EX-99.1 2 v169355_ex99-1.htm
 
Exhibit 99.1
 
 
FOR IMMEDIATE RELEASE

For More Information, Contact:

Daniel Greenberg, Chairman & CEO
Roger Pondel/Laurie Berman
Electro Rent Corporation
PondelWilkinson Inc.
818-786-2525
310-279-5980
 
investor@pondel.com
 
ELECTRO RENT REPORTS FISCAL 2010 SECOND QUARTER FINANCIAL RESULTS
 
Creating Long-Term Value Through New Agilent Agreement
 
VAN NUYS, Calif. – December 17, 2009 – Electro Rent Corporation (NASDAQ:ELRC) today reported financial results for its fiscal 2010 second quarter ended November 30, 2009.
 
Total revenues for the fiscal 2010 second quarter rose to $36.6 million from $35.4 million for the year-ago period.  Rental and lease revenues totaled $23.3 million, versus $26.2 million last year.  Equipment sales and other revenues increased to $13.2 million for the fiscal 2010 second quarter from $9.3 million for the fiscal 2009 second quarter.
 
“During the quarter, we saw continued improvements in several of our leading indicators as the overall environment continued to gain some positive momentum,” said Daniel Greenberg, Chairman and CEO of Electro Rent.  “Revenues grew both year-over-year and on a sequential basis as sales of used equipment and finance leasing in our test and measurement business picked up steam.  Our data products business stabilized, and we are committed to building a more effective strategy that will help us grow this segment of our business into a bigger profit center over time.
 
“In a depressed economic environment, Electro Rent has been successful in bringing equipment utilization performance back into a competitive position as we are making better use of an increased amount of equipment on rent.  During this time, we also responded to the global situation around us by significantly reducing costs across a number of areas throughout our business to enhance efficiency and ensure maximum operating flexibility,” Greenberg said.
 
SG&A expenses for the fiscal 2010 second quarter decreased to $10.4 million, or 28.3% of total revenues, from $12.1 million, or 34.0% of total revenues, for same period last year, as the result of proactive cost-cutting measures throughout the company.
 
Total operating expenses were $30.7 million for the second quarter of fiscal 2010, versus $30.6 million in the year-ago period.  Interest income was $1.0 million for the fiscal 2010 second quarter, compared with $632,000 in the prior year.  The increase principally reflects a realized gain of approximately $800,000 on the sale of two bond funds, offsetting a decrease in interest rates.
 
Operating profit for the first quarter of fiscal 2010 rose to $5.9 million, or 16.1% of total revenues, compared with $4.8 million, or 13.7% of total revenues, for last fiscal year’s second quarter.
 
Net income for the fiscal 2010 second quarter was $4.0 million, or $0.17 per diluted share, versus $3.5 million, or $0.14 per diluted share, for the same period last year.
 
Total revenues for the six months ended November 30, 2009 equaled $68.8 million, compared with $70.4 million for the six months ended November 30, 2008.  Rental and lease revenues for the first six months of fiscal 2010 were $45.1 million, versus $53.4 million for the first six months of fiscal 2009.  Equipment sales and other revenues totaled $23.7 million, up from $17.0 million for the first six months of fiscal 2009.

 

 
 
SG&A expenses were $20.7 million, or 30.0% of total revenues, for the fiscal 2010 year-to-date period, versus $24.1 million, or 34.2% of total revenues, for the same period last year.  Total operating expenses for the fiscal 2010 six-month period were $59.6 million, equal to the comparable period last year.
 
Operating profit for the first six months of fiscal 2010 was $9.2 million, or 13.4% of total revenue, versus $10.8 million, or 15.4% of revenue, in the prior-year period.
 
Net income in the fiscal 2010 year-to-date period was $6.1 million, or $0.25 per diluted share, compared with $7.9 million, or $0.31 per diluted share, in the fiscal 2009 period.
 
Equipment purchases for the fiscal 2010 second quarter and year-to-date period were $13.6 million and $23.0 million, respectively, compared with $15.4 million and $32.7 million, respectively, for the same periods last year.  The book value of Electro Rent's equipment pool was $144.5 million at November 30, 2009, versus $158.3 million at May 31, 2009.
 
The company paid dividends totaling $3.6 million for the second quarter of fiscal 2010.  On an annualized basis, the company’s current quarterly dividend of $0.15 per common share represents a 5.2% yield on the December 16, 2009 close price of $11.64.
 
Total shareholders' equity grew to $231.0 million, or $9.66 per share, at November 30, 2009, from $228.8 million, or $9.55 per share, at May 31, 2009.
 
At November 30, 2009, Electro Rent had $58.8 million in cash and cash equivalents and $20.9 million (at cost) in auction rate securities for a total cash, cash equivalents and investments balance of $79.7 million, up from $72.0 million at May 31, 2009.  Electro Rent’s balance sheet remains debt free.
 
Effective December 1, Electro Rent became the sole authorized technology partner for Agilent Technologies in the United States and Canada and is now selling new Agilent electronic test and measurement products to Agilent’s customers.  As previously announced, the company is in the process of creating a new channel to build the infrastructure required to best service its new customers.  Electro Rent said that it expects to hire more than 50 employees as part of this effort.  During December, the company rolled out its Agilent services on the West coast and expects to roll out similar services on the East coast and in Canada next month.
 
