Massachusetts imaging systems maker Analogic (NSDQ:ALOG) missed Wall Street’s mark for another quarter, but the company expects to improve its bottom line as previously planned closures and layoffs begin to bear fruit, even as its market prospects remain flat.
Analogic made progress on restructuring plans announced last year, including closure of a Colorado manufacturing plant and the winding down of another facility in Vancouver, Canada. The measures, tied to a merger with Ultrasonix Medical, resulted in layoffs of about 140 workers, Analogic said at the time.
The device maker has yet to see the financial boon of cutting those operations, but savings should become apparent over the next year, Analogic CFO, senior vice president & treasurer Michael Levitz said during the company’s quarterly conference call.
"We expect operating expenses to be lower in the 2nd half of this year as we complete and begin to see savings related to the closure of our manufacturing operations in Denver and Vancouver as part of our previously announced ultrasound manufacturing consolidation, as well as due to a lower cost following the headcount reduction we’ve taken in the second quarter," Levitz said. "We expect to benefit of these facility reductions to begin to be realized over the next 4 quarters."
Analogic fully closed the Denver, Colo., facility on schedule toward the end of Q2 and the Vancouver facility will wind down before the end of the year, Levitz said, but the redundant costs of those facilities are still impacting profits in the 1st half of the year.
The company posted a giant 97% boost to its profits for its 2nd quarter, driven by a 1-time tax benefit of $8.8 million, which contributed about 69¢ to Analogic’s per-share earnings. Excluding the impact of special items, Analogic’s non-GAAP per-share earnings came to $1.17, falling 3¢ shy of analysts’ expectations.
In total, Analogic posted profits of $19.3 million, or $1.53 per diluted share, on sales of $141.4 million during the 3 months ended January 31. That compared with profits of $9.8 million, or 78¢ per share, on sales of $138.6 million during the same period last year.
President & CEO Jim Green said in prepared remarks that he remains "bullish" about the company’s long-term growth, but that the rest of 2014 to be pretty drab.
"While our medical imaging business recovered from a difficult 1st quarter and with the headwinds in our markets, we now expect fiscal 2014 total revenue and operating margin to be roughly flat with fiscal 2013," Green said. "With underlying product revenue growth and exciting new products launching, we remain bullish on our long term profitable growth trajectory."
ALOG shares dove deep today, trading at $81.42 as of about 3:20 p.m. representing a 15.7% loss on the day.