Analogic Corporation Announces Results for Its Second Quarter
Analogic Corporation Announces Results for Its Second Quarter
PEABODY, Mass.–(BUSINESS WIRE)–March 6, 2008–AnalogicCorporation (NASDAQ: ALOG), a leading designer and manufacturer of
high-precision health and security imaging equipment, today announced
results for its second quarter ended January 31, 2008.
Highlights of the quarter and recent events include:
--Revenues - $99,400,000, up $11,042,000, or 12%, over the prior
second quarter
--Net Income (GAAP) - $7,147,000, up 32% over the prior second quarter
--EPS (GAAP) - $0.54 per diluted share, up 38% over the prior second
quarter
--Medical Technology Products segment demonstrated strong growth of
sales and profits
--Security Technology Products segment improved profitability on a
slight decrease in revenue
--Major customer launched 320-slice Computed Tomography (CT) system
using Analogic's Data Acquisition Systems (DASs)
--Siemens and Philips launched new full-field digital mammography
systems incorporating Anrad's Selenium-based, flat-panel digital
detectors
--Subsequent to the end of the quarter, the Company announced that it
had:
--Entered into an agreement to acquire Copley Controls Corporation,
a leading Original Equipment Manufacturer (OEM) supplier of
gradient amplifiers for Magnetic Resonance Imaging (MRI) and
precision motion control systems
--Signed a new teaming agreement with L-3 Communications, awarding
L-3 worldwide rights to sell KING COBRA(R) and XLB(TM)1100
automatic Explosives Detection Systems (EDSs) for air carrier
baggage applications
Revenues for the second quarter ended January 31, 2008, were
$99,400,000, compared with the prior year’s second quarter revenues of
$88,358,000, an increase of $11,042,000, or 12%. On a GAAP basis, net
income for the second quarter was $7,147,000, or $0.54 per diluted
share, compared with a net income of $5,420,000, or $0.39 per diluted
share, for the prior year’s second quarter.
On a non-GAAP basis, net income for the second quarter ended
January 31, 2008, was $7,831,000, or $0.59 per diluted share, compared
to a net income of $6,449,000, or $0.46 per diluted share, for the
prior year’s second quarter.
Revenues for the six months ended January 31, 2008, were
$193,601,000, compared with the prior year’s first six-month revenues
of $163,960,000, an increase of $29,641,000, or 18%. On a GAAP basis,
net income for the six months ended January 31, 2008, was $13,535,000,
or $1.02 per diluted share, compared with a net income of $60,000, or
$0.00 per diluted share, for the prior year’s first six months. The
six months ended January 31, 2007, included pre-tax asset impairment
charges of $9,705,000 associated with the Company’s digital
radiography systems business.
On a non-GAAP basis, net income for the six months ended January
31, 2008, was $14,890,000, or $1.12 per diluted share, compared to a
net income of $8,065,000, or $0.58 per diluted share, for the prior
year’s first six months.
Non-GAAP net income and other non-GAAP financial measures exclude
the impact of certain items. A description of these non-GAAP financial
measures and a reconciliation of all GAAP to non-GAAP financial
measures are presented in the financial tables at the end of this news
release.
President and CEO Jim Green said, “Our medical business continued
to show strong growth in the second quarter. Medical technology
revenues were up 16% over the prior second quarter, and up 9% from the
first quarter of fiscal year 2008. Security technology revenues were
down 7% from a year earlier due primarily to a decline in engineering
revenues, but security pre-tax income was $1,384,000, compared to a
loss of $242,000 a year earlier. We have made substantial progress
bringing our cost structure in line with our security business
revenues.”
Medical imaging revenues for the second quarter were $53,620,000,
up more than 15% over the prior year’s second quarter. The growth was
primarily due to an increased demand for the Company’s advanced
subsystems for CT, including multislice DASs and Data Management
Systems (DMSs), which integrate DASs with X-ray detectors. Revenues
for patient monitors and OEM ultrasound probes and transducers were
also up relative to last year’s second quarter. Revenues from power
systems for MRI were flat, and Medical CT revenues were down due to a
short-term delay in supplier shipments. Digital Radiography revenues
were $5,767,000, up from $3,967,000 in the prior second quarter, due
in part to initial ramp up of flat-panel digital mammography detectors
by our Anrad subsidiary. Revenues for our B-K Medical subsidiary,
specializing in clinical ultrasound, were $24,698,000, up over the
prior year due primarily to changes in foreign exchange rates.
