Tuesday, intelligence, surveillance and reconnaissance solutions company Applied Signal Technology, Inc. (APSG) reported higher net income for its third quarter, helped by a reduction in stock-based compensation expense and an improved mix of royalty revenue and fixed-price contracts, though revenue declined marginally. The company separately announced the acquisition of Pyxis Engineering.
The Sunnyvale, California-based company reported net income for the third quarter of $3.33 million or $0.25 per share, compared to $1.97 million or $0.15 per share in the year-ago quarter.
On average, eight analysts polled by Thomson Reuters expected the company to earn $0.26 per share, for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter decreased to $49.50 million from $49.95 million in the prior-year quarter. Eight analysts had a revenue consensus of $53.61 million for the third quarter.
The company's operating income for the quarter increased 51% to $4.84 million from $3.22 millionin the third quarter 2008, primarily driven by a reduction in stock-based compensation expense and an improved mix of royalty revenue and fixed-price contracts, including product sales.
Total operating expenses for the quarter eased to $44.66 million from $46.73 million in the third quarter of last year.
New orders received during the third quarter of fiscal 2009 totaled $51.24 million, compared to new orders of $70.28 million during the third quarter of fiscal year 2008. The company noted that the year-over-year reduction in new orders was due to the timing of certain material contract awards.
The company also said that since the close of the third quarter, it has received 7 separate ISR program awards with a total value of $44 million. Initial letter contracts granted under these awards are about $16 million and the company expects to definitize these contracts by the end of the fiscal year.
For the nine-month period, the company's net income was $10.92 million or $0.83 per share, compared to $5.47 million or $0.43 per share last year.
The company's total revenues for the nine-month period increased to $148.38 million from $137.96 million a year ago.
In a separate release, the company announced that it has completed the acquisition of Pyxis Engineering, which will provide immediate scale into cyber-related projects and their associated revenue streams. Applied Signal has agreed to acquire Pyxis Engineering for $16.25 million in cash, funded from current investments, with a stock-based earn-out potential of $3.75 million.
For the fiscal year ended December 31, 2008, Pyxis recognized revenues of about $11.7 million. For the period January 1, 2009 through May 31, 2009, Pyxis recognized revenues of around $6.3 million. The unaudited trailing twelve months revenues ended July 31, 2009 are estimated at approximately $14 million. The acquisition is anticipated to be accretive in its first twelve months of operation.
APSG closed Tuesday's regular trading session at $26.22, up $0.64 or 2.50% on a volume of 463,971 shares. However, the stock lost $2.57 or 9.80%, and traded at $23.65 in the after hours.
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