Analogic Corporation
ANALOGIC CORP (Form: 8-K, Received: 03/05/2018 16:35:36)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 5, 2018

 

 

Analogic Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Massachusetts   0-6715   04-2454372

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

8 Centennial Drive, Peabody,
Massachusetts
  01960
(Address of principal executive offices)   Zip Code)

Registrant’s telephone number, including area code: 978-326-4000

Not Applicable

Former name or former address, if changed since last report

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition

On March 5, 2018, Analogic Corporation (the “Registrant”) announced its financial results for the fiscal quarter ended January 31, 2018. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

Exhibit

    No.    

  

Description

99.1    Press Release dated March 5, 2018


Exhibit Index

 

Exhibit

    No.    

  

Description

99.1    Press Release dated March 5, 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Analogic Corporation
March 5, 2018     By:  

/s/ Michael Bourque

    Name:   Michael Bourque
    Title:   Senior Vice President, Chief Financial Officer, and Treasurer

Exhibit 99.1

 

LOGO

News Release

FOR IMMEDIATE WORLDWIDE RELEASE

For Further Information:

Investor and Financial Media Contact:

Mark Namaroff

Senior Director of Investor Relations and Corporate Communications

(978) 326-4058

investorrelations@analogic.com

Analogic Announces Results for the Second Quarter ended January 31, 2018

and Declares Quarterly Cash Dividend

PEABODY, Mass. (March 5, 2018)—Analogic Corporation (Nasdaq:ALOG), enabling the world’s medical imaging and aviation security technology, today announced results for its second quarter ended January 31, 2018.

Highlights during the second quarter included:

 

    Revenue of $129.2  million with gross margin of 44%

 

    GAAP operating margin of 12%; Non-GAAP operating margin of 15%

 

    GAAP diluted EPS of $0.52; Non-GAAP diluted EPS of $1.27

 

    Operating cash flow of $21 million

Revenue for the second quarter of fiscal 2018 was $129.2 million, a decrease of 2% compared with revenue of $131.5 million in the second quarter of fiscal 2017. GAAP net income for the second quarter of fiscal 2018 was $6.5 million, or $0.52 per diluted share, compared with net income of $7.5 million, or $0.59 per diluted share, in the second quarter of fiscal 2017. Included in GAAP net income and diluted EPS for the second quarter of 2018 is a provisional $6.5 million income tax expense, or $0.51 per diluted share, for the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017 that was recently signed into law. Also included in GAAP net income and diluted EPS for the second quarter of fiscal 2017 were one-time net charges of $2.2 million, or $0.11 per diluted share, in connection with our Oncura veterinary business.

Non-GAAP net income for the second quarter of fiscal 2018 was $16.0 million, or $1.27 per diluted share, compared with $12.6 million, or $0.99 per diluted share, in the prior year’s second quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

For the first six months of fiscal 2018, revenue totaled $236.0 million, down 7% from the same period in the prior fiscal

 

 

 

LOGO


year. Fiscal year-to-date GAAP net income was $12.2 million, or $0.97 per diluted share, compared with net income of $10.0 million, or $0.79 per diluted share, from the same period in 2017. Included in GAAP net income and diluted EPS for the first six months of 2018 is a provisional $6.5 million income tax expense, or $0.51 per diluted share, for the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017 that was recently signed into law. Included in year-to-date fiscal 2017 GAAP net income and diluted EPS were one-time net charges of $2.3 million, or $0.12 per diluted share, in connection with our Oncura veterinary business.

Year-to-date non-GAAP net income was $25.3 million, or $2.01 per diluted share, compared with $18.0 million, or $1.41 per diluted share, in the same period last year. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

Fred Parks, president and CEO, commented, “We continue to pursue our previously announced strategic sale process. In view of the status of that process, we are not commenting on our fiscal year guidance or other forward-looking performance measures.”

Segment Revenues for the Second Quarter of Fiscal 2018

Medical Imaging segment revenue was $63.4 million for the second quarter of fiscal 2018, down 12% from revenue of $72.4 million in the same period of fiscal 2017, primarily due to lower sales in CT associated with previously reported customer sourcing decisions combined with lower sales in MR offset by favorability in Motion Controls.

Ultrasound segment revenue was $43.5 million for the second quarter of fiscal 2018, up 8% from revenue of $40.3 million in the same period of fiscal 2017, due to the strong sales growth in North America and Europe. Revenue was partially offset by the comparative lower revenue from discontinued Oncura veterinary system sales.

Security and Detection segment revenue was $22.3 million for the second quarter of fiscal 2018, up 18% from revenue of $18.8 million in the same period of fiscal 2017 mainly driven by strong demand for international high-speed threat detection systems and increased revenue in Rapid DNA.

