Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal
2012 third quarter ended March 31, 2012 of $34.7 million, down
21.1% from $44.0 million for the third quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income
for the third quarter of fiscal 2012 was $2.0 million, or $0.14 per
diluted share, down 41.2% from $3.4 million, or $0.23 per diluted
share for the third quarter of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation and intangible amortization, was $0.19 for the
third quarter of fiscal 2012, down 32.1% compared to non-GAAP
earnings per share of $0.28 for the third quarter of fiscal
2011.
GAAP operating income for the third quarter of fiscal 2012 was
$1.8 million, or 5.0% of net sales, down 59.1% from $4.3 million,
or 9.7% of net sales for the third quarter of last year. Non-GAAP
operating income for the third quarter of fiscal 2012, which
excludes non-cash equity based compensation and intangible
amortization was $3.0 million, or 8.6% of net sales, down 47.3%
from $5.6 million, or 12.8% of net sales for the third quarter of
fiscal 2011.
The Company had a net income tax benefit for the third
quarter of fiscal 2012 of $0.1 million, representing an effective
tax rate of (4.7)%. This compares to income tax expense of $0.9
million for the third quarter of fiscal 2011, representing an
effective tax rate of 21.4%. The tax benefit in the third quarter
of fiscal 2012 resulted from a higher than anticipated Federal
Research and Experimentation (R&E) credit. The projected
effective tax rate for fiscal 2012 is now expected to be
approximately 27%.
Lawrence A. Sala, Anaren's Chairman, President and CEO said,
"The reduction in revenue and profitability compared to the third
quarter of last year resulted primarily from the lower sales levels
as demand for Wireless infrastructure products continued to be weak
throughout the third quarter. We continue to believe this decline
in demand for Wireless infrastructure products is temporary and
customer forecasts show improving demand in the fourth quarter of
this fiscal year. Profitability improved over second quarter
levels, despite the lower sales volume, due to the aggressive
actions taken in the first half of the fiscal year to reduce
operating expenses. Given the reduction in operating expenses, the
improving Wireless customer forecasts and the strong Space &
Defense order backlog, we believe that we are well positioned for
increased sales and profitability in the fourth quarter of fiscal
2012."
Net sales for the nine months ended March 31, 2012 were $109.2
million, down 17.3% from net sales of $132.0 million for the first
nine months of last year. GAAP net income for the first nine months
of fiscal 2012 was $5.7 million, or $0.39 per diluted share,
compared to $12.2 million, or $0.83 per diluted share for the first
nine months of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation and intangible amortization, was $0.55 for the
first nine months of fiscal 2012 compared to non-GAAP diluted
earnings per share of $1.01 for the first nine months of fiscal
2011.
During the third quarter of fiscal 2012, the Company generated
$2.3 million in operating cash flow compared to $7.8 million in the
third quarter of last year. Additionally, during the current
quarter the Company repurchased approximately 66,000 shares of its
common stock for a total of $1.1 million, and expended $1.4 million
for capital additions. Cash, cash equivalents and marketable debt
securities at March 31, 2012 were $52.6 million.
Wireless Group
Wireless Group net sales for the third quarter of fiscal 2012
were $10.2 million, down 32.5% from $15.2 million for the third
quarter of fiscal 2011, driven by the continuing softness in demand
from wireless infrastructure customers.
Demand for our Wireless infrastructure products declined
significantly in the fiscal 2012 first quarter and has continued at
these lower levels. Though new orders were weak throughout the
third quarter, inventory levels at our customers and distribution
partners declined substantially. Current customer forecasts
and order rates are showing some strengthening, which should result
in an increase in Wireless sales in the fourth quarter of this
fiscal year.
New product investments for the quarter continued to be focused
on expansion of the wireless infrastructure components and low
power wireless Anaren Integrated Radio (AIR) module product
lines. Several new Xinger III and resistive products were
introduced and two additional distribution partners were added
during the quarter. In addition, several new AIR modules were
introduced and the Company announced a third party software
agreement supporting the ZigBee® Standard.
Customers that generated greater than 10% of Wireless Group net
sales for the quarter were E.G. Components, Huawei and
Richardson.
