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Anaren, Inc. (NASDAQ:ANEN)

F4Q09 (Qtr End 6/30/09) Earnings Call Transcript

August 6, 2009 5:00 pm ET

Executives

Larry Sala - President, CEO and Chairman

George Blanton - CFO, SVP and Treasurer

Analysts

Charles John - Piper Jaffray

Rich Valera - Needham & Company

Chris McDonald - Kennedy Capital

Operator

Good day and welcome to the Anaren Inc. fourth quarter fiscal year 2009 earnings conference call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Larry Sala. Please go ahead.

Larry Sala

Thank you. Good afternoon and thank you for participating in the Anaren fiscal 2009 fourth quarter conference call. I am joined again today by George Blanton, our CFO; and Joe Porcello, our VP of Accounting. I will provide a brief overview of the results of the quarter after which George will review the financial highlights. We will then take your questions.

Certain statements made during this conference call will be forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those discussed. You are encouraged to review Anaren's Securities and Exchange Commission filings to learn more about the various risks and uncertainties facing our business, and their potential impact on our net sales, earnings, and stock price.

Net sales for the fourth quarter were $43.8 million, up 28% from the fourth quarter of last year and included $11.9 million in net sales from the M.S. Kennedy and Unicircuit acquisitions. The increase in net sales was driven by our Space and Defense Group.

Non-GAAP operating income for the quarter, excluding non-cash equity-based compensation and acquisition-related inventory step-up and intangible amortization was $6.4 million or 14.6% of net sales for the quarter. The increase in net sales, a very favorable sales in mix and our continued cost reduction efforts positively impacted profitability for the quarter.

Operating cash flow was $12.2 million for the quarter and $28.4 million for the fiscal year as a result of the improved profitability, improved collections and inventory management.

Wireless Group net sales for the quarter were $15.2 million, down 22% from the fourth quarter of last year and down 12% sequentially from the third quarter of this year. Weaker demand for custom and standard infrastructure products, predominantly from applications in China and in India, and for our consumer components related to satellite and television applications drove the decrease in sales from the third quarter.

During the quarter, the Group began production of Xinger-III, the latest generation of our industry-leading infrastructure standard component line. Market interest in this new product line has been robust with a rapid pace of new design-ins. In addition, we believe that design-in opportunities for our Xinger products are increasing in the latest generation of power amplifier architectures.

Also during the quarter, the Group introduced the new Balun Transformers for analog-to-digital converter applications increasing the addressable market for our consumer component products. We continued to capture numerous new consumer component design-ins. Customers that exceeded 10% of Wireless Group net sales for the quarter were Nokia and Richardson.

For the Space and Defense Group, net sales for the quarter were $28.6 million, up 95% from the fourth quarter of last year and included $11.9 million in net sales from the M.S. Kennedy and Unicircuit acquisitions. The Space and Defense Group continued to growing organic sales growth, and integration and performance of our recent acquisitions are progressing as planned.

Profit margins for the Group continued to improve as a result of increased production yield and a favorable sales mix. During the quarter, we completed the delivery of current orders for counter-IED related components. These products have contributed $2.5 million to $3 million in revenue per quarter for the last two quarters. We currently anticipate receiving new orders for counter-IED related component in this current quarter with the production resuming in our second quarter.

New orders for the quarter were $27.8 million and were driven by contracts for radar, satellite and passive ranging subsystems. Customers that generated greater than 10% of Space and Defense Group net sales for the quarter were Lockheed Martin and Northrop Grumman. Space and Defense order backlog at June 30th, 2009 was $87 million.

George?

George Blanton

The highlights of the fourth quarter income statement and balance sheet at June 30th, 2009 are presented on a non-GAAP basis. These non-GAAP measures are each adjusted from GAAP results to exclude certain non-cash items, including equity-based compensation and acquisition-related inventory step-up and intangible amortization.

The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. Please refer to our Q4 earnings release for a reconciliation of GAAP and non-GAAP measures.

Non-GAAP gross margin was 36.4% for the current quarter compared to 34.7% for the third quarter of fiscal 2009, and 28.2% for the fourth quarter of last year. The increase in fourth quarter fiscal 2009 gross margins resulted from higher overall volume, cost reduction efforts and contributions from our newly acquired company, lower manufacturing costs for our business transfer to China during the fiscal 2009 continued to improve gross margins. We expect non-GAAP gross margins to be between 33% and 35% for the first quarter of fiscal 2010.

