×

Anaren Reports 4th Quarter Fiscal 2013 Results

Anaren, Inc. Logo

SYRACUSE, N.Y., Aug. 5, 2013 (GLOBE NEWSWIRE) -- Anaren, Inc. (Nasdaq:ANEN) today reported net sales for the fiscal 2013 fourth quarter ended June 30, 2013 of $42.3 million, up 10.9% from $38.2 million for the fourth quarter of last year.

GAAP (U.S. generally accepted accounting principles) net income for the fourth quarter of fiscal 2013 was $3.4 million, up 15.2% from $2.9 million for the fourth quarter of last year. GAAP diluted earnings per share for the fourth quarter of fiscal 2013 was $0.25, up 25% from diluted earnings per share of $0.20 for the fourth quarter of last year.

Non-GAAP diluted earnings per share, excluding non-cash equity based compensation and intangible asset amortization, was $0.30 for the fourth quarter of fiscal 2013, up 15.4% compared to non-GAAP diluted earnings per share of $0.26 for the fourth quarter of fiscal 2012.

Both GAAP and Non-GAAP net income for the fourth quarter of fiscal 2013 were reduced by a one-time unfavorable adjustment of approximately $0.4 million, net of tax, or $(0.03) per diluted share resulting from an accrued charge for possible losses related to a bankruptcy filing (Chapter 11) by a current vendor.

GAAP operating income for the fourth quarter of fiscal 2013 was $4.1 million, or 9.8% of net sales, up 15.7% from $3.6 million, or 9.4% of net sales for the fourth quarter of last year. Non-GAAP operating income for the fourth quarter of fiscal 2013, which excludes non-cash equity based compensation and intangible asset amortization, was $5.2 million, or 12.2% of net sales, up 6.5% from $4.9 million, or 12.7% of net sales for the fourth quarter of fiscal 2012. Both GAAP and non-GAAP operating income for the fourth quarter of fiscal 2013 were reduced by the one-time unfavorable adjustment of approximately $0.6 million, or 1.4% of net sales, resulting from the previously mentioned vendor bankruptcy filing.

Income taxes for the fourth quarter of fiscal 2013 were $0.9 million, representing an effective tax rate of 20.2% compared to income tax expense of $0.9 million for the fourth quarter of fiscal 2012, representing an effective tax rate of 22.6%. The projected effective tax rate for fiscal 2014, absent one-time events, is expected to be 27%.

Lawrence A. Sala, Anaren's Chairman, President and CEO said, "The growth in net sales for the quarter was driven by both the Space & Defense and Wireless Groups. The Space & Defense Group business is benefiting from a growing percentage of Space related business and increasing demand for radar related technology. Wireless demand improved during the quarter and customer forecasts indicate strengthening worldwide demand for cellular infrastructure equipment. For the year, GAAP net income increased 75% on 7.5% growth in net sales and we believe that we are well positioned for continued growth and improved profitability in fiscal 2014."

Net sales for the year ended June 30, 2013, were $158.4 million, up 7.5% compared to net sales of $147.3 million for last year. GAAP net income for fiscal 2013 was $15.1 million, up 75% compared to $8.6 million for fiscal 2012. On a per share basis, GAAP diluted earnings per share for fiscal 2013 was $1.13, up 92% from diluted earnings per share of $0.59 for last year.

Non-GAAP diluted earnings per share, which excludes non-cash equity based compensation and intangible amortization, was $1.36 for fiscal 2013, up 68% compared to non-GAAP diluted earnings per share of $0.81 for fiscal 2012.

During the fourth quarter of fiscal 2013, the Company generated $10.9 million in operating cash flow compared to $10.4 million in the fourth quarter of fiscal 2012. Additionally, during the quarter the Company expended $1.5 million for capital additions and had non-operating cash receipts of $1.4 million from the exercise of stock options. During the fourth quarter of fiscal 2013, the Company did not purchased any additional treasury shares under the current buyback authorization. Cash, cash equivalents and marketable debt securities were $53.6 million at June 30, 2013, up $10.9 million from March 31, 2013 and at June 30, 2013, the Company had no outstanding debt.

Wireless Group

Wireless Group net sales for the quarter were $12.8 million, down 4.3% from the fourth quarter of fiscal 2012, and up 6.7% sequentially, due primarily to rising infrastructure component customer demand. Demand from Wireless infrastructure customers has increased in recent quarters and current forecasts indicate increased demand levels for fiscal 2014.