Security technology revenues for the quarter were $12,875,000,
down slightly from a year earlier. During the quarter, the Company
shipped 18 EXplosive Assessment Computed Tomography (EXACT®) systems
to L-3 Communications, the same quantity shipped during the second
quarter of fiscal 2007. The slight decrease in revenues was due to a
decline in engineering revenues. Just after the close of the quarter,
Analogic announced that it had received a $15 million order from L-3
for EXACT systems to begin shipping in June 2008.
Green added that the recent agreement to acquire Copley Controls
Corporation, a leading OEM supplier of gradient amplifiers for MRI
systems and of precision motion control systems, announced after the
close of the quarter, was another major step forward for the Company.
“The addition of Copley Controls will strongly complement our core
medical business. With Copley’s leading-edge technology in high-field
gradient amplifiers, we will be able to expand our product offerings
to our OEM customers, better address some significant emerging MRI
opportunities in Asia, and further enhance our position as a leading
OEM supplier of high-value medical imaging subsystems.”
Optimistic regarding continuing growth, Green noted that at the
annual Radiological Society of North America (RSNA) meeting in
November 2007 both Siemens and Philips introduced top-of-the-line
full-field digital mammography systems that incorporate Anrad’s
advanced digital flat-panel detectors. “We expect that production of
these major new systems will ramp up over the next several quarters.
Their introduction should generate significant growth in digital
mammography and in the demand for Anrad’s proprietary
amorphous-Selenium-based digital mammography detectors over the next
several years.”
Green added, “We expect our COBRA® automatic explosives and
weapons detection system for aircraft passenger checkpoints to be
qualified for sale by the U.S. Transportation Security Administration
(TSA) within the next several months. Before the end of the fiscal
year we expect to begin shipping units under the Indefinite Delivery
Indefinite Quantity (IDIQ) order received from the TSA last October.
Concurrently, we anticipate that the KING COBRA system, designed to
scan checked and checkpoint baggage at small to mid-sized airports,
will be certified within the next several months and production-ready
this summer. The XLB™1100 ultra-high-speed, inline checked baggage
scanning system is expected to be certified by the TSA several months
after the KING COBRA and production-ready in calendar 2009. Subsequent
to the end of the quarter we announced an expanded relationship with
L-3 Communications, awarding them exclusive worldwide rights to market
and service the KING COBRA and the XLB1100 Auto-EDS systems for air
carrier checked-baggage applications. With the continuing growth in
our medical businesses and the new opportunities in both health and
security, I believe we are establishing the foundation for Analogic’s
long-term growth as The World Resource for Health and Security
Technology.”
Use of Non-GAAP Financial Measures
This presentation includes non-GAAP financial measures that are
not in accordance with, nor an alternative to, generally accepted
accounting principles and may be different from non-GAAP measures used
by other companies. In addition, these non-GAAP measures are not based
on any comprehensive set of accounting rules or principles.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. They are limited in value because
they exclude charges that have a material effect on our reported
results and, therefore, should not be relied upon as the sole
financial measures to evaluate our financial results. The non-GAAP
financial measures are meant to supplement, and to be viewed in
conjunction with, GAAP financial results. An explanation and a
reconciliation of our non-GAAP measures are provided at the end of
this press release.
Conference Call
Analogic will conduct an investor conference call on Thursday,
March 6, 2008 at 11:00 a.m. ET to discuss the results for the second
quarter and recent developments. To participate in the conference
call, dial 1-866-823-6992, or 1-334-323-7225 for international
callers, approximately ten minutes before the conference is scheduled
to begin. Inform the operator that you wish to join the Analogic
conference, Passcode 03391. You will then be asked for your name,
organization, and telephone number and be connected to the conference.
Presentation materials related to quarterly financial information will
be posted on the Company’s website at www.analogic.com. To listen to
the live audio webcast in listen-only mode, visit www.analogic.com
approximately ten minutes before the conference is scheduled to begin.
A telephone digital replay will be available approximately two
hours after the call is completed through midnight (ET) Thursday,
March 27, 2008. To access the digital replay, dial 1-877-919-4059, or
1-334-323-7226 for international callers. The conference ID number is
13103403.