Investment in research and development was 8% of net sales in the fourth quarter compared to 7.8% of net sales in the third quarter of fiscal 2009, and 8.3% of sales for the fourth quarter of last year.

Current R&D spending is supporting a number of wireless component and custom assembly product opportunities, as well as a number of projects in the Space and Defense Group, and is not expected to decline in the near future.

Non-GAAP operating income was 14.6% of net sales for the fourth quarter, up 8.7 percentage points from the fourth quarter of fiscal 2008 and up 130 basis points from 13.3% for the third quarter of 2009.

Fourth quarter of fiscal 2009 improvement was the result of a more favorable product mix, higher sales volumes and continued improvement in operating profits at our new acquisitions.

Non-GAAP net income was 9.8% of net sales, or $0.30 per diluted share, for the fourth quarter of fiscal 2009, including $282,000 in interest expense. This compares to non-GAAP net income for the third quarter of fiscal 2009 of 9.6% of net sales, or $0.30 per diluted share, which included $340,000 in interest expense.

Non-GAAP net income for the fourth quarter of fiscal 2008 was 5.3% of net sales, or $0.13 per diluted share.

The effective income tax rate for the fourth quarter of fiscal 2009 was 30.3%. This compared to a tax rate of 25.3% for the fourth quarter of last year and 25.7% for the third quarter of fiscal 2009.

The expected effective annual tax rate for fiscal 2010 absent one-time events and given the scheduled exploration of the research and experimentation tax credit at December 31st, 2009 should be approximately 32%.

Interest expense for the fourth quarter of fiscal 2009 was $282,000 when compared to $340,000 for the third quarter. This decrease resulted from a further decline in the 90-day LIBOR at April 1st, 2009 compared to the third quarter rate. The 90-day LIBOR has remained at lower levels and we expect interest expense for the first quarter to be approximately $175,000.

Balance sheet highlights include cash provided by operations was $12.2 million in the fourth quarter of fiscal 2009 and $28.4 million for the fiscal year. Capital expenditures were $1.4 million in the quarter. Cash, cash equivalents and investments were approximately $65 million at June 30th, 2009, up $21 million from June 30th, 2008.

During the fourth quarter, we did not purchase any shares of Anaren common stock and year-to-date we have purchased 471,000 for $5 million. There are approximately 1 million shares remaining under the current Board repurchase authorization at June 30th, 2009.

Accounts receivables were $24.8 million at June 30th, 2009, up $1.7 million from June 30th, 2008 and included $6.3 million from the acquisition of M.S. Kennedy and Unicircuit. Days sales outstanding were the best of the year at 51 days, down 10 days from June 30th last year.

Inventories were $35.3 million at June 30th, 2009, down 10% last quarter at up 25% compared to $27 million at June 30th, 2008, due to the acquisitions of M.S. Kennedy and Unicircuit, which added $12.9 million in inventory.

Larry Sala

Thanks, George. For the first quarter of fiscal 2010, we expect comparable sales for the Wireless Group and a decline in sales in the Space and Defense Group from our just completed fourth quarter. As a result, we expect net sales to be in the range of $40 million to $43 million.

We expect GAAP net earnings per diluted share to be in the range of $0.15 to $0.20 using an anticipated tax rate of 32% and accounting for approximately $0.05 to $0.06 per share in charges related to expected stock-based compensation and amortization of acquired intangibles related to the acquisitions.

Non-GAAP net earnings per diluted share are expected to be in the range of $0.21 to $0.25 for the first quarter.

We will now take questions.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) We will go first to Charles John with Piper Jaffray.

Charles John - Piper Jaffray

Hi, Larry and George.

Larry Sala

Hi.

George Blanton

Hi, Charles. How are you?

Charles John - Piper Jaffray

Good. Thanks for taking my questions. So firstly on the infrastructure side, we have seen lower than expected numbers to some of the other – some other guys out there and one of the key reasons they've talked about is just overall inventory draw downs by some of the larger OEMs like Nokia, Siemens, and Ericsson. So maybe you can just talk about the inventory levels in general and what’s your discussions with some of the other OEMs have been like?

Larry Sala

Sure, we’ve been looking very hard at that, and we agree there was extensive buying back in the late February-March timeframe, and then there was a big delivery push outs through out the last quarter.

