Earnings News and Notes

L-1 Identity Solutions [ID]

L-1 says the sale of its identity solutions business to Safran Group and its intelligence services business to BAE Systems remain on track to during the fourth quarter of 2010 and the first quarter of 2011 respectively. Costs related to the pending sales, combined with higher general administrative costs and a $2.9M pre-tax asset impairment charge on the Registered Traveler program, led to the loss in net income in the quarter. Sales dipped nearly 2% on increased sales of capacity license, higher volume in enrollment services, and growth in state drivers licenses contracts. The revenue increases were nearly offset by lower HIIDE and Passcard shipments. Morgan Keegan security analyst Brian Ruttenbur says it was an “extremely disappointing quarter” for L-1, missing both earnings and sales estimates by a lot. The company lowered its earnings and sales guidance for the year, due to delays in booked biometric and credentialing international programs, delays in multiple federal credentialing opportunities, and a postponement of HIIDE and PIER multimode biometric devices to government customers. The new guidance calls for earnings before interest, taxes, depreciation and amortization of between $103M and $106M, versus earlier projections of between $110M and $120M. Sales are expected to be $685M to $690M, down from prior guidance of between $715M to $725M.

OSI Systems [OSIS]

Net income soared 36% mainly due to operational improvements and efficiencies in the Healthcare segment, which continues to see sales fall due to challenges in the hospital market, and to a lesser extent an increase in the Security segment, the only division to post higher sales. Restructuring charges lopped $200K from net income. Security sales rose 8% to $51.1M on continued deliveries of its S1000 single pose whole body imager for the Transportation Security Administration and international customers. Operating income at Security was up 5% to $2.1M. The big story at the Security division were outstanding bookings of $112M driven by TSA’s $35M in orders for AT X-Ray systems for checkpoint baggage screening, $31M in orders from various U.S. government agencies for cargo and vehicle inspection systems and whole body imagers, $12M in orders from the Domestic Nuclear Detection Office for research and development efforts to advance nuclear materials detection, and a $9M order from the European Customs agency for cargo and vehicle inspection systems. The strong bookings led to a record $205M backlog in the segment at the end of the quarter. The company’s overall backlog stood at $308M. The company says its turnkey cargo inspection service it is installing in the Port of San Juan, Puerto Rico, is expected to begin operating late in the second quarter of FY ’11. Company officials also say the Rapiscan security division has developed a new version of the S1000 that is man-portable and is meant for military, police, event security, corrections and critical infrastructure protection markets. OSI’s Optoelectronics and Manufacturing segment posted slightly lower profit on lower sales. The company raised its sales guidance about $5M to between $645M and $660M and its per share earnings about two cents to between $1.70 and $1.82 EPS, excluding the impact of restructuring and other non-recurring charges.