A replay of the conference call webcast will be archived on the
Company’s website at www.analogic.com approximately three hours after
the call is completed and will be available through midnight (ET)
Thursday, March 27, 2008.
For more information on the conference call, visit
www.analogic.com, call 978-326-4213, or email proberts@analogic.com.
About Analogic
Analogic Corporation is a leading designer and manufacturer of
high-precision health and security imaging equipment sold primarily to
Original Equipment Manufacturers. The Company is recognized worldwide
for advancing the state of the art in Automatic Explosives Detection,
Computed Tomography, Digital Radiography, Ultrasound, Magnetic
Resonance Imaging, Patient Monitoring, and Advanced Signal Processing.
Forward-Looking Statements
This press release contains the Company’s or management’s
intentions, hopes, beliefs, expectations, or predictions. These are
considered “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements (statements that are not historical facts) in this
presentation are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that all forward-looking statements, including statements
about product development, market and industry trends, strategic
initiatives, regulatory approvals, sales, profits, expenses, price
trends, research and development expenses and trends, and capital
expenditures involve risk and uncertainties. Actual results may differ
materially from those indicated by such statements as a result of
various factors, including those discussed in the Company’s periodic
reports filed with the SEC under the heading “Risk Factors.” In
addition, the forward-looking statements included in this press
release represent the Company’s views as of March 6, 2008. The Company
anticipates that subsequent events and developments will cause the
Company’s views to change. However, while the Company may elect to
update these forward-looking statements at some point in the future,
the Company specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as representing
the Company’s views as of any date subsequent to March 6, 2008.
Consolidated Statements of Operations (GAAP) (in thousands, except per
share data)
Three Months Ended Six Months Ended
January 31, January 31,
--------------------------------------
(Unaudited) (Unaudited)
2008 2007 2008 2007
--------------------------------------
Net revenue:
Products $94,231 $82,562 $179,542 $153,310
Engineering 2,729 3,721 8,244 5,385
Other 2,440 2,075 5,815 5,265
--------------------------------------
Total net revenue 99,400 88,358 193,601 163,960
--------------------------------------
Cost of sales:
Products 57,175 50,686 109,224 95,275
Engineering 3,120 3,435 8,576 6,298
Other 1,765 1,595 3,644 3,082
Asset impairment charges -- -- -- 8,625
--------------------------------------
Total cost of sales 62,060 55,716 121,444 113,280
--------------------------------------
Gross margin 37,340 32,642 72,157 50,680
--------------------------------------
Operating expenses:
Research and product
development 11,858 12,680 23,040 24,258
Selling and marketing 7,985 7,494 15,787 14,496
General and administrative 9,696 8,451 19,136 17,490
Asset impairment charges -- -- -- 1,080
--------------------------------------
Total operating expenses 29,539 28,625 57,963 57,324
--------------------------------------
Income (loss) from operations 7,801 4,017 14,194 (6,644)
--------------------------------------
Other (income) expense:
Interest income, net (2,484) (3,146) (5,187) (6,369)
Equity loss in
unconsolidated affiliates -- 53 -- 131
Other (421) (155) (860) (33)
--------------------------------------
Total other (income) expense (2,905) (3,248) (6,047) (6,271)
--------------------------------------
Income (loss) before income
taxes 10,706 7,265 20,241 (373)
Provision (benefit) for income
taxes 3,559 1,845 6,706 (433)
--------------------------------------
Net income $ 7,147 $ 5,420 $ 13,535 $ 60
======================================
Net income per share:
Basic $ 0.54 $ 0.39 $ 1.03 $ 0.00
Diluted 0.54 0.39 1.02 0.00
Dividends declared per share $ 0.10 $ 0.10 $ 0.20 $ 0.20
Shares outstanding:
Basic 13,174 13,866 13,133 13,846
Diluted 13,271 13,982 13,245 13,960
Condensed Consolidated Balance Sheets (GAAP) (in thousands)
January 31, July 31,
2008 2007
----------- ---------
(Unaudited) (Audited)
Assets:
Cash, cash equivalents and marketable
securities $240,511 $228,545
Accounts receivable, net 57,871 58,926
Inventories 58,287 54,413
Other current assets 16,892 23,558
----------- ---------
Total current assets 373,561 365,442
Property, plant and equipment, net 83,690 80,482
