Highlights during the third quarter included:
- Revenue of $120 million with gross margin of 44%
- GAAP operating margin of 6%; Non-GAAP operating margin of 13%
- GAAP diluted EPS of $0.56; Non-GAAP diluted EPS of $1.08
- Operating cash flow of $22 million
- Signed merger agreement to be acquired by affiliate of Altaris Capital Partners
Revenue for the third quarter of fiscal 2018 was $120.0 million, a decrease of 2% compared with revenue of $122.2 million in the third quarter of fiscal 2017. GAAP net income for the third quarter of fiscal 2018 was $7.1 million, or $0.56 per diluted share, compared with a net loss of $(59.7) million, or $(4.78) per diluted share, in the third quarter of fiscal 2017. Included in GAAP net income and diluted EPS for the third quarter of fiscal 2017 were impairment and restructuring related charges totaling $75.2 million, or $5.40 per diluted share, primarily due to the Ultrasound business restructuring initiative and the 2017 restructuring plan.
Non-GAAP net income for the third quarter of fiscal 2018 was $13.6 million, or $1.08 per diluted share, compared with $10.0 million, or $0.79 per diluted share, in the prior year’s third quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.
For the first nine months of fiscal 2018, revenue totaled $356.0 million, down 5% from the same period in the prior fiscal year. Fiscal year-to-date GAAP net income was $19.3 million, or $1.53 per diluted share, compared with a net loss of $(49.6) million, or $(3.98) per diluted share, from the same period in 2017. Included in GAAP net income and diluted EPS for the first nine months of 2018 is a provisional $5.8 million income tax expense, or $0.46 per diluted share, for the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017 that was signed into law in late 2017 in addition to the $2.4 million of non-cash inventory impairment charges described above. Included in GAAP net income and EPS for the first nine months of fiscal 2017 were impairment and restructuring related charges of $75.7 million, or $5.43 per diluted share, primarily due to our Ultrasound business restructuring initiative, the 2017 restructuring plan, and the Oncura contingent consideration adjustment.
Year-to-date non-GAAP net income was $38.9 million, or $3.08 per diluted share, compared with $27.9 million, or $2.20 per diluted share, in the same period last year. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.
Fred Parks, president and CEO, commented, “Our preparations to complete the previously announced transaction with Altaris Capital Partners are on track. We look forward to providing what we believe is the most attractive combination of value and certainty to shareholders upon the close of the transaction, and continuing to deliver innovative technology to our customers.”
Segment Revenues for the Third Quarter of Fiscal 2018
Medical Imaging segment revenue was $61.4 million for the third quarter of fiscal 2018, down 12% from revenue of $69.5 million in the same period of fiscal 2017, primarily due to lower sales in CT. Lower sales in MR and mammography were offset by favorability in Motion Controls.
Ultrasound segment revenue was $42.2 million for the third quarter of fiscal 2018, up 21% from revenue of $34.8 million in the same period of fiscal 2017, due to continued strong sales growth in North America and Europe. Revenue growth was partially offset by the comparative lower revenue from discontinued system sales.
Security and Detection segment revenue was $16.4 million for the third quarter of fiscal 2018, down 8% from revenue of $17.9 million in the same period of fiscal 2017, mainly driven by lower shipments of airport checked baggage systems.
Conference Call Details
The Company does not plan to host a conference call to review the results of the quarter.
Use of Non-GAAP Financial Measures
We supplement our GAAP financial reporting with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, non-GAAP other income and expense, non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted earnings per share. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We have included at the end of this document a reconciliation of each historical non-GAAP financial measure used in this document to the most directly comparable GAAP financial measure.
We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, in forecasting and planning for future periods, and in determining payments under our compensation programs. We also believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and in comparing financial results across accounting periods and to those of other companies.
Any statements about future expectations, plans, and prospects for the Company, including statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company’s products, limited number of customers, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, acquisition related risks, and other factors discussed in our most recent quarterly and annual reports filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this presentation represent the Company’s views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company’s views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s views as of any later date.
About Analogic – Celebrating 50 Years of Imaging Innovation
Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging and real-time guidance technologies used for disease diagnosis and treatment as well as for automated threat detection. Our market-leading ultrasound systems, led by our flagship BK Ultrasound brand, used in procedure-driven markets such as urology, surgery, and point-of-care, are sold to clinical practitioners around the world. Our advanced imaging technologies are also used in computed tomography (CT), magnetic resonance imaging (MRI), and digital mammography systems, as well as automated threat detection systems for aviation security. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.
Analogic and the globe logo are registered trademarks of Analogic Corporation.
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