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Aeroflex Announces Second Quarter Fiscal 2012 Results

Dépèche transmise le 9 février 2012 par Business Wire

Aeroflex Announces Second Quarter Fiscal 2012 Results

Aeroflex Announces Second Quarter Fiscal 2012 Results

PLAINVIEW, N.Y.--(BUSINESS WIRE)--Aeroflex Holding Corp. ("Aeroflex") (NYSE: ARX), a leading global provider of high performance microelectronic components, and test and measurement equipment, today announced its financial results for the second quarter of fiscal 2012, which ended December 31, 2011.

“Despite our success this quarter, the economic uncertainties surrounding our wireless end markets, the European economy and uncertainty in defense spending has made visibility more challenging and our future outlook more cautious.”

Net sales for the second quarter of fiscal 2012 were $171.1 million, up approximately 10% sequentially from the first quarter of fiscal 2012. AMS net sales were $84.6 million and ATS net sales were $86.5 million in the second quarter of fiscal 2012. Operating income was $8.2 million and net income (loss) was $(535,000), or $(0.01) per share, in the second quarter of fiscal 2012.

Non-GAAP operating income was $27.8 million, Adjusted EBITDA was $32.4 million and Non-GAAP net income per share was $0.15 in the second quarter. For the second quarter, the book-to-bill ratio was approximately 1-to-1.

“I am pleased that we exceeded our expectations this quarter,” said Len Borow, Chief Executive Officer of Aeroflex. “Contributing to our success were shipments of several prototype PXI lines to wireless test customers in Asia which we believe are a prelude for future business. We continued to build upon our success in AMS with significant contract wins across our high reliability and high performance microelectronics business.” Mr. Borow added, “Our unique technology and strong product portfolio allows both our AMS and ATS businesses to remain at the forefront of their respective industries.”

The following tables present selected financial information for the three and six months ended December 31, 2011 and 2010 prepared in accordance with generally accepted accounting principles (“GAAP”) and on a basis other than GAAP (“Non-GAAP”). The GAAP and Non-GAAP effective tax rates in fiscal 2012 were 31% and 35%, respectively. The GAAP and Non-GAAP effective tax rates in fiscal 2011 were 59% and 31%, respectively. The GAAP and the Non-GAAP tax rates are a result of Aeroflex’s geographic mix of pre-tax income. These rates were applied to the respective pre-tax income (loss) for the three and six month periods. A reconciliation between GAAP and Non-GAAP amounts is presented at the end of this press release.

Selected GAAP Results

(In thousands, except percentages and per share data)

   
Three Months Ended Six Months Ended
December 31, December 31,
2011   2010 2011   2010
 
Net sales $ 171,138 $ 181,579 $ 326,022 $ 337,510
 
Gross profit 85,691 94,840 164,210 174,666
Gross margin 50.1 % 52.2 % 50.4 % 51.8 %
 
Operating income (loss) 8,246 (5,351 ) 8,784 (2,148 )
 
Net income (loss) $ (535 ) $ (11,403 ) $ (5,577 ) $ (17,220 )
 
Net income (loss) per common share:
Basic $ (0.01 ) $ (0.15 ) $ (0.07 ) $ (0.25 )
Diluted $ (0.01 ) $ (0.15 ) $ (0.07 ) $ (0.25 )
 
Weighted average number of common shares outstanding:
Basic   84,804     74,034     84,797     69,517  
Diluted   84,804     74,034     84,797     69,517  
 

Selected Non-GAAP Results

(In thousands, except percentages and per share data)

       
Three Months Ended Six Months Ended
December 31, December 31,
2011 2010 2011 2010
Net sales $ 171,138 $ 181,603 $ 326,022 $ 337,558
 
Gross profit $ 85,693 $ 95,214 $ 164,202 $ 175,843

Gross margin

50.1 % 52.4 % 50.4 % 52.1 %
 
Operating income 27,801 39,522 46,785 65,049
 
Net income $ 12,591   $ 14,328   $ 19,598   $ 18,090  
 
Net income per common share:
Basic $ 0.15   $ 0.19   $ 0.23   $ 0.26  
Diluted $ 0.15   $ 0.19   $ 0.23   $ 0.26  
 
Weighted average number of common shares outstanding:
Basic   84,804     74,034     84,797     69,517  
Diluted   84,814     74,034     84,802     69,517  
 
