American Science & Engineering [ASEI]
4Q12 4Q11 FY12 FY11
Sales $39.8M $67.7M $203.6M $278.6M
Net Inc. $1.3M, 0.15 $9.6M, 1.03 $21.4, 2.34 $42.8M, 4.63
Sales fell 41% in the quarter due to the struggling global economy, political unrest in the Middle East, and tightening defense and security budgets domestically. In the U.S., both the Defense and Homeland Security Departments abruptly shifted away from best value to lowest price technically acceptable, which caused AS&E to lose three or four “high confidence” orders and has also led to awards being protested by AS&E and its competitors, leading to delays and even the cancellation of requirements, Anthony Fabiano, president and CEO of AS&E, tells analysts. He also says Customs and Border Protection has been delayed in deploying Z Portal Systems at ports of entry due to various factors, which also dampened revenues in the quarter and year, although recent changes will allow an acceleration of the installations. Net income in the quarter plummeted on the lower revenues and higher expenses as a percentage of sales. AS&E actually increased its spending on research and development to maintain its edge in innovation and continue to develop new products. In particular, the company is also investing in software related to its existing products, Fabiano says. The difficult market environment has led AS&E to reorganize to better align its cost structure, he says. Backlog at the end of the quarter stood at $192.6 million, down 11% from a year ago. Free cash flow for the year was $45.8 million. Rumors have surfaced that AS&E has been exploring strategic alternatives and when asked on the quarterly earnings call Fabiano pointed to a new $35 million stock buyback program the company has initiated and its interest in making a couple of acquisitions. AS&E also declared a 50 cents per share quarterly dividend. In the quarter field service work accounted for most of the company’s sales, $23.8 million, with cargo systems next with $11.5 million. Z Backscatter Systems provided $2.7 million in sales, parcel systems $1 million and contract R&D $800,000.
Implant Sciences [IMSC]
3Q12 3Q11
Sales $686K $734K
Net Inc. ($3.9M, 0.11) ($641K, 0.02)
Losses widened in the quarter mainly due to increased operating expenses, higher interest expense and the non-cash fair value adjustments recorded in the quarter ended March 31, 20111 on the note conversion option liability and warrant derivative liability. Selling, general and administrative expenses more than doubled to $2.3 million while interest expense increased nearly $400,000 to $1 million as the company increased its borrowings against its credit facility. The company says it is “disappointed” in its financial performance and that although there is increased activity in its markets, there are also delays in procurement decisions as projects are deferred or put on hold.