Attached files
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| 8-K - ELECTRO RENT CORP | v206079_8k.htm |
FOR
IMMEDIATE RELEASE
For
More Information, Contact:
|
Daniel
Greenberg, Chairman and CEO
|
Roger
Pondel/Laurie Berman
|
|
Electro
Rent Corporation
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PondelWilkinson
Inc.
|
|
818-786-2525
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310-279-5980
|
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investor@pondel.com
|
ELECTRO
RENT REPORTS HIGHER REVENUES, NET INCOME
FOR
FISCAL 2011 SECOND QUARTER
Agilent
Agreement, Telogy Acquisition and Strong Rental Business
Continue
to Foster Significant Growth
VAN NUYS, Calif. – December 20, 2010
– Electro Rent Corporation (NASDAQ:ELRC) today reported a 46% increase in
revenues and a 77% increase in net income for its second fiscal quarter ended
November 30, 2010.
Total
revenues for the second quarter of fiscal 2011 grew to $53.3 million from $36.6
million for the same period last year. Rental and lease revenues rose
27% to $29.7 million from $23.3 million for the fiscal 2010 second quarter,
reflecting increased rental demand and higher rental prices in North America and
Europe, as well as added revenues from the acquisition of Telogy,
LLC. Lease revenues were essentially unchanged from the prior-year
second quarter. Sales of equipment and other revenues increased 78%
to $23.6 million for the fiscal 2011 second quarter from $13.2 million last
year, primarily attributable to increased sales activity related to the
company’s sales agreement with Agilent, partially offset by declines in used
equipment sales and finance lease activity.
Net
income grew 77% to $7.1 million, or $0.30 per diluted share, for the fiscal 2011
second quarter, from $4.0 million, or $0.17 per diluted share, for the year-ago
period.
“We have
substantially improved the company’s financial profile and performance by
maximizing opportunities gained through our strategic acquisition of Telogy and
our sales agreement with Agilent as its sole Authorized Technology Partner in
the U.S. and Canada,” said Daniel Greenberg, Chairman and CEO of Electro
Rent. “As we continue to broaden our potential customer base and grow
market share, we are enthusiastic about our ability to continue delivering
improved financial results and reinforcing our position as the clear leader in
our segment of the electronic test and measurement equipment
market.”
SG&A
expenses for the fiscal 2011 second quarter were $13.7 million, or 25.7% of
total revenues, compared with $10.4 million, or 28.3% of total revenues, for
same period last year. The net increase was primarily attributable to
increases in the company’s sales force in connection with the Agilent agreement,
as well as expenses associated with higher rental activity. Total
operating expenses were $43.7 million for the second quarter of fiscal 2011,
versus $30.7 million in the same period last year, also primarily due to the
company’s new Agilent sales channel personnel and strong rental demand, as well
as the higher cost of equipment sales resulting from the company’s Agilent sales
agreement.
Interest
income was $101,000 for the fiscal 2011 second quarter, compared with $1.0
million last year, reflecting a lower cash balance in fiscal 2011, the
redemption of the company’s auction rate securities in the first quarter of
fiscal 2011 which carried a higher interest rate last year, and a realized gain
of $800,000 on the sale of the company’s investments available-for-sale in the
second quarter of fiscal 2010.
Operating
profit for the fiscal 2011 second quarter rose 63% to $9.6 million, or 18.0% of
total revenues, from $5.9 million, or 16.1% of total revenues, for last year’s
fiscal second quarter.
Total
revenues for the first six months of fiscal 2011 grew to $104.1 million from
$68.8 million for the comparable prior year period. Rental and lease
revenues for the fiscal 2011 year-to-date period increased to $58.5 million from
$45.1 million last year. Equipment sales and other revenues totaled
$45.6 million for the six months ended November 30, 2010, up from $23.7 million
for the first half of fiscal 2010.
Net
income for the fiscal 2011 year-to-date period advanced to $12.3 million, or
$0.51 per diluted share, from $6.1 million, or $0.25 per diluted share, in the
fiscal 2010 period.
SG&A
expenses were $27.3 million, or 26.2% of total revenues, for the first six
months of fiscal 2011, versus $20.7 million, or 30.0% of total revenues, for the
same period last year. Total operating expenses for the fiscal 2011
six-month period were $86.0 million, compared with $59.6 million for the fiscal
2010 six-month period.
Operating
profit for the first six months of fiscal 2011 rose to $18.1 million, or 17.4%
of total revenue, from $9.2 million, or 13.4% of total revenue, in the
prior-year period.
Electro
Rent’s effective tax rate was 26.7% for the second quarter of fiscal 2011 and
32.8% for the first six months of fiscal 2011, compared with 42.2% for the
second quarter of fiscal 2010 and 42.5% for the first six months of fiscal
2010. The decrease in both periods was due to a $1.4 million
reduction of the income tax provision related to the effective settlement of the
company’s uncertain tax positions during the second quarter of fiscal
2011.
Rental
equipment purchases for the fiscal 2011 second quarter and year-to-date period
were $23.4 million and $48.3 million, respectively, compared with $13.6 million
and $23.0 million, respectively, for the same periods last year. The
book value of Electro Rent's equipment was $190.5 million at November 30, 2010,
up from $173.6 million at May 31, 2010.
