American Science & Engineering [ASEI]
3Q14 3Q13
Sales $37.8M $50.8M
Net Inc. $1.6M, 0.20 $6.1M, 0.73
Sales fell 26% largely due to a delay of a shipment of Z Backscatter Vans (ZBV) while in transit and also to declines in the company’s other product and services lines with the exception of people and parcel screening systems. The order has since been delivered, the AS&E says. The lower sales, coupled with a $900,000 increase in research and development spending led to the drop in earnings. The company continues to invest in new products and in 2014 expects to rollout a number of portable products based on it backscatter technology. By product category, AS&E says cargo screening systems accounted for $9.6 million in sales, mobile cargo systems $6.9 million, people and parcel systems $4.4 million, field service $16.7 million, and customized products $135,000. Bookings in the quarter were $43.7 million, with new customers accounting for 36% of these. AS&E received orders for 38 ZBVs from international customers and shipped nine systems. The new customers demonstrate that the company is implementing one of its key growth initiatives, geographic expansion, says Chuck Dougherty, AS&E’s president and CEO. He says the pipeline of international activity remains robust. He also says the company has increased its staffing in the Asia-Pacific region and Latin America to help grow in those areas. AS&E also remains confident that it will close its first turnkey screening services contract in 2014, referring to a model where the company provides the scanning equipment and personnel to perform screening functions for customers on a pay-per-scan basis. Backlog at the end of the quarter stood at $180.9 million, down 18% from a year ago.
OSI Systems [OSIS]
2Q14 2Q13
Sales $236.4M $194M
Net Inc. $14.6M, 0.71 $12.4M, 0.60
Net earnings rose 18% on the 22% jump in sales, which benefited from double-digit increases across the company’s three segments. The Opto-Electronics group led the revenue gain with a 33% jump to $63.1 million although profits declined as the higher sales were weighted toward lower margin products. The Security division posted a 16% increase in sales to $106.6 million and operating income was also up 16% to $15.1 million. Rapiscan Systems, which makes up the Security division, benefited from higher revenues in the turnkey screening services program in Mexico, which is operating at about 90% of its planned target. Company officials say that a turnkey screening services award from Albania last year will begin to generate revenue in the second half of the current fiscal year with those sales becoming material to the top line in FY ’16. Rapiscan shipped its first fixed-gantry RTT 110 explosive detection system to an international customer and is booked more orders for the system as well in the quarter. The system continues to go through the approval process by the Transportation Security Administration (TSA). Deepak Chopra, OSI’s chairman and CEO, says that despite an ongoing review by the Department of Homeland Security (DHS) for potential federal contracting debarment based on the TSA’s cancellation for default last fall of a contract with the company for checkpoint X-Ray systems, that hasn’t slowed the agency’s review of the RTT system nor caused the Pentagon to delay the process for a potential foreign military sale of the company’s screening products to Iraq. Chopra says the company is discussing the matter with DHS, a fact that Benchmark Co. security analyst Josephine Millward is a positive. She believes there will be a favorable outcome for the company soon. Free cash flow in the quarter was $35 million and backlog at the end of the quarter stood at $900 million. Based on the stronger than expected sales in the quarter, OSI raised its top line guidance for the year by $15 million to between $890 million and $920 million. OSI maintained it’s per share earnings guidance at $3.39 on the high end of the range but dropped the low end by 14 cents to $3.10.