Anaren Reports 1st Quarter Fiscal 2013 Results

SYRACUSE, N.Y., Oct. 23, 2012 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2013 first quarter ended September 30, 2012 of $39.1 million, up 0.9% from $38.7 million for the first quarter of last year.

GAAP (U.S. generally accepted accounting principles) net income for the first quarter of fiscal 2013 was $2.9 million, or $0.21 per diluted share, compared to $2.5 million, or $0.17 per diluted share for the first quarter of last year.

Non-GAAP diluted earnings per share, excluding non-cash equity based compensation and intangible asset amortization, was $0.27 for the first quarter of fiscal 2013 compared to non-GAAP diluted earnings per share of $0.23 for the first quarter of fiscal 2012.

GAAP operating income for the first quarter of fiscal 2013 was $4.0 million, or 10.2% of net sales, compared to $3.6 million, or 9.3% of net sales for the first quarter of last year. Non-GAAP operating income for the first quarter of fiscal 2013, which excludes non-cash equity based compensation and intangible asset amortization, was $5.3 million, or 13.6% of net sales, up 9.4% from $4.8 million, or 12.5% of net sales for the first quarter of fiscal 2012.

Income taxes for the first quarter of fiscal 2013 were $1.3 million, representing an effective tax rate of 32.0% compared to income tax expense of $1.1 million for the first quarter of fiscal 2012, representing an effective tax rate of 30.7%. The projected effective tax rate for fiscal 2013, absent one-time events, is expected to be approximately 32.0%.

Lawrence A. Sala, Anaren's Chairman, President and CEO said, "We were pleased to see continuing sequential quarterly sales growth and improved profitability for the quarter. Non-GAAP operating income improved more than 9% from first quarter fiscal year 2012 levels, as a result of both the higher sales volume and the actions taken last year to reduce operating expenses."

During the first quarter of fiscal 2013, the Company generated $2.1 million in operating cash flow compared to $5.3 million in the first quarter of fiscal 2012. Additionally, during the current quarter the Company repurchased approximately 469,000 shares of its common stock for a total of $8.9 million and expended $1.3 million for capital additions. Non-operating cash receipts for the quarter included $1.4 million from the exercise of stock options and the Company borrowed $8.0 million under its revolving credit facility during the quarter to help fund stock repurchases. Cash, cash equivalents and marketable debt securities at September 30, 2012 were $45.6 million, up $1.7 million from $43.9 million at June 30, 2012.

Wireless Group

Wireless Group net sales for the quarter were $13.2 million, down 27.5% from the first quarter of fiscal 2012, due to the continuing softness in demand in the wireless infrastructure market. While current Wireless Group sales remain below the peak first quarter fiscal 2012 levels, demand for our Wireless infrastructure products has increased more than 29% from the low point in the third quarter of last year.

New product investments for the quarter continued to be focused on expansion of the wireless infrastructure components and low power wireless Anaren Integrated Radio (AIR) module product lines.

Customers that generated greater than 10% of Wireless Group net sales for the quarter were Arrow Electronics, Richardson, Huawei and Nokia.

Space & Defense Group

Space & Defense Group net sales for the quarter were $25.9 million, up 26.1% from the first quarter of fiscal 2012. This increase was driven mainly by higher shipments of passive ranging sub systems and hybrid electronic modules. The increase in net sales and improved operational execution during the quarter resulted in higher profitability for the Group.

New orders for the quarter totaled $24.8 million and were driven largely by radar, passive ranging and satellite applications. Space & Defense Group order backlog at September 30, 2012 was approximately $104 million.  

Customers that generated greater than 10% of Space & Defense Group net sales for the quarter were Lockheed Martin, Northrop Grumman and Raytheon. 

Non-GAAP Financial Measures

In addition to presenting financial results calculated in accordance with GAAP, Anaren's earnings release contains non-GAAP financial measures including: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items including equity based compensation and intangible asset amortization.

