Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal
2012 second quarter ended December 31, 2011 of $35.7 million, down
17.7% from $43.4 million for the second quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income
for the second quarter of fiscal 2012 was $1.2 million, or $0.08
per diluted share, down 74.8% from $4.7 million, or $0.32 per
diluted share for the second quarter of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation and intangible amortization, was $0.13 for the
second quarter of fiscal 2012, down 65.8% compared to non-GAAP
earnings per share of $0.38 for the second quarter of fiscal 2011.
GAAP operating income for the second quarter of fiscal 2012 was
$1.4 million, or 3.9% of net sales, down 74.5% from $5.5 million,
or 12.7% of net sales for the second quarter of last
year. Non-GAAP operating income for the second quarter of
fiscal 2012, which excludes non-cash equity based compensation and
acquisition related intangible amortization was $2.7 million, or
7.5% of net sales, down 60.9% from $6.9 million, or 15.9% of net
sales for the second quarter of fiscal 2011.
Income taxes for the second quarter of fiscal 2012 were
$0.3 million, representing an effective tax rate of 21.4%. This
compares to income tax expense of $1.0 million for the second
quarter of fiscal 2011, representing an effective tax rate of
17.0%. The low effective rate in the second quarter of fiscal 2011,
primarily resulted from the reinstatement of the Federal
Research and Experimentation credit retroactive to January 1,
2010. The projected effective tax rate for fiscal 2012 is now
expected to be approximately 28.5%.
Lawrence A. Sala, Anaren's Chairman, President and CEO said,
"The reduction in revenue and profitability compared to the second
quarter of last year resulted primarily from a substantial decline
in demand for Wireless infrastructure products, as well as an
unfavorable mix of business within the Space & Defense
Group. In response to the current business conditions, we have
taken numerous actions to reduce costs and improve our operating
performance at these lower business levels. We will continue
to monitor the Wireless infrastructure market conditions and adjust
our business model accordingly. We believe this decline in
demand for Wireless infrastructure products is temporary as
customer forecasts for calendar 2012 remain strong and we expect
demand to improve in the fourth quarter of this fiscal year."
Net sales for the six months ended December 31, 2011 were $74.5
million, down 15.4% from net sales of $88.0 million for the first
six months of last year. GAAP net income for the first half of
fiscal 2012 was $3.7 million, or $0.25 per diluted share, compared
to $8.8 million, or $0.60 per diluted share for the first half of
last year.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation and intangible amortization, was $0.36 for the
first six months of fiscal 2012 compared to non-GAAP diluted
earnings per share of $0.72 for the first six months of fiscal
2011.
During the second quarter of fiscal 2012, the Company generated
$2.5 million in operating cash flow compared to $2.9 million in the
second quarter of fiscal 2011. Additionally, during the current
quarter the Company repurchased approximately 256,000 shares of its
common stock for a total of $4.3 million, used $20.0 million to
pay-off its line of credit, expended $2.4 million for capital
additions and received $1.7 million from employees exercising stock
options. Cash, cash equivalents and marketable debt securities at
December 31, 2011 were $52.8 million, down $28.3 million from $81.1
million at June 30, 2011.
Wireless Group
Wireless Group net sales for the second quarter of fiscal 2012
were $10.8 million, down 30.8% from the second quarter of fiscal
2011 levels driven by the continuing decline in demand from
wireless infrastructure customers in the first half of the current
fiscal year.
Demand for our Wireless infrastructure products, which declined
significantly in the fiscal 2012 first quarter, continued at these
lower levels throughout the second quarter. Though current order
rates remain weak, customer forecasts for calendar 2012 remain
strong and should result in an increase in demand in the fourth
quarter of this fiscal year.
New product investments for the quarter continued to be
focused on the expansion of the Xinger III, consumer component and
high power resistor product lines. In addition, development of
the low power wireless Anaren Integrated Radio (AIR) module product
line continued with both new module product introductions as well
as the launch of the new "Booster Pack" development kit. This
kit, which is promoted and sold through Texas Instruments, enables
potential AIR customers to efficiently and cost effectively
evaluate the AIR module performance in their specific
application.
Customers that generated greater than 10% of Wireless Group net
sales for the quarter were E.G. Components, Huawei and
Nokia.
Space & Defense Group
Space & Defense Group net sales for the second quarter of
fiscal 2012 were $24.9 million, down 10.4% from the second quarter
of fiscal 2011 due to the decline in sales of counter-IED related
products which was partially offset by an increase in sales of
space related products.
New orders for the quarter totaled $26.4 million and were driven
largely by radar and space applications. Space & Defense
Group order backlog at December 31, 2011 was approximately $95.8
million.
