American Science & Engineering [ASEI]
3Q16 3Q15
Sales $22.2M $37M
Net Inc. (500K, 0.06) $2.6M, 0.32
Sales fell 39% mainly on big declines in revenue from mobile cargo and cargo screening systems that company President and CEO Chuck Dougherty attributed to “continuing regional volatility and falling oil prices in strategic end-markets, which caused delays in new orders and in shipment of backlog orders.” The sales breakout by product line is cargo systems ($2.6 million), mobile cargo systems ($2.7 million), parcel and personnel systems ($3.8 million), service revenue ($12.4 million), and other product revenue ($700,000). Net income swung to a loss on the sharp decline in sales, partially offset by a nearly $1 million tax benefit from the retroactive extension of the federal research and development tax credit. Orders totaled $29.5 million and backlog stood at $156.6 million, up from $138.2 million a year ago. Free cash flow as a strong $8.2 million and the company says it is maintaining 50 cents per share dividend in the quarter. Diane Basile, AS&E’s chief financial officer, says the company is making new cost containment actions that are expected to reduce run rate expenses by $6 million.
OSI Systems [OSIS]
2Q16 2Q15
Sales $197.3M $257.8M
Net Inc. $108K, 0.01 $18.2M, 0.89
Sales fell 23% on a steep decline in revenue at its Security segment—down 32 percent—and also declines at its Healthcare and Optoelectronics and Manufacturing segments. Net income plummeted on a steep drop in operating income at its Security segment, and sharp declines as well at Healthcare and Opto. Alan Edrick, OSI’s chief financial officer, says that decline in sales at Healthcare, which carries the highest margins in the company, drove the earnings fall. The drop in sales in the quarter at the Rapiscan Systems security division down to $93.7 million comes against a tough comparison a year ago when the segment benefited from a $39 million foreign military sale to the U.S. Defense Department for Iraq. OSI says that in the second quarter of FY ’16 security sales also suffered from the deferral of $15 million in revenue recognition for equipment—both cargo screening systems and the RTT explosives detection systems—shipped during the quarter and in part due customer delays in making decisions on some tenders for parcel inspection systems, says Deepak Chopra, the company’s chairman and CEO. As a result, the company has begun streamlining certain functions within Rapiscan that will save about $6 million in annual costs with additional efforts underway, says Chopra. Security bookings in the quarter were $67 million. Chopra says that changes in customer schedules have pushed out some RTT revenue expected in FY ’16 until FY ’17. Free cash in the quarter was negative $8 million due to working capital requirements to build inventory to support the backlog at Rapiscan, which stood at $571 million at the end of the quarter, says Edrick. Delays in security revenues and a conservative outlook for sales in its Healthcare division due to global economic uncertainties and delayed product rollouts led OSI to reduce its revenue guidance for the fiscal year to between $900 million and $945 million versus the prior outlook of $985 million to $1 billion. The earnings outlook was chopped 80 cents to between $2.95 and $3.20 EPS.