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Electro Rent Corp. Reports Operating Results (10-Q)

January 09, 2013 | About:
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10qk

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Electro Rent Corp. (ELRC) filed Quarterly Report for the period ended 2012-11-30.

Electro Rent Corporation has a market cap of $361.9 million; its shares were traded at around $14.83 with a P/E ratio of 15.6 and P/S ratio of 1.4. The dividend yield of Electro Rent Corporation stocks is 5.5%. Electro Rent Corporation had an annual average earning growth of 1.6% over the past 10 years.

Highlight of Business Operations:

Comparing the first six months of fiscal 2013 to the first six months of fiscal 2012, our revenues increased by 2.8% from $120.3 million to $123.7 million, our operating profit increased 2.8% from $18.1 million to $18.6 million and our net income decreased by 22.0% from $14.5 million to $11.3 million. Our net income for the six months ended November 30, 2011 included a bargain purchase gain, net of deferred taxes, of $3.4 million, as a result of our acquisition of EMT.

Our rental and lease revenues increased $4.0 million, or 6.3%, from $64.2 million for the first six months of fiscal 2012 to $68.2 million for the first six months of fiscal 2013. Our rental and lease revenues increased, in part, due to an increase of $1.5 million in rental and lease revenues from the equipment acquired from EMT in August 2011, and $3.7 million due to increased rental and lease demand, in particular in our North American and foreign operations, and the integration of our new resale organization and existing T&M sales force. These increases were partially offset by a decline in rental and lease rates and foreign currency rates, resulting in a decrease in rental and lease revenues of $0.6 million and $0.6 million, respectively.

Our net income includes a bargain purchase gain, net of deferred taxes, of $3.4 million for the six months ended November 30, 2011, as a result of our acquisitions of EMT. For the six months ended November 30, 2012, our operating profit increased 2.8%, or $0.5 million, compared to the six months ended November 30, 2011. Our rental and lease business contributed an additional $1.6 million in operating profit, including $1.0 million in connection with the equipment acquired from EMT, resulting from a) a $4.0 million increase in rental and lease revenues, b) an offsetting increase in depreciation expense of $2.2 million, or 8.6%, due to a higher average rental equipment pool, and c) an offsetting increase in our costs of rentals and leases, excluding depreciation, of $0.2 million, or 1.8%. In spite of a decrease of $0.6 million, sales of equipment and other revenues contributed an additional $0.5 million in operating profit, as an increase in our higher margin used equipment sales more than offset a decline in sales of our lower margin new equipment. Our selling, general and administrative expenses increased by $1.6 million, or 6.0%, for the six months ended November 30, 2012 compared to the six months ended November, 2011, primarily due to the broadening and strengthening of our sales organization in support of our new and used equipment sales, higher rental demand, and future growth opportunities. Finally, a decline in our foreign currency rates reduced our operating profit by $0.5 million.

Sales of equipment and other revenues increased to $30.6 million for the second quarter of fiscal 2013 from $28.7 million in the prior year quarter. Sales of used equipment, including finance leases, increased to $7.8 million for the three months ended November 30, 2012, compared to $5.7 million for the prior year period, while sales of new equipment decreased to $21.1 million for the three months ended November 30, 2012 compared to $21.7 million for the prior year period.

Sales of equipment and other revenues decreased to $55.5 million for the first six months of fiscal 2013 from $56.1 million in the same period of the prior fiscal year. Sales of used equipment, including finance leases, increased to $14.1 million for the six months ended November 30, 2012, compared to $11.1 million of the prior year period, while sales of new equipment decreased to $38.2 million for the six months ended November 30, 2012 compared to $42.0 million of the same prior year period.

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