Electro Rent Corporation (Nasdaq: ELRC) today reported
financial results for the third quarter of fiscal 2014 ended
February 28, 2014.
“In our third quarter, the trends we experienced in the first
two quarters of the fiscal year continued, with some areas of our
business performing well, some stable, and others remaining
constrained by macro factors outside of our immediate control,”
said Daniel Greenberg, Chairman and CEO. “Used equipment sales grew
year-over-year, and we experienced a pick-up in rentals for both
the telecom services and industrial sectors. Our China business was
well ahead of last year, and progress was made in our data products
segment. Our European business remained steady, and our total
rental and lease business was similar to last year. Gains in the
above segments helped mitigate declines in new equipment sales and
rentals related to the continued weakness in our aerospace/defense
and semiconductor business segments.
“Defense spending continued to be under pressure, even though
changes in the sequestration formula and a formal budget were put
into place, and the immediate future with respect to this important
segment of our economy remains uncertain,” Greenberg said. “We are
continuing to work with our customers in this segment as they make
decisions as to how they will function with these new rules now in
effect.”
Total revenues for the third quarter of fiscal 2014 were $62.0
million, compared with $64.7 million last year. Rental and lease
revenues equaled $32.5 million for the 2014 third fiscal quarter,
versus $32.8 million one year ago. Sales of equipment and other
revenues were $29.5 million for the third quarter of fiscal 2014,
compared with $31.8 million for the prior-year period.
Selling, general and administrative expenses totaled $14.4
million, or 23.2% of total revenues, for the fiscal 2014 third
quarter, compared with $13.8 million, or 21.3% of total revenues,
for the same quarter last year.
Total operating expenses declined to $54.8 million for the
fiscal 2014 third quarter from $56.3 million a year ago.
Operating profit for the third quarter of fiscal 2014 was $7.2
million, or 11.6% of total revenues, compared with $8.4 million, or
13.0% of total revenues, for the third quarter of fiscal 2013.
Net income was $4.5 million, or $0.19 per diluted share, for the
fiscal 2014 third quarter, versus $5.0 million, or $0.21 per
diluted share, for the same quarter last year.
The company’s effective tax rate was 37.8% for the third quarter
of fiscal 2014, compared with 40.3% for the same quarter last year.
The decrease was principally related to a decline in foreign losses
for which the company records valuation allowances and therefore
does not recognize a tax benefit.
Rental equipment additions for the fiscal 2014 third quarter
totaled $12.6 million, compared with $12.9 million for the fiscal
2013 third quarter.
Total revenues for the first nine months of fiscal 2014 were
$180.1 million, compared with $188.4 million a year ago. Rental and
lease revenues for the fiscal 2014 year-to-date period were $103.3
million, versus $101.1 million for the fiscal 2013 year-to-date
period. Equipment sales and other revenues were $76.7 million for
the nine months ended February 28, 2014, compared with $87.3
million for the same period last year.
SG&A expenses were $43.3 million, or 24.0% of total
revenues, for the first nine months of fiscal 2014, versus $41.6
million, or 22.1% of total revenues, a year ago. Total operating
expenses for the fiscal 2014 nine-month period were $155.2 million,
compared with $161.4 million for the corresponding period of fiscal
2013.
Operating profit for the first nine months of fiscal 2014
totaled $24.9 million, or 13.8% of total revenue, compared with
$26.9 million, or 14.3% of total revenue, in the prior-year
period.
Net income for the fiscal 2014 year-to-date period amounted to
$15.8 million, or $0.65 per diluted share, versus $16.4 million, or
$0.68 per diluted share, for the fiscal 2013 period.
Rental equipment purchases for the first nine months of fiscal
2014 were $42.7 million, versus $47.2 million for the first nine
months of fiscal 2013. The net book value of Electro Rent's
equipment was $223.7 million at February 28, 2014, compared with
$234.9 million at the end of the last fiscal year.
Electro Rent had a sales order backlog for test and measurement
equipment relating to its Agilent resale agreement of $9.8 million
at February 28, 2014, versus $4.8 million last year. The majority
of the backlog is expected to be delivered to customers within the
next six months.
Electro Rent paid dividends of $4.9 million for the third
quarter of fiscal 2014. On an annualized basis, Electro Rent’s
current quarterly dividend of $0.20 per common share represents a
4.8% yield on the April 4, 2014 closing share price of $16.61.
Total shareholders' equity at February 28, 2014 amounted to
$230.9 million, or $9.62 per share, versus $228.5 million, or $9.52
per share, at May 31, 2013.
Electro Rent’s cash and cash equivalents balance was $5.2
million at February 28, 2014, compared with $10.4 million at May
31, 2013. The decline related principally to the repayment of debt.
Bank borrowings at February 28, 2014 were $2.0 million, compared
with $10.0 million at May 31, 2013 and a high of $23.0 million in
December 2012, when the company paid its special dividend.