Adjusted EBITDA $ 32,385   $ 44,494   $ 56,139   $ 74,540  
 

Business Outlook

Mr. Borow added, “Despite our success this quarter, the economic uncertainties surrounding our wireless end markets, the European economy and uncertainty in defense spending has made visibility more challenging and our future outlook more cautious.” For the fiscal third quarter ending March 31, 2012, Aeroflex expects net sales to be between $167 million and $177 million, GAAP net income (loss) to be between $(650,000) and $2 million, Adjusted EBITDA to be between $31 million and $35 million, GAAP net income (loss) per share to be between $(0.01) and $0.02, and Non-GAAP net income per share to be between $0.14 and $0.17.

For the full fiscal year ending June 30, 2012, Aeroflex expects net sales to be between $700 million and $720 million, GAAP net income to be between $12 million and $17 million, Adjusted EBITDA to be between $147 million and $155 million, GAAP net income per share to be between $0.14 and $0.20, and Non-GAAP net income per share to be between $0.73 and $0.79.

The range of expected GAAP and Non-GAAP net income (loss) per share for the fiscal third quarter and the full fiscal year was calculated using GAAP and Non-GAAP effective tax rates of 31% and 35%, respectively.

Non-GAAP Presentation

This press release contains Non-GAAP financial measures that are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures: (i) are not based on any comprehensive set of accounting rules or principles; and (ii) have limitations in that they do not reflect all of the amounts associated with Aeroflex's results of operations as determined in accordance with GAAP. As such, these measures should only be used to evaluate Aeroflex's results of operations in conjunction with the corresponding GAAP measures.

Aeroflex believes that the presentation of Non-GAAP financial measures, when shown in conjunction with the corresponding GAAP measures, provides useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations because they exclude certain non-cash charges or items that management does not believe are reflective of its ongoing operating results when assessing the performance of its business.

Aeroflex believes that these Non-GAAP financial measures also facilitate the comparison by management and investors of results between periods and among its peer companies. However, its peer companies may calculate similar Non-GAAP financial measures differently than Aeroflex, limiting the information’s usefulness as comparative measures.

Webcast and Conference Call Information

Aeroflex will host a live webcast and conference call at 8:15 a.m. eastern standard time on Thursday, February 9th during which management will discuss the financial results. To participate in the live webcast, please visit the events page of the website located at http://ir.aeroflex.com. Please plan to join five to ten minutes before the start of the webcast to facilitate a timely connection. If you are unable to participate and would like to hear a replay of the call, an audio replay of the webcast will be available on the Aeroflex website for approximately 90 days or can be accessed telephonically for domestic callers at (888) 286-8010 or internationally at (617) 801-6888 with pass code 46532525.

About Aeroflex

Aeroflex Holding Corp. is a leading global provider of high performance microelectronic components, and test and measurement equipment used by companies in the space, avionics, defense, commercial wireless communications, medical and other markets.

Forward-looking Statements

All statements other than statements of historical fact included in this press release regarding Aeroflex’s business strategy and plans and objectives of its management for future operations are forward-looking statements. When used in this press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to Aeroflex or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Aeroflex’s management, as well as assumptions made by and information currently available to its management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, adverse developments in the global economy; changes in government spending; dependence on growth in customers’ businesses; the ability to remain competitive in the markets Aeroflex serves; the inability to continue to develop, manufacture and market innovative, customized products and services that meet customer requirements for performance and reliability; any failure of suppliers to provide raw materials and/or properly functioning component parts; the inability to meet covenants contained in debt agreements; the termination of key contracts, including technology license agreements, or loss of key customers; the inability to protect intellectual property; the failure to comply with regulations such as International Traffic in Arms Regulations and any changes in regulations; the failure to realize anticipated benefits from completed acquisitions, divestitures or restructurings, or the possibility that such acquisitions, divestitures or restructurings could adversely affect Aeroflex; the loss of key employees; exposure to foreign currency exchange rate risks; and terrorist acts or acts of war. Such statements reflect the current views of management with respect to the future and are subject to these and other risks, uncertainties and assumptions. Aeroflex does not undertake any obligation to update such forward-looking statements. Any projections in this release are based on limited information currently available to Aeroflex, which is subject to change. Although any such projections and the factors influencing them will likely change, Aeroflex will not necessarily update the information, since Aeroflex will only provide guidance at certain points during the year.

