Analogic Corporation (Nasdaq:ALOG), enabling the world's medical
imaging and aviation security technology, today announced results
for its first quarter ended October 31, 2017.
Highlights during the first quarter
included:
• Revenue of $106.9 million with gross margin of 45%• GAAP
operating margin of 7%; Non-GAAP operating margin of 12%• GAAP
diluted EPS of $0.45; Non-GAAP diluted EPS of $0.75• Operating cash
flow of $14 million• Awarded $4 million base contract by TSA for
software algorithm development and additional ConneCT
prototypes
Revenue for the first quarter of fiscal 2018 was $106.9 million,
a decrease of 12% compared with revenue of $121.1 million in the
first quarter of fiscal 2017. GAAP net income for the first quarter
of fiscal 2018 was $5.7 million, or $0.45 per diluted share,
compared with net income of $2.5 million, or $0.20 per diluted
share, in the first quarter of fiscal 2017. Non-GAAP net income for
the first quarter of fiscal 2018 was $9.5 million, or $0.75 per
diluted share, compared with $5.4 million, or $0.43 per diluted
share, in the prior year's first quarter. A reconciliation of GAAP
to non-GAAP results is included as an attachment to this press
release.
Fred Parks, president and CEO, commented, “We are encouraged by
our results this quarter as our strategy to optimize our Ultrasound
portfolio is showing promise. As expected, our strategic
redirection coupled with our fiscal 2017 restructuring has yielded
improved profitability in Q1 on a lower revenue base. Security
continues to show strength in the second half of the year driven by
demand for international high-speed checked baggage systems and the
recent TSA checkpoint contract.”
Parks continued, “The strategic sale process, as previously
announced, is progressing as planned. We will provide updates as
appropriate.”
Segment Revenues for the First
QuarterMedical Imaging segment revenue was $53.1
million for the first quarter of fiscal 2018, down 21% from revenue
of $67.2 million in the same period of fiscal 2017, primarily due
to lower sales in CT associated with previously reported customer
sourcing issues combined with lower sales in MR and
Mammography.
Ultrasound segment revenue was $37.4 million for the first
quarter of fiscal 2018, up 4% from revenue of $35.8 million in the
same period of fiscal 2017, due to the stronger sales of our bk5000
system for surgery in North America and Europe partially offset by
the comparative lower revenue from Oncura veterinary system
sales.
Security and Detection segment revenue was $16.4 million for the
first quarter of fiscal 2018, down 10% from revenue of $18.1
million in the same period of fiscal 2017, mainly due to a stronger
comparison from last year and lower service revenue.
Fiscal 2018 OutlookTotal company revenue for
fiscal 2018 is expected to be between $450 and $460 million with
non-GAAP operating margins of 10% to 11% resulting in non-GAAP
diluted EPS of $2.75 to $2.90. We expect sequential revenue
improvement throughout the remainder of fiscal 2018.
- With anticipated reductions from our portfolio optimization
efforts partially offset by improved performance in our urology and
surgery markets, we now expect our Ultrasound revenue for fiscal
2018 to be down low-single digits with positive low-single digit
non-GAAP operating margin as the company realizes the benefit of
its product portfolio optimization efforts and lower operating
expenses
- Medical Imaging revenue for fiscal 2018 is expected to be down
low-double digits with mid-teens non-GAAP operating margin due
primarily to the impact of a customer outsourcing decision in
CT
- Security and Detection revenue for fiscal 2018 is expected to
have double-digit growth, with mid-teens non-GAAP operating margin
on continued demand for medium-speed and high-speed check baggage
screening systems
The Company does not provide a GAAP operating margin and
earnings outlook because it is unable to reliably forecast many of
the items that are excluded from the calculation of non-GAAP
operating margin and earnings. These items could cause our GAAP
operating margins and earnings to differ materially from the
corresponding non-GAAP values. For more information, see “Use of
Non-GAAP Financial Measures,” below.
Quarterly Cash Dividend
On December 1, 2017, Analogic's Board of
Directors declared a $0.10 cash dividend for each common share for
its fourth fiscal quarter ended October 31, 2017. The cash dividend
will be payable on December 29, 2017, to shareholders of record on
December 15, 2017.
