I can't help but chuckle, reading the earnings report that American Science & Engineering
You see, after reading over the numbers, I was all set to come out and blast AS&E for its poor performance in Q4. Quarterly sales down 8%, profits cut in half -- miserable news all around. And yet, AS&E has gone and stolen my thunder, hoisted me by my own petard, or pulled a rabbit out of the hat -- take the metaphor of your choice.
Before we get to that, though, a few words on Q4 are in order: AS&E missed estimates, but I won't criticize it for that. AS&E doesn't give guidance, making it one of the few companies from which Wall Street analysts can't simply crib estimates and then present the work as their own. Estimating AS&E's numbers is pure guesswork, and yesterday, it was the analysts who were proved wrong -- not AS&E.
Still, the news was not good. Sales declined, gross margins declined, R&D spending soared, and AS&E wrote off $0.12 per share in bad debt. No wonder net profits ($0.30 per share, if you're counting) suffered. Operating margins now sit at 12.7% for the year. That's still more than rivals L-3
This makes three straight quarters of year-over-year profit declines at AS&E. Inventories of unsold goods sit about twice as high as their year-ago levels, and accounts receivable, 18% higher. With so much working capital tied up in uncollected bills and unsold goods, free cash flow plunged 65% for the year, to $14 million.
Speaking of free cash flow, we now come to the one bit of unqualifiedly good news in the report. In recent quarters, I've chided companies such as Symantec
No more. With a wave of its magic wand, AS&E's investor relations department made my criticism disappear and replaced it with a cash flow statement yesterday. And the fact that AS&E released the document in a quarter when it reported bad news makes the disclosure all the more commendable. So while I can't praise its numbers, I have to commend AS&E for its shareholder-friendly move. Kudos, guys.
What did we expect out of AS&E last quarter, and what did we get? Find out in: