American Science And Engineering, Inc. F4Q10 (Qtr End 03/31/10) Earnings Call Transcript

The company recorded income tax provision of $5.5 million in the current quarter as compared to $4.8 million provision in the March ’09 quarter. The increase from the March ’09 quarter is due to the increase in taxable income attributable to the factors noted earlier, offset somewhat by a decrease in the effective tax rate from 36.6% in the prior-year quarter to 31% in the current quarter. The lower rate in the current quarter was primarily due to the reductions related to the reinforcement of revenues to states, probably recognizing nexus in states where we do perform services.

Fully diluted earnings per share in the March ’10 quarter were $1.34 as compared to $0.92 in the March ’09 quarter. A review of our annual results reflects the following. Revenues increased 11% to a new record-high of $242.1 million in the current year, from $218.4 million in the prior year. This is attributable to increases in cargo, Z Backscatter Systems, and Field Service, offset somewhat by decreases in parcel and contract research and development. Gross profit increased to $111.1 million in the current year from $93 million in the prior year. The increase is due to the increased revenues at an increase of 3.3 points in margin as a percent of revenue.

This improvement is due to a more favorable product mix and improved field service margins. SG&A expenses in the current year were $37 million or 15% of revenues as compared to $32.9 million or 15.1% of revenues in the prior year. This increase is primarily attributable to increased incentive in stock compensation expense, increased bidding proposal activities, and salaries and benefits related to headcount increases, offset somewhat by reduced legal expenses.

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