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 third quarter of fiscal 2012, we anticipate comparable
sales for both the Wireless group and the Space & Defense Group
compared to the second quarter levels. As a result, we expect
net sales to be in the range of $34 to $39 million. We expect
GAAP net earnings per diluted share to be in the range of $0.06 -
$0.10, using an anticipated tax rate of approximately 28.5% 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 $0.11 - $0.15 for the third
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
January 26, 2012 at 8:30 a.m. (ET). A replay of the conference
call will be available at 9:30 a.m. (ET) beginning January 26, 2012
through 11:30 p.m. on February 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
35487636. 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 |
Six Months
Ended |
|
December 31, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
|
|
|
|
|
Sales |
$ 35,737 |
$ 43,443 |
$ 74,457 |
$ 87,982 |
|
|
|
|
|
Cost of sales |
24,395 |
27,149 |
48,591 |
54,055 |
Gross profit |
11,342 |
16,294 |
25,866 |
33,927 |
|
31.7% |
37.5% |
34.7% |
38.6% |
Operating expenses: |
|
|
|
|
Marketing |
2,438 |
2,596 |
5,033 |
4,995 |
Research and
development |
3,124 |
3,538 |
7,049 |
7,369 |
General and
administration |
4,372 |
4,628 |
8,787 |
9,862 |
Total operating
expenses |
9,934 |
10,762 |
20,869 |
22,226 |
|
|
|
|
|
Operating income |
1,408 |
5,532 |
4,997 |
11,701 |
|
3.9% |
12.7% |
6.7% |
13.3% |
Other income (expense): |
|
|
|
|
Other income |
139 |
177 |
279 |
298 |
Interest expense |
(53) |
(105) |
(133) |
(289) |
Total other income,
net |
86 |
72 |
146 |
9 |
|
|
|
|
|
Income before income tax expense |
1,494 |
5,604 |
5,143 |
11,710 |
Income tax expense |
320 |
950 |
1,440 |
2,950 |
Net income |
$ 1,174 |
$ 4,654 |
$ 3,703 |
$ 8,760 |
|
3.3% |
10.7% |
5.0% |
10.0% |
Earnings per share: |
|
|
|
|
Basic |
$ 0.08 |
$ 0.33 |
$ 0.26 |
$ 0.63 |
Diluted |
$ 0.08 |
$ 0.32 |
$ 0.25 |
$ 0.60 |
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
Basic |
14,244 |
13,961 |
14,180 |
13,900 |
Diluted |
14,861 |
14,720 |
14,825 |
14,573 |
|
ANAREN,
INC. |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
(unaudited) |
|
|
|
|
December 31, 2011 |
June 30, 2011 |
|
|
|
Assets: |
|
|
Cash, cash equivalents and short-term
investments |
$ 44,414 |
$ 67,702 |
Receivables, less allowances |
27,489 |
30,931 |
Inventories |
36,991 |
33,733 |
Prepaid expenses and other current
assets |
6,965 |
6,120 |
Total current assets |
115,859 |
138,486 |
|
|
|
Securities held to maturity |
8,380 |
13,441 |
Property, plant, and equipment, net |
47,831 |
47,627 |
Other assets |
48 |
1,741 |
Goodwill |
42,389 |
42,389 |
Other intangibles, net |
8,365 |
8,961 |
Total assets |
$ 222,872 |
$ 252,645 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Liabilities: |
|
|
Current installments of long-term debt
obligation |
$ -- |
$ 10,000 |
Accounts payable |
9,025 |
9,535 |
Accrued expenses |
3,052 |
6,340 |
Customer advance payments |
536 |
222 |
Other liabilities |
1,969 |
2,290 |
Total current liabilities |
14,582 |
28,387 |
|
|
|
Long-term debt obligation |
-- |
20,000 |
Other non-current liabilities |
8,990 |
9,154 |
Total liabilities |
23,572 |
57,541 |
|
|
|
Stockholders' Equity: |
|
|
Common stock and additional paid-in
capital |
221,326 |
214,467 |
Retained earnings |
138,215 |
134,512 |
Accumulated other comprehensive loss |
(396) |
(603) |
Less: cost of treasury shares |
(159,845) |
(153,272) |
Total stockholders' equity |
199,300 |
195,104 |
|
|
|
Total liabilities and
stockholders' equity |
$ 222,872 |
$ 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 |
Six Months
Ended |
|
December 31, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
|
|
|
|
|
Sales |
$ 35,737 |
$ 43,443 |
$ 74,457 |
$ 87,982 |
|
|
|
|
|
GAAP gross profit |
$ 11,342 |
$ 16,294 |
$ 25,866 |
$ 33,927 |
Equity-based compensation
expense (1) |
210 |
164 |
404 |
330 |
Acquisition related
amortization of intangibles (2) |
39 |
39 |
78 |
78 |
Non-GAAP gross
profit |
$ 11,591 |
$ 16,497 |
$ 26,348 |
$ 34,335 |
% of sales |
32.4% |
38.0% |
35.4% |
39.0% |
|
|
|
|
|
GAAP operating income |
$ 1,408 |
$ 5,532 |
$ 4,997 |
$ 11,701 |
