SYRACUSE, N.Y., Oct. 29, 2013 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2014 first quarter ended September 30, 2013 of $38.5 million, down 1.3% from $39.1 million for the first quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income for the first quarter of fiscal 2014 was $3.0 million, or $0.23 per diluted share, up 4.5%, compared to $2.9 million, or $0.21 per diluted share for the first quarter of last year.
Non-GAAP diluted earnings per share, excluding non-cash equity based compensation and intangible asset amortization, was $0.28 for the first quarter of fiscal 2014 compared to non-GAAP diluted earnings per share of $0.27 for the first quarter of fiscal 2013.
GAAP operating income for the first quarter of fiscal 2014 was $4.4 million, or 11.3% of net sales, up 9.2%, compared to $4.0 million, or 10.2% of net sales for the first quarter of last year. Non-GAAP operating income for the first quarter of fiscal 2014, which excludes non-cash equity based compensation and intangible asset amortization, was $5.5 million, or 14.2% of net sales, up 3.0% from $5.3 million, or 13.6% of net sales for the first quarter of fiscal 2013.
Income taxes for the first quarter of fiscal 2014 were $1.5 million, representing an effective tax rate of 32.7% compared to income tax expense of $1.3 million for the first quarter of fiscal 2013, representing an effective tax rate of 32.0%. The projected effective tax rate for fiscal 2014, absent one-time events, is expected to be approximately 29.0%.
Lawrence A. Sala, Anaren's Chairman, President and CEO said, "Despite a slight decline in first quarter net sales, non-GAAP operating income improved 3.0% from first quarter fiscal year 2013 levels as a result of improved operating efficiencies. Although Space & Defense Group net sales declined in the quarter, the Group continued to experience a strong flow of new orders. In addition, Wireless Group sales increased in the quarter as a result of stronger demand for both infrastructure and AIR (Anaren Integrated Radio) related products. We continue to expect an increase in sales and profitability for both groups in fiscal 2014."
During the first quarter of fiscal 2014, the Company generated $3.5 million in operating cash flow compared to $2.1 million in the first quarter of fiscal 2013. Additionally, during the current quarter the Company expended $2.5 million for capital additions. Cash, cash equivalents and marketable debt securities at September 30, 2013 were $53.5 million, down $0.1 million from $53.6 million at June 30, 2013.
Wireless Group
Wireless Group net sales for the quarter were $13.6 million, up 2.9% from the first quarter of fiscal 2013, and up 6.4% sequentially, due to rising infrastructure component demand and increased sales of AIR related products. Demand from Wireless infrastructure customers has increased in recent quarters and current forecasts indicate increased demand levels for fiscal 2014. In addition, we continue to see an increase in the number of AIR related customers transitioning to volume production.
New product investments for the quarter continued to be focused on expansion of the wireless infrastructure components, as well as low power wireless AIR module and solution product lines.
Customers that generated greater than 10% of Wireless Group net sales for the quarter were Arrow Electronics, Richardson and Huawei.
Space & Defense Group
Space & Defense Group net sales for the quarter were $25.0 million, down 3.5% from the first quarter of fiscal 2013. This decrease resulted from customer delays in approving shipments of hybrid electronic modules and a shortfall in shipments of printed wire board products. Despite the decrease in net sales, continuing operational execution during the quarter resulted in comparable profitability for the Group compared to the first quarter of last year.
New orders for the quarter totaled $28.5 million and were driven largely by radar, passive ranging and satellite applications. Space & Defense Group order backlog at September 30, 2013 was approximately $100.0 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 second quarter of fiscal 2014, we anticipate comparable sales for the Wireless Group and an increase in sales for the Space & Defense Group compared to the first quarter levels. As a result, we expect net sales to be in the range of $39 to $43 million. We expect GAAP net earnings per diluted share to be in the range of $0.26 - $0.32, using an anticipated tax rate of approximately 29.0% and inclusive of approximately $0.05 per diluted share related to expected equity based compensation expense and amortization of intangible assets. Non-GAAP net earnings per diluted share are expected to be in the range of $0.31 - $0.37 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 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 October 30 at 8:30 a.m. (ET). A replay of the conference call will be available at 11:30 a.m. (ET) beginning October 30, 2013 through 11:30 p.m. on November 13, 2013. 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 71112496. 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.
