Electro Rent Corporation (Nasdaq: ELRC) today reported
financial results for the fiscal fourth quarter and full year ended
May 31, 2015.
Total revenues for the fiscal 2015 fourth quarter were $60.4
million, compared with $61.1 million for the same quarter last
year. Rental and lease revenues amounted to $31.6 million, versus
$34.1 million one year ago. Sales of equipment and other revenues
grew to $28.8 million for the fiscal 2015 fourth quarter, up from
$27.0 million for the comparable period in fiscal 2014.
“We are encouraged by several areas of our business,” said
Daniel Greenberg, Chairman and CEO of Electro Rent. “Our aerospace
and defense business was stable during the year despite
market-specific issues. We significantly enhanced our equipment
pool, grew our data products business and expanded our European
operations with the recent opening of a new office in London.
Against this backdrop, we are addressing the challenges that have
affected several of our key customer industries and that limited
our growth in fiscal 2015.
“As we move into the new fiscal year, our Authorized Technology
Partner agreement with Keysight Technologies, Inc. has expired, and
while this means somewhat lower revenue in the short term, we are
excited to be able to take advantage of our robust infrastructure
to pursue new growth opportunities and revenue streams with no
exclusivity limitations,” said Greenberg. “Since the expiration of
the Keysight contract at the end of May, we have already signed key
distribution agreements with Anritsu and ART-Fi, and are
participating in ongoing discussions with additional industry
leading manufacturers.”
Selling, general and administrative expenses for the fiscal 2015
fourth quarter were reduced to $15.0 million, or 24.8% of total
revenues, from $15.6 million, or 25.6% of total revenues, for the
same quarter last year. The reduction resulted from a decline in
certain selling and other discretionary expenses due, in part, to
lower revenues.
Total operating expenses were $54.8 million for the fourth
quarter of fiscal 2015, compared with $53.8 million a year ago. The
increase was primarily related to higher cost of sales of equipment
and other revenue.
Operating profit for the fourth quarter of fiscal 2015 was $5.6
million, or 9.2% of total revenues, versus $7.3 million, or 11.9%
of total revenues, for last year’s fourth quarter. Lower operating
profit for the fiscal 2015 period resulted from the decrease in
total revenues and increase in operating expenses.
Net income totaled $3.4 million, or $0.14 per diluted share, for
the fiscal 2015 fourth quarter, compared with $4.6 million, or
$0.19 per diluted share, last year.
Rental equipment purchases for the fiscal 2015 fourth quarter
totaled $22.2 million, versus $15.5 million for the same quarter
last year.
Electro Rent’s effective tax rate was 39.1% for the fourth
quarter of fiscal 2015, compared with 37.7% for the same quarter
one year ago. The higher rate in the fiscal 2015 period was due to
a true-up of the company’s fiscal 2014 state income tax provision,
resulting in additional tax expense in the current period.
Total revenues for fiscal 2015 were $238.3 million, compared
with $241.1 million for fiscal 2014. Rental and lease revenues
equaled $129.3 million for fiscal 2015, versus $137.4 million last
year. Equipment sales and other revenues improved to $109.1 million
for fiscal 2015, up from $103.7 million one year ago.
Selling, general and administrative expenses were $59.3 million,
or 24.9% of total revenues, for the year ended May 31, 2015,
compared with $58.9 million, or 24.4% of total revenues, for the
prior year.
Total operating expenses for fiscal 2015 amounted to $215.4
million, compared with $209.0 million last year.
Fiscal 2015 operating profit was $22.9 million, or 9.6% of total
revenues, versus $32.1 million, or 13.3% of total revenues, for
fiscal 2014.
Net income for fiscal 2015 was $15.4 million, or $0.63 per
diluted share, versus $20.4 million, or $0.84 per diluted share, a
year ago. Fiscal 2015 net income 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 fiscal 2015 were $71.0 million,
up from $58.7 million for fiscal 2014.
The net book value of Electro Rent's equipment was $231.7
million at May 31, 2015, 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 resale agreement of
$12.4 million at May 31, 2015, versus $10.7 million one year ago.