Quarterly Cash Dividend

On March 1, 2018, Analogic’s Board of Directors declared a $0.10 cash dividend for each common share for its second fiscal quarter ended January 31, 2018. The cash dividend will be payable on March 26, 2018, to shareholders of record on March 15, 2018.

Use of Non-GAAP Financial Measures

We supplement our GAAP financial reporting with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, non-GAAP other income and expense, non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted earnings per share. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We have included at the end of this document a reconciliation of each historical non-GAAP


financial measure used in this document to the most directly comparable GAAP financial measure.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, in forecasting and planning for future periods, and in determining payments under our compensation programs. We also believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and in comparing financial results across accounting periods and to those of other companies.

Forward-Looking Statements

Any statements about future expectations, plans, and prospects for the Company, including statements containing the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company’s products, limited number of customers, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, acquisition related risks, and other factors discussed in our most recent quarterly and annual reports filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this presentation represent the Company’s views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company’s views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company’s views as of any later date.

Conference Call Details

Analogic will conduct an investor conference call on Monday, March 5, 2018 at 5:00 p.m. (ET) to discuss the second quarter results. To participate in the conference call, dial 1-866-823-6992, or 1-334-323-7225 for international callers, approximately ten minutes before the conference is scheduled to begin. Inform the operator that you wish to join the Analogic conference, passcode 42748. You will then be asked for your name, organization, and telephone number, and be connected to the conference. The earnings release and, just prior to the call, presentation materials related to the quarterly financial information will be posted on the Company’s website at http://investor.analogic.com .

The call will also be available via webcast in listen-only mode. To listen to the webcast, visit investor.analogic.com approximately five to ten minutes before the conference is scheduled to begin. A telephone digital replay will be available approximately two hours after the call is completed through midnight April 5, 2018. To access the digital replay, dial 1-877-919-4059 or 1-334-323-0140 for international callers. The passcode is 84106845.

A replay of the conference call webcast will be archived on the Company’s website at www.analogic.com approximately three hours after the call is completed and will be available through midnight April 5, 2018. For more information on the conference call, visit www.analogic.com , call 978-326-4058, or email investorrelations@analogic.com.


About Analogic – Celebrating 50 Years of Imaging Innovation

Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging and real-time guidance technologies used for disease diagnosis and treatment as well as for automated threat detection. Our market-leading ultrasound systems, led by our flagship BK Ultrasound brand, used in procedure-driven markets such as urology, surgery, and point-of-care, are sold to clinical practitioners around the world. Our advanced imaging technologies are also used in computed tomography (CT), magnetic resonance imaging (MRI), and digital mammography systems, as well as automated threat detection systems for aviation security. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com .

Analogic and the globe logo are registered trademarks of Analogic Corporation.


CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three Months Ended      Six Months Ended  
(In thousands, except per share data)    January 31, 2018      January 31, 2017      January 31, 2018      January 31, 2017  

Net revenue:

           

Product

     126,691      $ 130,330      $ 232,444      $ 250,582  

Engineering

     2,481        1,204        3,604        2,077  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

     129,172        131,534        236,048        252,659  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost of sales:

           

Product

     70,356        72,721        128,329        141,482  

Engineering

     1,952        1,123        3,088        1,846  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of sales

     72,308        73,844        131,417        143,328  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     56,864        57,690        104,631        109,331  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses:

           

Research and product development

     15,631        16,213        30,642        32,063  

Selling and marketing

     13,195        17,358        25,601        35,538  

General and administrative

     12,098        3,979        24,039        17,600  

Restructuring

     197        267        731        299  

Asset impairment charges

     —          10,423        —          10,423  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     41,121        48,240        81,013        95,923  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     15,743        9,450        23,618        13,408  

Total other income (expense), net

     939        28        1,175        (414
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     16,682        9,478        24,793        12,994  

Provision for income taxes

     10,133        1,968        12,586        2,948  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 6,549      $ 7,510      $ 12,207      $ 10,046  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income per share

           

Basic

   $ 0.52      $ 0.60      $ 0.98      $ 0.81  

Diluted

   $ 0.52      $ 0.59      $ 0.97      $ 0.79  

Dividends declared and paid per share

   $ 0.10      $ 0.10      $ 0.20      $ 0.20  

Weighted-average shares outstanding:

           

Basic

     12,490        12,466        12,482        12,442  

Diluted

     12,601        12,680        12,606        12,712  


CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(In thousands)              
     January 31, 2018      July 31, 2017  

Assets:

     

Cash and cash equivalents

   $ 101,863      $ 129,298  

Short-term marketable securities

   $ 63,772        18,797  

Accounts receivable, net

     84,555        77,587  

Inventory

     127,395        130,575  

Other current assets

     13,508        14,448  
  

 

 

    

 

 

 

