NEI, a leading global provider of server-based application platforms, deployment solutions and lifecycle support services for software technology developers and OEMs, today reported financial results for its second fiscal quarter ended March 31, 2011, with results surpassing previous guidance.
“NEI’s results met or exceeded our guidance and represent our sixth consecutive quarter of profitability. Our pre-tax profit was roughly equal to the December quarter as we benefited from a more favorable mix of custom products which drove slightly higher gross margin dollars despite seasonally adjusted lower revenues. We also continue to carefully manage our expenses and leverage our infrastructure to increase profitability,” Greg Shortell, president and CEO of NEI, stated in the press release.
Second-quarter net revenues increased 18 percent to $65 million compared to $55 million reported for the second quarter of the year prior.
Gross profit margin was 11.6 percent of net revenues compared to 11.8 percent for the second fiscal quarter of the prior year.
NEI reported net income on a GAAP basis at $1.5 million, or $0.03 per share, which included $236,000 of stock-based compensation expense and $332,000 of amortization expense. This compares to net income of $236,000, or $0.01 per share, which included $282,000 of stock-based compensation expense and $389,000 of amortization expense in the same period a year ago.
Non-GAAP net income, which excludes stock-based compensation and amortization expenses, was $2.0 million, or $0.05 per share, better than the expected range of non-GAAP profit of $700,000 to $1.3 million. The non-GAAP net income compared to non-GAAP net income of $907,000, or $0.02 per share, in the second fiscal quarter of 2010.
NEI finished the quarter with $15.1 million in cash and cash equivalents and $53.4 million in working capital. Accounts receivable decreased to $38.8 million and inventory levels increased to $26.5 million compared to $43.0 million and $25.8 million as of December 31, 2010, primarily due to the lower revenues. NEI also has a $10 million bank credit facility that it has yet to utilize.
The company offered guidance for its fiscal third quarter ending June 30, 2011, based on current forecasts from certain customers and historical trends. NEI anticipates net revenues in the range of $61 million to $66 million; gross profit margin in the range of 10.5 percent to 11.0 percent of net revenues; operating expenses between $5.9 million and $6.4 million; net income on a GAAP basis in the range of $400,000 to $900,000; and net income on a non-GAAP basis in the range of $1.0 million to $1.5 million.
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