| ANAREN, INC. | ||
| Condensed Consolidated Income Statements | ||
| (in thousands except per share data) | ||
| (unaudited) | ||
| Three Months Ended | ||
| September 30, 2013 | September 30, 2012 | |
| Net sales | $ 38,543 | $ 39,062 |
| Cost of sales | 24,656 | 24,647 |
| Gross profit | 13,887 | 14,415 |
| 36.0% | 36.9% | |
| Operating expenses: | ||
| Marketing | 2,131 | 2,539 |
| Research and development | 3,223 | 3,334 |
| General and administration | 4,174 | 4,550 |
| Total operating expenses | 9,528 | 10,423 |
| Operating income | 4,359 | 3,992 |
| 11.3% | 10.2% | |
| Other income (expense): | ||
| Other income | 93 | 223 |
| Interest expense | (19) | (18) |
| Total other income, net | 74 | 205 |
| Income before income tax expense | 4,433 | 4,197 |
| Income tax expense | 1,450 | 1,343 |
| Net income | $ 2,983 | $ 2,854 |
| 7.7% | 7.3% | |
| Earnings per share: | ||
| Basic | $ 0.24 | $ 0.22 |
| Diluted | $ 0.23 | $ 0.21 |
| Weighted average common shares outstanding: | ||
| Basic | 12,649 | 12,999 |
| Diluted | 13,193 | 13,676 |
| ANAREN, INC. | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| (unaudited) | ||
| September 30, 2013 | June 30, 2013 | |
| Assets: | ||
| Cash, cash equivalents and short-term investments | $ 50,942 | $ 50,996 |
| Receivables, less allowances | 31,721 | 32,059 |
| Inventories | 36,260 | 34,928 |
| Prepaid expenses and other assets | 4,223 | 5,108 |
| Total current assets | 123,146 | 123,091 |
| Securities held to maturity | 2,577 | 2,582 |
| Property, plant, and equipment, net | 41,548 | 40,842 |
| Goodwill | 42,408 | 42,297 |
| Other intangibles, net | 7,021 | 6,833 |
| Total assets | $ 216,700 | $ 215,645 |
| Liabilities and Stockholders' Equity | ||
| Liabilities: | ||
| Accounts payable | $ 6,791 | $ 7,319 |
| Accrued expenses | 3,248 | 4,806 |
| Customer advance payments | 1,615 | 1,603 |
| Other liabilities | 4,524 | 5,335 * |
| Total current liabilities | 16,178 | 19,063 |
| Other non-current liabilities | 11,019 | 10,279 |
| Total liabilities | 27,197 | 29,342 |
| Stockholders' Equity: | ||
| Common stock and additional paid-in capital | 232,315 | 230,653 |
| Retained earnings | 157,730 | 154,747 * |
| Accumulated other comprehensive loss | (773) | (858) |
| Less: cost of treasury shares | (199,769) | (198,239) |
| Total stockholders' equity | 189,503 | 186,303 |
| Total liabilities and stockholders' equity | $ 216,700 | $ 215,645 |
| * - Balance has been adjusted for an out of period error totaling $3.4 million related to income taxes. | ||
| 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 | ||
| September 30, 2013 | September 30, 2012 | |
| Net sales | $ 38,543 | $ 39,062 |
| GAAP gross profit | $ 13,887 | $ 14,415 |
| Equity-based compensation expense (1) | 216 | 239 |
| Amortization of intangibles (2) | 13 | 39 |
| Non-GAAP gross profit | $ 14,116 | $ 14,693 |
| % of sales | 36.6% | 37.6% |
| GAAP operating income | $ 4,359 | $ 3,992 |
| Equity-based compensation expense (1) | 902 | 1,050 |
| Amortization of intangibles (2) | 201 | 255 |
| Non-GAAP operating income | $ 5,462 | $ 5,297 |
| % of sales | 14.2% | 13.6% |
| GAAP net income | $ 2,983 | $ 2,854 |
| Equity-based compensation expense (1) | 902 | 1,050 |
| Amortization of intangibles (2) | 201 | 255 |
| Tax effect | (397) | (470) |
| Non-GAAP net income | $ 3,689 | $ 3,689 |
| % of sales | 9.6% | 9.4% |
| Diluted earnings per share | ||
| GAAP diluted earnings per share | $ 0.23 | $ 0.21 |
| Equity-based compensation expense (1) | 0.07 | 0.08 |
| Amortization of intangibles (2) | 0.02 | 0.02 |
| Tax adjustments | (0.04) | (0.04) |
| Non-GAAP diluted earnings per share | $ 0.28 | $ 0.27 |
| Weighted average common shares outstanding | ||
| Diluted | 13,193 | 13,676 |
| 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 months ended September 30, 2013 and 2012. |
| 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 September 30, 2013 | |||
| (in thousands) | |||
| (unaudited) | |||
| Equity Based | Amortization | ||
| Compensation | of Intangibles | Total | |
| Cost of sales | $ 216 | $ 13 | $ 229 |
| Marketing | 74 | -- | 74 |
| Research and development | 93 | -- | 93 |
| General and administrative | 519 | 188 | 707 |
| $ 902 | $ 201 | $ 1,103 | |
| Three Months Ended September 30, 2012 | |||
| (in thousands) | |||
| (unaudited) | |||
| Equity Based | Amortization | ||
| Compensation | of Intangibles | Total | |
| Cost of sales | $ 239 | $ 39 | $ 278 |
| Marketing | 86 | -- | 86 |
| Research and development | 120 | -- | 120 |
| General and administrative | 605 | 216 | 821 |
| $ 1,050 | $ 255 | $ 1,305 | |
| ANAREN, INC. | |
| Condensed Consolidated Statement of Cash Flows | |
| (in thousands) | |
| (unaudited) | |
| Three Month Ended | |
| September 30, 2013 | |
| Cash flows from operating activities: | |
| Net income | $ 2,983 |
| Adjustments to reconcile net income to net cash | |
| provided by operating activities: | |
| Depreciation | 1,780 |
| Write down of other current asset | -- |
| Amortization | 250 |
| Gain on disposal of fixed assets | -- |
| Deferred income taxes | 598 |
| Equity-based compensation | 902 |
| Receivables | 338 |
| Inventories | (1,332) |
| Accounts payable | (678) |
| Other assets and liabilities | (1,331) |
| Net cash provided by operating activities | 3,510 |
| Cash flows from investing activities: | |
| Capital expenditures | (2,485) |
| Payment for purchase of Cellular Machines | (350) |
| Maturities of held to maturity securities | 1,940 |
| Net cash used in investing activities | (895) |
| Cash flows from financing activities: | |
| Stock options exercised | 354 |
| Excess tax benefit from equity-based compensation | 406 |
| Purchase of treasury shares | (1,531) |
| Net cash used in financing activities | (771) |
| Effect of exchange rates on cash | 85 |
| Net increase in cash and cash equivalents | $ 1,929 |
| Cash and cash equivalents at beginning of period | $ 44,308 |
| Cash and cash equivalents at end of period | $ 46,237 |