsystems for the wireless communications,
satellite communications and defense electronics markets. For
more information on Anaren's products, visit our Web site at
www.anaren.com.
The Anaren, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5360
ANAREN,
INC. |
Condensed
Consolidated Income Statement |
(in thousands
except per share data) |
(unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
September 30, 2010 |
September 30, 2009 |
|
|
|
Sales |
$ 44,539 |
$ 40,337 |
|
|
|
Cost of sales |
26,906 |
25,673 |
Gross profit |
17,633 |
14,664 |
|
39.6% |
36.4% |
Operating expenses: |
|
|
Marketing |
2,399 |
2,363 |
Research
& Development |
3,831 |
3,608 |
General &
Administration |
5,234 |
4,480 |
Total operating expenses |
11,464 |
10,451 |
|
|
|
Operating income |
6,169 |
4,213 |
|
13.9% |
10.4% |
Other income (expense): |
|
|
Other income, primarily
interest |
120 |
127 |
Interest expense |
(184) |
(183) |
Total other income
(expense) |
(64) |
(56) |
|
|
|
Income before income tax
expense |
6,105 |
4,157 |
Income taxes |
2,000 |
1,300 |
Net income |
$ 4,105 |
$ 2,857 |
|
9.2% |
7.1% |
|
|
|
Earnings per share |
|
|
Basic |
$ 0.30 |
$ 0.20 |
Diluted |
$ 0.28 |
$ 0.19 |
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
Basic |
13,839 |
14,117 |
Diluted |
14,426 |
14,795 |
|
ANAREN,
INC. |
Condensed Consolidated
Balance Sheet |
(in
thousands) |
(unaudited) |
|
|
|
|
September 30, 2010 |
June 30, 2010 |
|
|
|
Assets: |
|
|
Cash, cash equivalents and short-term
investments |
$ 48,755 |
$ 52,855 |
Receivables, less allowances |
27,852 |
29,124 |
Inventories |
33,353 |
31,361 |
Prepaid expenses and other current
assets |
4,561 |
4,871 |
Total current assets |
114,521 |
118,211 |
|
|
|
Securities available-for-sale |
1,051 |
1,051 |
Securities held to maturity |
17,866 |
19,756 |
Property, plant, and equipment, net |
48,022 |
48,711 |
Other assets |
1,452 |
1,031 |
Goodwill |
42,435 |
42,435 |
Other intangibles, net of accumulated
amortization |
9,855 |
10,153 |
Total assets |
$ 235,202 |
$ 241,348 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Liabilities: |
|
|
Current installments of long-term debt
obligation |
$ 10,000 |
$ 10,000 |
Accounts payable |
8,602 |
9,271 |
Accrued expenses |
3,837 |
5,661 |
Customer advance payments |
837 |
888 |
Other liabilities |
3,765 |
2,920 |
Total current liabilities |
27,041 |
28,740 |
|
|
|
Long-term debt obligation |
20,000 |
30,000 |
Other non-current liabilities |
10,253 |
9,682 |
Total liabilities |
57,294 |
68,422 |
|
|
|
Common stock and additional paid-in
capital |
207,825 |
206,478 |
Retained earnings |
122,216 |
118,111 |
Accumulated other comprehensive loss |
(2,627) |
(2,813) |
Less: cost of treasury shares |
(149,506) |
(148,850) |
Total stockholders' equity |
177,908 |
172,926 |
|
|
|
Total liabilities and stockholders'
equity |
$ 235,202 |
$ 241,348 |
|
ANAREN,
INC. |
Reconciliation of
GAAP and Non-GAAP Gross Profit, Operating Income, and Earnings Per
Share |
(in thousands
except per share data) |
(unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
|
September 30, 2010 |
September 30, 2009 |
|
|
|
Sales |
$ 44,539 |
$ 40,337 |
|
|
|
GAAP gross profit |
$ 17,633 |
$ 14,664 |
Equity based compensation expense
(1) |
166 |
69 |
Acquisition related amortization of
intangibles (2) |
39 |
39 |
Non-GAAP gross profit |
$ 17,838 |
$ 14,772 |
% of sales |
40.1% |
36.6% |
|
|
|
GAAP operating income |
$ 6,169 |
$ 4,213 |
Equity based compensation expense
(1) |
1,093 |
702 |
Acquisition related amortization of
intangibles (2) |
298 |
298 |
Non-GAAP operating
income |
$ 7,560 |
$ 5,213 |
% of sales |