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 fourth
quarter of fiscal 2015. On an annualized basis, Electro Rent’s
current quarterly dividend of $0.125 per common share represents a
5% yield on the August 12, 2015 closing share price of $10.06.
Total shareholders' equity at the end of fiscal 2015 was $228.0
million, or $9.46 per share, compared with $231.0 million, or $9.62
per share, at the end of last year.
Electro Rent’s cash balance was $4.1 million at the end of
fiscal 2015, compared with $5.9 million at the end of fiscal 2014.
Bank borrowings were $2.4 million at May 31, 2015. The company had
no bank borrowings at the end of the last fiscal year.
“As our recent progress in attracting new distribution
relationships demonstrates, Electro Rent’s significant expertise,
years of experience and substantial know-how can move Electro Rent
forward, and help us build a healthier, more flexible company,”
Greenberg said.
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. Forward looking statements
in this press release include statements regarding whether certain
industries will rebound, whether expansion into new markets will be
successful, whether Electro Rent will pay future dividends and in
what amounts, and whether Electro Rent can implement alternatives
to its Keysight reseller agreement. 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,
including: general macroeconomic conditions may not improve or may
deteriorate; U.S. federal government spending with respect to
defense and other research and development activities may not
increase or may decline; Electro Rent may not succeed in retaining
its key sales personnel; and manufacturers of test and measurement
equipment may not be willing to enter reseller arrangements with
Electro Rent. 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.
ELECTRO RENT CORPORATION CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except per share
information) Three Months Ended
May 31,
Twelve Months Ended May 31,
2015 2014 2015
2014 Revenues: Rentals and leases $
31,645 $ 34,070 $ 129,255 $ 137,417 Sales of equipment and other
revenues 28,768 27,007 109,074 103,720
Total revenues 60,413 61,077 238,329
241,137 Operating expenses: Depreciation of rental and lease
equipment 14,016 14,059 56,445 57,034 Costs of rentals and leases,
excluding depreciation 4,421 4,189 18,086 18,292 Costs of sales of
equipment and other revenues 21,396 19,952 81,557 74,752 Selling,
general and administrative expenses 15,002 15,621
59,313 58,920 Total operating expenses 54,835
53,821 215,401 208,998 Operating profit 5,578
7,256 22,928 32,139 Interest income, net 68 112 332 387 Other
income - - 1,390 - Income before income
taxes 5,646 7,368 24,650 32,526 Income tax provision 2,205
2,775 9,218 12,118 Net Income $ 3,441 $ 4,593
$ 15,432 $ 20,408 Earnings per share: Basic $ 0.14 $ 0.19 $
0.63 $ 0.84 Diluted $ 0.14 $ 0.19 $ 0.63 $ 0.84 Shares used in per
share calculation Basic 24,385 24,336 24,360 24,325 Diluted 24,411
24,382 24,378 24,357
ELECTRO RENT CORPORATION
CONSOLIDATED BALANCE SHEETS (in thousands, except share
information)
May 31,
May 31, 2015 2014
ASSETS Cash $ 4,064 $ 5,946 Accounts receivable, net of
allowance for doubtful accounts of $604 and $555 33,863 34,970
Rental and lease equipment, net of accumulated depreciation of
$241,116 and $237,151 231,671 221,888 Other property, net of
accumulated depreciation and amortization of $16,749 and $18,983
13,120 13,122 Goodwill 3,109 3,109 Intangibles, net of amortization
of $1,761 and $1,632 744 873 Other assets 13,743
22,150 $ 300,314 $ 302,058 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities: Bank borrowings 2,387 - Accounts payable 8,234
7,279 Accrued expenses 18,487 14,472 Deferred revenue 5,576 7,537
Deferred tax liability 37,652 41,812 Total
liabilities 72,336 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
2015 - 24,108,176; 2014 - 24,007,709
40,440
39,252
Retained earnings 187,538 191,706 Total shareholders'
equity 227,978 230,958 $ 300,314 $ 302,058
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version on businesswire.com: http://www.businesswire.com/news/home/20150813006363/en/
Electro Rent CorporationDaniel Greenberg, 818-786-2525Chairman
and CEOorPondelWilkinson Inc.Roger Pondel/Laurie
Berman310-279-5980pwinvestor@pondel.com
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