Monday, ADC Telecommunications Inc. (ADCT) said its first quarter loss narrowed from the year-ago period, mainly on a decline in operating expenses, despite lower revenues. On an adjusted basis, the company reported earnings that came in ahead of Street estimates. Looking ahead, the company provided its guidance for the second quarter.
The Eden Prairie, Minnesota-based company said that due to a change in its fiscal year to September 30, comparisons for the first quarter 2010 results were with proforma results of the prior year first quarter ended December 26, 2008.
First quarter net loss available to common share owners narrowed to $11.2 million or $0.11 per share from $49.7 million or $0.47 per share in the year-ago period.
ADC's earnings from continuing operations was $3.6 million or $0.04 per share, compared to a loss of $48.4 million or $0.46 per share in the same period last year.
Results included $14.2 million of expenses or $0.14 per share, related to purchased intangible amortization, restructuring and impairment and certain other charges along with a one-time gain of $15.9 million or $0.16 per share related to the sale of certain assets. Excluding items, adjusted earnings were $0.02 per share for the quarter.
Excluding non-GAAP items of $1.7 million, net earnings for the first quarter was $1.9 million, or $0.02 per share.
Net sales for latest quarter totaled $265.6 million compared to proforma net sales of $299.7 million in the first quarter of fiscal 2009. The year-over-year decline in revenue reflects mainly the impact of the global economic downturn, which was just beginning to impact the business at the same time last year. Eleven analysts expected revenue of $267.72 million for the first quarter.
On segmental basis, sales at global connectivity solutions was $201.5 million, down from $234.7 million a year ago. Network Solutions sales increased to $25.2 million from $23.1 million last year, while sales at professional services decreased to $38.9 million from $41.9 million in the prior year period.
In the recent quarter gross margin was 34.7%, up from adjusted gross margins of 29.5% in the same quarter last year, contributed by the company's successful actions to increase efficiency across its operating cost structure, which offset the negative impact of lower revenue.
Operating expenses declined to $96.2 million from $98.8 million in the prior year quarter. Excluding impairment and restructuring charges, intangible amortization and certain other charges from each period, adjusted operating expenses increased to $82.0 million from $78.1 million, due to higher stock-based compensation expense, that included a $4 million charge to reflect a change in assumptions.
Looking ahead to the second quarter, ADC expects to report a loss of $0.04 per share to earnings of $0.06 per share, which includes non-cash amortization expense of $0.05 per share and excludes potential non-cash charges or restructuring charges that the company cannot estimate at this time. Net sales are projected to be within the range of $260 million - $280 million.
Analysts currently expect earnings of $0.05 per share on revenue of $275.52 million for the second quarter.
ADCT closed Monday's regular trading at $5.38, down $0.12 or 2.18%, on a volume of 1.56 million shares on the Nasdaq. In after hours, the stock rose 2.23% or $0.12, trading at $5.50.
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