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. The Company continues to see an increasing number of AIR related design wins and new customers transitioning to volume production.

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

Space & Defense Group

Space & Defense Group net sales for the quarter were $29.6 million, up 19.1% from the fourth quarter of fiscal 2012. The sales increase was highlighted by rising Low-temperature Co-fired Ceramic ("LTCC") product sales generated by our Salem Ceramics subsidiary. The Group also experienced continued improvement in operational execution, despite a less favorable product mix during the current quarter which resulted in higher profitability for the Group compared to the fourth quarter of last year.

New orders for the quarter totaled $28.2 million which were driven by numerous space, radar and electronic warfare applications. Space & Defense Group order backlog at June 30, 2013 was approximately $96.3 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 first quarter of fiscal 2014, we anticipate comparable sales for the Wireless Group and lower sales for the Space & Defense Group compared to the fourth quarter levels as Space & Defense Group LTCC product sales are anticipated to decline due to a one quarter gap in production on a new multi-year program. As a result, we expect net sales to be in the range of $38 to $42 million. We expect GAAP net earnings to be in the range of $0.25 - $0.31 per diluted share for the first quarter.

Non-GAAP net earnings, which are inclusive of approximately $0.05 -$0.06 per diluted share related to expected equity based compensation expense and amortization of intangibles assets, are expected to be in the range of $0.30 - $0.36 per diluted share for the first quarter of fiscal 2014.

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 August 6, 2013 at 8:30 a.m. (ET). A replay of the conference call will be available at 11:30 a.m. (ET) beginning August 6 through 11:30 p.m. on August 20, 2013. 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 93139749. 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.

