Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal
2014 second quarter ended December 31, 2013 of $41.8 million, up
10.0% from $38.0 million for the second quarter of last year.
GAAP (U.S. generally accepted accounting principles) net income
for the second quarter of fiscal 2014 was $2.8 million, or $0.21
per diluted share, compared to $3.5 million, or $0.27 per diluted
share for the second quarter of last year. Current second quarter
net income included approximately $2.0 million, or $0.15 per
diluted share, in one-time pre-tax costs related to the pending
acquisition of the Company by an affiliate of Veritas Capital Fund
IV, L.P.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation, intangible asset amortization and expenses
attributable to the pending acquisition of the Company, was $0.35
for the second quarter of fiscal 2014 compared to non-GAAP diluted
earnings per share of $0.33 for the second quarter of fiscal
2013.
GAAP operating income for the second quarter of fiscal 2014 was
$3.8 million, or 9.2% of net sales, down 24.5% from $5.1 million,
or 13.4% of net sales for the second quarter of last year. Non-GAAP
operating income for the second quarter of fiscal 2014, which
excludes non-cash equity based compensation, intangible asset
amortization and expenses attributable to the pending acquisition
of the Company, was $6.9 million, or 16.4% of net sales, up 9.0%
from $6.3 million, or 16.6% of net sales for the second quarter of
fiscal 2013.
Income taxes for the second quarter of fiscal 2014 were $1.2
million, representing an effective tax rate of 29.7% compared to
income tax expense of $1.7 million for the second 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 30%.
Net sales for the six months ended December 31, 2013 were $80.4
million, up 4.3% from net sales of $77.1 million for the first six
months of last year. GAAP net income for the first half of fiscal
2014 was $5.7 million, or $0.43 per diluted share, compared to $6.4
million, or $0.47 per diluted share for the first half of last
year. Net income for the current first six months included $2.1
million in pre-tax one-time costs related to the
pending acquisition of the Company.
Non-GAAP diluted earnings per share, excluding non-cash equity
based compensation, intangible asset amortization and expenses
attributable to the pending acquisition of the Company was
$0.64 for the first six months of fiscal 2014 compared to non-GAAP
diluted earnings per share of $0.59 for the first six months of
fiscal 2013.
During the second quarter of fiscal 2014, the Company generated
$7.9 million in operating cash flow compared to $3.5 million in the
first quarter of fiscal 2014. Additionally, during the current
quarter the Company expended $1.3 million for capital additions.
Cash, cash equivalents and marketable debt securities at December
31, 2013 were $62.1 million, up $8.6 million from $53.5 million at
September 30, 2013.
Wireless Group
Wireless Group net sales for the quarter were $14.2 million, up
10.8% from the second quarter of fiscal 2013, and up 4.8%
sequentially compared to the first quarter of fiscal 2014,
reflecting higher continued demand in the wireless infrastructure
market. Demand from wireless infrastructure customers was robust
throughout the second quarter and current forecasts indicate
comparable demand for the third quarter.
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.
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 $27.6
million, up 9.6% from the second quarter of fiscal 2013. Space
& Defense Group sales are expected to be higher in the second
half of fiscal 2014 based on anticipated customer contractual
deliveries.
New orders for the quarter totaled $21.4 million and were driven
largely by radar, electronic warfare and satellite applications.
Space & Defense Group order backlog at December 31, 2013 was
approximately $94.2 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 items including equity based
compensation, intangible asset amortization and expenses
attributable to the pending acquisition of the Company by an
affiliate of Veritas Capital Fund IV, L.P.
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 2014, we anticipate comparable
sales for the Wireless Group and an increase in sales for the Space
& Defense Group compared to the second quarter levels. As
a result, we expect net sales to be in the range of $41 to $45
million. We expect GAAP net earnings, exclusive of one-time
costs associated with the pending acquisition transaction and
related litigation, to be in the range of $0.30 - $0.34 per diluted
share for the third quarter.
Non-GAAP net earnings, which are inclusive of approximately
$0.05 -$0.06 per diluted share related to expected equity based
compensation expense and amortization of intangibles assets and
exclusive of one-time costs associated with the pending acquisition
transaction and related litigation, are expected to be in the range
of $0.35 - $0.39 per diluted share for the third quarter.
