Electro Rent says its gear has 'reliable role' helping fight terrorism

'Electronic warfare, surveillance. These are areas where we have been playing a reliable role for a long time'

As a company that rents out sophisticated electronic testing equipment, Electro Rent Corp. benefited during the Reagan administration's military buildup in the 1980s. Now, the company views its job as helping combat the threat posed by terrorist attacks.

Its customers have included some of the nation's biggest aerospace and military contractors whose technicians need to run myriad tests during product development. Other customers are in the telecommunications, electronics, industrial and semiconductor markets.

Electro Rent Chief Executive Daniel Greenberg put it this way: "We now have to build a defense not against armies but against smaller groups. Electronic warfare, surveillance. These are areas where we have been playing a reliable role for a long time."

From its Van Nuys headquarters and offices around the world, the company presides over a line of more than 26,000 products, including computers, electrical and power testing machines, oscilloscopes and spectrum analyzers. More than 200 manufacturers are represented.

Part of the company's continuing work, Greenberg said in an interview, is "making sure the equipment is calibrated and recalibrated to government standards. We also do repairs, and we will do that a number of times over the course of a lease."

Electro Rent also refurbishes and sells testing equipment once leases have expired.

The company was founded in 1965 and acquired by Telecor Inc. in 1973 when it was posting about $3.5 million a year in sales in the then-obscure business of instrument rentals.

It was spun off from Telecor and went public in 1980. In addition to benefiting from increased military spending during the Reagan years, Electro Rent grew through acquisitions, including Genstar Rental Electronics Inc. in 1994 and GE Capital Technology Management Services' computer rental business in 1997. Now, the company thinks it has significant growth potential.

In its 2014 annual report, the company said: "In our judgment, rentals will become a more critical focus in the decision-making process, as the best, strongest and most productive companies will need to turn to rentals as one of their equipment procurement choices to avoid large upfront capital costs."

The latest

Electro Rent this month released its fiscal 2015 second-quarter results that showed revenues up slightly to $59.7 million from $57.9 million a year earlier. Net income fell to $4.8 million from $5.6 million.

"Business remained fairly constant for the second quarter, as revenues edged up," Greenberg said in a statement. "Sales of used equipment improved, and our international business grew slightly. Sales of new equipment improved for the second consecutive quarter, and our data products business generated low double-digit gains."

Accomplishments

Electro Rent is one of the biggest players in the testing equipment rental business.

"We paid $58.7 million for the purchase of equipment during fiscal 2014 compared to $64.1 million in the previous fiscal year," Greenberg said. "We returned $19.7 million to our shareholders during the year and fully repaid our outstanding debt, which had been $10 million."

Challenges

Economic downturns, especially those as severe as the recent global recession, will always affect its customers, Electro Rent said. So, too, will any new budget funding logjam between the Obama administration and the Republican-controlled Congress that results in a government shutdown.

Electro Rent operates in a market where "no single competitor holds a dominant market share in North America," and involves "intense competition" from a variety of rivals, the annual report said.

Analysts

The one analyst who follows the company rates it a strong buy. Sidoti analyst David Gold notes that the company is disciplined and has no debt.

ron.white@latimes.com

Twitter: @RonWLATimes

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