Earnings News & Notes

American Science and Engineering [ASEI]

Net income increased 51% in the final quarter on a 24% boost in sales to a quarterly record. Sales increased across all product categories, driven by 45% gains for cargo ($23.1M total) and Z Backscatter Van ($17.4M) systems and a 43% jump in parcel ($5.1M). AS&E’s Gemini X-Ray system, which makes up the parcel category, is gaining traction, with bookings up 100% the past year and recent inclusion on the Transportation Security Administration’s qualified product list for screening air cargo, says Anthony Fabiano, AS&E’s president and CEO. While the company is already giving out quotes for Gemini for air cargo screening, Fabiano doesn’t think this will be a big market. Demand for the Gemini products is being driven by critical infrastructure protection needs internationally, he says. Field service revenues climbed 6% to $25.4M and now make up the most stable part of AS&E’s revenues due to a strong and growing installed product base, company officials say. Revenue from contract research and development was down due to the termination a year ago of the Cargo Advanced Automated Radiography System. Internal R&D spending was up for the year and Fabiano says that AS&E is now funding research in new technical areas such as X-rays, detector technology, image processing and analysis rather than just on enhancing existing products and developing new ones. Backlog at the end of March stood at $195.7M, a 26% gain from a year ago. Bookings were down in the quarter due to a slip into the first quarter of FY ’11 for ZBV Military Trailers but were up just over $10M for the year to $282.4M. Of the annual bookings for products, 51% were international and the rest domestic. The pipeline of business opportunities remains “robust” but it is not growing as “quickly” as in the past, Fabiano says. He believes this has to do with uncertainty in the world, mentioning Greece’s financial crisis as an example. Free cash flow for the year was a strong $43M, up from $33M. The company didn’t buy back any stock in the quarter and will pay a 30 cent per share dividend in June. Analysts generally lauded the strong quarter.

ICx Technologies [ICXT]

Losses narrowed due to a 10% increase in gross margins, which was due to a shift toward higher margin product sales, and lower amortization expenses. The company attributed the higher product sales to increased shipments of its Fido explosive detection system and Identifinder handheld radiation detector. Overall sales declined 14% in part due to delays last year in finalizing the FY ’10 defense budget that in turn led to order delays, and a difficult comparison compared to the first quarter a year ago when it had higher service revenues related to the Army’s force protection program called Base Expeditionary Targeting and Surveillance Systems-Combined (BETSS-C). ICx recently received a $10M order from the Marine Corps for the Ground Based Operational Surveillance System (GBOSS), which is similar to BETSS-C and consists of the company’s mobile Cerberus towers integrated with radars and cameras. ICx CEO Colin Cumming says the GBOSS order was an interim contract and that he expects the Marines and Army to host competitions later this year for new awards under GBOSS and BETSS-C respectively. Benchmark Company analyst Josephine Millward likes ICx’ chances for winning additional BETSS-C and GBOSS work as well as a forthcoming competition by Customs and Border Protection for mobile surveillance systems. ICx also mentioned two significant international wins for its Surveillance segment, one a $9M order from a government customer in Abu Dhabi for mobile surveillance towers and sensors to protect critical infrastructure and the other an $8M order for surveillance systems for an oil field. Cumming says the Abu Dhabi award has the potential for more orders and that both contracts demonstrate the company can compete for, and win, business in the Middle East. The pipeline of opportunities in the region is strong and growing rapidly, he says. Despite the weak sales quarter, which ICx says was in line with its expectations, the company is maintaining its 2010 financial guidance with revenue forecast between $212M-$226M and earnings per share between 6 and 25 cents, which would be its first profitable year ever. The sales and profit gains are baked into second half results, ICx says. Morgan Keegan analyst Brian Ruttenbur likes ICx’ cost control efforts but is concerned about the growth for the year given that the majority of revenues are expected in the last two quarters. Backlog stood at $63M at the end of the first quarter.