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Exhibit 99.1

 

LOGO

 

  LOGO         

FOR IMMEDIATE WORLDWIDE RELEASE

For Further Information, Contact:

Mark Namaroff

Director of Investor Relations

(978) 326-4058

investorrelations@analogic.com

Analogic Announces Financial Results for the Fourth Quarter and Fiscal Year Ended

July 31, 2014 and Declares Quarterly Cash Dividend

Delivered strong margins and cash flow despite market headwinds;

Strong backlog further supports growth in fiscal 2015

PEABODY, Mass. (September 15, 2014) – Analogic Corporation (Nasdaq:ALOG), enabling the world’s medical imaging and aviation security technology, today announced results for its fourth quarter ended July 31, 2014.

Highlights during the fourth quarter (comparisons are against Q4 of fiscal 2013) included:

 

  Revenue of $142 million, down 15%

 

  Gross margin of 44%, up 4 points

 

  GAAP operating margin of 8%; Non-GAAP operating margin of 14%

 

  GAAP diluted EPS of $0.89; Non-GAAP diluted EPS of $1.36

 

  Entered into an agreement with a significant medical equipment supplier to provide our advanced ultrasound technology beyond our core markets

 

  After quarter end, Security backlog increased to over $60 million and introduced new bk3000™ premium ultrasound system

Highlights for fiscal year 2014 included:

 

  Revenue of $518 million, down 6% from fiscal 2013

 

  Gross margin of 42%, up 3 points

 

  GAAP operating margin of 6%: Non-GAAP operating margin of 10%

 

  GAAP diluted EPS of $2.72; Non-GAAP diluted EPS of $3.52

 

  Positive operating cash flows of $48 million, free cash flow of $30 million

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


Revenue for the fourth quarter of fiscal 2014 was $142.0 million, a decrease of 15% compared with revenue of $166.2 million in the fourth quarter of fiscal 2013. GAAP net income for the fourth quarter of fiscal 2014 was $11.2 million, or $0.89 per diluted share, compared with net income of $11.7 million, or $0.93 per diluted share, in the fourth quarter of fiscal 2013.

Non-GAAP net income for the fourth quarter was $17.2 million, or $1.36 per diluted share, compared with $19.3 million, or $1.53 per diluted share, in the prior year’s fourth quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

For fiscal 2014, revenue totaled $517.5 million, down 6% from the same period in the prior year. GAAP net income for the fiscal year was $34.5 million, or $2.72 per diluted share, compared with $31.1 million, or $2.48 per diluted share, in fiscal 2013. GAAP net income for fiscal 2014 included favorable discrete net tax benefits totaling $8.8 million, or $0.69 per diluted share, primarily associated with a reduction in taxes expected to be payable in the future associated with our Canadian operations. Non-GAAP net income for the fiscal year was $44.6 million, or $3.52 per diluted share, compared with $48.8 million, or $3.88 per diluted share, in fiscal 2013. Our non-GAAP results do not include the tax benefit noted above.

Jim Green, president and CEO, commented, “Despite market challenges in both the medical and security markets, for the fiscal year we generated significant operating cash flow and maintained near record margins, positioning Analogic for growth and significant profitability in the future. In Medical Imaging, our new high-value-content CT platform is entering production and our MRI and Mammography businesses are stable. In Security, our baggage screening products are proven, our market position with L-3 Communications and Smiths Detection remains strong, and we are seeing early adoption for RapidDNA Analysis™ Systems. After the end of the quarter we received significant orders for threat detection and DNA analysis systems increasing our Security backlog to over $60 million, positioning us well for fiscal 2015.”

“In direct Ultrasound, our sales force is stabilizing and we recently introduced our new bk3000 system, a premium ultrasound solution for urology and general imaging, positioning us for accelerating growth,” Green added. “We are pleased to mention that during the fourth quarter we entered into an agreement with a significant global medical equipment provider that will allow us to leverage our new TriCore™ based ultrasound technology beyond our core markets. We expect to see shipments beginning in fiscal 2015 underpinning our long-term growth expectations for our Ultrasound business.”

