Welcome!

News Feed Item

Electro Rent Reports Fiscal 2014 Second Quarter Financial Results

Electro Rent Corporation (Nasdaq: ELRC) today reported financial results for the second quarter of fiscal 2014 ended November 30, 2013.

“To a large degree, our second quarter mirrored the first, with gains in several key areas of our business that resulted in year-over-year rental and lease revenue improvement. Our China operations benefited from increased demand, and we saw ongoing rental strength in the telecommunications sector, while our European and data products businesses remained stable,” said Daniel Greenberg, Chairman and CEO. “New equipment sales declined, continuing a trend resulting from the Government’s inability to deal with ongoing budget and sequestration issues. That trend should change in 2014, however, with a new budget agreement put in place at the end of last year. Delayed shipments by manufacturers shifted equipment deliveries to some of our customers into the third quarter, increasing our backlog by $4 million over last year’s second quarter.

“Additionally, we faced a difficult comparison with last year’s second quarter, during which time several of our aerospace and defense customers made one-time, last minute purchases to utilize their remaining budgets prior to the government shutdown,” Greenberg said.

Total revenues for the second quarter of fiscal 2014 were $57.9 million, compared with $65.2 million last year. Rental and lease revenues grew to $35.2 million for the 2014 second fiscal quarter, up from $34.6 million one year ago. Sales of equipment and other revenues were $22.7 million for the second quarter of fiscal 2014, compared with $30.6 million for the corresponding prior-year period.

Selling, general and administrative expenses equaled $14.2 million, or 24.6% of total revenues, for the fiscal 2014 second quarter, compared with $14.1 million, or 21.6% of total revenues, for the same quarter last year. Although SG&A expenses were constant, they increased as a percentage of revenue because of the decline in new equipment sales.

Total operating expenses amounted to $49.0 million for the fiscal 2014 second quarter, versus $54.9 million a year ago.

Operating profit for the second quarter of fiscal 2014 was $8.9 million, or 15.4% of total revenues, compared with $10.3 million, or 15.8% of total revenues, for the second quarter of fiscal 2013.

Net income was $5.6 million, or $0.23 per diluted share, for the fiscal 2014 second quarter, versus $6.2 million, or $0.26 per diluted share, for the same quarter last year.

Total revenues for the first half of fiscal 2014 were $118.0 million, compared with $123.7 million for the comparable period last year. Rental and lease revenues for the fiscal 2014 year-to-date period increased to $70.9 million from $68.2 million for the fiscal 2013 year-to-date period. Equipment sales and other revenues were $47.2 million for the six months ended November 30, 2013, compared with $55.5 million for the six months ended November 30, 2012.

SG&A expenses were $28.9 million, or 24.5% of total revenues, for the first six months of fiscal 2014, versus $27.8 million, or 22.5% of total revenues, for the same period last year. Total operating expenses for the fiscal 2014 six-month period were $100.3 million, compared with $105.1 million for the fiscal 2013 six-month period.

Operating profit for the first six months of fiscal 2014 totaled $17.7 million, or 15.0% of total revenue, compared with $18.6 million, or 15.0% of total revenue, in the prior-year period.

Net income for the first half of fiscal 2014 amounted to $11.3 million, or $0.46 per diluted share, versus $11.3 million, or $0.47 per diluted share, for the fiscal 2013 period.

The company’s effective tax rate was 38.0% for the second quarter of fiscal 2014, compared with 40.3% for the same quarter last year. The decrease was principally related to a decline in foreign losses where the company has a valuation allowance and therefore does not recognize a tax benefit.

Rental equipment additions for the fiscal 2014 second quarter totaled $15.1 million, compared with $16.4 million for the fiscal 2013 second quarter. Rental equipment purchases for the first six months of fiscal 2014 were $30.1 million, versus $34.3 million for the first six months of fiscal 2013. The net book value of Electro Rent's equipment was $231.8 million at November 30, 2013, compared with $234.9 million at the end of the last fiscal year.

Electro Rent had a sales order backlog for test and measurement equipment relating to its Agilent resale agreement of $11.2 million at November 30, 2013, versus $7.2 million last year. The majority of the backlog is expected to be delivered to customers within the next six months.

