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

April 03, 2009 | About:
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Electro Rent Corp. (ELRC) filed Quarterly Report for the period ended 2009-02-28.

Electro Rent Corporation primarily engages in the rental lease and sale of state-of-the-art electronic equipment. About half of the Company's equipment portfolio at acquisition cost is composed of general purpose test and measurement instruments purchased from leading manufacturers such as Agilent Technologies and Tektronix. The remainder comprises personal computers and workstations. Personal computer lines include those from Compaq Dell IBM Apple and Toshiba. Electro Rent Corp. has a market cap of $247.5 million; its shares were traded at around $10.07 with a P/E ratio of 14.3 and P/S ratio of 1.7. The dividend yield of Electro Rent Corp. stocks is 5.9%. Electro Rent Corp. had an annual average earning growth of 9.4% over the past 5 years.

Highlight of Business Operations:

Interest income, net, was $0.1 million for the third quarter of fiscal 2009 compared to $0.9 million in the prior year period. The decrease reflects decreases in prevailing interest rates and a lower cash balance. Interest income, net, includes $2.0 million of unrealized losses on our put option. In addition, interest income, net, includes $2.0 million of unrealized gains on our investments, trading.

Interest income, net, was $1.4 million for the first nine months of fiscal 2009 compared to $2.6 million in the prior year period. The decrease reflects decreases in prevailing interest rates and a lower cash balance. Interest income, net, includes $1.1 million of unrealized gain on our put option. In addition, interest income, net, includes $1.1 million of unrealized losses on our investments, trading.

In April 2007, our board of directors authorized a regular quarterly cash dividend of $0.10 per common share, or $0.40 per annum. We commenced payment of our quarterly cash dividend in July 2007. In January 2008, our board of directors approved an increase to $0.15 per common share, or $0.60 per annum. For the nine months ended February 28, 2009 and February 29, 2008, we paid dividends of $11.4 million and $7.8 million, respectively.

During the first nine months of fiscal 2009 and fiscal 2008, net cash provided by operating activities was $46.8 million and $42.2 million, respectively. The increase in operating cash flow was due primarily to: a $5.3 million decrease in accounts receivable for the nine months ended February 28, 2009, compared to an increase of $3.3 million in the prior year period; an increase in deferred tax liability of $3.4 million for the nine months ended February 29, 2009, compared to an increase of $701 for the prior year period; and a remeasurement loss of $471 for the nine months ended February 28, 2009, compared to a gain of $407 in the prior year period. This increase was offset by a decline in net income of $6.1 million for the nine months ended February 28, 2009, compared to the nine months ended February 29, 2008.

During the nine months ended February 28, 2009 net cash used in investing activities was $19.4 million, compared to $34.8 million in the same period of fiscal 2008. The decline in net cash used in investing activities is mainly due to a decrease in payments for the purchase of rental and lease equipment to $42.1 million for the nine months ended February 28, 2009, compared to $55.5 million for the nine months ended February 29, 2008.

Net cash used in financing activities increased to $30.5 million from $6.4 million for the nine months ended February 28, 2009 and February 29, 2008, respectively, due to an increase in payments for the repurchase of common stock to $20.4 million for the current fiscal period, compared to $19 for the prior year period, and an increase in dividends paid to $11.4 million for the nine months ended February 28, 2009, compared to $7.8 million for the nine months ended February 29, 2008.

Read the The complete ReportELRC is in the portfolios of Bruce Sherman of Private Capital Management, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

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