Space & Defense Group
Space & Defense Group net sales for the third quarter of
fiscal 2012 were $24.5 million, down 15.1% from $28.8 million for
the third quarter of fiscal 2011, due primarily to a $2.8 million
decline in sales of counter-IED related products.
New orders for the quarter totaled $24.1 million and were driven
by radar, satellite and passive ranging applications. Space
& Defense Group order backlog at March 31, 2012 was
approximately $95.4 million.
On April 9, 2012 the Company announced that it had received
three contracts totaling in excess of $11.5 million in follow-on
orders, approximately $6 million of which was included in third
quarter 2012 bookings, for passive ranging subsystems to be
deployed in airborne applications. These orders from a Defense
Original Equipment Manufacturer (OEM) customer are related to a
continuing long-term supply agreement for both domestic and
international applications of Anaren's proprietary electronic
warfare technology. Deliveries are expected to be completed over a
26 month timeframe beginning in the first quarter of calendar
2013. In addition, based on contracts that were recently
awarded to our customers late in the third quarter, we expect an
increase in orders for our Space & Defense products in the
fourth quarter.
Customers that generated greater than 10% of Space & Defense
Group net sales for the quarter were Lockheed Martin, Northrop
Grumman and Raytheon.
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 intangible asset 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 fourth quarter of fiscal 2012, we anticipate comparable
sales for the Space & Defense Group and increased sales for the
Wireless group compared to third quarter levels. As a result,
we expect net sales to be in the range of $35 to $40
million. We expect GAAP net earnings per diluted share to be
in the range of $0.11 - $0.23, using an anticipated tax rate of
approximately 27.0% and inclusive of approximately $0.05 per share
related to expected equity based compensation expense and
amortization of intangibles. Non-GAAP net earnings per diluted
share are expected to be in the range of $0.16 - $0.28 for the
fourth 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 based on management's current expectations and are subject to
business, market and economic risks and uncertainties that could
cause actual results to differ materially from those
discussed. You are encouraged to review Anaren's filings 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 (www.anaren.com) on
April 25, 2012 at 8:30 a.m. (ET). A replay of the conference
call will be available at 9:30 a.m. (ET) beginning April 25, 2012
through 11:30 p.m. on May 2, 2012. To listen to the replay,
interested parties may dial in the U.S. at 1-855-859-2056 and
International at 1-404-537-3406. The passcode is
58691888. 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 Statements |
(in thousands
except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, 2012 |
March 31, 2011 |
March 31, 2012 |
March 31, 2011 |
|
|
|
|
|
Sales |
$ 34,717 |
$ 44,015 |
$ 109,174 |
$ 131,997 |
|
|
|
|
|
Cost of sales |
23,027 |
27,928 |
71,619 |
81,983 |
Gross profit |
11,690 |
16,087 |
37,555 |
50,014 |
|
33.7% |
36.5% |
34.4% |
37.9% |
Operating expenses: |
|
|
|
|
Marketing |
2,553 |
2,622 |
7,586 |
7,617 |
Research and development |
3,133 |
4,656 |
10,182 |
12,024 |
General and administration |
4,252 |
4,521 |
13,038 |
14,384 |
Total operating expenses |
9,938 |
11,799 |
30,806 |
34,025 |
|
|
|
|
|
Operating income |