As of
November 30, 2010, Electro Rent had an order backlog of $16.7 million as the
result of sales in connection with the company’s Agilent sales
agreement. The majority of the backlog is expected to be delivered to
customers before the end of May 2011. The company had no order
backlog in the prior-year period.
Electro
Rent paid dividends of $3.6 million for the second quarter of fiscal
2011. On an annualized basis, the company’s current quarterly
dividend of $0.15 per common share represents a 3.9% yield on the December 17,
2010 closing price of $15.28.
Total
shareholders' equity at November 30, 2010 was $235.7 million, or $9.83 per
share, versus $230.0 million, or $9.60 per share, at May 31, 2010.
Electro
Rent had $31.1 million in cash, cash equivalents and investments at November 30,
2010, versus $47.2 million at May 31, 2010. Electro Rent’s balance
sheet remains debt free.
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, which include, but are not limited to, broadening
the company’s customer base, and delivering improved financial results, 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 "anticipates," "believes,"
"expects," "intends," "future," and other similar expressions identify
forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties. The company believes its
management's 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, our 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 data)
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Three Months Ended
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Six Months Ended
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|||||||||||||||
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November 30,
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November 30,
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|||||||||||||||
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2010
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2009
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2010
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2009
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Revenues:
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||||||||||||||||
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Rentals
and leases
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$ | 29,673 | $ | 23,329 | $ | 58,460 | $ | 45,076 | ||||||||
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Sales
of equipment and other revenues
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23,604 | 13,248 | 45,642 | 23,702 | ||||||||||||
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Total
revenues
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53,277 | 36,577 | 104,102 | 68,778 | ||||||||||||
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Operating
expenses:
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||||||||||||||||
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Depreciation
of rental and lease equipment
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11,919 | 10,473 | 23,575 | 21,268 | ||||||||||||
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Costs
of revenues other than depreciation of rental
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||||||||||||||||
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and
lease equipment
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18,087 | 9,853 | 35,309 | 17,620 | ||||||||||||
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Selling,
general and administrative expenses
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13,714 | 10,357 | 27,282 | 20,665 | ||||||||||||
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Gain
on bargain purchase, net of taxes
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(49 | ) | - | (202 | ) | - | ||||||||||
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Total
operating expenses
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43,671 | 30,683 | 85,964 | 59,553 | ||||||||||||
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Operating
profit
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9,606 | 5,894 | 18,138 | 9,225 | ||||||||||||
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Interest
income, net
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101 | 1,048 | 219 | 1,356 | ||||||||||||
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Income
before income taxes
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9,707 | 6,942 | 18,357 | 10,581 | ||||||||||||
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Income
tax provision
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2,588 | 2,931 | 6,017 | 4,495 | ||||||||||||
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Net
income
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$ | 7,119 | $ | 4,011 | $ | 12,340 | $ | 6,086 | ||||||||
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Earnings
per share:
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||||||||||||||||
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Basic
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$ | 0.30 | $ | 0.17 | $ | 0.51 | $ | 0.25 | ||||||||
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Diluted
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$ | 0.30 | $ | 0.17 | $ | 0.51 | $ | 0.25 | ||||||||
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Shares
used in per share calculation:
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||||||||||||||||
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Basic
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23,976 | 23,918 | 23,970 | 23,925 | ||||||||||||
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Diluted
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24,075 | 23,959 | 24,049 | 23,968 | ||||||||||||
ELECTRO
RENT CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share numbers)
|
November 30,
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May 31,
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2010
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2010
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ASSETS
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Cash
and cash equivalents
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$ | 31,067 | $ | 32,906 | ||||
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Investments,
trading, at fair value (cost of $14,275)
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- | 13,323 | ||||||
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Put
option
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- | 952 | ||||||
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Accounts
receivable, net of allowance for doubtful accounts of $473 and
$536
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28,470 | 25,670 | ||||||
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Rental
and lease equipment, net of accumulated depreciation of $186,210 and
$177,380
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190,467 | 173,647 | ||||||
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Other
property, net of accumulated depreciation and amortization of $16,464 and
$16,055
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13,628 | 13,585 | ||||||
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Goodwill
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3,109 | 3,109 | ||||||
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Intangibles,
net of amortization of $2,126 and $2,017
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1,289 | 1,398 | ||||||
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Other
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14,710 | 11,478 | ||||||
| $ | 282,740 | $ | 276,068 | |||||
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LIABILITIES
AND SHAREHOLDERS' EQUITY
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||||||||
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Liabilities:
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||||||||
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Accounts
payable
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$ | 6,949 | $ | 8,294 | ||||
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Accrued
expenses
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9,461 | 14,240 | ||||||
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Deferred
revenue
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6,082 | 6,022 | ||||||
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Deferred
tax liability
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24,545 | 17,550 | ||||||
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Total
liabilities
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47,037 | 46,106 | ||||||
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Commitments
and contingencies
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||||||||
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Shareholders'
equity:
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||||||||
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Preferred
stock, $1 par - shares authorized 1,000,000, none issued or
outstanding
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||||||||
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Common
stock, no par - shares authorized 40,000,000;
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||||||||
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issued
and outstanding November 30, 2010 - 23,977,155;
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||||||||
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May
31, 2010 - 23,960,694
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34,210 | 33,555 | ||||||
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Retained
earnings
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201,493 | 196,407 | ||||||
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Total
shareholders' equity
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235,703 | 229,962 | ||||||
| $ | 282,740 | $ | 276,068 | |||||