Electro Rent Corporation (Nasdaq: ELRC) today reported
financial results for the fiscal first quarter ended August 31,
2015.
“Our results for the quarter reflect a time of transition for
our company,” said Daniel Greenberg, Chairman and CEO of Electro
Rent. “As expected, our top line was impacted by a significant
reduction in new equipment sales resulting from the end of our
agreement with Keysight Technologies. On the positive side, used
equipment sales were up for the first quarter, and equipment
rentals, our primary business sector, only declined slightly,
primarily due to changes in foreign currency exchange rates.
Further, the aerospace/defense sector remained stable, and we
believe that favorable industry changes will occur this year that
should inure to our benefit.
“Meanwhile, we are fully committed to continuing to provide our
customers with a wide range of technical and financial choices, and
have developed new reseller relationships with Anritsu and Rohde
& Schwarz,” Greenberg said. “At the same time, we continued to
invest in our sales infrastructure during the quarter to further
broaden our product and customer relationships, expand our customer
base, and increase our geographic reach. While we anticipate it
will take time to rebuild our new equipment sales, we think this
area of our business will continue to be highly valuable to Electro
Rent’s future,” Greenberg added.
Total revenues for the fiscal 2016 first quarter were $53.3
million, compared with $61.9 million for the same quarter last
year. Rental and lease revenues amounted to $32.3 million, versus
$33.9 million one year ago. Sales of equipment and other revenues
totaled $21.0 million for the fiscal 2016 first quarter, compared
with $28.0 million for the comparable period in fiscal 2015.
Selling, general and administrative expenses for the fiscal 2016
first quarter were $14.8 million, or 27.7% of total revenues,
compared with $15.0 million, or 24.3% of total revenues, for the
same quarter last year. Total operating expenses were $49.2 million
for the first quarter of fiscal 2016, compared with $54.4 million a
year ago.
Operating profit for the first quarter of fiscal 2016 was $4.2
million, or 7.9% of total revenues, versus $7.5 million, or 12.1%
of total revenues, for last year’s first quarter. Operating profit
for the fiscal 2016 period was impacted by lower revenues.
Net income totaled $2.5 million, or $0.10 per diluted share, for
the fiscal 2016 first quarter, compared with $4.8 million, or $0.20
per diluted share, last year.
Rental equipment purchases for the fiscal 2016 first quarter
totaled $15.5 million, versus $17.6 million for the same quarter
last year.
Electro Rent’s effective tax rate was 37.5% for the first
quarter of fiscal 2016, compared with 36.9% for the same quarter
one year ago. The higher rate primarily related to higher losses in
the company’s China operations for which it receives no tax
benefit.
The net book value of Electro Rent's equipment was $226.8
million at August 31, 2015, compared with $231.7 million at May 31,
2015.
Electro Rent had a sales order backlog for test and measurement
equipment primarily relating to its Keysight Technologies resale
agreement of $2.0 million at August 31, 2015, versus $6.4 million
one year ago. The majority of the backlog is expected to be
delivered to customers within the next three months.
Electro Rent paid dividends of $3.2 million for the first
quarter of fiscal 2016. On an annualized basis, Electro Rent’s
current quarterly dividend of $0.125 per common share represents a
4.5% yield on the October 7, 2015 closing share price of
$11.06.
Total shareholders' equity at August 31, 2015 was $227.6
million, or $9.43 per share, compared with $228.0 million, or $9.46
per share, at May 31, 2015.
Electro Rent’s cash balance was $8.7 million at the end of the
first quarter of fiscal 2016, compared with $4.1 million at the end
of fiscal 2015. There were no bank borrowings at August 31, 2015,
compared with $2.4 million at May 31, 2015.
“We hope to improve our performance in each and every area of
our business as the year progresses. Management remains cautiously
optimistic that, allowing for the substantial reductions in new
equipment sales, Electro Rent will get stronger as we work to build
enhanced value for our customers and shareholders,” Greenberg
added.
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 views and expectations at this
time with respect to future events and financial performance, based
on currently available information. Forward-looking statements in
this press release include statements regarding whether changes in
certain industries will occur and will inure to Electro Rent’s
benefit, whether Electro Rent will pay future dividends and in what
amounts, whether Electro Rent can implement additional reseller
agreements, whether sales of new equipment will increase or prove
highly valuable to Electro Rent’s future operations, as well as
general expressions of optimism about future operating results.
When used, the words “anticipate,” “believe,” "expect" and "will"
and other similar expressions identify forward-looking statements.
Forward-looking statements are based on assumptions about future
operations and market conditions, and 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 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 or those agreements may not succeed to the level
anticipated. 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. You should not put undue reliance on these statements.
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) August 31, 2015
2014 Revenues: Rentals and leases $
32,303 $ 33,889 Sales of equipment and other revenues 21,040
27,982 Total revenues 53,343
61,871 Operating expenses: Depreciation of rental and lease
equipment 14,601 13,915 Costs of rentals and leases, excluding
depreciation 4,912 4,574 Costs of sales of equipment and other
revenues 14,866 20,902 Selling, general and administrative expenses
14,771 15,021 Total operating expenses
49,150 54,412 Operating profit 4,193 7,459 Interest
income/expense, net (242 ) 103 Income before income
taxes 3,951 7,562 Income tax provision 1,481
2,791 Net Income $ 2,470 $ 4,771 Earnings per share:
Basic $ 0.10 $ 0.20 Diluted $ 0.10 $ 0.20 Shares used in per share
calculation Basic 24,416 24,372 Diluted 24,426 24,396
ELECTRO RENT CORPORATION CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands, except share numbers)
August 31, May 31, 2015 2015
ASSETS Cash $ 8,749 $ 4,064 Accounts receivable, net of allowance
for doubtful accounts of $553 and $604 26,917 33,863 Rental and
lease equipment, net of accumulated depreciation of $237,652 and
$241,116 226,764 231,671 Other property, net of accumulated
depreciation and amortization of $16,983 and $16,749 12,901 13,120
Goodwill 3,109 3,109 Intangibles, net of accumulated amortization
of $1,790 and $1,761 715 744 Other assets 13,587 13,743 $ 292,742 $
300,314 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Bank
borrowings $ -- $ 2,387 Accounts payable 6,233 8,234 Accrued
expenses 16,636 18,487 Deferred revenue 5,607 5,576 Deferred tax
liability 36,716 37,652 Total liabilities 65,192 72,336
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 40,598 40,440 August
31, 2015 - 24,126,792; May 31, 2015 – 24,108,176 Retained earnings
186,952 187,538 Total shareholders' equity 227,550 227,978 $
292,742 $ 300,314
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151008006354/en/
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