“The business atmosphere has been in a state of flux for some
time now, and it’s still too soon to determine how things will play
out for national defense spending. In the meantime, we are focusing
on those areas of the economy that are growing, and ensuring that
our equipment purchases match the current demand environment,” said
Greenberg. “As a result of our ongoing strong cash flow, even
through this period of ups and downs, we have been able to pay down
all of our $23 million debt over the past year, giving us
significant financial flexibility to operate efficiently and to
continue to provide customers with the equipment, service and
know-how they have come to expect from Electro Rent.”
About Electro Rent
Electro Rent Corporation (www.ElectroRent.com) is one of the
largest global organizations devoted to the rental, leasing and
sales of general purpose electronic test equipment, personal
computers and servers.
“Safe Harbor" Statement:
Except for the historical statements and discussions in this
press release, the company’s statements above constitute
forward-looking statements within the meaning of section 21E of the
Securities Exchange Act of 1934. These forward-looking statements
reflect Electro Rent’s management's current views with respect to
future events and financial performance; however, you should not
put undue reliance on these statements. When used, the words
"expect" and "will" and other similar expressions identify
forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties. The company believes
its assumptions are reasonable; nonetheless, it is likely that at
least some of these assumptions will not come true. Accordingly,
Electro Rent’s actual results will probably differ from the
outcomes contained in any forward-looking statement, and those
differences could be material. Factors that could cause or
contribute to these differences include, among others, those risks
and uncertainties discussed in the company’s periodic reports on
Form 10-K and 10-Q and in its other filings with the Securities and
Exchange Commission. Should one or more of the risks discussed, or
any other risks, materialize, or should one or more of our
underlying assumptions prove incorrect, the company’s actual
results may vary materially from those anticipated, estimated,
expected or projected. In light of the risks and uncertainties,
there can be no assurance that any forward-looking statement will
in fact prove to be correct. Electro Rent undertakes no obligation
to update or revise any forward-looking statements.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share information)
Three Months Ended
Nine Months Ended February 28, February 28,
2014 2013 2014 2013 Revenues:
Rentals and leases $ 32,485 $ 32,837 $ 103,347 $ 101,077 Sales of
equipment and other revenues 29,531 31,835
76,713 87,288 Total revenues 62,016 64,672
180,060 188,365 Operating expenses: Depreciation of
rental and lease equipment 14,361 14,320 42,975 42,460 Costs of
rentals and leases, excluding depreciation 4,493 4,721 14,103
13,651 Costs of sales of equipment and other revenues 21,583 23,471
54,800 63,684 Selling, general and administrative expenses
14,394 13,784 43,299 41,629 Total operating
expenses 54,831 56,296 155,177 161,424
Operating profit 7,185 8,376 24,883 26,941 Interest income, net
106 61 275 344 Income before income
taxes 7,291 8,437 25,158 27,285 Income tax provision 2,754
3,400 9,343 10,923 Net Income $ 4,537 $ 5,037
$ 15,815 $ 16,362 Earnings per share: Basic $ 0.19 $ 0.21 $ 0.65 $
0.68 Diluted $ 0.19 $ 0.21 $ 0.65 $ 0.68 Shares used in per share
calculation Basic 24,334 23,996 24,320 23,995 Diluted 24,367 24,257
24,349 24,228 Cash dividend declared per share $ 0.20 $ - $
0.60 $ 1.60
ELECTRO RENT
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands, except share information) February 28,
May 31, 2014 2013 ASSETS Cash
and cash equivalents $ 5,214 $ 10,402 Accounts receivable, net of
allowance for doubtful accounts of $479 and $457 33,827 34,350
Rental and lease equipment, net of accumulated depreciation of
$236,796 and $224,397 223,658 234,856 Other property, net of
accumulated depreciation of $19,538 and $18,873 13,354 13,826
Goodwill 3,109 3,109 Intangibles, net of amortization of $1,591 and
$1,468 914 1,037 Other assets 21,800 21,346 $ 301,876
$ 318,926 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank
Borrowings 2,025 10,000 Accounts payable 5,805 7,479 Accrued
expenses 12,721 15,866 Deferred revenue 7,184 7,292 Deferred tax
liability 43,234 49,740 Total liabilities
70,969 90,377 Commitments and contingencies Shareholders'
equity: Preferred stock, $1 par - shares authorized 1,000,000; none
issued - - Common stock, no par - shares authorized 40,000,000;
issued and outstanding 38,905 37,724 February 28, 2014 -
24,007,708; May 31, 2013 - 23,995,626 Retained earnings
192,002 190,825 Total shareholders' equity 230,907
228,549 $ 301,876 $ 318,926
Electro Rent CorporationDaniel Greenberg, Chairman and
CEO818-786-2525orPondelWilkinson Inc.Roger Pondel/Laurie
Berman310-279-5980pwinvestor@pondel.com
Electro Rent Corp. (MM) (NASDAQ:ELRC)
Historical Stock Chart
From Jul 2024 to Jul 2024
Electro Rent Corp. (MM) (NASDAQ:ELRC)
Historical Stock Chart
From Jul 2023 to Jul 2024