And we are now seeing, we would say in the last few weeks, the last couple of weeks especially, strengthening demand in the last – second half of the year here, so forecasts have strengthened, pulling in a lot of those deliveries, and we would expect over the next couple of weeks to start to see a need to order again based on the pull-ins of deliveries that we have seen in the last few weeks.

So, yes, we are very true, orders for the last quarter were very weak because our customers had significant inventory as well as significant orders on the books with us already relative to what they were taking in shipments.

Charles John - Piper Jaffray

So Larry, just in terms, does the confidence level for the guidance for the next quarter, if you had a put any metrics around just the risks to be upside or downside, can you just walk us through your thought process there?

Larry Sala

Yes, I mean, we have narrowed up the range, because we are reporting farther into the quarter than when it’s not year end for us. From a risk standpoint, we feel fairly comfortable about our Wireless projections and the potential for some positive impact from there. We see strength in our consumer component demand; we see strength in our standard component demand forecast. And in general, see I guess a little more positive trends and forecast getting strong from our bigger customers.

On the Space and Defense side though, I would say we feel a little weaker in our forecast than typical for us. We’ve got a hold this quarter because of the IED business orders that we expect to receive this quarter that have caused a quarter gap in that production program. And we have a number of new production programs which we talked about for some time that a transition from development into production for us in the next quarter, and so those are ramping up and we are not obviously had as much experience and our confidence in our ability to shift.

So the orders are there, the demand is there, but it’s a little more challenging for us than typical in our Space and Defense Group, because of the fact that they are new programs and not fully vetted out and into full volume and production rates yet.

Charles John - Piper Jaffray

And then, for then maybe for overall for next year, if you could just barge through your year-over-year – just the growth rates for the infrastructure and the Space and Defense. I know it’s too early to talk about year-over-year growth rates, but if you could just kind of put some metrics on that and help us understand what your ramps are going to be both for the infrastructure and the Space and Defense, that would be helpful?

Larry Sala

Yes, I mean it’s very difficult for us to give year-over-year forecast for our Wireless business. We feel like we are holding on to the design-ins that we have and we are gaining share on expanded component side, the customer assembly side, is competing quarterly these days as far as our allocations go.

So we feel like, I guess, generally good about our product road maps and content opportunities increasing for our standard components as we discussed a little bit on – in our presentation. But in general, I would say, we feel like there is opportunity for that business to grow, but don’t have as good a feel for what overall demand is going to do.

On the Space and Defense side, we expect another year of good growth in that business. The first half of the year – we won’t see too much growth because of the fact that we are having this gap in the IED business in the first quarter.

Overall, our expectations are we can grow this business. I think our early forecast up something on the order of total of maybe 7%, 8% next year over this past year with, like I said, potential on the Wireless side to either be stronger than that or weaker than that based on how base line demand goes. But because of that, Wireless business, we are never comfortable giving a year forecast in our business, it’s just too much is out of our control.

Charles John - Piper Jaffray

Okay, great. And then, George, maybe one for you. Just on the cash transition front sounded like, I guess, ending this year, you are at about $28 million in cash from operations. For the next year, have you guys got any internal targets and can we expect similar levels for the next year or due to the ramp in your Space and Defense, it might be slightly lower?

George Blanton

Yes we go into FY ’10 with a good momentum from FY ’09. We think we can come near those levels. Again, the opportunity is there. We certainly had really good collections. We had great cooperation within the company and our customers. And we had a strong decline in our inventories in Q4. We still have some more work to do with our inventories and we think there is opportunity for cash flow there. So we see a good cash generating year in FY ’10 also.

Charles John - Piper Jaffray

Okay. Great. That’s it from me. Thanks guys.

Larry Sala

Thank you.

Operator

(Operator instructions) We will go next to Rich Valera with Needham & Company.

Rich Valera - Needham & Company

Thanks. Good afternoon, gentlemen. Larry, I was wondering if you can give us a little bit color on the IED order you’re expecting, and if you can say anything about the size, and if you think the run rate will be similar to your prior run rate, and do you expect to have a full quarter of that I guess in the December quarter.

Larry Sala

I will tell you just what we know. What we know is that we are hearing from the marketplace, I guess, generally high confidence that our customer will be awarded this contract some time in the very near future. But that’s not a fact until that happens. So there is at risk out there. Assuming that’s the case, we would expect orders quite shortly and that our production will begin in the September quarter.

