Commodities: Analogic 1Q EPS 45c >ALOG

Press Release: Analogic Announces Results for the First Quarter Ended October 31, 2017 and Declares Quarterly Cash Dividend

Analogic Announces Results for the First Quarter Ended October 31, 2017 and Declares Quarterly Cash Dividend

Operating Expense Reductions in Fiscal 2017 Yield Improved Profitability; Tightens Guidance Range for Fiscal 2018 on Increased Confidence

PEABODY, Mass., Dec. 06, 2017 (GLOBE NEWSWIRE) — Analogic Corporation (Nasdaq:ALOG), enabling the world’s medical imaging and aviation security technology, today announced results for its first quarter ended October 31, 2017.

Highlights during the first quarter included:

— Revenue of $106.9 million with gross margin of 45%

— GAAP operating margin of 7%; Non-GAAP operating margin of 12%

— GAAP diluted EPS of $0.45; Non-GAAP diluted EPS of $0.75

— Operating cash flow of $14 million

— Awarded $4 million base contract by TSA for software algorithm development and additional ConneCT prototypes

Revenue for the first quarter of fiscal 2018 was $106.9 million, a decrease of 12% compared with revenue of $121.1 million in the first quarter of fiscal 2017. GAAP net income for the first quarter of fiscal 2018 was $5.7 million, or $0.45 per diluted share, compared with net income of $2.5 million, or $0.20 per diluted share, in the first quarter of fiscal 2017. Non-GAAP net income for the first quarter of fiscal 2018 was $9.5 million, or $0.75 per diluted share, compared with $5.4 million, or $0.43 per diluted share, in the prior year’s first quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

Fred Parks, president and CEO, commented, “We are encouraged by our results this quarter as our strategy to optimize our Ultrasound portfolio is showing promise. As expected, our strategic redirection coupled with our fiscal 2017 restructuring has yielded improved profitability in Q1 on a lower revenue base. Security continues to show strength in the second half of the year driven by demand for international high-speed checked baggage systems and the recent TSA checkpoint contract.”

Parks continued, “The strategic sale process, as previously announced, is progressing as planned. We will provide updates as appropriate.”

Segment Revenues for the First Quarter

Medical Imaging segment revenue was $53.1 million for the first quarter of fiscal 2018, down 21% from revenue of $67.2 million in the same period of fiscal 2017, primarily due to lower sales in CT associated with previously reported customer sourcing issues combined with lower sales in MR and Mammography.

Ultrasound segment revenue was $37.4 million for the first quarter of fiscal 2018, up 4% from revenue of $35.8 million in the same period of fiscal 2017, due to the stronger sales of our bk5000 system for surgery in North America and Europe partially offset by the comparative lower revenue from Oncura veterinary system sales.

Security and Detection segment revenue was $16.4 million for the first quarter of fiscal 2018, down 10% from revenue of $18.1 million in the same period of fiscal 2017, mainly due to a stronger comparison from last year and lower service revenue.

Fiscal 2018 Outlook

Total company revenue for fiscal 2018 is expected to be between $450 and $460 million with non-GAAP operating margins of 10% to 11% resulting in non-GAAP diluted EPS of $2.75 to $2.90. We expect sequential revenue improvement throughout the remainder of fiscal 2018.

   -- With anticipated reductions from our portfolio optimization efforts 
      partially offset by improved performance in our urology and surgery 
      markets, we now expect our Ultrasound revenue for fiscal 2018 to be down 
      low-single digits with positive low-single digit non-GAAP operating 
      margin as the company realizes the benefit of its product portfolio 
      optimization efforts and lower operating expenses 
 
   -- Medical Imaging revenue for fiscal 2018 is expected to be down low-double 
      digits with mid-teens non-GAAP operating margin due primarily to the 
      impact of a customer outsourcing decision in CT 
 
   -- Security and Detection revenue for fiscal 2018 is expected to have 
      double-digit growth, with mid-teens non-GAAP operating margin on 
      continued demand for medium-speed and high-speed check baggage screening 
      systems 
 

The Company does not provide a GAAP operating margin and earnings outlook because it is unable to reliably forecast many of the items that are excluded from the calculation of non-GAAP operating margin and earnings. These items could cause our GAAP operating margins and earnings to differ materially from the corresponding non-GAAP values. For more information, see “Use of Non-GAAP Financial Measures,” below.

Quarterly Cash Dividend

On December 1, 2017, Analogic’s Board of Directors declared a $0.10 cash dividend for each common share for its fourth fiscal quarter ended October 31, 2017. The cash dividend will be payable on December 29, 2017, to shareholders of record on December 15, 2017.