Total current assets

     391,093        370,705  

Long-term marketable securities

   $ 36,625        26,171  

Property, plant, and equipment, net

     100,399        102,676  

Intangible assets and goodwill, net

     25,631        28,269  

Other non-current assets

     8,364        10,262  
  

 

 

    

 

 

 

Total Assets

   $ 562,112      $ 538,083  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity:

     

Accounts payable

   $ 28,431      $ 27,179  

Accrued liabilities

     29,708        31,619  

Other current liabilities

     8,957        8,312  
  

 

 

    

 

 

 

Total current liabilities

     67,096        67,110  

Long-term liabilities

     17,675        10,479  

Stockholders’ equity

     477,341        460,494  
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 562,112      $ 538,083  
  

 

 

    

 

 

 


NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION

 

(In thousands, except per share data)    Three Months Ended     Six Months Ended  
     January 31, 2018     January 31, 2017     January 31, 2018     January 31, 2017  

GAAP Income From Operations

   $ 15,743     $ 9,450     $ 23,618     $ 13,408  

Share-based compensation expense (Note 1)

     1,898       2,597       3,881       4,160  

Acquisition-related revenues and expenses (Note 2)

     1,461       (6,065     2,923       (3,853

Non-routine other legal costs (Note 3)

     77       12       654       15  

Restructuring (Note 4)

     197       267       731       299  

Asset impairment charges (Note 5)

     —         10,423       —         10,423  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income From Operations

   $ 19,376     $ 16,684     $ 31,807     $ 24,452  
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     15.0     12.7     13.5     9.7

GAAP Tax Provision (Note 6)

   $ 10,133     $ 1,968     $ 12,586     $ 2,948  

GAAP Tax Rate

     60.7     20.8     50.8     22.7

Non-GAAP Tax Provision (Note 6)

     4,355       4,123     $ 7,704     $ 6,074  

Non-GAAP Tax Rate

     21.4     24.7     23.4     25.3

GAAP Net Income

   $ 6,549     $ 7,510     $ 12,207     $ 10,046  

Share-based compensation expense (Note 1)

     1,493       1,791       3,377       2,857  

Acquisition-related revenues and expenses (Note 2)

     1,264       (3,500     2,378       (1,748

Non-routine other legal costs (Note 3)

     101       8       466       10  

Restructuring (Note 4)

     159       169       517       189  

Asset impairment charges (Note 5)

     (15     —         13       —    

Valuation Allowance Tax Effect (Note 6)

     (72     —         (161     —    

Transition Tax Impact (Note 6)

     6,482       6,610       6,482       6,610  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income

   $ 15,961     $ 12,588     $ 25,279     $ 17,964  
  

 

 

   

 

 

   

 

 

   

 

 

 

Percentage of Total Net Revenue

     12.4     9.6     10.7     7.1

GAAP Diluted EPS

   $ 0.52     $ 0.59     $ 0.97     $ 0.79  

Effect of non-GAAP adjustments

   $ 0.75     $ 0.40       1.04       0.62  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted EPS

   $ 1.27     $ 0.99     $ 2.01     $ 1.41  
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 1: Exclusion of variable share-based compensation expense allows consistency of operating results between periods and other companies.


Note 2: During fiscal years 2017 and 2018, we incurred acquisition costs related to the Ultrasonix Medical Corporation, PocketSonics, Inc., and Oncura Partners Diagnostics, LLC acquisitions, which we closed on March 2, 2013, September 20, 2013, and January 8, 2016, respectively. Costs included the amortization of intangibles of $1.5 million and $2.9 million for the three and six months ended January 31, 2018, respectively.

Note 3: During the three and six months ended January 31, 2018, we incurred $77 thousand and $654 thousand, respectively, of pre-tax strategic alternative related costs. Additionally, during the three and six months ended January 31, 2018, we incurred $0 of pre-tax inquiry-related costs, associated with the BK matter, as initially disclosed in our annual report on Form 10-K for the fiscal year ended July 31, 2011. This matter relates to transactions we identified involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, regarding compliance with the law.

Note 4: During the three and six months ended January 31, 2018, we incurred pre-tax charges of $197 thousand and $731 thousand, respectively, primarily due to facility exit costs associated with exiting the Vancouver facility.

Note 5: As a result of continuing losses in the Oncura business and the related business outlook, the Company evaluated the net realizability of all of the related assets at December 31, 2016. As a result, the company recorded a pre-tax asset impairment charge of $10.4 million, primarily associated with the write-down of the Oncura goodwill to its estimated fair values.

Note 6: The quarter to date Q2 FY 2018 non-GAAP tax rate differs from the GAAP tax rate primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related adjustments and stock compensation expenses. The quarter to date Q2 FY 2018 non-GAAP tax rates differ from the GAAP tax rates primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related amortization expenses and stock compensation expenses.