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» Anaren, Inc. F4Q10 (Qtr End 06/30/10) Earnings Call Transcript
Net sales for the fourth quarter were record $47.2 million, up 4% from the fourth quarter of last year. Continuing robust demand for wireless standard components drove the overall increase in net sales. Non-GAAP operating income for the quarter was $6.4 million or 13.7% of net sales, down 4% from the fourth quarter of last year.Margins were negatively impacted by $1 million charge for severance and excess inventory charges at our Anaren’s ceramics operation to better focus this operation on higher margin revenue stream. This initiative reduced annual operating cost by approximately $2.5 million. Wireless Group net sales for the quarter were $19.7 million, up 36% from the fourth quarter of last year. The continuing increasing demand for standard infrastructure and consumer component drove the increase in net sales from the fourth quarter of last year and our customers are forecasting continued strong demand in to calendar 2012. The strong demand is the result of the overall demand for increased wireless capacity and the continuing shift in demand to 4G basestation applications, where our new products have significantly increased our dollar content per basestation. We believe that our dollar content in many 4G basestation applications is two to three times our content in prior generations basestation equipment. In addition product yields improved to more historical level during the quarter resulting in significantly improved profitability for the group. New product and technology development efforts remain focused on expanding our wireless product portfolio. During the quarter, the Group continued to expand the Xinger III the high power resistor and consumer component product lines. In addition, development of the Anaren Integrated Radio or AIR product lines of low power wireless transceiver modules continues and we anticipate Wireless Group R&D spending to continue at current levels. The number of AIR products design wins continues to increase and we remain optimistic as to the future revenue potential from the AIR product line. Customers that exceeded 10% of Wireless Group net sales for the quarter were E.G Components, Huawei, Nokia and Richardson.
For the Space & Defense Group, net sales for the quarter were $27.4 million down 10.7% from the fourth quarter of last year. And unfavorable sales mix, new production start ups and the severance costs and inventory write down due to reorganization at Anaren's ceramics negatively impacted the Group’s profitably for the quarter. We anticipate improved margins for the group in the first quarter of fiscal 2012 due to a more favorable sales mix and improved profitability at Anaren's ceramics.Product and technology development issues for the Group remain focused on expanding our RAD-hard hybrid electronic module product lines for space applications, advancing our RF manifold and hybrid electronic module technologies for radar applications and the development of integrated microwave assembly technology. New orders for the quarter were $30 million and included contracts for components and assemblies for ground based radar, shipborne jamming and various satellite applications. Space and defense order backlog at June 30, 2011 was $90.6 million. Customers that generated greater than 10% of Space & Defense Group net sales for the quarter were Lockheed Martin, Northrop Grumman, and Raytheon. George? George Blanton – Chief Financial Officer The highlights of the fourth quarter income statement and balance sheet at June 30, 2011, are presented on a non-GAAP basis. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items including equity-based compensation and intangible amortization. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. Please refer to our Q4 earnings release for a reconciliation of GAAP and non-GAAP measures. Non-GAAP gross margin was $18.1 million, or 38.4% in the current quarter, compared to $16.71 million or 37% for the fourth quarter of last year. Gross profit as a percent of sales increased by 140 basis points compared to the fourth quarter of last year due to a more favorable sales mix including increased shipments for wireless products, which offset lower margins in the Space & Defense Group. We expect company non-GAAP gross margins to be between 37% and 41% for the first quarter of fiscal 2011. Read the rest of this transcript for free on seekingalpha.com