Use of Non-GAAP Financial Measures

We supplement our GAAP financial reporting with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, non-GAAP other income and expense, non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted earnings per share. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We have included at the end of this document a reconciliation of each historical non-GAAP financial measure used in this document to the most directly comparable GAAP financial measure.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, in forecasting and planning for future periods, and in determining payments under our compensation programs. We also believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and in comparing financial results across accounting periods and to those of other companies.

With respect to forwarding-looking measures, we provide an outlook for our non-GAAP operating margins and earnings. We do not provide operating margin or earnings outlook on a GAAP basis. Many of the items that we exclude from our non-GAAP operating margin and earnings calculations, such as amortization of intangibles, acquisition related costs, restructuring expenses, and one-time tax adjustments, are less capable of being controlled or reliably predicted by management. These items could cause our GAAP operating margins and earnings to vary materially from the corresponding Non-GAAP figures presented in our outlook statements.

Forward-Looking Statements

Any statements about future expectations, plans, and prospects for the Company, including statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company’s products, limited number of customers, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, acquisition related risks, and other factors discussed in our most recent quarterly and annual reports filed with the Securities and Exchange Commission. In addition, the forward looking statements included in this presentation represent the Company’s views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company’s views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s views as of any later date.

Conference Call Details

Analogic will conduct an investor conference call on Wednesday, December 6, 2017 at 5:00 p.m. (ET) to discuss the first quarter results and outlook for fiscal 2018. To participate in the conference call, dial 1-866-823-6992, or 1-334-323-7225 for international callers, approximately ten minutes before the conference is scheduled to begin. Inform the operator that you wish to join the Analogic conference, passcode 42748. You will then be asked for your name, organization, and telephone number, and be connected to the conference. The earnings release and, just prior to the call, presentation materials related to the quarterly financial information will be posted on the Company’s website at http://investor.analogic.com.

The call will also be available via webcast in listen-only mode. To listen to the webcast, visit investor.analogic.com approximately five to ten minutes before the conference is scheduled to begin. A telephone digital replay will be available approximately two hours after the call is completed through midnight Saturday, January 6, 2018. To access the digital replay, dial 1-877-919-4059 or 1-334-323-0140 for international callers. The passcode is 13740288.

Press Release: Analogic Announces Results for the -2-

A replay of the conference call webcast will be archived on the Company’s website at www.analogic.com approximately three hours after the call is completed and will be available through midnight January 6, 2018. For more information on the conference call, visit www.analogic.com, call 978-326-4058, or email [email protected]

About Analogic — Celebrating 50 Years of Imaging Innovation

Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging and real-time guidance technologies used for disease diagnosis and treatment as well as for automated threat detection. Our market-leading ultrasound systems, led by our flagship BK Ultrasound brand, used in procedure-driven markets such as urology, surgery, and point-of-care, are sold to clinical practitioners around the world. Our advanced imaging technologies are also used in computed tomography (CT), magnetic resonance imaging (MRI), and digital mammography systems, as well as automated threat detection systems for aviation security. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.

Analogic and the globe logo are registered trademarks of Analogic Corporation.

 
 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited) 
 
 
                                    Three Months Ended 
  (In thousands, except per 
  share data)                       October 31, 2017      October 31, 2016 
 
  Net revenue: 
  Product                        $           105,752   $           120,245 
  Engineering                                  1,123                   873 
  Total net revenue                          106,875               121,118 
  Cost of sales: 
  Product                                     57,972                68,759 
  Engineering                                  1,136                   723 
  Total cost of sales                         59,108                69,482 
 
  Gross profit                                47,767                51,636 
  Operating expenses: 
  Research and product development            15,012                15,850 
  Selling and marketing                       12,405                18,180 
  General and administrative                  11,941                13,621 
  Restructuring                                  535                    32 
  Total operating expenses                    39,893                47,683 
 
  Income from operations                       7,874                 3,953 
  Total other income (expense), 
   net                                           238                 (442) 
  Income before income taxes                   8,112                 3,511 
  Provision for income taxes                   2,453                   980 
  Net income                     $             5,659   $             2,531 
 
  Net income per share 
  Basic                          $              0.45   $              0.20 
  Diluted                        $              0.45   $              0.20 
 
  Dividends declared and paid 
   per share                     $              0.10   $              0.10 
 
  Weighted-average shares 
  outstanding: 
  Basic                                       12,473                12,419 
  Diluted                                     12,599                12,616 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Unaudited) 
 
  (In thousands) 
 