Electro Rent paid dividends of $4.9 million for the second quarter of fiscal 2014. On an annualized basis, Electro Rent’s current quarterly dividend of $0.20 per common share represents a 4.4% yield on the January 7, 2014 closing share price of $18.33.

Total shareholders' equity at November 30, 2013 grew to $230.9 million, or $9.62 per share, from $228.5 million, or $9.52 per share, at May 31, 2013.

Electro Rent’s cash and cash equivalents balance was $8.2 million at November 30, 2013, compared with $10.4 million at May 31, 2013. The decline related primarily to the repayment of debt. Bank borrowings at November 30, 2013 were $8.5 million, compared with $10.0 million at May 31, 2013 and a high of $23.0 million in December 2012, when the company paid its special dividend.

“The business climate remains somewhat complicated. However, we hope to see some improvement later in the calendar year as a result of a new defense budget and important changes regarding sequestration. These changes could begin to provide additional decision-making flexibility for many of our customers, as they start to feel more comfortable taking risks they were previously unwilling to without clear signals from our government," said Greenberg. "We remain highly focused on providing customers with the widest range and breadth of test and measurement equipment available, irrespective of the external environment.”

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 current views with respect to future events and financial performance; however, you should not put undue reliance on these statements. When used, the words "expect" and "will" and other similar expressions identify forward-looking statements. These forward-looking statements 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 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, 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. Electro Rent undertakes no obligation to update or revise any forward-looking statements.

 
ELECTRO RENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (in thousands, except per share data)
                     
Three Months Ended Six Months Ended
November 30, November 30,
2013 2012 2013 2012
 
Revenues:
Rentals and leases $ 35,205 $ 34,575 $ 70,862 $ 68,240
Sales of equipment and other revenues   22,671   30,617   47,182   55,453
 
Total revenues   57,876   65,192   118,044   123,693
 
Operating expenses:
Depreciation of rental and lease equipment 14,241 14,082 28,614 28,140
Costs of rentals and leases, excluding depreciation 4,798 4,558 9,610 8,930
Costs of sales of equipment and other revenues 15,699 22,164 33,217 40,213
Selling, general and administrative expenses   14,226   14,068   28,905   27,845
 
Total operating expenses   48,964   54,872   100,346   105,128
 
Operating profit 8,912 10,320 17,698 18,565
 
Interest income, net   87   137   169   283
 
Income before income taxes 8,999 10,457 17,867 18,848
 
Income tax provision   3,418   4,218   6,589   7,523
 
Net income $ 5,581 $ 6,239 $ 11,278 $ 11,325
 
Earnings per share:
Basic $ 0.23 $ 0.26 $ 0.46 $ 0.47
Diluted $ 0.23 $ 0.26 $ 0.46 $ 0.47
 
Shares used in per share calculation:
Basic   24,331   23,988   24,313   23,994
Diluted   24,350   24,225   24,340   24,221
 
Cash dividend declared per share $ - $ 1.40 $ 0.40 $ 1.60
 
 
ELECTRO RENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands, except share numbers)
         
 
 
November 30, May 31,
2013 2013
ASSETS
 
Cash and cash equivalents $ 8,191 $ 10,402
Accounts receivable, net of allowance for doubtful accounts of $454 and $457 33,103 34,350
Rental and lease equipment, net of accumulated depreciation of $237,533 and $224,397

231,787

234,856
Other property, net of accumulated depreciation and amortization of $19,337 and $18,873 13,617 13,826
Goodwill 3,109 3,109
Intangibles, net of accumulated amortization of $1,550 and $1,468 955 1,037
Other assets   21,320   21,346
$

312,082

$ 318,926
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Liabilities:
Bank Borrowings $ 8,508 $ 10,000
Accounts payable 5,797 7,479
Accrued expenses

13,538

15,866
Deferred revenue 7,720 7,292
Deferred tax liability   45,583   49,740
Total liabilities  

81,146

  90,377
 
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 November 30, 2013 - 24,006,698;
May 31, 2013 - 23,995,626 38,579 37,724
Retained earnings  

192,357

  190,825
Total shareholders' equity  

230,936

  228,549
$

312,082

$ 318,926

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists looked at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deliver...
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
"We are a monitoring company. We work with Salesforce, BBC, and quite a few other big logos. We basically provide monitoring for them, structure for their cloud services and we fit into the DevOps world" explained David Gildeh, Co-founder and CEO of Outlyer, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...