Use of Non-GAAP Financial
MeasuresWe supplement our GAAP financial
reporting with certain non-GAAP financial measures, including
non-GAAP operating income, non-GAAP operating margin, non-GAAP
other income and expense, non-GAAP net income, non-GAAP effective
tax rate and non-GAAP diluted earnings per share. These measures
are not presented in accordance with, nor are they a substitute
for, U.S. generally accepted accounting principles, or GAAP. In
addition, these measures may be different from non-GAAP measures
used by other companies, limiting their usefulness for comparison
purposes. The non-GAAP financial measures should not be considered
in isolation from measures of financial performance prepared in
accordance with GAAP. Investors are cautioned that there are
material limitations associated with the use of non-GAAP financial
measures as an analytical tool. We have included at the end of this
document a reconciliation of each historical non-GAAP financial
measure used in this document to the most directly comparable GAAP
financial measure.
We utilize a number of different financial measures, both GAAP
and non-GAAP, in analyzing and assessing the overall performance of
our business, in making operating decisions, in forecasting and
planning for future periods, and in determining payments under our
compensation programs. We also believe that non-GAAP financial
measures provide useful information to investors and others in
understanding and evaluating our operating results and in comparing
financial results across accounting periods and to those of other
companies.
With respect to forwarding-looking measures, we provide an
outlook for our non-GAAP operating margins and earnings. We do not
provide operating margin or earnings outlook on a GAAP basis. Many
of the items that we exclude from our non-GAAP operating margin and
earnings calculations, such as amortization of intangibles,
acquisition related costs, restructuring expenses, and one-time tax
adjustments, are less capable of being controlled or reliably
predicted by management. These items could cause our GAAP operating
margins and earnings to vary materially from the corresponding
Non-GAAP figures presented in our outlook statements.
Forward-Looking StatementsAny statements about
future expectations, plans, and prospects for the Company,
including statements containing the words "believes,"
"anticipates," "plans," "expects," and similar expressions,
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those indicated by such forward-looking
statements as a result of various important factors, including
risks relating to product development and commercialization,
limited demand for the Company's products, limited number of
customers, risks associated with competition, uncertainties
associated with regulatory agency approvals, competitive pricing
pressures, downturns in the economy, the risk of potential
intellectual property litigation, acquisition related risks, and
other factors discussed in our most recent quarterly and annual
reports filed with the Securities and Exchange Commission. In
addition, the forward looking statements included in this
presentation represent the Company's views as of the date of this
document. While the Company anticipates that subsequent events and
developments will cause the Company's views to change, the Company
specifically disclaims any obligation to update these
forward-looking statements. These forward-looking statements should
not be relied upon as representing the Company's views as of any
later date.
Conference Call DetailsAnalogic will conduct an
investor conference call on Wednesday, December 6, 2017 at 5:00
p.m. (ET) to discuss the first quarter results and outlook for
fiscal 2018. To participate in the conference call, dial
1-866-823-6992, or 1-334-323-7225 for international callers,
approximately ten minutes before the conference is scheduled to
begin. Inform the operator that you wish to join the Analogic
conference, passcode 42748. You will then be asked for your name,
organization, and telephone number, and be connected to the
conference. The earnings release and, just prior to the call,
presentation materials related to the quarterly financial
information will be posted on the Company’s website at
http://investor.analogic.com.
The call will also be available via webcast in listen-only mode.
To listen to the webcast, visit investor.analogic.com approximately
five to ten minutes before the conference is scheduled to begin. A
telephone digital replay will be available approximately two hours
after the call is completed through midnight Saturday, January 6,
2018. To access the digital replay, dial 1-877-919-4059 or
1-334-323-0140 for international callers. The passcode is
13740288.
A replay of the conference call webcast will be archived on the
Company's website at www.analogic.com approximately three hours
after the call is completed and will be available through midnight
January 6, 2018. For more information on the conference call, visit
www.analogic.com, call 978-326-4058, or email
investorrelations@analogic.com.