  Assets:                               October 31, 2017   July 31, 2017 
  Cash and cash equivalents          $            96,806  $      129,298 
  Short-term marketable securities                50,555          18,797 
  Accounts receivable, net                        73,111          77,587 
  Inventory                                      131,314         130,575 
  Other current assets                            12,429          14,448 
    Total current assets                         364,215         370,705 
  Long-term marketable securities                 35,539          26,171 
  Property, plant, and equipment, net            100,302         102,676 
  Intangible assets and goodwill, net             26,950          28,269 
  Other non-current assets                        10,325          10,262 
    Total Assets                     $           537,331  $      538,083 
 
  Liabilities and Stockholders' 
  Equity: 
  Accounts payable                   $            25,728  $       27,179 
  Accrued liabilities                             28,034          31,620 
  Other current liabilities                        8,802           8,311 
    Total current liabilities                     62,564          67,110 
  Long-term liabilities                           10,133          10,479 
  Stockholders' equity                           464,634         460,494 
    Total Liabilities and 
     Stockholders' Equity            $           537,331  $      538,083 
 
 
 
 
NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION 
 
  (In thousands, except per 
  share data)                                Three Months Ended 
                                     October 31, 2017   October 31, 2016 
 
  GAAP Income From Operations    $              7,874  $           3,953 
  Share-based compensation expense 
   (Note 1)                                     1,984              1,563 
  Acquisition-related revenues and 
   expenses (Note 2)                            1,462              2,212 
  Non-routine other legal costs 
   (Note 3)                                       577                  4 
  Restructuring (Note 4)                          535                 32 
  Non-GAAP Income From 
   Operations                    $             12,432  $           7,764 
  Percentage of Total Net Revenue               11.6%               6.4% 
 
  GAAP Tax Provision (Note 5)    $              2,453  $             980 
  GAAP Tax Rate                                 30.2%              27.9% 
  Non-GAAP Tax Provision (Note 5)               3,171              1,950 
  Non-GAAP Tax Rate                             25.0%              26.6% 
 
  GAAP Net Income                $              5,659  $           2,531 
  Share-based compensation expense 
   (Note 1)                                     1,885              1,066 
  Acquisition-related revenues and 
   expenses (Note 2)                            1,114              1,752 
  Non-routine other legal costs 
   (Note 3)                                       365                  2 
  Restructuring (Note 4)                          358                 21 
  Asset impairment charges                         28                  - 
  Valuation Allowance Tax 
  Effect                                           89                  - 
  Non-GAAP Net Income            $              9,498  $           5,372 
  Percentage of Total Net Revenue                8.9%               4.4% 
 
  GAAP Diluted EPS               $               0.45  $            0.20 
  Effect of non-GAAP 
   adjustments                   $               0.30  $            0.23 
  Non-GAAP Diluted EPS           $               0.75  $            0.43 
 
 
Note 1: Exclusion of variable share-based compensation 
 expense allows consistency of operating results between 
 periods and other companies. 
 
Note 2: During fiscal years 2017 and 2018, we incurred 
 acquisition costs related to the Ultrasonix Medical 
 Corporation, PocketSonics, Inc., and Oncura Partners 
 Diagnostics, LLC acquisitions, which we closed on 
 March 2, 2013, September 20, 2013, and January 8, 
 2016, respectively. Costs included theamortization 
 of intangibles of $1.5 million for the three months 
 ended October 31, 2017. 
 
Note 3: During the three months ended October 31, 
 2017, we incurred $577 thousand of pre-tax strategic 
 alternative related costs. Additionally, during the 
 three months ended October 31, 2017, we incurred $0 
 of pre-tax inquiry-related costs, associated with 
 the BK matter, as initially disclosed in our annual 
 report on Form 10-K for the fiscal year ended July 
 31, 2011. This matter relates to transactions we identified 
 involving our Danish subsidiary, BK Medical, and certain 
 of its foreign distributors, regarding compliance 
 with the law. 
 
Note 4: During the three months ended October 31, 
 2017, we incurred pre-tax charges of $535 thousand, 
 primarily due to facility exit costs associated with 
 exiting the Vancouver facility. 
 
Note 5: The quarter to date Q1 FY 2018 non-GAAP tax 
 rate differs from the GAAP tax rate primarily due 
 to acquisition related adjustments and stock compensation 
 expenses. The quarter to date Q1 FY 2017 non-GAAP 
 tax rates differ from the GAAP tax rates primarily 
 due to the BK Matter Inquiry costs and by acquisition 
 related amortization expense and stock compensation 
 expenses. 
 
 
 

For Further Information:

Investor and Financial Media Contact:

Mark Namaroff

Senior Director of Investor Relations and Corporate Communications

(978) 326-4058

[email protected]