From an overall size standpoint, that’s difficult to for us to say. But we heard nothing that would lead us to believe that it would not be a relatively the same volume of what we produced when we had built the originals, parts for the original systems. So from that standpoint, we said originally it would be about 20 set dollar value of contract something total on the order of magnitude of maybe $20 million of total business to us and our expectations there haven’t changed at all.

As far as how much we can get into the second quarter, obviously, we can ramp up very quickly. We don’t have a great perspective on our customers’ ability to ramp up, but obviously, they knew our parts before they can ramp up systems. So I would say, with confidence maybe 60% of what we were producing quarterly is reasonable if we had turned on before the quarter begins, but we will be doing everything we can do and probably be asked to do everything we can do to ramp up as fast as we can.

So the expectation is, yes, once everybody is back up and running we will be back to those types of rates. Whether we get there in the second quarter is may or may not happen, but certainly, shortly after we’ve received that order, we will ramping up as fast as we can.

Rich Valera - Needham & Company

Great. And then when we look maybe beyond December quarter into the second half of the fiscal year, should we be thinking of overall Defense run rate similar to what you did in the fourth quarter of this year or the past year?

Larry Sala

Yes, and it’s not just IED related, as I said, we have got a number of new programs that began ramping up last quarter, continuing to ramp up this quarter, and will drive that revenue growth. But yes, we expect to see strong a performance again next year from our Space and Defense Group.

Rich Valera - Needham & Company

Right. Could we see that in the back half maybe getting above those 4Q levels approaching, say $30 million or is that getting too ambitious here?

Larry Sala

I am looking right now at what our latest forecasts are. And based on early plans in the second half of the year, we get back up to comparable levels to what we shipped last quarter, maybe a little over that by the end of the year.

Rich Valera - Needham & Company

Okay. That’s very helpful. And then on the Wireless side, just quickly, what was the consumer business in the quarter?

Larry Sala

Consumer business in this quarter was $1.2 million.

Rich Valera - Needham & Company

And can you give us a little more color on the dynamics of that business? You have had promising design wins there for quite a while and I guess we are looking for – kind of looking for a ramp and how do you view that business for this fiscal year?

Larry Sala

We are viewing the business actually very positively for this fiscal year. We had light orders last quarter, largely driven by weakness from the satellite L&B marketplace in general. But that’s picked up significantly in the last month. So it’s seems like we are going to see a typical positive seasonal cycle of orders this quarter into next for that strong holiday build that we typically see from that segment.

On the other side, we are seeing just a continuing flow of new design wins predominantly for modules for wireless LAN – combo kind of Bluetooth wireless LAN applications for PDA applications for the most part. And we have got a good and robust pipeline and new products coming in.

So we are a seeing a probably a – we are certainly – July is any indication, July is by far our strongest order amount for CCG in our history and looks promising for the visibility that we have. So now we think we are going to finally see that business getting to the kind of revenue contribution that we’ve been talking about and start to move towards in excess of $2 million a quarter for us hopefully over the next couple of quarters.

Rich Valera - Needham & Company

Okay, that’s helpful. And in terms of gross margin, you’re obviously guiding for a pretty significant downtick there and I assume it’s a bit volume related, but it seems like it’s significantly more than. Can you maybe talk about what’s driving the downward move in gross margin sequentially and should that maybe bounce back when you get more of a contribution from IED or some other maybe factors?

Larry Sala

I think part of it is just our caution of declining revenue, so that's always a challenge for us to predict the impact on our gross margins as well as IED being a reasonable margin piece of business for us out of the mix. I would say those are the two bigger factors in our assessment of trying to predict our gross margins.

Rich Valera - Needham & Company

So when we look beyond the September quarter getting back to sort of a similar run rate from the Defense side and getting IED back in the mix, presumably we would see some nice pickup there again.

Larry Sala

Yes, I mean there was no unique driving our margins last quarter, and we had a good mix, it wasn’t off the charts relative to what we would expect the mix to be with the rebound in IED business.

George Blanton

And our cost reduction efforts are continuing, and we think we will see continued improvement there to help out with the margins.

Rich Valera - Needham & Company

Okay, that’s helpful. Thank you. I will get back in the queue. Thanks guys.

Larry Sala

Yes.

Operator

(Operator instructions) We will go next to Chris McDonald with Kennedy Capital.

