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Electro Rent Corporation (NASDAQ:ELRC) today reported financial results for the third quarter and nine months ended February 29, 2012.
“Our business remained steady during the quarter, with growth constrained by slower new and used equipment sales and uncertainty in the defense and aerospace industries, an important segment of our business,” said Daniel Greenberg, Chairman and CEO of Electro Rent. “A challenging budgetary environment in the sector delayed buying decisions while companies come to grips with changes in the defense budget. We believe that when the dust settles, renting test and measurement equipment will emerge as a key alternative to purchasing. Electro Rent is squarely positioned to benefit from this fundamental shift caused by a steadily deteriorating defense budget.”
Total revenues grew to $60.1 million for the third quarter of fiscal 2012 from $59.5 million for the same quarter last year. Sales of equipment and other revenues were $28.4 million for the most recent fiscal quarter, compared with $30.8 million for the fiscal 2011 third quarter. The decline primarily reflected lower sales of used equipment and new Agilent equipment, partially offset by increased finance lease activity. Rental and lease revenues increased to $31.7 million for the third quarter of fiscal 2012 from $28.7 million for the third quarter of fiscal 2011. The increase was principally attributable to higher rental activity and rates in North America and Europe, as the integration of Electro Rent’s new resale organization with its existing test and measurement sales force provided additional rental opportunities to an expanding customer base. This increase was partially offset by decline in leasing demand in the company’s data products business.
SG&A expenses totaled $15.7 million, or 26.2% of total revenues, for the fiscal 2012 third quarter, compared with $14.3 million, or 24.0% of total revenues, for last year’s third quarter. The increased selling, general and administrative expenses reflects the enhancement of Electro Rent’s sales organization in support of its Agilent resale agreement, higher rental demand and future growth opportunities. Total operating expenses amounted to $52.2 million for the fiscal 2012 third quarter, compared with $51.2 million last year.