About Analogic – Celebrating 50 Years of Imaging
InnovationAnalogic (Nasdaq:ALOG) provides leading-edge
healthcare and security technology solutions to advance the
practice of medicine and save lives. We are recognized around the
world for advanced imaging and real-time guidance technologies used
for disease diagnosis and treatment as well as for automated threat
detection. Our market-leading ultrasound systems, led by our
flagship BK Ultrasound brand, used in procedure-driven markets such
as urology, surgery, and point-of-care, are sold to clinical
practitioners around the world. Our advanced imaging technologies
are also used in computed tomography (CT), magnetic resonance
imaging (MRI), and digital mammography systems, as well as
automated threat detection systems for aviation security. Analogic
is headquartered just north of Boston, Massachusetts. For more
information, visit www.analogic.com.
Analogic and the globe logo are registered trademarks of
Analogic Corporation.
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
(In
thousands, except per share data) |
|
|
October 31, 2017 |
|
|
October 31, 2016 |
|
|
|
|
|
|
|
Net
revenue: |
|
|
|
|
|
|
Product |
|
$ |
105,752 |
|
$ |
120,245 |
Engineering |
|
|
1,123 |
|
|
873 |
Total net revenue |
|
|
106,875 |
|
|
121,118 |
Cost
of sales: |
|
|
|
|
|
|
Product |
|
|
57,972 |
|
|
68,759 |
Engineering |
|
|
1,136 |
|
|
723 |
Total cost of sales |
|
|
59,108 |
|
|
69,482 |
|
|
|
|
|
|
|
Gross profit |
|
|
47,767 |
|
|
51,636 |
Operating expenses: |
|
|
|
|
|
|
Research
and product development |
|
|
15,012 |
|
|
15,850 |
Selling
and marketing |
|
|
12,405 |
|
|
18,180 |
General
and administrative |
|
|
11,941 |
|
|
13,621 |
Restructuring |
|
|
535 |
|
|
32 |
Total operating expenses |
|
|
39,893 |
|
|
47,683 |
|
|
|
|
|
|
|
Income from operations |
|
|
7,874 |
|
|
3,953 |
Total other income (expense), net |
|
|
238 |
|
|
(442) |
Income before income taxes |
|
|
8,112 |
|
|
3,511 |
Provision for income taxes |
|
|
2,453 |
|
|
980 |
Net
income |
|
$ |
5,659 |
|
$ |
2,531 |
|
|
|
|
|
|
|
Net
income per share |
|
|
|
|
|
|
Basic |
|
$ |
0.45 |
|
$ |
0.20 |
Diluted |
|
$ |
0.45 |
|
$ |
0.20 |
|
|
|
|
|
|
|
Dividends declared and paid per share |
|
$ |
0.10 |
|
$ |
0.10 |
|
|
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
12,473 |
|
|
12,419 |
Diluted |
|
|
12,599 |
|
|
12,616 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
|
|
|
|
|
|
|
(In
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
October 31, 2017 |
|
|
July 31, 2017 |
Cash and
cash equivalents |
|
$ |
96,806 |
|
$ |
129,298 |
Short-term marketable securities |
|
|
50,555 |
|
|
18,797 |
Accounts
receivable, net |
|
|
73,111 |
|
|
77,587 |
Inventory |
|
|
131,314 |
|
|
130,575 |
Other
current assets |
|
|
12,429 |
|
|
14,448 |
Total
current assets |
|
|
364,215 |
|
|
370,705 |
Long-term
marketable securities |
|
|
35,539 |
|
|
26,171 |
Property,
plant, and equipment, net |
|
|
100,302 |
|
|
102,676 |
Intangible assets and goodwill, net |
|
|
26,950 |
|
|
28,269 |
Other
non-current assets |
|
|
10,325 |
|
|
10,262 |
Total
Assets |
|
$ |
537,331 |
|
$ |
538,083 |
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
Accounts
payable |
|
$ |
25,728 |
|
$ |
27,179 |
Accrued
liabilities |
|
|
28,034 |
|
|
31,620 |
Other
current liabilities |
|
|
8,802 |
|
|
8,311 |
Total
current liabilities |
|
|
62,564 |
|
|
67,110 |
Long-term
liabilities |
|
|
10,133 |
|
|
10,479 |
Stockholders' equity |
|
|
464,634 |
|
|
460,494 |
Total