1,752 |
4,288 |
6,749 |
15,989 |
|
5.0% |
9.7% |
6.2% |
12.1% |
Other income (expense): |
|
|
|
|
Other income |
175 |
139 |
454 |
436 |
Interest expense |
(19) |
(104) |
(152) |
(393) |
Total other income, net |
156 |
35 |
302 |
43 |
|
|
|
|
|
Income before income tax (benefit)
expense |
1,908 |
4,323 |
7,051 |
16,032 |
Income tax (benefit) expense |
(90) |
925 |
1,350 |
3,875 |
Net income |
$ 1,998 |
$ 3,398 |
$ 5,701 |
$ 12,157 |
|
5.8% |
7.7% |
5.2% |
9.2% |
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.14 |
$ 0.24 |
$ 0.40 |
$ 0.87 |
Diluted |
$ 0.14 |
$ 0.23 |
$ 0.39 |
$ 0.83 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
14,070 |
14,123 |
14,143 |
13,973 |
Diluted |
14,696 |
14,994 |
14,783 |
14,712 |
|
|
ANAREN,
INC. |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
(unaudited) |
|
|
|
|
March 31, 2012 |
June 30, 2011 |
|
|
|
Assets: |
|
|
Cash, cash equivalents and short-term
investments |
$ 42,855 |
$ 67,702 |
Receivables, less allowances |
28,859 |
30,931 |
Inventories |
38,133 |
33,733 |
Prepaid expenses and other current
assets |
6,329 |
6,120 |
Total current assets |
116,176 |
138,486 |
|
|
|
Securities held to maturity |
9,759 |
13,441 |
Property, plant, and equipment, net |
47,145 |
47,627 |
Other assets |
49 |
1,741 |
Goodwill |
42,389 |
42,389 |
Other intangibles, net |
8,068 |
8,961 |
Total assets |
$ 223,586 |
$ 252,645 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Liabilities: |
|
|
Current installments of long-term debt
obligation |
$ -- |
$ 10,000 |
Accounts payable |
6,375 |
9,535 |
Accrued expenses |
4,014 |
6,340 |
Customer advance payments |
1,344 |
222 |
Other liabilities |
2,054 |
2,290 |
Total current liabilities |
13,787 |
28,387 |
|
|
|
Long-term debt obligation |
-- |
20,000 |
Other non-current liabilities |
8,566 |
9,154 |
Total liabilities |
22,353 |
57,541 |
|
|
|
Stockholders' Equity: |
|
|
Common stock and additional paid-in
capital |
222,282 |
214,467 |
Retained earnings |
140,213 |
134,512 |
Accumulated other comprehensive loss |
(317) |
(603) |
Less: cost of treasury shares |
(160,945) |
(153,272) |
Total stockholders' equity |
201,233 |
195,104 |
|
|
|
Total liabilities and stockholders'
equity |
$ 223,586 |
$ 252,645 |
|
|
ANAREN,
INC. |
Reconciliation of
GAAP and Non-GAAP Gross Profit, Operating Income, Net Income and
Diluted Earnings Per Share |
(in thousands
except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, 2012 |
March 31, 2011 |
March 31, 2012 |
March 31, 2011 |
|
|
|
|
|
Sales |
$ 34,717 |
$ 44,015 |
$ 109,174 |
$ 131,997 |
|
|
|
|
|
GAAP gross profit |
$ 11,690 |
$ 16,087 |
$ 37,555 |
$ 50,014 |
Equity-based compensation expense
(1) |
201 |
221 |
606 |
551 |
Amortization of intangibles
(2) |
39 |
39 |
117 |
117 |
Non-GAAP gross profit |
$ 11,930 |
$ 16,347 |
$ 38,278 |
$ 50,682 |
% of sales |
34.4% |
37.1% |
35.1% |
38.4% |
|
|
|
|
|
GAAP operating income |
$ 1,752 |
$ 4,288 |
$ 6,749 |
$ 15,989 |
Equity-based compensation expense
(1) |
922 |
1,051 |
2,869 |
3,215 |
Amortization of intangibles
(2) |
298 |
298 |
894 |
894 |
Non-GAAP operating
income |
$ 2,972 |
$ 5,637 |
$ 10,512 |
$ 20,098 |
% of sales |
8.6% |
12.8% |
9.6% |
15.2% |
|
|
|
|
|
GAAP net income |
$ 1,998 |
$ 3,398 |
$ 5,701 |
$ 12,157 |
Equity-based compensation expense
(1) |
922 |
1,051 |
2,869 |
3,215 |
Amortization of intangibles
(2) |
298 |
298 |
894 |
894 |
Tax effect |
(439) |
(486) |
(1,354) |
(1,479) |
Non-GAAP net income |
$ 2,779 |
$ 4,261 |
$ 8,110 |
$ 14,787 |
% of sales |
8.0% |
9.7% |
7.4% |