Aeroflex Holding Corp. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 
Three Months Ended December 31,
2011   2010
 
Net sales $ 171,138 $ 181,579
Cost of sales   85,447     86,739  
Gross profit   85,691     94,840  
 
Operating expenses:
Selling, general and administrative costs 38,445 38,266
Research and development costs 22,420 21,656
Amortization of acquired intangibles 15,665 15,843
Termination of Sponsor Advisory Agreement - 18,133
Restructuring charges   915     6,293  
Total operating expenses   77,445     100,191  
Operating income (loss)   8,246     (5,351 )
 
Other income (expense):
Interest expense (8,560 ) (20,713 )
Loss on extinguishment of debt and write-off of deferred financing costs - (25,178 )
Gain from a bargain purchase of a business - 173
Other income (expense), net   (398 )   (378 )
Total other income (expense), net   (8,958 )   (46,096 )
 
Income (loss) before income taxes (712 ) (51,447 )
Provision (benefit) for income taxes   (177 )   (40,044 )
Net income (loss) $ (535 ) $ (11,403 )
 
Net income (loss) per common share:
Basic $ (0.01 ) $ (0.15 )
Diluted $ (0.01 ) $ (0.15 )
 
Weighted average number of common shares outstanding:
Basic   84,804     74,034  
Diluted   84,804     74,034  
 

Aeroflex Holding Corp. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

 
Six Months Ended December 31,
2011   2010
 
Net sales $ 326,022 $ 337,510
Cost of sales   161,812     162,844  
Gross profit   164,210     174,666  
 
Operating expenses:
Selling, general and administrative costs 75,979 74,969
Research and development costs 46,695 43,814
Amortization of acquired intangibles 31,401 31,806
Termination of Sponsor Advisory Agreement - 18,133
Restructuring charges   1,351     8,092  
Total operating expenses   155,426     176,814  
Operating income (loss)   8,784     (2,148 )
 
Other income (expense):
Interest expense (17,134 ) (41,951 )
Loss on extinguishment of debt and write-off of deferred financing costs - (25,178 )
Gain from a bargain purchase of a business - 173
Other income (expense), net   (693 )   (407 )
Total other income (expense), net   (17,827 )   (67,363 )
 
Income (loss) before income taxes (9,043 ) (69,511 )
Provision (benefit) for income taxes   (3,466 )   (52,291 )
Net income (loss) $ (5,577 ) $ (17,220 )
 
Net income (loss) per common share:
Basic $ (0.07 ) $ (0.25 )
Diluted $ (0.07 ) $ (0.25 )
 
Weighted average number of common shares outstanding:
Basic   84,797     69,517  
Diluted   84,797     69,517  
 

Selected Segment Data

(In thousands except percentages)

   
Three Months Ended Six Months Ended
December 31, December 31,
2011   2010 2011   2010
Net sales:
Microelectronic solutions ("AMS") $ 84,592 $ 89,225 $ 166,397 $ 166,530
Test solutions ("ATS")   86,546     92,354     159,625     170,980  
Total net sales $ 171,138   $ 181,579   $ 326,022   $ 337,510  
 
Gross profit:
- AMS $ 42,280 $ 44,696 $ 83,302 $ 83,415
- ATS   43,411     50,144     80,908     91,251  
Total gross profit $ 85,691   $ 94,840   $ 164,210   $ 174,666  
 
Gross Margin:
- AMS 50.0 % 50.1 % 50.1 % 50.1 %
- ATS 50.2 % 54.3 % 50.7 % 53.4 %
Total gross margin 50.1 % 52.2 % 50.4 % 51.8 %
 

Aeroflex Holding Corp. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

   
December 31, June 30,
2011 2011
 

Assets

Current assets:
Cash and cash equivalents $ 64,370 $ 66,278

Accounts receivable, less allowance for doubtful accounts of $1,114 and $1,210

148,668 168,141
Inventories 182,560 186,370
Deferred income taxes 54,617 51,855
Prepaid expenses and other current assets   13,020     10,044  
Total current assets 463,235 482,688
 

Property, plant and equipment, net of accumulated depreciation of $92,640 and $82,581

100,709

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