Forward-Looking Statements
This press release contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, any
statement that may project, indicate or imply future results,
events, performance or achievements, and may contain the words
"anticipate," "expect," "intend," "plan," "believe," "estimate,"
"may," "project," "will," "continue" and similar expressions of a
future or forward-looking nature. Forward-looking statements may
include discussions concerning revenue, expenses, earnings, cash
flow, impairments, losses, dividends, capital structure, market and
industry conditions, premium and commission rates, interest rates,
contingencies, the direction or outcome of regulatory
investigations and litigation, income taxes and the Company's
operations or strategy. 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, including but not limited
to, Anaren's 2013 Annual Report on Form 10-K for the fiscal year
ended June 30, 2013, and the definitive proxy statement filed on
November 4, 2013, 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 not host a teleconference in connection with its
second quarter fiscal 2014 earnings.
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 Statements of Income |
(in thousands
except per share data) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
|
|
|
|
Net sales |
$ 41,809 |
$ 38,002 |
$ 80,353 |
$ 77,064 |
|
|
|
|
|
Cost of sales |
26,673 |
22,987 |
51,330 |
47,634 |
Gross profit |
15,136 |
15,015 |
29,023 |
29,430 |
|
36.2% |
39.5% |
36.1% |
38.2% |
Operating expenses: |
|
|
|
|
Marketing |
2,362 |
2,376 |
4,492 |
4,915 |
Research and development |
3,329 |
3,243 |
6,552 |
6,577 |
General and
administration |
5,611 |
4,317 |
9,785 |
8,867 |
Total operating expenses |
11,302 |
9,936 |
20,829 |
20,359 |
|
|
|
|
|
Operating income |
3,834 |
5,079 |
8,194 |
9,071 |
|
9.2% |
13.4% |
10.2% |
11.8% |
Other income (expense): |
|
|
|
|
Other income |
123 |
138 |
215 |
360 |
Interest expense |
(22) |
(47) |
(41) |
(65) |
Total other income, net |
101 |
91 |
174 |
295 |
|
|
|
|
|
Income before income tax
expense |
3,935 |
5,170 |
8,368 |
9,366 |
Income tax expense |
1,170 |
1,657 |
2,620 |
3,000 |
Net income |
$ 2,765 |
$ 3,513 |
$ 5,748 |
$ 6,366 |
|
6.6% |
9.2% |
7.2% |
8.3% |
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 0.22 |
$ 0.28 |
$ 0.45 |
$ 0.50 |
Diluted |
$ 0.21 |
$ 0.27 |
$ 0.43 |
$ 0.47 |
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
Basic |
12,833 |
12,697 |
12,741 |
12,848 |
Diluted |
13,321 |
13,191 |
13,257 |
13,433 |
|
|
ANAREN,
INC. |
Condensed Consolidated
Balance Sheets |
(in
thousands) |
(unaudited) |
|
|
|
|
December 31, 2013 |
June 30, 2013 |
|
|
|
Assets: |
|
|
Cash, cash equivalents and short-term
investments |
$ 62,087 |
$ 50,996 |
Receivables, less allowances |
31,515 |
32,059 |
Inventories |
37,159 |
34,928 |
Prepaid expenses and other assets |
3,769 |
5,108 |
Total current assets |
134,530 |
123,091 |
|
|
|
Securities held to maturity |
-- |
2,582 |
Property, plant, and equipment, net |
41,053 |
40,842 |
Goodwill |
42,408 |
42,297 |
Other intangibles, net |
6,833 |
6,833 |
Total assets |
$ 224,824 |
$ 215,645 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Liabilities: |
|
|
Accounts payable |
$ 10,437 |
$ 7,319 |
Accrued expenses |
3,742 |
4,806 |