11.2% |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
GAAP diluted earnings per
share |
$ 0.14 |
$ 0.23 |
$ 0.39 |
$ 0.83 |
Equity-based compensation expense
(1) |
0.06 |
0.07 |
0.19 |
0.22 |
Amortization of intangibles
(2) |
0.02 |
0.02 |
0.06 |
0.06 |
Tax adjustments |
(0.03) |
(0.04) |
(0.09) |
(0.10) |
Non-GAAP diluted earnings per
share |
$ 0.19 |
$ 0.28 |
$ 0.55 |
$ 1.01 |
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
Diluted |
14,696 |
14,994 |
14,783 |
14,712 |
|
|
|
|
|
|
|
|
|
|
1) These costs
represent expense recognized in accordance with the share-based
compensation accounting rules. |
|
|
|
|
|
2) These costs
represent amortization of intangible assets for the three and nine
months ended March 31, 2012 and 2011. |
|
|
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-based compensation
and intangible asset amortization by expense category. |
|
|
|
|
|
Three Months Ended March 31,
2012 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 201 |
$ 39 |
$ 240 |
Marketing |
36 |
-- |
36 |
Research and development |
88 |
-- |
88 |
General and administrative |
597 |
259 |
856 |
|
$ 922 |
$ 298 |
$ 1,220 |
|
|
|
|
|
|
|
|
|
Nine Months Ended March 31,
2012 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 606 |
$ 117 |
$ 723 |
Marketing |
175 |
-- |
175 |
Research and development |
308 |
-- |
308 |
General and administrative |
1,780 |
777 |
2,557 |
|
$ 2,869 |
$ 894 |
$ 3,763 |
|
|
|
|
|
|
|
|
|
Three Months Ended March
31, 2011 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 221 |
$ 39 |
$ 260 |
Marketing |
71 |
-- |
71 |
Research and development |
114 |
-- |
114 |
General and administrative |
645 |
259 |
904 |
|
$ 1,051 |
$ 298 |
$ 1,349 |
|
|
|
|
|
|
|
|
|
Nine Months Ended March
31, 2011 |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 551 |
$ 117 |
$ 668 |
Marketing |
194 |
-- |
194 |
Research and development |
419 |
-- |
419 |
General and administrative |
2,051 |
777 |
2,828 |
|
$ 3,215 |
$ 894 |
$ 4,109 |
|
|
ANAREN,
INC. |
Condensed Consolidated
Statements of Cash Flows |
(in
thousands) |
(unaudited) |
|
|
|
|
Three Months Ended March 31,
2012 |
Nine Months Ended March 31,
2012 |
Cash flows from operating activities: |
|
|
Net income |
$ 1,998 |
$ 5,701 |
|
|
|
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation |
2,045 |
6,212 |
Amortization |
465 |
1,437 |
Deferred income taxes |
(172) |
339 |
Equity-based compensation |
922 |
2,869 |
Receivables |
(1,372) |
2,071 |
Inventories |
(1,141) |
(4,400) |
Accounts payable |
(2,650) |
(3,159) |
Other assets and liabilities |
2,239 |
(884) |
Net cash provided by operating
activities |
2,334 |
10,186 |
|
|
|
Cash flows from investing activities: |
|
|
Capital expenditures |
(1,359) |
(5,730) |
Net purchases of marketable debt
securities |
(601) |
(504) |
Net cash used in investing
activities |
(1,960) |
(6,234) |
|
|
|
Cash flows from financing activities: |
|
|
Payments on long-term debt |
-- |
(30,000) |
Proceeds from stock options
exercised |
32 |
4,261 |
Excess tax benefit |
1 |
685 |
Purchase of treasury shares |
(1,100) |
(7,673) |
Net cash used in financing
activities |
(1,067) |
(32,727) |
|
|
|
Effect of exchange rates on cash |
79 |
286 |
|
|
|
Net decrease in cash and cash
equivalents |
$ (614) |
$ (28,489) |
|
|
|
Cash and cash equivalents at beginning of
period |
$ 30,513 |
$ 58,388 |
|
|
|
Cash and cash equivalents at end of
period |
$ 29,899 |
$ 29,899 |
CONTACT: George Blanton, CFO
315-362-0436
Joseph E. Porcello, VP-Accounting
315-362-0514
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