Aeroflex Announces Second Quarter Fiscal 2012 Results

Aeroflex Holding Corp. ("Aeroflex") (NYSE: ARX), a leading global provider of high performance microelectronic components, and test and measurement equipment, today announced its financial results for the second quarter of fiscal 2012, which ended December 31, 2011.

Net sales for the second quarter of fiscal 2012 were $171.1 million, up approximately 10% sequentially from the first quarter of fiscal 2012. AMS net sales were $84.6 million and ATS net sales were $86.5 million in the second quarter of fiscal 2012. Operating income was $8.2 million and net income (loss) was $(535,000), or $(0.01) per share, in the second quarter of fiscal 2012.

Non-GAAP operating income was $27.8 million, Adjusted EBITDA was $32.4 million and Non-GAAP net income per share was $0.15 in the second quarter. For the second quarter, the book-to-bill ratio was approximately 1-to-1.

“I am pleased that we exceeded our expectations this quarter,” said Len Borow, Chief Executive Officer of Aeroflex. “Contributing to our success were shipments of several prototype PXI lines to wireless test customers in Asia which we believe are a prelude for future business. We continued to build upon our success in AMS with significant contract wins across our high reliability and high performance microelectronics business.” Mr. Borow added, “Our unique technology and strong product portfolio allows both our AMS and ATS businesses to remain at the forefront of their respective industries.”

The following tables present selected financial information for the three and six months ended December 31, 2011 and 2010 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). The GAAP and Non-GAAP effective tax rates in fiscal 2012 were 31% and 35%, respectively. The GAAP and Non-GAAP effective tax rates in fiscal 2011 were 59% and 31%, respectively. The GAAP and the Non-GAAP tax rates are a result of Aeroflex’s geographic mix of pre-tax income. These rates were applied to the respective pre-tax income (loss) for the three and six month periods. A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release.

Selected GAAP Results

(In thousands, except percentages and per share data)
   
Three Months Ended Six Months Ended
December 31, December 31,
2011   2010 2011   2010
 
Net sales $ 171,138 $ 181,579 $ 326,022 $ 337,510
 
Gross profit 85,691 94,840 164,210 174,666
Gross margin 50.1 % 52.2 % 50.4 % 51.8 %
 
Operating income (loss) 8,246 (5,351 ) 8,784 (2,148 )
 
Net income (loss) $ (535 ) $ (11,403 ) $ (5,577 ) $ (17,220 )
 
Net income (loss) per common share:
Basic $ (0.01 ) $ (0.15 ) $ (0.07 ) $ (0.25 )
Diluted $ (0.01 ) $ (0.15 ) $ (0.07 ) $ (0.25 )
 
Weighted average number of common shares outstanding:
Basic   84,804     74,034     84,797     69,517  
Diluted   84,804     74,034     84,797     69,517  
 

Selected Non-GAAP Results

(In thousands, except percentages and per share data)
       
Three Months Ended Six Months Ended
December 31, December 31,
2011 2010 2011 2010
Net sales $ 171,138 $ 181,603 $ 326,022 $ 337,558
 
Gross profit $ 85,693 $ 95,214 $ 164,202 $ 175,843

Gross margin
50.1 % 52.4 % 50.4 % 52.1 %
 
Operating income 27,801 39,522 46,785 65,049
 
Net income $ 12,591   $ 14,328   $ 19,598   $ 18,090  
 
Net income per common share:
Basic $ 0.15   $ 0.19   $ 0.23   $ 0.26  
Diluted $ 0.15   $ 0.19   $ 0.23   $ 0.26  
 
Weighted average number of common shares outstanding:
Basic   84,804     74,034     84,797     69,517  
Diluted   84,814     74,034     84,802     69,517  
 
Adjusted EBITDA $ 32,385   $ 44,494   $ 56,139   $ 74,540  
 

Business Outlook

Mr. Borow added, “Despite our success this quarter, the economic uncertainties surrounding our wireless end markets, the European economy and uncertainty in defense spending has made visibility more challenging and our future outlook more cautious.” For the fiscal third quarter ending March 31, 2012, Aeroflex expects net sales to be between $167 million and $177 million, GAAP net income (loss) to be between $(650,000) and $2 million, Adjusted EBITDA to be between $31 million and $35 million, GAAP net income (loss) per share to be between $(0.01) and $0.02, and Non-GAAP net income per share to be between $0.14 and $0.17.

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