Equity-based compensation
expense (1) |
991 |
1,071 |
1,946 |
2,164 |
Acquisition related
amortization of intangibles (2) |
298 |
298 |
596 |
596 |
Non-GAAP operating
income |
$ 2,697 |
$ 6,901 |
$ 7,539 |
$ 14,461 |
% of sales |
7.5% |
15.9% |
10.1% |
16.4% |
|
|
|
|
|
GAAP net income |
$ 1,174 |
$ 4,654 |
$ 3,703 |
$ 8,760 |
Equity-based compensation
expense (1) |
991 |
1,071 |
1,946 |
2,164 |
Acquisition related
amortization of intangibles (2) |
298 |
298 |
596 |
596 |
Tax effect |
(464) |
(493) |
(915) |
(993) |
Non-GAAP net income |
$ 1,999 |
$ 5,530 |
$ 5,330 |
$ 10,527 |
% of sales |
5.6% |
12.7% |
7.2% |
12.0% |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
GAAP diluted earnings per
share |
$ 0.08 |
$ 0.32 |
$ 0.25 |
$ 0.60 |
Equity-based compensation
expense (1) |
0.07 |
0.07 |
0.13 |
0.15 |
Acquisition related
amortization of intangibles (2) |
0.02 |
0.02 |
0.04 |
0.04 |
Tax adjustments |
(0.04) |
(0.03) |
(0.06) |
(0.07) |
Non-GAAP diluted earnings per
share |
$ 0.13 |
$ 0.38 |
$ 0.36 |
$ 0.72 |
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
Diluted |
14,861 |
14,720 |
14,825 |
14,573 |
|
|
|
|
|
1) These costs represent
expense recognized in accordance with the share-based payment
accounting rules. |
|
|
2) These costs represent
amortization of intangible assets for the three and six months
ended December 31, 2011 and 2010. |
|
|
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
December 31, 2011 |
|
|
(in thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 210 |
$ 39 |
$ 249 |
Marketing |
74 |
-- |
74 |
Research and development |
107 |
-- |
107 |
General and administrative |
600 |
259 |
859 |
|
$ 991 |
$ 298 |
$ 1,289 |
|
|
|
|
|
Six Months Ended December
31, 2011 |
|
|
(in
thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 404 |
$ 78 |
$ 482 |
Marketing |
139 |
-- |
139 |
Research and development |
221 |
-- |
221 |
General and administrative |
1,182 |
518 |
1,700 |
|
$ 1,946 |
$ 596 |
$ 2,542 |
|
|
|
|
|
Three Months
Ended December 31, 2010 |
|
|
(in thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 164 |
$ 39 |
$ 203 |
Marketing |
70 |
-- |
70 |
Research and development |
155 |
-- |
155 |
General and administrative |
682 |
259 |
941 |
|
$ 1,071 |
$ 298 |
$ 1,369 |
|
|
|
|
|
Six Months
Ended December 31, 2010 |
|
|
(in thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
Equity Based
Compensation |
Amortization of
Intangibles |
Total |
Cost of sales |
$ 330 |
$ 78 |
$ 408 |
Marketing |
123 |
-- |
123 |
Research and development |
305 |
-- |
305 |
General and administrative |
1,406 |
518 |
1,924 |
|
$ 2,164 |
$ 596 |
$ 2,760 |
|
ANAREN,
INC. |
Condensed Consolidated
Statements of Cash Flows |
(in
thousands) |
(unaudited) |
|
|
|
|
Three months ended December 31,
2011 |
Six months ended
December 31, 2011 |
Cash flows from operating activities: |
|
|
Net income |
$ 1,174 |
$ 3,703 |
|
|
|
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation |
1,958 |
4,166 |
Amortization |
485 |
972 |
Deferred income taxes |
214 |
511 |
Equity-based compensation |
991 |
1,946 |
Receivables |
(1,257) |
3,444 |
Inventories |
(638) |
(3,258) |
Accounts payable |
956 |
(510) |
Other assets and
liabilities |
(1,339) |
(3,122) |
Net cash provided by operating
activities |
2,544 |
7,852 |
|
|
|
Cash flows from investing activities: |
|
|
Capital expenditures |
(2,392) |
(4,371) |
Net sales and maturities of
marketable debt securities |
202 |
97 |
Net cash used in investing
activities |
(2,190) |
(4,274) |
|
|
|
Cash flows from financing activities: |
|
|
Payments on long-term debt |
(20,000) |
(30,000) |
Proceeds from stock options
exercised |
1,687 |
4,229 |
Excess tax benefit |
(23) |
684 |
Purchase of treasury
shares |
(4,328) |
(6,573) |
Net cash used in financing
activities |
(22,664) |
(31,660) |
|
|
|
Effect of exchange rates on
cash |
69 |
207 |
|
|
|
Net decrease in cash and cash
equivalents |
$ (22,241) |
$ (27,875) |
|
|
|
Cash and cash equivalents at beginning of
period |
$ 52,754 |
$ 58,388 |
|
|
|
Cash and cash equivalents at end of
period |
$ 30,513 |
$ 30,513 |
CONTACT: George Blanton, CFO
315-362-0436
Joseph E. Porcello, VP-Accounting
315-362-0514
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