Green continued, “We believe that fiscal 2015 will see a return to growth as our Medical Imaging business stabilizes, our Ultrasound business accelerates in direct markets and Security sees strong growth. We expect revenues in fiscal 2015 to grow mid single-digits with 1-2 points improvement in non-GAAP operating margin, putting us back on a trajectory of long-term sustainable growth.”

Segment Revenues

Medical Imaging segment revenue was $84.2 million for the fourth quarter of fiscal 2014, down 7% from the same period of fiscal 2013, due primarily to timing of MRI sales, lower customer funded engineering and the exit from our legacy patient monitoring product line. In the fiscal year, Medical Imaging revenue was $295.6 million, down 7% from the prior year.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


Ultrasound segment revenue was $40.4 million for the fourth quarter of fiscal 2014, down 8% from revenue of $43.7 million in the same period of fiscal 2013, due to fulfillment delays related to timing of orders received during the quarter. In the fiscal year, Ultrasound revenue was $152.5 million, up 2% from the prior year.

Security Technology segment revenue was $17.4 million for the fourth quarter of fiscal 2014, down 46% from revenue of $32.3 million in the same period of fiscal 2013. Compared with a very strong fourth quarter of fiscal 2013, revenues in the fourth quarter of fiscal 2014 were lower as a result of a reduction in engineering revenue and fewer shipments of high-speed threat detection systems primarily due to international airport tender delays. In the fiscal year, Security Technology revenue was $69.4 million, down 15% from the prior year.

Quarterly Cash Dividend

On September 9, 2014, Analogic’s Board of Directors declared a $0.10 cash dividend for each common share for its fourth fiscal quarter ended July 31, 2014. The cash dividend will be payable on October 10, 2014, to shareholders of record on September 25, 2014.

Use of Non-GAAP Financial Measures

This document includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. An explanation and a reconciliation of our non-GAAP measures are provided at the end of this press release.

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.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


Conference Call

Analogic will conduct an investor conference call on Monday, September 15, 2014 at 5:00 p.m. (ET) to discuss the fourth quarter results. 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 October 15, 2014. To access the digital replay, dial 1-877-919-4059 or 1-334-323-0140 for international callers. The passcode is 49860587.

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 October 15, 2014.

For more information on the conference call, visit www.analogic.com, call 978-326-4058, or email investorrelations@analogic.com.

About Analogic

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, 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. Our imaging technology can be found in over half of the CT and MRI systems installed worldwide. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.

Analogic is a registered trademark of Analogic Corporation.

The globe logo is a trademark of Analogic Corporation.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
(In thousands, except per share data)    July 31, 2014     July 31, 2013     July 31, 2014     July 31, 2013  

Net revenue:

        

Product

   $ 139,535      $ 160,227      $ 509,527      $ 526,725   

Engineering

     2,462        5,950        8,021        23,638   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenue

     141,997        166,177        517,548        550,363   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales:

        

Product

     77,841        95,103        290,951        313,458   

Engineering

     1,827        4,020        6,894        20,226   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of sales

     79,668        99,123        297,845        333,684   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     62,329        67,054        219,703        216,679   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and product development

     18,034        17,666        73,828        63,990   

Selling and marketing

     15,554        14,206        59,157        51,268   

General and administrative

     13,523        14,734        54,147        52,527   

Restructuring

     3,267        3,023        3,483        3,519   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     50,378        49,629        190,615        171,304   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     11,951        17,425        29,088        45,375   

Total other expense, net

     (153     (160     (50     (1,278
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     11,798        17,265        29,038        44,097   

Provision for (benefit from) income taxes

     647        5,558        (5,442     12,976   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 11,151      $ 11,707      $ 34,480      $ 31,121   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share

        