Customer advance payments |
1,077 |
1,603 |
Other liabilities |
3,841 |
5,335* |
Total current liabilities |
19,097 |
19,063 |
|
|
|
Other non-current liabilities |
11,157 |
10,279 |
Total liabilities |
30,254 |
29,342 |
|
|
|
Stockholders' Equity: |
|
|
Common stock and additional paid-in
capital |
235,783 |
230,653 |
Retained earnings |
160,495 |
154,747* |
Accumulated other comprehensive loss |
(711) |
(858) |
Less: cost of treasury shares |
(200,997) |
(198,239) |
Total stockholders' equity |
194,570 |
186,303 |
|
|
|
Total liabilities and stockholders'
equity |
$ 224,824 |
$ 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 |
Six Months
Ended |
|
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
|
|
|
|
|
|
Net sales |
$ 41,809 |
$ 38,002 |
$ 80,353 |
$ 77,064 |
|
|
|
|
|
|
|
GAAP gross profit |
$ 15,136 |
$ 15,015 |
$ 29,023 |
$ 29,430 |
|
Equity-based compensation expense
(1) |
215 |
238 |
431 |
477 |
|
Amortization of intangibles
(3) |
-- |
39 |
13 |
78 |
|
Non-GAAP gross profit |
$ 15,351 |
$ 15,292 |
$ 29,467 |
$ 29,985 |
|
% of sales |
36.7% |
40.2% |
36.7% |
38.9% |
|
|
|
|
|
|
|
GAAP operating income |
$ 3,834 |
$ 5,079 |
$ 8,194 |
$ 9,071 |
|
Equity-based compensation expense
(1) |
849 |
997 |
1,752 |
2,047 |
|
Acquisition related costs
(2) |
1,998 |
-- |
2,064 |
-- |
|
Amortization of intangibles
(3) |
188 |
227 |
390 |
482 |
|
Non-GAAP operating
income |
$ 6,869 |
$ 6,303 |
$ 12,400 |
$ 11,600 |
|
% of sales |
16.4% |
16.6% |
15.4% |
15.1% |
|
|
|
|
|
|
|
GAAP net income |
$ 2,765 |
$ 3,513 |
$ 5,748 |
$ 6,366 |
|
Equity-based compensation expense
(1) |
849 |
997 |
1,752 |
2,047 |
|
Acquisition related costs
(2) |
1,998 |
-- |
2,064 |
-- |
|
Amortization of intangibles
(3) |
188 |
227 |
390 |
482 |
|
Tax effect |
(1,093) |
(441) |
(1,514) |
(910) |
|
Non-GAAP net income |
$ 4,707 |
$ 4,296 |
$ 8,440 |
$ 7,985 |
|
% of sales |
11.3% |
11.3% |
10.5% |
10.4% |
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
GAAP diluted earnings per
share |
$ 0.21 |
$ 0.27 |
$ 0.43 |
$ 0.47 |
|
Equity-based compensation expense
(1) |
0.06 |
0.08 |
0.13 |
0.15 |
|
Acquisition related costs
(2) |
0.15 |
-- |
0.16 |
-- |
|
Amortization of intangibles
(3) |
0.01 |
0.02 |
0.03 |
0.04 |
|
Tax adjustments |
(0.08) |
(0.04) |
(0.11) |
(0.07) |
|
Non-GAAP diluted earnings per
share |
$ 0.35 |
$ 0.33 |
$ 0.64 |
$ 0.59 |
|
|
|
|
|
|
|
Weighted average common shares
outstanding |
|
|
|
|
|
Diluted |
13,321 |
13,191 |
13,257 |
13,433 |
|
|
|
|
|
|
|
1) These costs
represent expense recognized in accordance with the share-based
payment accounting rules. |
|
2) These costs
represent deal costs related to the pending acquisition of the
Company for the three and six months ended December 31, 2013
and 2012. |
|
3) These costs
represent amortization of intangible assets for the three and six
months ended December 31, 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 expenses related to equity-based compensation, acquisition
related costs, and intangible asset amortization by expense
category. |
|
|
|
|
|
Three Months Ended December 31,
2013 |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
Equity Based |
Acquisition |
Amortization |
|
|
Compensation |
Related Costs |
of Intangibles |
Total |
Cost of sales |
$ 215 |
$ -- |
$ -- |
$ 215 |