17.0% |
12.9% |
|
|
|
GAAP net income |
$ 4,105 |
$ 2,857 |
Equity based compensation expense
(1) |
1,093 |
702 |
Acquisition related amortization of
intangibles (2) |
298 |
298 |
Tax effect |
(501) |
(360) |
Non-GAAP net income |
$ 4,995 |
$ 3,497 |
% of sales |
11.2% |
8.7% |
|
|
|
|
|
|
Diluted earnings per share |
|
|
GAAP earnings per share |
$ 0.28 |
$ 0.19 |
Equity based compensation expense
(1) |
0.08 |
0.05 |
Acquisition related amortization of
intangibles (2) |
0.02 |
0.02 |
Tax adjustments |
(0.03) |
(0.02) |
Non-GAAP earnings per share |
$ 0.35 |
$ 0.24 |
|
|
|
Weighted average common shares
outstanding |
|
|
Diluted |
14,426 |
14,795 |
|
|
1) These costs represent expense
recognized in accordance with FASB Statement No. 123R,
Share-based |
Payment. |
2) These costs represent
amortization of purchase accounting charges for acquisition related
intangible |
charged to expense for the quarter
ended September 30, 2010 and 2009. |
|
ANAREN,
INC. |
Reconciliation of
GAAP and Non-GAAP Gross Profit, Operating Income, and Earnings Per
Share |
(in
thousands) |
(unaudited) |
|
|
|
|
The following table details
the Non-GAAP, Non-Cash expenses related to equity compensation
and |
|
acquisition related intangible
amortization by expense category. |
|
|
|
|
|
|
|
|
Three Months Ended |
September 30, 2010 |
|
|
(in thousands) |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Equity Based |
Amortization |
|
|
Compensation |
of Intangibles |
Total |
Cost of sales |
$ 166 |
$ 39 |
$ 205 |
Marketing |
53 |
-- |
53 |
Research and Development |
150 |
-- |
150 |
General and Administrative |
724 |
259 |
983 |
|
$ 1,093 |
$ 298 |
$ 1,391 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
September 30, 2009 |
|
|
(in thousands) |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Equity Based |
Amortization |
|
|
Compensation |
of Intangibles |
Total |
Cost of sales |
$ 69 |
$ 39 |
$ 108 |
Marketing |
46 |
-- |
46 |
Research and Development |
183 |
-- |
183 |
General and Administrative |
404 |
259 |
663 |
|
$ 702 |
$ 298 |
$ 1,000 |
|
ANAREN,
INC. |
Condensed Consolidated
Statements of Cash Flows |
(in
thousands) |
(unaudited) |
|
|
|
Three months ending September
30, 2010 |
Cash flows from operating activities: |
|
Net income |
$ 4,105 |
|
|
Adjustments to reconcile net income to net
cash |
|
provided by operating activities: |
|
Depreciation |
2,129 |
Amortization |
487 |
Loss on disposal of fixed assets |
7 |
Deferred income taxes |
(51) |
Equity based compensation |
1,093 |
Receivables |
1,273 |
Inventories |
(1,983) |
Accounts payable |
(668) |
Other assets and liabilities |
(520) |
Net cash provided by operating
activities |
5,872 |
|
|
Cash flows from investing activities: |
|
Capital expenditures |
(1,396) |
Escrow claim received related to the
Unicircuit acquisition |
-- |
Net purchases of marketable debt
securities |
(786) |
Net cash used in investing
activities |
(2,182) |
|
|
Cash flows from financing activities: |
|
Payments on note payable |
(10,000) |
Stock options exercised |
237 |
Tax benefit from exercise of stock
options |
7 |
Purchase of treasury stock |
(656) |
Net cash used in financing
activities |
(10,412) |
|
|
Effect of exchange rates on cash |
135 |
|
|
Net decrease in cash and cash
equivalents |
$ (6,587) |
|
|
Cash and cash equivalents at beginning of
period |
$ 50,521 |
|
|
Cash and cash equivalents at end of
period |
$ 43,934 |
CONTACT: Anaren, Inc.
George Blanton, CFO
315-362-0436
Joseph E. Porcello, VP-Accounting
315-362-0514
6635 Kirkville Road
East Syracuse, NY 13057
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