The Company believes these non-GAAP financial measures provide useful information to both management and investors to help understand and compare business trends among reporting periods on a consistent basis. Additionally, these non-GAAP financial measurements are one of the primary indicators management uses for planning and forecasting in future periods. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

Outlook

For the second quarter of fiscal 2013, we anticipate comparable sales for both the Wireless and Space & Defense Groups compared to the first quarter levels. As a result, we expect net sales to be in the range of $37 to $41 million.  We expect GAAP net earnings per diluted share to be in the range of $0.17 - $0.25, using an anticipated tax rate of approximately 32.0% and inclusive of approximately $0.05 -$0.06 per diluted share related to expected equity based compensation expense and amortization of intangibles assets. Non-GAAP net earnings per diluted share are expected to be in the range of $0.22 - $0.30 for the second quarter.

Forward-Looking Statements

The statements contained in this news release which are not historical information are "forward-looking statements."   These and other forward-looking statements are based on management's current expectations and are subject to business, market and economic risks and uncertainties that could cause actual results to differ materially from those discussed. You are encouraged to review Anaren's filings with the Securities and Exchange Commission to learn more about the various risks and uncertainties facing Anaren's business and their potential impact on Anaren's revenue, earnings and stock price. Unless required by law, Anaren disclaims any obligation to update or revise any forward-looking statement.

Conference Call

Anaren will host a live teleconference, open to the public on the Anaren Investor Info, Live Webcast Web Site ( www.anaren.com ) on October 24 at 8:30 a.m. (ET). A replay of the conference call will be available at 11:30 a.m. (ET) beginning October 24, 2012 through 11:30 p.m. on October 31, 2012. To listen to the replay, interested parties may dial in the U.S. at 1-855-859-2056 and International at 1-404-537-3406. The passcode is 34844702. If you are unable to access the Live Webcast, the dial in number for the U.S. is 1-877-734-4580 and International is 1-678-905-9378.

Company Background

Anaren designs, manufactures and sells complex microwave components and subsystems for the wireless communications, satellite communications and defense electronics markets. For more information on Anaren's products, visit our Web site at www.anaren.com.

The Anaren, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5360
 ANAREN, INC. 
 Condensed Consolidated Income Statements 
 (in thousands except per share data) 
 (unaudited) 
     
     
   Three Months Ended 
  September 30, 2012 September 30, 2011
     
 Sales   $ 39,062  $ 38,720
     
 Cost of sales   24,647  24,196
 Gross profit   14,415  14,524
  36.9% 37.5%
 Operating expenses:     
 Marketing   2,539  2,596
 Research and development   3,334  3,924
 General and administration   4,550  4,415
 Total operating expenses   10,423  10,935
     
 Operating income   3,992  3,589
  10.2% 9.3%
 Other income (expense):     
 Other income   223  140
 Interest expense   (18)  (80)
 Total other income, net   205  60
     
 Income before income tax expense   4,197  3,649
 Income tax expense   1,343  1,120
 Net income   $ 2,854  $ 2,529
  7.3% 6.5%
     
 Earnings per share:     
 Basic   $ 0.22  $ 0.18
 Diluted   $ 0.21  $ 0.17
     
     
 Weighted average common shares outstanding:   
 Basic   12,999  14,129
 Diluted   13,676  14,803
 
ANAREN, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
  September 30, 2012 June 30, 2012
     
Assets:    
Cash, cash equivalents and short-term investments  $ 35,990  $ 32,232
Receivables, less allowances  33,426  29,521
Inventories  36,854  36,443
Held for sale assets  4,359  -- 
Prepaid expenses and other assets  5,842  6,650
Total current assets  116,471  104,846
     
Securities held to maturity  9,622  11,657
Property, plant, and equipment, net  42,212  47,171
Goodwill  42,343  42,343
Other intangibles, net  7,515  7,770
Total assets  $ 218,163  $ 213,787
     
Liabilities and Stockholders' Equity    
Liabilities:    
Accounts payable  $ 7,615  $ 8,604
Accrued expenses  4,585  3,926
Customer advance payments  1,206  1,307
Other liabilities  2,334  2,068
Total current liabilities  15,740  15,905
     
Long-term debt obligation  8,000  -- 
Other non-current liabilities  12,139  12,379
Total liabilities  35,879  28,284
     
