Electro Rent Corporation (Nasdaq: ELRC) today reported
financial results for the fiscal second quarter ended November 30,
2014.
“Our business remained fairly constant for the second quarter,
as revenues edged up,” said Daniel Greenberg, Chairman and CEO of
Electro Rent. “Sales of used equipment improved, and our
international business grew slightly. Sales of new equipment
improved for the second consecutive quarter, and our data products
business generated low double-digit gains.
“While equipment rental revenue for the quarter was down about 5
percent compared to the prior year, we are encouraged by a
continuing increase in the amount of equipment on rent in our test
and measurement business from this year’s first quarter. With
monthly expansion throughout the second quarter, we remain
optimistic about the long-term viability of a meaningful equipment
rental market,” Greenberg said.
Total revenues for the fiscal 2015 second quarter increased to
$59.7 million from $57.9 million last year. Rental and lease
revenues were $33.5 million, compared with $35.2 million a year
ago. Sales of equipment and other revenues rose to $26.2 million
for the fiscal 2015 second quarter, up from $22.7 million for the
comparable prior-year period.
Selling, general and administrative expenses totaled $14.6
million, or 24.5% of total revenues, for the fiscal 2015 second
quarter, compared with $14.2 million, or 24.6% of total revenues,
for the same quarter last year.
Total operating expenses were $53.5 million for the fiscal 2015
second quarter, compared with $49.0 million a year ago. The
increase primarily reflected higher costs related to sales of
equipment and other revenue.
Operating profit for the second quarter of fiscal 2015 was $6.2
million, or 10.4% of total revenues, compared with $8.9 million, or
15.4% of total revenues, for the second quarter of fiscal 2014. The
decline principally related to a decrease in higher margin rentals,
which was partially offset by an increase in lower margin
sales.
Net income was $4.8 million, or $0.20 per diluted share, for the
fiscal 2015 second quarter, compared with $5.6 million, or $0.23
per diluted share, for the fiscal 2014 second quarter. Net income
for the fiscal 2015 period included $1.4 million, before tax, in
income related to a settlement received from a class action lawsuit
involving the purchase of certain computer products and a $1.3
million reduction in sales of equipment and other revenues, before
tax, related to a non-recurring, out-of-period adjustment.
Rental equipment purchases for the fiscal 2015 second quarter
totaled $14.7 million, compared with $15.1 million for the same
quarter last year.
The company’s effective tax rate was 37.7% for the second
quarter of fiscal 2015, compared with 38.0% for the same quarter
last year.
Total revenues for the first half of fiscal 2015 grew to $121.6
million, up from $118.0 million for the comparable period last
year. Rental and lease revenues were $67.4 million for the fiscal
2015 year-to-date period, versus $70.9 million for the fiscal 2014
year-to-date period. Equipment sales and other revenues rose to
$54.2 million for the six months ended November 30, 2014, from
$47.2 million for the six months ended November 30, 2013.
Selling, general and administrative expenses totaled $29.6
million, or 24.4% of total revenues, for the first half of fiscal
2015, versus $28.9 million, or 24.5% of total revenues, for the
first six months of fiscal 2014. Total operating expenses for the
fiscal 2015 six-month period were $107.9 million, compared with
$100.3 million for the fiscal 2014 six-month period.
Operating profit for the first six months of fiscal 2015
amounted to $13.7 million, or 11.3% of total revenue, compared with
$17.7 million, or 15.0% of total revenue, in the prior-year
period.
Net income for the first half of fiscal 2015 was $9.6 million,
or $0.39 per diluted share, compared with $11.3 million, or $0.46
per diluted share, for the first half of fiscal 2014. Net income
for the fiscal 2015 period included the $1.4 million, before tax,
legal settlement and the $1.3 million, before tax, out-of-period
adjustment.
Rental equipment purchases for the first six months of fiscal
2015 were $32.3 million, versus $30.1 million for the first six
months of fiscal 2014.
The net book value of Electro Rent's equipment was $217.8
million at November 30, 2014, compared with $221.9 million at May
31, 2014.
