SYRACUSE, N.Y., Oct. 24, 2011 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2012 first quarter ended September 30, 2011 of $38.7 million, down 13.0% from $44.5 million for the first quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income for the first quarter of fiscal 2012 was $2.5 million, or $0.17 per diluted share, compared to $4.1 million, or $0.28 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 $0.23 for the first quarter of fiscal 2012 compared to non-GAAP earnings per share of $0.35 for the first quarter of fiscal 2011.
GAAP operating income for the first quarter of fiscal 2012 was $3.6 million, or 9.3% of net sales, compared to $6.2 million, or 13.9% of net sales for the first quarter of last year. Non-GAAP operating income for the first quarter of fiscal 2012, which excludes non-cash equity based compensation and intangible asset amortization, was $4.8 million, or 12.5% of net sales, down 36.8% from $7.6 million, or 17.0% of net sales for the first quarter of fiscal 2011.
Income taxes for the first quarter of fiscal 2012 were $1.1 million, representing an effective tax rate of 30.7% compared to income tax expense of $2.0 million for the first quarter of fiscal 2011, representing an effective tax rate of 32.8%. The projected effective tax rate for fiscal 2012, absent one-time events, is expected to be approximately 31.0%.
Lawrence A. Sala, Anaren's Chairman, President and CEO said, "The reduction in revenue and profitability compared to the guidance we provided in August for the first quarter of fiscal 2012 resulted primarily from unanticipated delays in approvals for shipments, an unfavorable mix of business and operational performance issues within the Space & Defense Group, as well as a decline in demand for Wireless infrastructure products. We believe the decline in demand for Wireless infrastructure products is temporary as customer forecasts for calendar 2012 remain robust. In addition, we expect improvement in the business mix and operating performance for the Space & Defense Group in the second half of the current fiscal year."
During the first quarter of fiscal 2012, the Company generated $5.3 million in operating cash flow compared to $5.9 million in the first quarter of fiscal 2011. Additionally, during the current quarter the Company repurchased approximately 118,000 shares of its common stock for a total of $2.2 million, used $10.0 million to make a payment on its line of credit, expended $2.0 million for capital additions and received $2.5 million from employees exercising stock options. Cash, cash equivalents and marketable debt securities at September 30, 2011 were $75.4 million, down $5.7 million from $81.1 million at June 30, 2011.
Wireless Group
Wireless Group net sales for the quarter were $18.2 million, up 17.3% from the first quarter of fiscal 2011 levels driven by continuing strong demand for standard component products in the first half of the quarter.
Demand for our Wireless infrastructure products, while strong in the first half of the quarter, weakened significantly in the second half of the quarter. Though current order rates remain weak, customer forecasts for calendar 2012 remain robust and should result in an increase in second half fiscal 2012 shipment levels.
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 continues.
Customers that generated greater than 10% of Wireless Group net sales for the quarter were E.G. Components, Richardson, Huawei and Nokia.
Space & Defense Group
Space & Defense Group net sales for the quarter were $20.5 million, down 29.3% from the first quarter of fiscal 2011. In addition to expected first quarter program shipment declines driven mainly by the decline in counter-IED related business, unanticipated delays in approvals for shipments of Space & Defense products and operating performance issues during the quarter resulted in lower than expected sales and profitability.
New orders for the quarter totaled $25 million and were driven largely by radar and satellite applications. In addition, the Group renewed its five year supply agreement for Passive Ranging Subsystem (PRSS) technology which is deployed on numerous airborne applications. Space & Defense Group order backlog at September 30, 2011 was approximately $95 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 2012, we anticipate a decline in 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 $35 to $40 million. We expect GAAP net earnings per diluted share to be in the range of $0.03 - $0.07, using an anticipated tax rate of approximately 31.0% 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 $0.08 - $0.12 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 25 at 8:30 a.m. (ET). A replay of the conference call will be available at 11:30 a.m. (ET) beginning October 25, 2011 through 11:30 a.m. on November 2, 2011. 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 16756402. 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 | |||
| September 30, 2011 | September 30, 2010 | ||
| Sales | $ 38,720 | $ 44,539 | |
| Cost of sales | 24,196 | 26,906 | |
| Gross profit | 14,524 | 17,633 | |
| 37.5% | 39.6% | ||
| Operating expenses: | |||
| Marketing | 2,596 | 2,399 | |
| Research and development | 3,924 | 3,831 | |
