Electronic design automation systems supplier Mentor Graphics Corp. (MENT) reported Friday a profit for the first quarter compared to a loss last year, reflecting improved margins, lower expenses and revenue growth.
Adjusted for one-time items, the company reported an increase in profit that topped analysts' expectations, while quarterly revenues missed their estimates by a whisker. The company also provided guidance for the second quarter, meeting Street view, and raised its earnings outlook for the full-year 2013, while backing revenue forecast.
"Strength in our business continued in the first quarter, with record first quarter revenue and earnings. The release of our next-generation emulation platform during the quarter has attracted broad customer interest, and we have a very full sales funnel," Chairman and CEO Walden Rhines said in a statement.
The Wilsonville, Oregon-based company reported net income of $28.18 million or $0.25 per share for the first quarter, compared to a net loss of $2.35 million or $0.02 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter increased to $34.43 million or $0.30 per share from $22.72 million or $0.20 per share in the year-ago quarter.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the first quarter. Analysts' estimate typically excludes one-time items.
Total revenues for the quarter grew to $247.92 million from $230.04 million in the same quarter last year, but missed six Wall Street analysts' consensus estimate of $254.95 million by a whisker.
System and software revenue totaled $149.36 million, higher than last year's $139.65 million, and service and support revenues also rose to $98.56 million from $90.39 million in the year-ago quarter.
Operating margins for the quarter expanded 620 basis points to 13.2 percent from last year as gross margin improved 110 basis points and lower cost and expenses.
Interest expense for the quarter plunged to $4.59 million from $17.44 million in the year-ago quarter.
"Continued focus on cost controls, a favorable product mix, and better than forecasted profitability in the business have allowed us to raise earnings guidance for the year. We also reaffirm revenue guidance at $1.1 billion for the year as we expect increased Veloce2 emulation shipments beginning in the second quarter as production capacity increases," President Gregory Hinckley added.
Looking ahead to the second quarter, the company expects adjusted earnings of about $0.17 per share on projected quarterly revenues of about $240 million. Analysts project earnings of $0.17 per share for the quarter, on revenues of $240.33 million.
For fiscal 2013, Mentor Graphics raised its adjusted earnings outlook to $1.37 per share from the prior guidance of $1.32 per share, and said it continues to project annual revenues of about $1.1 billion. Street is currently looking for full-year 2013 earnings of $1.33 per share on revenues of $1.10 billion.
MENT closed Thursday's regular trading session at $15.21, up $0.46 on a volume of 1.48 million shares.
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