Stockholders' Equity:    
Common stock and additional paid-in capital  226,180  223,326
Retained earnings  145,980  143,126
Accumulated other comprehensive loss  (3,056)  (3,026)
Less: cost of treasury shares  (186,820)  (177,923)
Total stockholders' equity  182,284  185,503
     
Total liabilities and stockholders' equity  $ 218,163  $ 213,787
 
 ANAREN, INC. 
 Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, Net Income and Diluted Earnings Per Share 
 (in thousands except per share data) 
 (unaudited) 
     
   Three Months Ended 
  September 30, 2012 September 30, 2011
     
 Sales   $ 39,062  $ 38,720
     
 GAAP gross profit   $ 14,415  $ 14,524
 Equity-based compensation expense (1)   239  194
 Amortization of intangibles (2)   39  39
 Non-GAAP gross profit   $ 14,693  $ 14,757
 % of sales  37.6% 38.1%
     
 GAAP operating income   $ 3,992  $ 3,589
 Equity-based compensation expense (1)   1,050  956
 Amortization of intangibles (2)   255  298
 Non-GAAP operating income   $ 5,297  $ 4,843
 % of sales  13.6% 12.5%
     
 GAAP net income   $ 2,854  $ 2,529
 Equity-based compensation expense (1)   1,050  956
 Amortization of intangibles (2)   255  298
 Tax effect   (470)  (451)
 Non-GAAP net income   $ 3,689  $ 3,332
 % of sales  9.4% 8.6%
     
     
 Diluted earnings per share     
 GAAP diluted earnings per share   $ 0.21  $ 0.17
 Equity-based compensation expense (1)   0.08  0.06
 Amortization of intangibles (2)   0.02  0.02
 Tax adjustments   (0.04)  (0.02)
 Non-GAAP diluted earnings per share   $ 0.27  $ 0.23
     
 Weighted average common shares outstanding     
 Diluted   13,676  14,803
     
     
 1) These costs represent expense recognized in accordance with the share-based compensation accounting rules. 
     
 2) These costs represent amortization of intangible assets for the three months ended September 30, 2012 and 2011. 
 
 ANAREN, INC. 
 Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, and Earnings Per Share 
 (in thousands) 
 (unaudited) 
       
 The following table details the Non-GAAP, Non-Cash expenses related to equity-based compensation and intangible asset amortization by expense category. 
       
 Three Months Ended September 30, 2012
  (in thousands) 
  (unaudited) 
       
   Equity Based   Amortization   
   Compensation   of Intangibles   Total 
 Cost of sales   $ 239  $ 39  $ 278
 Marketing   86  --   86
 Research and development   120  --   120
 General and administrative   605  216  821
   $ 1,050  $ 255  $ 1,305
       
       
       
       
  Three Months Ended September 30, 2011
  (in thousands) 
  (unaudited)
       
   Equity Based   Amortization   
   Compensation   of Intangibles   Total 
 Cost of sales   $ 194  $ 39  $ 233
 Marketing   65  --   65
 Research and development   114  --   114
 General and administrative   583  259  842
   $ 956  $ 298  $ 1,254
 
ANAREN, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
   
   Three Months Ended 
   September 30, 2012 
Cash flows from operating activities:  
Net income  $ 2,854
   
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation  1,909
Amortization  363
Deferred income taxes  105
Equity-based compensation  1,050
Receivables  (3,906)
Inventories  (411)
Accounts payable  (989)
Other assets and liabilities  1,088
Net cash provided by operating activities  2,063
   
Cash flows from investing activities:  
Capital expenditures   (1,309)
Proceeds from deposit on held for sale assets  200
Net maturities of held to maturity securities  5,415
Net cash provided by investing activities  4,306
   
Cash flows from financing activities:  
Proceeds from long-term debt obligation  8,000
Stock options exercised  1,352
Excess tax benefit from equity-based compensation  453
Purchase of treasury shares  (8,897)
Net cash provided by financing activities  908
   
Effect of exchange rates on cash  (31)
   
Net increase in cash and cash equivalents  $ 7,246
   
Cash and cash equivalents at beginning of period  $ 21,012
   
Cash and cash equivalents at end of period  $ 28,258
CONTACT: George Blanton, CFO         315-362-0436         Joseph E. Porcello, VP-Accounting         315-362-0514

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