| General and administration | 4,415 | 5,234 | |
| Total operating expenses | 10,935 | 11,464 | |
| Operating income | 3,589 | 6,169 | |
| 9.3% | 13.9% | ||
| Other income (expense): | |||
| Other income | 140 | 120 | |
| Interest expense | (80) | (184) | |
| Total other income (expense) | 60 | (64) | |
| Income before income tax expense | 3,649 | 6,105 | |
| Income tax expense | 1,120 | 2,000 | |
| Net income | $ 2,529 | $ 4,105 | |
| 6.5% | 9.2% | ||
| Earnings per share: | |||
| Basic | $ 0.18 | $ 0.30 | |
| Diluted | $ 0.17 | $ 0.28 | |
| Weighted average common shares outstanding: | |||
| Basic | 14,129 | 13,839 | |
| Diluted | 14,803 | 14,426 | |
| ANAREN, INC. | ||
| Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
| (unaudited) | ||
| September 30, 2011 | June 30, 2011 | |
| Assets: | ||
| Cash, cash equivalents and short-term investments | $ 65,151 | $ 67,702 |
| Receivables, less allowances | 26,230 | 30,931 |
| Inventories | 36,353 | 33,733 |
| Prepaid expenses and other current assets | 6,105 | 6,120 |
| Total current assets | 133,839 | 138,486 |
| Securities held to maturity | 10,274 | 13,441 |
| Property, plant, and equipment, net | 47,397 | 47,627 |
| Other assets | 1,673 | 1,741 |
| Goodwill | 42,389 | 42,389 |
| Other intangibles, net of accumulated amortization | 8,663 | 8,961 |
| Total assets | $ 244,235 | $ 252,645 |
| Liabilities and Stockholders' Equity | ||
| Liabilities: | ||
| Current installments of long-term debt obligation | $ -- | $ 10,000 |
| Accounts payable | 8,069 | 9,535 |
| Accrued expenses | 3,690 | 6,340 |
| Customer advance payments | 981 | 222 |
| Other liabilities | 2,414 | 2,290 |
| Total current liabilities | 15,154 | 28,387 |
| Long-term debt obligation | 20,000 | 20,000 |
| Other non-current liabilities | 9,351 | 9,154 |
| Total liabilities | 44,505 | 57,541 |
| Stockholders' Equity: | ||
| Common stock and additional paid-in capital | 218,672 | 214,467 |
| Retained earnings | 137,041 | 134,512 |
| Accumulated other comprehensive loss | (466) | (603) |
| Less: cost of treasury shares | (155,517) | (153,272) |
| Total stockholders' equity | 199,730 | 195,104 |
| Total liabilities and stockholders' equity | $ 244,235 | $ 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 | |||
| September 30, 2011 | September 30, 2010 | ||
| Sales | $ 38,720 | $ 44,539 | |
| GAAP gross profit | $ 14,524 | $ 17,633 | |
| Equity-based compensation expense (1) | 194 | 166 | |
| Amortization of intangibles (2) | 39 | 39 | |
| Non-GAAP gross profit | $ 14,757 | $ 17,838 | |
| % of sales | 38.1% | 40.1% | |
| GAAP operating income | $ 3,589 | $ 6,169 | |
| Equity-based compensation expense (1) | 956 | 1,093 | |
| Amortization of intangibles (2) | 298 | 298 | |
| Non-GAAP operating income | $ 4,843 | $ 7,560 | |
| % of sales | 12.5% | 17.0% | |
| GAAP net income | $ 2,529 | $ 4,105 | |
| Equity-based compensation expense (1) | 956 | 1,093 | |
| Amortization of intangibles (2) | 298 | 298 | |
| Tax effect | (451) | (501) | |
| Non-GAAP net income | $ 3,332 | $ 4,995 | |
| % of sales | 8.6% | 11.2% | |
| Diluted earnings per share | |||
| GAAP diluted earnings per share | $ 0.17 | $ 0.28 | |
| Equity-based compensation expense (1) | 0.06 | 0.08 | |
| Amortization of intangibles (2) | 0.02 | 0.02 | |
| Tax adjustments | (0.02) | (0.03) | |
| Non-GAAP diluted earnings per share | $ 0.23 | $ 0.35 | |
| Weighted average common shares outstanding | |||
| Diluted | 14,803 | 14,426 | |
| 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, 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 | September 30, 2011 | |||
| (in thousands) | ||||
| (unaudited) | ||||
| Equity Based | Amortization | |||
| Compensation | of Intangibles | Total | ||
| Cost of sales | $ 194 | $ 39 | $ 233 | |
| Marketing | 65 | -- | 65 | |
| Research and development | 114 | -- | 114 | |
| General and administrative | 583 | 259 | 842 | |
| $ 956 | $ 298 | $ 1,254 | ||
| 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 | ||
| ANAREN, INC. | |
| Condensed Consolidated Statement of Cash Flows | |
| (in thousands) | |
| (unaudited) | |
|
Three months ended September 30, 2011 |
|
| Cash flows from operating activities: | |
| Net income | $ 2,529 |
| Adjustments to reconcile net income to net cash | |
| provided by operating activities: | |
| Depreciation | 2,208 |
| Amortization | 487 |
| Deferred income taxes | 297 |
| Equity-based compensation | 956 |
| Receivables | 4,699 |
| Inventories | (2,620) |
| Accounts payable | (1,465) |
| Other assets and liabilities | (1,783) |
| Net cash provided by operating activities | 5,308 |
| Cash flows from investing activities: | |
| Capital expenditures | (1,979) |
| Net (purchases) sales and maturities of marketable | |
| debt securities | (105) |
| Net cash used in investing activities | (2,084) |
| Cash flows from financing activities: | |
| Payments on long-term debt | (10,000) |
| Proceeds from stock options exercised | 2,542 |
| Excess tax benefit | 707 |
| Purchase of treasury shares | (2,245) |
| Net cash used in financing activities | (8,996) |
| Effect of exchange rates on cash | 138 |
| Net decrease in cash and cash equivalents | $ (5,634) |
| Cash and cash equivalents at beginning of period | $ 58,388 |
| Cash and cash equivalents at end of period | $ 52,754 |