Earnings News and Notes

American Science and Engineering [ASEI]

Net income soared on the 36% increase in sales, in particular higher sales of cargo inspection systems, and a decline in warranty reserves. The sales charge was led by the cargo, Z backscatter systems and field service lines of business, offset somewhat by declines in the parcel screening product line and contract research and development. The breakout by product line for sales was: Cargo, $16M, up 109%; Z Backscatter Systems, $12M, up 68%; Field Service, $23.9M, up 32%; Parcel, $2.8M, down 59%; Contract R&D, $3.5M, down 16%. The strong performance in cargo systems wasn’t tied to one particular customer and included several large contracts, company officials say. Morgan Keegan analyst Brian Ruttenbur says the quarter was “disappointing” because AS&E fell sharply below consensus estimates for sales and earnings. He attributes this to a delay in shipping Z Backscatter Vans (ZBV) for the U.S. military. Revenues for the year reached an all-time high as did bookings and the company’s backlog was up 56% to $155.6M. AS&E says its pipeline of business opportunities is up as well, 20%, with demand increasing for its products in the U.S., Europe, Middle East, the Pacific Rim and Latin America. The ZBV, AS&E’s most prolific product and at one time the anchor of its fortunes, continues to do well, with 15 systems shipped in the quarter, including 13 for international customers. The strong boost in quarterly net income came despite a 50% increase in company funded R&D to $5.5M. On the contract R&D side, AS&E says it is developing a miniaturized backscatter module for the Department of Homeland Security’s Science and Technology Directorate for integration with a robotic platform for detection of vehicle borne improvised explosive devices.

ICx Technologies [ICXT]

Losses narrowed on the 32% jump in sales and a big reduction in total operating expenses, in particular cuts in the workforce to eliminate redundancies and a near halving of company funded R&D. All three of the company’s business segments boasted higher sales although growth was mainly driven by the Surveillance and Solutions segments. Surveillance Group revenues were driven by strong performance with Mobile Surveillance Systems under the Army’s BETTS-C program and Solutions Group sales benefited from ongoing strength in the intelligent transportation solutions business line. The strong growth also benefited from some service revenues being pulled forward into the quarter, which means the second quarter is expected to be relatively weak. ICx maintained its positive outlook on earnings guidance in the range of $2M to $7M of earnings before interest, taxes depreciation and amortization. However, sales guidance was lowered by $6M to a range of $190M to $200M due to delays in the federal government’s spending of economic stimulus funds and general weakness in the economy. Colin Cumming, ICx’ new president and CEO, says the commercial market is difficult and will remain so for some time. Stimulus spending in the areas of intelligent transportation and border security could begin flowing later in the year, he says. Cumming, who is the founder of the Nomadics business unit of ICx and headed the Detection Group, says not to expect any changes in the ICx business model going forward. He says the company’s technology units will provide “leading edge product solutions unencumbered by bureaucracy.” ICx will “retain the nimbleness of our small units but have them operate in a unified and cohesive fashion,” he adds. ICx’ funded backlog increased to $85M, up 85% from a year ago.