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» American Science & Engineering, Inc. F2Q10 (Qtr End 09/30/09) Earnings Call Transcript
Before we begin, I am obliged to share our Safe Harbor guidelines with you. Forward-looking statements made during the course of this conference call are modified in their entirety by the risk factors we have identified in our press release and in our SEC filings.As we discuss the results of the quarter, you will see this has been a very exciting quarter for all of us here, as we have achieved new records in quarterly and year-to-date revenues, earnings per share, quarterly bookings and backlog. Now I would like to discuss the results of the second quarter. Net sales and contract revenues in the September '10 quarter were a record $80.6 million or 32% above the second quarter revenues in the prior year of $61.2 million. This increase in revenue is attributable to increases in revenue across all product lines. We're very pleased with this across the board performance, as it demonstrates the acceptance of our product portfolio. The breakout of revenue by product line for the quarter is as follows: Cargo was $20.9 million, up 99% over the prior year quarter. Z Backscatter systems were $34.2 million, up 21%. Parcel was $1.4 million, up 23%. Field service was $23.1 million, up 13%. And contract research and development was $1.1 million, up 19% over the prior year. The gross profit in the September quarter was $39.8 million as compared to $29.5 million in the prior year quarter. This increase in gross margin resulted from the increased revenues and a margin contribution increase of 1.3 percentage points in the current quarter as compared to the prior year quarter. The margin improvement was primarily related to delivery to multiple cargo systems which had a comparatively lower unit cost due to streamlining efforts that have been achieved. Selling, general and administrative expenses were $11 million or 13.6% of revenue in the September '10 quarter as compared to $8 million or 13.1% of revenue in the September '09 quarter. The $3 million increase in SG&A over the prior year quarter is a result of increases in incentive compensation expense attributable to the increased financial performance, travel expenses related to sales and marketing activities, salaries and benefits related to headcount increases and legal fees related to a terminated acquisition opportunity.
Company-funded research and development expenditures in the current quarter were $5.2 million or 6.5% of revenue, and they were 5.5% above the prior year expenditure of $5 million.Other income and expense in the current quarter was an expense of $975,000 as compared to income of $87,000 in the prior year quarter. This change is primarily attributable to the mark-to-market loss related to a foreign currency put that was closed out in the second quarter. As you will recall, we reported a $1.1 million gain on this put in the first quarter. In the second quarter, we are recording a $1.1 million expense due to the volatility of the euro during this fiscal year. The company recorded an income tax provision of $8 million in the current quarter as compared to $5.9 million provision in the September '09 quarter. The increase from the September '09 quarter is due to the increase in taxable income offset by a slight decrease in the effective tax rate from 35.5% in the prior year quarter to 35.2% in the current year quarter. At this time, we anticipate the effective tax rate for the remainder of the year to be 35%. Fully diluted earnings per share in the September '10 quarter were $1.59 as compared to earnings per share in the September '09 quarter of $1.18. A review of our year-to-date results would reflect the following. Revenues increased 16% to a new record of $134.3 million in the first six months of fiscal 2011 as compared to $115.9 million in the prior year. This increase is attributable to increases across all product lines. Read the rest of this transcript for free on seekingalpha.com