Liabilities and Stockholders' Equity |
|
$ |
537,331 |
|
$ |
538,083 |
|
|
|
|
|
|
|
|
NON-GAAP STATEMENTS OF OPERATIONS
RECONCILIATION |
|
|
|
|
|
|
|
(In
thousands, except per share data) |
|
Three Months Ended |
|
|
|
October 31, 2017 |
|
|
October 31, 2016 |
|
|
|
|
|
|
|
|
GAAP Income From Operations |
$ |
7,874 |
|
$ |
3,953 |
|
Share-based compensation expense (Note 1) |
|
1,984 |
|
|
1,563 |
|
Acquisition-related revenues and expenses (Note 2) |
|
1,462 |
|
|
2,212 |
|
Non-routine other legal costs (Note 3) |
|
577 |
|
|
4 |
|
Restructuring (Note 4) |
|
535 |
|
|
32 |
|
Non-GAAP Income From Operations |
$ |
12,432 |
|
$ |
7,764 |
|
Percentage of Total Net Revenue |
|
11.6% |
|
|
6.4% |
|
|
|
|
|
|
|
|
GAAP Tax Provision (Note 5) |
$ |
2,453 |
|
$ |
980 |
|
GAAP Tax
Rate |
|
30.2% |
|
|
27.9% |
|
Non-GAAP Tax Provision (Note 5) |
|
3,171 |
|
|
1,950 |
|
Non-GAAP
Tax Rate |
|
25.0% |
|
|
26.6% |
|
|
|
|
|
|
|
|
GAAP Net Income |
$ |
5,659 |
|
$ |
2,531 |
|
Share-based compensation expense (Note 1) |
|
1,885 |
|
|
1,066 |
|
Acquisition-related revenues and expenses (Note 2) |
|
1,114 |
|
|
1,752 |
|
Non-routine other legal costs (Note 3) |
|
365 |
|
|
2 |
|
Restructuring (Note 4) |
|
358 |
|
|
21 |
|
Asset
impairment charges |
|
28 |
|
|
- |
|
Valuation
Allowance Tax Effect |
|
89 |
|
|
- |
|
Non-GAAP Net Income |
$ |
9,498 |
|
$ |
5,372 |
|
Percentage of Total Net Revenue |
|
8.9% |
|
|
4.4% |
|
|
|
|
|
|
|
|
GAAP Diluted EPS |
$ |
0.45 |
|
$ |
0.20 |
|
Effect of
non-GAAP adjustments |
$ |
0.30 |
|
$ |
0.23 |
|
Non-GAAP Diluted EPS |
$ |
0.75 |
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Exclusion of variable share-based compensation expense
allows consistency of operating results between periods and other
companies. |
|
Note 2: During fiscal years 2017 and 2018, we incurred
acquisition costs related to the Ultrasonix Medical Corporation,
PocketSonics, Inc., and Oncura Partners Diagnostics, LLC
acquisitions, which we closed on March 2, 2013, September 20, 2013,
and January 8, 2016, respectively. Costs included theamortization
of intangibles of $1.5 million for the three months ended October
31, 2017. |
|
Note 3: During the three months ended October 31, 2017, we
incurred $577 thousand of pre-tax strategic alternative related
costs. Additionally, during the three months ended October
31, 2017, we incurred $0 of pre-tax inquiry-related costs,
associated with the BK matter, as initially disclosed in our annual
report on Form 10-K for the fiscal year ended July 31, 2011. This
matter relates to transactions we identified involving our Danish
subsidiary, BK Medical, and certain of its foreign distributors,
regarding compliance with the law. |
|
Note 4: During the three months ended October 31, 2017, we
incurred pre-tax charges of $535 thousand, primarily due to
facility exit costs associated with exiting the Vancouver
facility. |
|
Note 5: The quarter to date Q1 FY 2018 non-GAAP tax rate
differs from the GAAP tax rate primarily due to acquisition related
adjustments and stock compensation expenses. The quarter to
date Q1 FY 2017 non-GAAP tax rates differ from the GAAP tax rates
primarily due to the BK Matter Inquiry costs and by acquisition
related amortization expense and stock compensation
expenses. |
|
For Further Information:
Investor and Financial Media Contact:Mark
NamaroffSenior Director of Investor Relations and Corporate
Communications(978) 326-4058investorrelations@analogic.com
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