ANAREN, INC.
Condensed Consolidated Statements of Income
(in thousands except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Net sales $ 42,336 $ 38,172 $ 158,374 $ 147,346
Cost of sales 27,212 24,305 99,565 95,924
Gross profit 15,124 13,867 58,809 51,422
35.7% 36.3% 37.1% 34.9%
Operating expenses:
Marketing 2,123 2,742 9,545 10,328
Research and development 3,629 3,035 13,607 13,217
General and administration 5,230 4,511 17,518 17,549
Total operating expenses 10,982 10,288 40,670 41,094
Operating income 4,142 3,579 18,139 10,328
9.8% 9.4% 11.5% 7.0%
Other income (expense):
Other income 82 203 494 656
Interest expense (18) (19) (127) (170)
Total other income, net 64 184 367 486
Income before income tax expense 4,206 3,763 18,506 10,814
Income tax expense 850 850 3,450 2,200
Net income $ 3,356 $ 2,913 $ 15,056 $ 8,614
7.9% 7.6% 9.5% 5.8%
Earnings per share:
Basic $ 0.27 $ 0.21 $ 1.19 $ 0.61
Diluted $ 0.25 $ 0.20 $ 1.13 $ 0.59
Weighted average common shares outstanding:
Basic 12,558 13,767 12,687 14,050
Diluted 13,220 14,457 13,281 14,702
ANAREN, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, 2013 June 30, 2012
Assets:
Cash, cash equivalents and short-term investments $ 50,996 $ 32,232
Receivables, less allowances 32,059 29,521
Inventories 34,928 36,443
Prepaid expenses and other assets 5,108 6,650
Total current assets 123,091 104,846
Securities held to maturity 2,582 11,657
Property, plant, and equipment, net 40,842 47,171
Goodwill 42,297 42,343
Other intangibles, net 6,833 7,770
Total assets $ 215,645 $ 213,787
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $ 7,319 $ 8,604
Accrued expenses 4,806 3,926
Customer advance payments 1,603 1,307
Other liabilities 1,900 2,068
Total current liabilities 15,628 15,905
Other non-current liabilities 10,279 12,379
Total liabilities 25,907 28,284
Stockholders' Equity:
Common stock and additional paid-in capital 230,653 223,326
Retained earnings 158,182 143,126
Accumulated other comprehensive loss (858) (3,026)
Less: cost of treasury shares (198,239) (177,923)
Total stockholders' equity 189,738 185,503
Total liabilities and stockholders' equity $ 215,645 $ 213,787
ANAREN, INC.
Reconciliation of GAAP and Non-GAAP Gross Profit, Operating Income, Net Income and Dilluted Earnings Per Share
(in thousands except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Net sales $ 42,336 $ 38,172 $ 158,374 $ 147,346
GAAP gross profit $ 15,124 $ 13,867 $ 58,809 $ 51,422
Equity-based compensation expense (1) 198 209 886 814
Amortization of intangibles (2) 39 39 156 156
Non-GAAP gross profit $ 15,361 $ 14,115 $ 59,851 $ 52,392
% of sales 36.3% 37.0% 37.8% 35.6%
GAAP operating income $ 4,142 $ 3,579 $ 18,139 $ 10,328
Equity-based compensation expense (1) 809 984 3,784 3,853
Amortization of intangibles (2) 227 298 936 1,192
Non-GAAP operating income $ 5,178 $ 4,861 $ 22,859 $ 15,373
% of sales 12.2% 12.7% 14.4% 10.4%
GAAP net income $ 3,356 $ 2,913 $ 15,056 $ 8,614
Equity-based compensation expense (1) 809 984 3,784 3,853
Amortization of intangibles (2) 227 298 936 1,192
Tax effect (373) (462) (1,699) (1,816)
Non-GAAP net income $ 4,019 $ 3,733 $ 18,077 $ 11,843
% of sales 9.5% 9.8% 11.4% 8.0%
Diluted earnings per share
GAAP diluted earnings per share $ 0.25 $ 0.20 $ 1.13 $ 0.59
Equity-based compensation expense (1) 0.06 0.07 0.28 0.26
Amortization of intangibles (2) 0.02 0.02 0.07 0.08
Tax adjustments (0.03) (0.03) (0.12) (0.12)
Non-GAAP diluted earnings per share $ 0.30 $ 0.26 $ 1.36 $ 0.81
Weighted average common shares outstanding
Diluted 13,220 14,457 13,281 14,702
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 and year ended June 30, 2013 and 2012.
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 June 30, 2013
(in thousands)
(unaudited)
Equity Based Amortization
Compensation of Intangibles Total
Cost of sales $ 198 $ 39 $ 237
Marketing (1) -- (1)
Research and development 67 -- 67
General and administrative 545 188 733
$ 809 $ 227 $ 1,036
Twelve Months Ended June 30, 2013
(in thousands)
(unaudited)
Equity Based Amortization
Compensation of Intangibles Total
Cost of sales $ 886 $ 156 $ 1,042
Marketing 249 -- 249
Research and development 392 -- 392
General and administrative 2,257 780 3,037
$ 3,784 $ 936 $ 4,720
Three Months Ended June 30, 2012
(in thousands)
(unaudited)
Equity Based Amortization
Compensation of Intangibles Total
Cost of sales $ 209 $ 39 $ 248
Marketing 71 -- 71
Research and development 101 -- 409
General and administrative 603 259 862
$ 984 $ 298 $ 1,282
Twelve Months Ended June 30, 2012
(in thousands)
(unaudited)
Equity Based Amortization
Compensation of Intangibles Total
Cost of sales $ 814 $ 156 $ 970
Marketing 245 -- 245
Research and development 409 -- 409
General and administrative 2,385 1,036 3,421
$ 3,853 $ 1,192 $ 5,045
ANAREN, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Twelve Months
Ended Ended
June 30, 2013 June 30, 2013
Cash flows from operating activities:
Net income $ 3,356 $ 15,056
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 1,733 7,508
Write down of other current asset 600 600
Amortization 285 1,259
Gain on disposal of fixed assets -- (557)
Deferred income taxes (616) 393
Equity-based compensation 809 3,784
Receivables (1,355) (2,538)
Inventories 2,743 1,515
Accounts payable 519 (1,285)
Other assets and liabilities 2,816 516
Net cash provided by operating activities 10,890 26,251
Cash flows from investing activities:
Capital expenditures (1,463) (5,538)
Proceeds from sale of property, plant, and equipment -- 5,787
Maturities of held to maturity securities 1,605 13,285
Net cash provided by investing activities 142 13,534
Cash flows from financing activities:
Stock options exercised 1,366 3,084
Excess tax (expense) benefit from equity-based compensation (87) 459
Purchase of treasury shares -- (20,316)
Net cash provided by (used in) financing activities 1,279 (16,773)
Effect of exchange rates on cash 197 284
Net increase in cash and cash equivalents $ 12,508 $ 23,296
Cash and cash equivalents at beginning of period $ 31,800 $ 21,012
Cash and cash equivalents at end of period $ 44,308 $ 44,308

CONTACT: George Blanton, CFO 315-362-0436 Joseph E. Porcello, VP-Accounting 315-362-0514

Source:Anaren, Inc.