Other assets 20,663 13,217
----------- ---------
Total Assets $477,914 $459,141
=========== =========
Liabilities and Stockholders' Equity:
Accounts payable, trade $ 20,329 $ 21,734
Accrued liabilities 23,994 26,570
Advance payments and deferred revenue 10,983 11,517
Accrued income taxes 0 5,507
----------- ---------
Total current liabilities 55,306 65,328
----------- ---------
Other long-term liabilities 7,046 --
Deferred income taxes 711 456
----------- ---------
Total long-term liabilities 7,757 456
----------- ---------
Stockholders' equity 414,851 393,357
----------- ---------
Total Liabilities and Stockholders' Equity $477,914 $459,141
=========== =========
UNAUDITED SUPPLEMENTAL INFORMATION – RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
The Company provides non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP other (income) expense, non-GAAP income before
taxes, non-GAAP net income and non-GAAP diluted earnings per share as
supplemental measures to GAAP regarding the Company’s operational
performance. These financial measures exclude the impact of certain
items and, therefore, have not been calculated in accordance with
GAAP. The adjustments to these non-GAAP financial measures, and the
basis for such adjustments, are outlined below:
Share-based compensation expense. The Company incurs expense
related to share-based compensation included in its GAAP presentation
of cost of sales, research and development, selling and marketing,
general and administrative expense. Although share-based compensation
is an expense of the Company and viewed as a form of compensation,
these expenses vary in amount from period to period, and are affected
by market forces that are difficult to predict and are not within the
control of management, such as the market price and volatility of the
Company’s shares, risk-free interest rates, the expected term and
forfeiture rates of the awards. In accordance with SFAS No. 123R,
share-based compensation expense is calculated as of the grant date of
each share-based award, and generally cannot be changed or influenced
by management after the grant date. Management believes that exclusion
of these expenses allows comparisons of operating results that are
consistent between periods and allows comparisons of the Company’s
operating results to those of other companies that disclose non-GAAP
financial measures that exclude share-based compensation.
Executive transition expenses. In November 2006, John W. Wood Jr.
resigned as President of the Company and was temporarily replaced by
Bernard M. Gordon, who was appointed as our Executive Chairman, in
which capacity he served as both our principal executive officer and
Chairman of the Board. James W. Green was appointed as our President
and CEO on May 21, 2007, replacing Mr. Gordon as our principal
executive officer. Since his arrival Mr. Green has made and is
continuing to make a number of changes in the senior leadership team
reporting to him. As such, the Company has incurred charges for
severance, executive search, relocation and other related expenses.
Management believes these charges should be excluded from the non-GAAP
results because they are one-time items not associated with the
ongoing operations of the business.
Acquisition related expenses. The Company incurs amortization of
intangibles and other expenses related to acquisitions it has made in
recent years. The intangible assets are valued at the time of
acquisition, are then amortized over a period of several years after
the acquisition and generally cannot be changed or influenced by
management after the acquisition. Management believes that exclusion
of these expenses allows comparisons of operating results that are
consistent over time for both our newly acquired and long-held
businesses.
Asset impairment charges. As a result of continuing losses in its
Digital Radiography business and the related business outlook, the
Company evaluated the net realizability of all of the related assets
at October 31, 2006. As a result, the Company recorded an asset
impairment charge of $9,705,000 associated with the write-down of the
Company’s Digital Radiography system business assets to their
estimated fair values as a group based upon the present value of
estimated future cash flows of the business. Of the $9,705,000 asset
impairment charges, $8,625,000 was recorded to cost of sales and
$1,080,000 was recorded to operating expenses. Management believes
these charges should be excluded from the non-GAAP results because
they are one-time items not associated with the ongoing operations of
the business.