Basic

   $ 0.90      $ 0.96      $ 2.78      $ 2.54   

Diluted

   $ 0.89      $ 0.93      $ 2.72      $ 2.48   

Dividends declared and paid per share

   $ 0.10      $ 0.10      $ 0.40      $ 0.40   

Weighted-average shares outstanding:

        

Basic

     12,352        12,249        12,404        12,247   

Diluted

     12,594        12,621        12,667        12,569   

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)              
     July 31, 2014      July 31, 2013  

Assets:

     

Cash and cash equivalents

   $ 114,540       $ 113,033   

Accounts receivable, net

     106,436         113,150   

Inventory

     124,777         116,280   

Other current assets

     28,021         17,950   
  

 

 

    

 

 

 

Total current assets

     373,774         360,413   

Property, plant, and equipment, net

     114,165         110,983   

Intangible assets and goodwill, net

     114,321         105,598   

Other non-current assets

     12,082         10,790   
  

 

 

    

 

 

 

Total Assets

   $ 614,342       $ 587,784   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity:

     

Accounts payable

   $ 37,241       $ 32,138   

Accrued liabilities

     33,465         42,191   

Other current liabilities

     13,807         16,565   
  

 

 

    

 

 

 

Total current liabilities

     84,513         90,894   

Long-term liabilities

     17,249         10,494   

Stockholders’ equity

     512,580         486,396   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 614,342       $ 587,784   
  

 

 

    

 

 

 

UNAUDITED SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP MEASURES

We provide non-GAAP income from operations, operating margin, other income, net income, and diluted net income per share as supplemental measures to reported results regarding our operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. The adjustments to these financial measures, and the basis for such adjustments, are outlined below:

Share-Based Compensation Expense

We incur expense related to share-based compensation included in the reported presentation of cost of sales, research and development, selling and marketing, and general and administrative expense. Although share-based compensation is an expense and viewed as a form of compensation, these expenses vary in amount from period to period. In addition, fluctuations in market price and volatility of our shares, risk-free interest rates, and the expected term and forfeiture rates of the awards impact the expense period to period. A portion of our equity compensation is performance-based, which drives volatility in expense as estimated performance-based metrics are updated for actual and forecasted results. Our management team believes that exclusion of these expenses allows comparisons of operating results that are consistent between periods and allows comparisons of our operating results to those of other companies that disclose non-GAAP financial measures that exclude share-based compensation.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


BK Medical Distributor Matter Inquiry-Related Costs

As initially disclosed in our annual report on Form 10-K for the fiscal year ended July 31, 2011, we have identified transactions involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, with respect to which we have raised questions concerning compliance with law and our business policies. We have concluded that the identified transactions have been properly accounted for in our reported consolidated financial statements in all material respects. During the three months ended July 31, 2014 and 2013, we incurred $0.1 million and $0.5 million of pre-tax inquiry-related costs, respectively. We incurred $1.4 million and $1.2 million of pre-tax inquiry-related costs during fiscal year 2014 and 2013, respectively.

Acquisition Related Expenses

We incur amortization of intangibles and other expenses related to acquisitions. The intangible assets are valued at the time of acquisition and are amortized over their estimated economic life. We believe the exclusion of these acquisition related expenses allow comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses. On March 2, 2013, we acquired Ultrasonix Medical Corporation and on September 20, 2013 we acquired the remaining 90% equity interest in PocketSonics, Inc. We initially purchased a 10% equity interest in PocketSonics in April 2010. During the three months and full-year ended July 31, 2014, we incurred pre-tax acquisition-related expenses associated with the Ultrasonix and PocketSonics acquisitions of $1.4 million and $6.3 million, respectively. The remainder relates to prior acquisitions.