Electro Rent had a sales order backlog for test and measurement
equipment relating to its Keysight Technologies (formerly Agilent)
resale agreement of $9.6 million at November 30, 2014, versus $11.2
million at November 30, 2013. 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 second
quarter of fiscal 2015. On an annualized basis, Electro Rent’s
current quarterly dividend of $0.20 per common share represents a
6.1% yield on the January 15, 2015 closing share price of
$13.08.
Total shareholders' equity at November 30, 2014 was $231.5
million, or $9.64 per share, versus $231.0 million, or $9.62 per
share, at May 31, 2014.
Electro Rent’s cash and cash equivalents balance was $5.2
million at the end of the second quarter of fiscal 2015, compared
with $5.9 million at the end of fiscal 2014. The decline primarily
related to equipment purchases and the company’s regular quarterly
dividend payment.
“While the business environment in which our customers operate
remains uncertain, especially in the aerospace and defense market
which has been under considerable pressure, there is ongoing
evidence of a slightly better demand climate for test and
measurement equipment,” Greenberg said. “With this in mind, Electro
Rent is fully prepared to exceed our customers’ requirements with
the best and most cost-effective test and measurement solutions
available.”
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.
(Financial tables follow)
ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except
per share information) Three
Months Ended November 30, Six Months Ended November 30,
2014 2013 2014 2013 Revenues:
Rentals and leases $ 33,469 $ 35,205 $ 67,358 $ 70,862 Sales of
equipment and other revenues 26,234 22,671
54,216 47,182 Total revenues 59,703
57,876 121,574 118,044 Operating expenses:
Depreciation of rental and lease equipment 14,670 14,241 28,585
28,614 Costs of rentals and leases, excluding depreciation 4,547
4,798 9,121 9,610 Costs of sales of equipment and other revenues
19,661 15,699 40,563 33,217 Selling, general and administrative
expenses 14,598 14,226 29,619 28,905
Total operating expenses 53,476 48,964
107,888 100,346 Operating profit 6,227 8,912 13,686
17,698 Interest income, net 79 87 182 169 Other
income 1,390 - 1,390 - Income
before income taxes 7,696 8,999 15,258 17,867 Income tax
provision 2,901 3,418 5,692 6,589
Net Income $ 4,795 $ 5,581 $ 9,566 $ 11,278 Earnings
per share: Basic $ 0.20 $ 0.23 $ 0.39 $ 0.46 Diluted $ 0.20 $ 0.23
$ 0.39 $ 0.46 Shares used in per share calculation Basic
24,404 24,331 24,380 24,313 Diluted
24,408 24,350 24,393 24,340
ELECTRO RENT CORPORATION CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) (in thousands, except share
information) November 30, May 31,
2014 2014 ASSETS Cash $ 5,200 $ 5,946
Accounts receivable net of allowance for doubtful accounts of $659
and $555 38,422 34,970 Rental and lease equipment, net of
accumulated depreciation of $241,856 and $237,151 217,801 221,888
Other property, net of accumulated depreciation and amortization of
$19,329 and $18,983 12,942 13,122 Goodwill 3,109 3,109 Intangibles,
net of accumulated amortization of $1,702 and $1,632 803 873 Other
assets 23,058 22,150 $ 301,335 $ 302,058 LIABILITIES
AND SHAREHOLDERS' EQUITY Liabilities: Bank borrowings $
2,843 $ - Accounts payable 7,383 7,279 Accrued expenses 15,385
14,472 Deferred revenue 6,954 7,537 Deferred tax liability
37,286 41,812 Total liabilities 69,851 71,100
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 November 30, 2014 -
24,008,683; May 31, 2014 - 24,007,709 40,007 39,252 Retained
earnings 191,477 191,706 Total shareholders' equity
231,484 230,958 $ 301,335 $ 302,058
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 Jun 2024 to Jul 2024
Electro Rent Corp. (MM) (NASDAQ:ELRC)
Historical Stock Chart
From Jul 2023 to Jul 2024