Chris McDonald - Kennedy Capital

Hi, thanks for taking my question. I just wanted to get a little more insight from you Larry on the Xinger product and you mentioned share gain opportunities there. Maybe you can just provide some perspective on the opportunity in the Xinger-III and then just high level kind of the overall opportunity to grow the standard components business here over the next year or two.

Larry Sala

Sure. Our Xinger product line is predominantly used in call amplifiers in cellular base stations and we’ve always had very broad penetration and clearly high saturation of the marketplace with our high market share.

With the introduction of our Xinger-III product line, we gained the opportunity because of the improvement in size, the reduction in size and the improvement in performance to capture some additional slots inside of our amplifier applications where we didn’t participate before. It’s largely because of our low – small-time low cost in the high performance.

But in addition to that, amplifier architectures have matured the linearization techniques that people use and the way they build their amplifiers had given us opportunities to design new variations of our Xingers to fulfill these – some of these new requirements that they have, so that’s a driver as well. So these are functions that we can build in Xinger products that perform better in other ways that our customer can implement them in our amplifier.

So Xinger-III product line will be broader and will have some of these other types of components that didn’t exist in our Xinger-II product line and weren’t required based on the architectures of the previous generations of amplifiers.

And then lastly, we are seeing in the latest generation of amplifiers, people moving to – our customers moving to lower cost circuit board materials that have inferior microwave performance characteristics. So the boards are of a much lower cost, but it opens up the opportunity for us again to offer more functionality in our Xinger product line to pick up areas where they used to able to embed the functions in the printed circuit board and now need to buy a higher performance component like our Xinger product to be able to offset the core performance that they now have in the circuit board material that they are using. So it’s more cost effective overall for them, but it gives us more opportunity.

In summary, our guess is probably incremental market opportunity for us that maybe is much as 50% or more of content opportunity in these amplifiers than what we have been seeing in the last few years. So it’s significant for us. But it’s a bunch of different factors that is kind of creating that opportunity.

Chris McDonald - Kennedy Capital

But, when I look at the timeline for that further penetration of Xinger into those different applications to those functions, just help me understand how quickly the evolution towards that might happen?

Larry Sala

We say, typically, it would be over the course of the next six months, so these products several of our bigger customers who we’re typically in more advanced stages with. Their amplifiers are designed, our products are in there, and they are going to qualifications and getting ready to ramp things up. So we say, within six months, we should start to see some meaningful impacts from it.

Chris McDonald - Kennedy Capital

Okay. And then just to help calibrate that, the Xinger product, I know in the past I think standard components are somewhere in the area of maybe 60% of Wireless revenue that’s nearly all Xinger, right?

Larry Sala

A good percentage. Between Xinger and CCT, that’s a large part of it. We also have our register product line that we account for in there as well. But Xinger and consumer make up a big part of it.

Chris McDonald - Kennedy Capital

Okay. Thanks. And then just quickly, you mentioned some of the programs that on the Space and Defense side that are in transition from development to production and then – as it relates to the September quarter, how does that typically impact the margin profile. I would imagine they’re these product start out with lower gross margins than as the ramp whose forwarding as the company gains confidence in the production process that it would improve, am I thinking about that the right way?

Larry Sala

Yes, I definitely think if it has any impact, it has a negative impact on margins. So we would expect margins in the Group to certainly be more challenged this quarter than they were last quarter, both because the IED businesses are more predictable and decent margin product as well as the fact that these are the programs that are ramping.

I was expressing it from the standpoint of its – it’s also more challenging for us to be able to predict our ability to get things out the door both for our own ability to ramp up this production and get through issues and ship products. And often times our customer is also ramping and may have issues and challenges that inhibit us from being able to ship as well. So there is little more out of our control and would be typical for our Space and Defense Group.

Chris McDonald - Kennedy Capital

Okay, great. Thank you very much.

Larry Sala

Yes.

Operator

We will go next to Rich Valera with Needham & Company.

Rich Valera - Needham & Company

Thank you. I was wondering if you could provide the OpEx by line item break down for the pro forma numbers, either how the option expense and amortization breakout by line item or just a pro forma items themselves by OpEx line item.

George Blanton

For the quarter.

Rich Valera - Needham & Company

Yes.

