Post Earnings Coverage as Analogics Operating Metrics Improves

September 23, 2016   |   9:15 am

Contributor: Tom Johnson, Active Wall Street

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Active Wall St. announces its post-earnings coverage on Analogic Corporation (NASDAQ: ALOG). The company released its fourth quarter fiscal 2016 (Q4 FY16) and full fiscal 2016 (FY16) financial results on September 21, 2016. The Peabody, Massachusetts-based company’s revenue declined 11% y-o-y in Q4 FY16; however gross margin and non-GAAP operating margin improved by 440 and 40 basis points, respectively. Register with us now for your free membership at: http://www.activewallst.com/register/.

Today, AWS is promoting its earnings coverage on ALOG. Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=ALOG.

Earnings Reviewed

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Analogic reported total net revenue of $138.05 million in Q4 FY16 which was below the $154.47 million recorded in the prior year’s comparable quarter and market expectations of $139.03 million. The company attributed the year-over-year fall in total net revenue to delays in international Security and lower revenues in OEM probe business.

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For the quarter ended July 31, 2016, GAAP net income stood at $8.77 million, or $0.70 per diluted share compared to net income of $10.87 million, or $0.86 per diluted share, in Q4 FY15. In Q4 FY16, Analogic had spent $0.07 per share on restructuring cost associated with the Restructuring Plan of 2016 announced during Q4 FY15.

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The company reported non-GAAP net income of $12.77 million, or $1.02 per diluted share, Q4 FY16 versus $16.07 million, or $1.28 per diluted share, in the year-ago comparable quarter. Non-GAAP net income numbers missed analysts’ estimate of $1.17 per diluted share.

For full-year FY16, the company reported consolidated revenue of $508.85 million compared to $540.29 million in FY15. Analogic’s GAAP net income for FY16 came in at $12.13 million, or $0.96 per diluted share, versus $33.48 million, or $2.66 per diluted share, recorded in FY15. Additionally, the company’s non-GAAP net income during FY16 was $44.73 million, or $3.54 per diluted share, compared to $51.03 million, or $4.05 per diluted share, in the year-ago comparable period.

Operating Metrics

alog92316-5The Medical Imaging manufacturer’s gross profit came in at $63.41 million compared to $64.04 million in Q4 FY15. The company’s non-GAAP gross margin improved 4.5 points in Q4 FY16, primarily on favorable mix and cost reductions across all three segments.

In FY16, the company reported gross profit of $228.07 million, marginally lower than $229.49 million in FY15. Analogic’s non-GAAP gross margin was 46% for FY16, up 2.3 points y-o-y. Additionally, GAAP operating margin for FY16 stood at 5%, down 2.6 points from the year ago comparable period.

Segment-wise

In Q4 FY16, the company’s Medical Imaging segment revenue came in at $77.9 million, down 4% y-oy from $80.8 million in Q4 FY15, primarily attributed to the shipments timing of MR and mammography detector offset by growth in CT. In FY16, the segment’s revenues fell marginally by 1% y-o-y to $289.2 million.

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Analogic’s Ultrasound segment revenue fell 4% y-o-y in Q4 FY16 to $45.6 million from $47.3 million reported in the year ago period. The company attributed this decline to the expected 58% decline in OEM probe revenues and was partially offset by strong double-digit growth in North America and China. The segment recorded revenues of $163.2 million in FY16, down 2% on y-o-y basis.

The company’s Security and Detection segment revenue tumbled 45% y-o-y to $14.5 million in Q4 FY16 from $26.4 million in Q4 FY16, primarily due to lower medium-speed and high-speed system shipments. Further, the segment’s revenues declined 31% y-o-y to $56.4 million in FY16.

Cash Matters & Balance Sheet

In FY16, the company reported positive cash flow from operations of $33 million which included $14.9 million as settlement for BK Medical. Analogic had cash and cash equivalents and investments worth $118.70 million at on July 31, 2016, compared to $123.80 million as on close of books in the year-ago period. Additionally, the company’s long-term liabilities increased to $23.25 million on July 31, 2016, from $13.38 million recorded on July 31, 2015.

Dividend

In a separate press release on September 16, 2016, the company’s Board of Directors announced a quarterly cash dividend of $0.10 per each common share. The cash dividend is to be paid on October 12, 2016, to all shareholders of record on October 01, 2016.

Earnings Outlook

Analogic forecasts a mid-single digits percentage growth in revenue for full year fiscal 2017. The company is targeting non-GAAP operating margin expansion of approximately 1 point with non-GAAP earnings growth in the range of 10% to 14%. For the Medical Imaging segment, the company expects a relatively flat revenue growth for the current fiscal year. Additionally, Ultrasound segment and Security and Detection segment are expected to report double-digit growth figures.

Stock Performance

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Analogic’s stock is trading jumped 2.94%, closing Thursday’s session at $91.95 on volume of 305.46 thousand shares. The company’s shares surged 11.59% since the beginning of the year. Additionally, the stock has advanced 9.56% and 22.11% in the last three months and past six months. The company’s shares are trading a PE ratio of 81.66 and have a dividend yield of 0.44%.

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