Analogic Corp. (NSDQ:ALOG) posted lower sales and earnings during the first quarter, but its medical technology business clawed its way toward last year’s levels. Analogic also settled a dispute with an activist investor group and inked a new deal for its security business.
The Peabody, Mass.-based imaging equipment maker posted sales of $95.4 million for the three months ended Oct. 31, down 6.1 percent compared with $101.6 million during the same period last year. Net income plummeted 91.9 percent to $26 million, from $320 million during Q1 2009.
Analogic said results for its medical imaging businesses continued to improve. Total sales for Analogic’s medical technology segment reached $85.9 million, up 3.12 percent over the fourth quarter last year and flat compared with the first quarter of fiscal 2009.
Its CT and MRI segment posted sales of $57.7 million for the quarter, down 2.5 percent from Q1 2009 but up 12.7 percent compared with the fourth quarter last year. The company cited an uptick in demand from “major medical OEMs” for the improvement over the prior quarter.
Digital radiography revenues of $8.2 million were down 2.4 percent compared with the fourth quarter but up 9.3 percent from Q1 2009. Sales of specialized ultrasound equipment made by its Danish BK Medical subsidiary were $20 million during the quarter, down 15.6 percent compared with the prior quarter but up 5.8 percent compared with the first quarter of fiscal 2009.
The federal Transportation Safety Administration hit Analogic’s security business where it hurts. Sales for the division were $6.9 million for the quarter, down 46.1 percent from Q$ 2009 and 46.5 percent from the year-ago period. The company attributed those dismal numbers to delayed orders from one of its OEM customers, L-3 Communications, which were in turn due to delays in TSA orders for checked baggage screening systems.
The security business is due for a boost, however, via a new, two-year deal Analogic struck with Smiths Detection to develop advanced imaging subsystems “for use in a next-generation explosives detection system to be manufactured and marketed by Smiths,” according to an Analogic press release.
Analogic said it also settled a dispute with activist investor group Ramius LLC, a New York-based hedge fund that had agitated for changes after the company posted dismal results for fiscal 2009 — with president and CEO Jim Green calling it “the most challenging year in the company’s history” — and founder and chairman Bernard Gordon retired. Ramius owns about 5 percent of Analogic’s outstanding shares.
The settlement calls for Analogic to nominate Dr. Burton Drayer, executive vice president for risk at The Mount Sinai Medical Center and chairman and director of Mount Sinai’s radiology dept., to its board of directors. The company said it expects Drayer, a Ramius pick, to serve on its nominating and corporate goverance committee. The deal also means Analogic will ask shareholders to approve an expansion of its board from 10 to 11 members, with a new independent director taking a seat by March 31, 2010. And it calls for the company to issue the “Financial Pathway Statement,” detailing its plans to reach “double-digit operating margins by fiscal year 2012.”