George Blanton

$251,000 in cost of sales, $72,000 in marketing, a $154,000 in R&D, and $800,000 in G&A. A total of $1.2 million -- $1.277 million.

Rich Valera - Needham & Company

Okay. And the amortization.

George Blanton

That’s the total of both.

Rich Valera - Needham & Company

It’s the total of both, okay, very good. Thank you.

George Blanton

Amortization in that total was $259,000 – or $298,000 (inaudible) was in G&A and $979,000 of stock-based comp.

Rich Valera - Needham & Company

Great. And just circling back to the Defense and Space programs that are ramping Larry, is there any color you can give on the new programs you are referring to that that will be ramping?

Larry Sala

We were a little hesitant to start too much. We started our EQ-36 program that certainly continues to ramp up for us and be a bigger contributor. And we are also had multiple subsystems on that overall in EQ-36 systems, some of which are ramping up at different timeframes. So we have got some we are just trying to getting to get qualified for now to increase our content on that platform. And so that’s one.

We have another airborne radar contract that we won last quarter. It’s about a $7 million program for us or so, and it’s a similar type of radar feed technology that we provide to these big ground based radar applications. Another one is a system, a ship borne receiver, a gun system that we have captured a part of –

Rich Valera - Needham & Company

It’s a Failinx.

Larry Sala

Yes, it’s part of the Failinx system. And so that’s one that’s brand new for us. We started ramping last quarter, but we look at that as being a very significant long-term contract for us that should be a good 10-year significant tens of million dollar program for us over the next probably decade. So those are some of the bigger ones.

There is also small ship borne radar that we won a few million dollar contract for building similar types of radar subsystems for that we are ramping for now, so there is a number of them that are causing the complications or at least the transition to some of the new projects.

Rich Valera - Needham & Company

Any signs of maybe more order activity on the FAD [ph] program? That obviously got a favorable mention and gate [ph] for this reprioritization. Have you seen any signs of any potential orders there?

Larry Sala

We have not. In fact we have been hearing possibilities about filling for (inaudible), that’s actually one program that we completed all of our outstanding orders for last quarter and don’t currently have plans for that to start back up again till maybe the second half of this fiscal year or even a little later than that.

So no, I mean there is a number of programs that we participate on, AHF [ph], FAD, the Joint Strike Fighter that are getting fairly favorable support in press, but we have not seen orders or the possibility of near-term orders from any of that.

Rich Valera - Needham & Company

Okay. That’s helpful. Thanks very much, guys.

Larry Sala

Yes.

Operator

We will go next to Chris McDonald with Kennedy Capital.

Chris McDonald - Kennedy Capital

Hi, I just wanted a see if I could get an update on the progress as it relates to the expansion of capabilities at M.S. Kennedy.

Larry Sala

Sure. And we have got all the equipments in place, it’s up and running, it’s being used in production. So from a capability standpoint, that’s pretty much completed I believe.

From a capturing business standpoint with that capability, we have built hardware that we have shipped to at least one customer, one of the large airborne radar customers that we have potential with successfully. And we hope that over the course of the first half of this year fiscal year, we are going to compete for development to be a production supplier to that customer. So it’s moving along, I would say, at or ahead of our expectations.

Chris McDonald - Kennedy Capital

Okay, fantastic. And then, just one more quick one back to the thought process around the expanding utilization of the Xinger product. When I think about that as it relates to Wireless margins, the extent that standard components grow as a percentage of the total Wireless pie, that ought to have a favorable gross margin impact, correct?

Larry Sala

Yes, absolutely. And we have seen some of that benefit obviously this year. As the Wireless didn’t grow a lot for us this year, we did see a shift in mix in that business. There are some of these large custom sub-assembly contracts are a much smaller portion of our revenue in the standard components for Xingers and CCG.

Our consumer components is driving a biggest percentage of our revenue had a very positive impact on our margins this year. So yes, we would expect if that trend continues, we will continue to see the benefit in our profitability.

Chris McDonald - Kennedy Capital

Thanks a lot.

Larry Sala

Yes.

Operator

And there are no further questions at this time. I would like to turn the conference back to our speakers for any closing remarks.

Larry Sala

We greatly appreciate your participation and we look forward to speaking with you again next quarter.

Operator

Thank you every one. That does conclude today’s conference. We thank you for your participation.

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Source: Anaren, Inc. F4Q09 (Qtr End 6/30/09) Earnings Call Transcript
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