Analogic Conference Call Highlights

Analogic Corp

reported its fourth quarter earnings on Tuesday. Shares of the company are down six percent. Below are some highlights and key takeaways from its conference call: Growth and General Highlights: • Let me just start by saying that this fiscal Q4 is compared to Q4 of fiscal 2013, which was arguably our best recent quarter, and best in recent history, and in a pretty difficult comparison. • The good news is the revenue drags from FY2014 annualized and the new year is starting with a strong backlog. • Now, in the quarter, we had total revenues of $142 million, that's down 15% from last year primarily from delays in security shipments, pretty consistent with what I said last quarter was likely to happen. • The revenue was down 8% on difficulty in meeting shipment demands in the quarter. • And Security Detection was down 46% from a very large comparable last year on delays in customer ordering. • However, our current backlog is more than twice what we started with last year. • In spite of the lower revenue this quarter, our gross margin improved to 44%, that's up four points supported by our focus on cost containment. Financials: • GAAP operating margin came in at 8%, • Included a charge of $3.3 million or three points for restructuring. • Non-GAAP operating margin measured 14%. • GAAP earnings per share measured $0.89, which is down 4% from last year, and non-GAAP earnings per share came in at $0.36, down 11%. • For the full year, revenue was $518 million, that's down 6% from fiscal 2013. • Gross margin came in at 42%. • GAAP operating margin measured 6%, down two points and included a one point impact from restructuring. • Non-GAAP EPS was $3.52; that's down $0.36 from a record fiscal 2013. • Finally, operating cash flow was $48 million that's up 17% from last year. Specific Segment Highlights: • Starting with Medical Imaging, revenue was down 7%, from last year. • We believe the drags from our Medical Imaging business have annualized in Q4 and expect a clean year starting this year for FY2015. • CT product revenue and Mammography revenue both increased mid-single digits • The window security Q4 shows just how lumpy our security revenues can be, with security revenue down 46% when compared to an extremely strong prior Q4. • Ultrasound revenue was down 8%, primarily on fulfillment delays related to order timing. • Ultrasound OEM probe revenues stabilized and we're no longer a drag on the year-over-year basis. Performance: • Fourth quarter is again and has been our strongest quarter of the fiscal year. • However, revenue for the quarter declined 15% from the same quarter last year. • Our overall revenues in the fourth quarter were also unfavorably impacted by our exit from the legacy patient monitoring business. Guidance: • Moving to Security, we expect a return to double-digit growth on expected improved shipment timing. • We start the year with a strong backlog that's typical in FY2015. • High speed international adoption is picking up with numerous large airport tenders beginning to drive long-term growth. • In summary, FY2015 is a recovery year where revenues return to growth. • So we expect mid-single-digit revenue growth, and non-GAAP operating margin improving one percentage to two percentage points.