Marketing |
66 |
-- |
-- |
66 |
Research and development |
81 |
-- |
-- |
81 |
General and administrative |
487 |
1,998 |
188 |
2,673 |
|
$ 849 |
$ 1,998 |
$ 188 |
$ 3,035 |
|
|
|
|
|
Six Months Ended December 31,
2013 |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
Equity Based |
Acquisition |
Amortization |
|
|
Compensation |
Related Costs |
of Intangibles |
Total |
Cost of sales |
$ 431 |
$ -- |
$ 13 |
$ 444 |
Marketing |
140 |
-- |
-- |
140 |
Research and development |
174 |
-- |
-- |
174 |
General and administrative |
1,007 |
2,064 |
377 |
3,448 |
|
$ 1,752 |
$ 2,064 |
$ 390 |
$ 4,206 |
|
|
|
|
|
Three Months Ended December 31,
2012 |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
Equity Based |
Acquisition |
Amortization |
|
|
Compensation |
Related Costs |
of Intangibles |
Total |
Cost of sales |
$ 238 |
$ -- |
$ 39 |
$ 277 |
Marketing |
86 |
-- |
-- |
86 |
Research and development |
108 |
-- |
-- |
108 |
General and administrative |
565 |
-- |
188 |
753 |
|
$ 997 |
$ -- |
$ 227 |
$ 1,224 |
|
|
|
|
|
Six Months Ended December 31,
2012 |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
Equity Based |
Acquisition |
Amortization |
|
|
Compensation |
Related Costs |
of Intangibles |
Total |
Cost of sales |
$ 477 |
$ -- |
$ 78 |
$ 555 |
Marketing |
172 |
-- |
-- |
172 |
Research and development |
228 |
-- |
-- |
228 |
General and administrative |
1,170 |
-- |
404 |
1,574 |
|
$ 2,047 |
$ -- |
$ 482 |
$ 2,529 |
|
|
ANAREN,
INC. |
Condensed Consolidated
Statements of Cash Flows |
(in
thousands) |
(unaudited) |
|
|
|
|
Three Month Ended |
Six Month Ended |
|
December 31, 2013 |
December 31, 2013 |
Cash flows from operating activities: |
|
|
Net income |
$ 2,765 |
$ 5,748 |
|
|
|
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation |
1,815 |
3,595 |
Amortization |
222 |
472 |
Gain on disposal of fixed assets |
(606) |
(606) |
Deferred income taxes |
(203) |
395 |
Equity-based compensation |
849 |
1,752 |
Receivables |
206 |
543 |
Inventories |
(899) |
(2,231) |
Accounts payable |
3,646 |
2,968 |
Other assets and liabilities |
69 |
(1,262) |
Net cash provided by operating
activities |
7,864 |
11,374 |
|
|
|
Cash flows from investing activities: |
|
|
Capital expenditures |
(1,321) |
(3,806) |
Payment for purchase of Cellular
Machines |
-- |
(350) |
Proceeds from sale of fixed assets |
606 |
606 |
Proceeds from sale and maturities of held
to maturity securities |
7,248 |
9,188 |
Net cash provided by investing
activities |
6,533 |
5,638 |
|
|
|
Cash flows from financing activities: |
|
|
Stock options exercised |
2,412 |
2,766 |
Excess tax benefit from equity-based
compensation |
206 |
612 |
Purchase of treasury shares |
(1,227) |
(2,758) |
Net cash provided by financing
activities |
1,391 |
620 |
|
|
|
Effect of exchange rates on cash |
62 |
147 |
|
|
|
Net increase in cash and cash
equivalents |
$ 15,850 |
$ 17,779 |
|
|
|
Cash and cash equivalents at beginning of
period |
$ 46,237 |
$ 44,308 |
|
|
|
Cash and cash equivalents at end of
period |
$ 62,087 |
$ 62,087 |
CONTACT: George Blanton, CFO
315-362-0436
Joseph E. Porcello, VP-Accounting
315-362-0514
Anaren, Inc. (MM) (NASDAQ:ANEN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Anaren, Inc. (MM) (NASDAQ:ANEN)
Historical Stock Chart
From Apr 2023 to Apr 2024