“We are highly focused on establishing, positioning and growing these new opportunities, as well as expanding our existing rental business, to help solidify Electro Rent’s long-term future and success,” Greenberg said.
 
About Electro Rent
 
Electro Rent Corporation (www.ElectroRent.com) is one of the largest global organizations devoted to the rental, leasing and sales of general purpose electronic test equipment, personal computers and servers.
 
"Safe Harbor" Statement:
 
Except for the historical statements and discussions above, our statements above constitute forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934.  These forward-looking statements, which include statements about continued improvements in several of the company’s leading indicators, the environment gaining some positive momentum, the company’s commitment to building a more effective strategy for its data products business, and its ability to focus on establishing, positioning and growing new opportunities, as well as expanding its existing rental business, among others, reflect Electro Rent’s management's current views with respect to future events and financial performance; however, you should not put undue reliance on these statements.  When used, the words "anticipates," "believes," "expects," "intends," "future," and other similar expressions identify forward-looking statements.  These forward-looking statements are subject to certain risks and uncertainties.  The company believes its management's assumptions are reasonable; nonetheless, it is likely that at least some of these assumptions will not come true.  Accordingly, Electro Rent’s actual results will probably differ from the outcomes contained in any forward-looking statement, and those differences could be material.  Factors that could cause or contribute to these differences include, among others, those risks and uncertainties discussed in the company’s periodic reports on Form 10-K and 10-Q and in its other filings with the Securities and Exchange Commission.  Should one or more of the risks discussed, or any other risks, materialize, or should one or more of our underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, expected or projected.  In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct.  Electro Rent undertakes no obligation to update or revise any forward-looking statements.

(Financial Tables Follow)

 

 
 
ELECTRO RENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (in thousands, except per share data)

   
Three Months Ended
   
Six Months Ended
 
   
November 30,
   
November 30,
 
   
2009
   
2008
   
2009
   
2008
 
                         
Revenues:
                       
Rentals and leases
  $ 23,329     $ 26,155     $ 45,076     $ 53,389  
Sales of equipment and other revenues
    13,248       9,278       23,702       17,030  
                                 
Total revenues
    36,577       35,433       68,778       70,419  
                                 
Operating expenses:
                               
Depreciation of rental and lease equipment
    10,473       11,555       21,268       23,139  
Costs of revenues other than deprecation of rental and lease equipment
    9,853       6,985       17,620       12,351  
Selling, general and administrative expenses
    10,357       12,054       20,665       24,104  
                                 
Total operating expenses
    30,683       30,594       59,553       59,594  
                                 
Operating profit
    5,894       4,839       9,225       10,825  
                                 
Interest income, net
    1,048       632       1,356       1,223  
                                 
Income before income taxes
    6,942       5,471       10,581       12,048  
                                 
Income tax provision
    2,931       1,977       4,495       4,183  
                                 
Net income
  $ 4,011     $ 3,494     $ 6,086     $ 7,865  
                                 
Earnings per share:
                               
Basic
  $ 0.17     $ 0.14     $ 0.25     $ 0.31  
Diluted
  $ 0.17     $ 0.14     $ 0.25     $ 0.31  
                                 
Shares used in per share calculation:
                               
Basic
    23,918       25,420       23,925       25,646  
Diluted
    23,959       25,511       23,968       25,756  

 

 
 
ELECTRO RENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (in thousands, except share numbers)

   
November 30,
   
May 31,
 
   
2009
   
2009
 
ASSETS
           
             
Cash and cash equivalents
  $ 58,799     $ 22,215  
Investments available-for-sale, at fair value (cost of $27,896)
    -       28,188  
Investments, trading, at fair value (cost of $20,875 and $21,600)
    19,365       19,977  
Put option
    1,510       1,623  
Accounts receivable, net of allowance for doubtful accounts of $464 and $317
    19,863       16,271  
Rental and lease equipment, net of accumulated depreciation of $177,032 and $179,318
    144,477       158,252  
Other property, net of accumulated depreciation and amortization of $15,585 and $15,207
    13,435       13,781  
Goodwill
    3,109       3,109  
Intangibles, net of amortization of $1,909 and $1,741
    566       734  
Other
    11,570       7,184  
    $ 272,694     $ 271,334  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Liabilities:
               
Accounts payable
  $ 3,228     $ 3,291  
Accrued expenses
    13,557       15,023  
Deferred revenue
    4,553       4,281  
Deferred tax liability
    20,407       19,986  
Total liabilities
    41,745       42,581  
                 
Commitments and contingencies
               
                 
Shareholders' equity:
               
Preferred stock, $1 par - shares authorized 1,000,000; none issued
               
Common stock, no par - shares authorized 40,000,000;
               
issued and outstanding November 30, 2009 - 23,919,508;
               
May 31, 2009 - 23,953,540
    32,804       32,596  
Accumulated other comprehensive income, net of tax
    -       176  
Retained earnings
    198,145       195,981  
Total shareholders' equity
    230,949       228,753  
    $ 272,694     $ 271,334