Restructuring Charges

During the fourth quarter of fiscal year 2014, we incurred pre-tax charges of $2.9 million, primarily relating to severance and personnel related costs of 48 involuntarily terminated employees associated with restructuring activities, including optimization of our operations in Peabody Massachusetts, which are recognized in our Consolidated Statement of Operations under restructuring and which we refer to as the Fiscal 2014 Restructuring. During fiscal year 2013, we incurred pre-tax charges of $3.5 million, primarily relating to severance and personnel related costs of 115 involuntarily terminated employees, as well as for facility exit costs associated with restructuring activities, including the consolidation of manufacturing and certain support activities currently conducted at the Ultrasonix facility in Vancouver, into operations at our existing facilities, closure of the Ultrasonix sales subsidiary in Paris, France, the transition costs associated with the planned closure of our Englewood, Colorado facility, as we consolidated manufacturing and development activities into our State College, Pennsylvania facility, and optimization of our operations in Montreal, Canada and Peabody Massachusetts, all of which were recognized in our Consolidated Statement of Operations under restructuring and which we refer to as the Fiscal 2013 Restructuring. We incurred an additional $0.6 million during fiscal year 2014 related to the Fiscal 2013 Restructuring. Total pre-tax restructuring charges for the three months and full-year ended July 31, 2014 amounted to $3.3 million and $3.5 million, respectively.

Taxes

For purposes of calculating non-GAAP net income and non-GAAP diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. In addition, from time-to-time, we recognize certain non-recurring tax adjustments.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


During the year ended July 31, 2014, we excluded from our non-GAAP results $8.8 million in discrete net tax benefits primarily associated with a reduction in taxes expected to be payable in the future associated with our Canadian operations. These benefits were excluded from our non-GAAP results as the significant benefit recorded in the second quarter of fiscal year 2014 was non-recurring and management believes not helpful in evaluating short-term and longer-term trends in our operations.

Summary

We exclude the above-described expenses, their related tax impact and other non-recurring tax benefits in evaluating short-term and long-term operating trends in our operations, and allocating resources to various initiatives and operational requirements. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making.

These non-GAAP financial measures have not been prepared in accordance with GAAP, and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Further, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. The following table reconciles the non-GAAP financial measures to their most directly comparable GAAP financial measures.

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com


NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION

 

(In thousands, except per share data)    Three Months Ended     Twelve Months Ended  
     July 31, 2014     July 31, 2013     July 31, 2014     July 31, 2013  

GAAP Income From Operations

   $ 11,951      $ 17,425      $ 29,088      $ 45,375   

Share-based compensation expense

     2,787        3,643        11,512        11,601   

BK distributor matter inquiry related costs

     97        471        1,426        1,211   

Restructuring

     3,267        3,023        3,483        3,519   

Acquisition-related expenses

     2,099        3,495        8,773        8,310   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income From Operations

   $ 20,201      $ 28,057      $ 54,282      $ 70,016   
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     14.2     16.9     10.5     12.7

GAAP Other Income (Expense), net

   ($ 153   ($ 160   ($ 50   ($ 1,278

Acquisition related loss

     —          —          484        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other Income (Expense), net

   ($ 153   ($ 160   $ 434      ($ 1,278
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     -0.1     -0.1     0.1     -0.2

GAAP Net Income

   $ 11,151      $ 11,707      $ 34,480      $ 31,121   

Share-based compensation expense

     2,128        2,546        8,155        8,015   

BK distributor matter inquiry related costs

     62        303        906        779   

Restructuring

     2,110        2,000        2,250        2,372   

Acquisition related revenues, expenses and loss

     1,727        2,705        7,615        6,486   

Tax benefit

     —          —          (8,764     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income

   $ 17,178      $ 19,261      $ 44,642      $ 48,773   
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     12.1     11.6     8.6     8.9

GAAP Diluted Net Income Per Share

   $ 0.89      $ 0.93      $ 2.72      $ 2.48   

Effect of non-GAAP adjustments

   $ 0.47        0.60      $ 0.80      $ 1.40   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted Net Income Per Share

   $ 1.36      $ 1.53      $ 3.52      $ 3.88   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Analogic Corporation            8 Centennial Drive, Peabody, MA 01960            978-326-4000            www.analogic.com