Gain on sale of investments and other. During the three months
ended October 31, 2007, the Company received $84,000 as an initial
escrow payment related to the Q4 2007 sale of its interest in
Bio-Imaging Research, which it recorded as other income. On November
1, 2006, the Company sold certain assets of SKY and its obligation to
service sold products for a purchase price of $405,000. The $405,000
includes $225,000 in cash paid at closing, $150,000 in cash paid after
the closing for additional inventory, and the assumption of $30,000 in
liabilities. The Company recorded a gain of $205,000 from the sale in
the three and six months ended January 31, 2007. On December 7, 2007,
the Company received $555,000 from its insurance company as
reimbursement for legal fees incurred in relation to an
indemnification matter related to the Company’s sale of its
wholly-owned subsidiary Camtronics Medical Systems, Ltd. in November
2005. The $555,000 gain was recorded as other income during the three
months and six months ended January 31, 2008. These gains have been
presented as a non-GAAP item for that period.
Adjustments for related tax impact. Finally, for purposes of
calculating non-GAAP net income and non-GAAP diluted earnings (losses)
per share, management adjusts the provision (benefit) for income taxes
to tax effect the non-GAAP adjustments described above as they have a
significant impact on the Company’s income tax provision (benefit).
Management excludes the above described expenses and their related
tax impact in evaluating short-term and long-term operating trends in
the Company’s operations, and allocating resources to various
initiatives and operational requirements. The Company believes that
these non-GAAP financial adjustments are useful to investors because
they allow investors to evaluate the effectiveness of the methodology
and information used by management in its financial and operational
decision-making.
These non-GAAP financial measures have not been prepared in
accordance with GAAP, and should not be considered in isolation or as
a substitute for financial information provided in accordance with
GAAP. Further, these non-GAAP financial measures may not be computed
in the same manner as similarly titled measures used by other
companies.
The following table reconciles the non-GAAP financial measures to
their most directly comparable GAAP financial measures.
Three Months Ended Six Months Ended
(in thousands, except per share January 31, January 31,
data)
2008 2007 2008 2007
------------------------------------
GAAP Gross Margin $37,340 $32,642 $72,157 $50,680
Share-based compensation 67 35 95 79
Asset impairment charges -- -- -- 8,625
------------------------------------
Non-GAAP Gross Margin $37,407 $32,677 $72,252 $59,384
====================================
Percent of Total Revenue 37.6% 37.0% 37.3% 36.2%
GAAP Operating Expenses $29,539 $28,625 $57,963 $57,324
Share-based compensation (1,004) (99) (1,372) (703)
Executive transition (426) (230) (844) (375)
Acquisition related expense -- (357) (327) (714)
Asset impairment charges -- -- -- (1,080)
------------------------------------
Non-GAAP Operating Expenses 28,109 27,939 55,420 54,452
====================================
Percent of Total Revenue 28.3% 31.6% 28.6% 33.2%
GAAP Other (income) $(2,905) $(3,248) $(6,047) $(6,271)
Gain on sale of investments
and other 555 205 639 205
------------------------------------
Non-GAAP Other (income) expense (2,350) (3,043) (5,408) (6,066)
====================================
GAAP Income (Loss) Before Income
Taxes $10,706 $ 7,265 $20,241 $ (373)
Share-based compensation 1,071 134 1,467 782
Executive transition 426 230 844 375
Acquisition related expense -- 357 327 714
Asset impairment charges -- -- -- 9,705
(Gain) on sale of
investments and other (555) (205) (639) (205)
------------------------------------
Non-GAAP Income Before Income
Taxes 11,648 7,781 22,240 10,998
====================================
Percent of Total Revenue 11.7% 8.8% 11.5% 6.7%
GAAP Net Income $ 7,147 $ 5,420 $13,535 $ 60
Share-based compensation 765 94 1,019 571
Executive transition 269 145 533 263
Acquisition related expense -- 225 206 450
Asset impairment charges -- -- -- 6,156
(Gain) loss on sale of
investments and other (350) 565 (403) 565
------------------------------------
Non-GAAP Net Income 7,831 6,449 14,890 8,065
====================================
Percent of Total Revenue 7.9% 7.3% 7.7% 4.9%
GAAP Diluted EPS $ 0.54 $ 0.39 $ 1.02 $ 0.00
Effect of non-GAAP
adjustments 0.05 0.07 0.10 0.58
------------------------------------
Non-GAAP Diluted EPS $ 0.59 $ 0.46 $ 1.12 $ 0.58
====================================
CONTACT: Analogic Corporation
John J. Millerick, 978-326-4000
Senior Vice President & CFO
or
Paul M. Roberts, 978-326-4213
Director of Communications
proberts@analogic.com
SOURCE: Analogic Corporation