Gerber Scientific, Inc. Reports Encouraging Fiscal 2010 Fourth Quarter and Full Year Results

SOUTH WINDSOR, Conn., June 22 /PRNewswire-FirstCall/ -- Gerber Scientific, Inc. (NYSE: GRB) today reported revenue and earnings results for its fiscal fourth quarter and year ended April 30, 2010.

Summary of Results for FY 2010 Fourth Quarter versus FY 2009 Fourth Quarter

• Reported revenue increased 13.7% to $121.2 million from $106.6 million. The effects of favorable currency exchange increased revenue by approximately $6.8 million, or 6.4%;
• Gross profit was $35.3 million or 29.1% of sales versus $30.5 million or 28.6% of sales. Gross profit and margin in the current quarter benefitted from improved sales volume and $2.4 million of favorable currency exchange;
• Selling, general and administrative (SG&A) expenses were $28.0 million, or 23.1% of sales, compared with $26.1 million, or 24.5% of sales. The increase in SG&A was due to $1.3 million in exchange rate fluctuations and the absence of approximately $1.5 million of temporary cost reductions that were in place during the prior year fourth quarter, which was partially offset by lower spending and certain tax contingency adjustments;
• Operating income was $1.1 million compared to an operating loss of $0.3 million. Current quarter operating income was negatively impacted by $1.2 million of restructuring and other expenses, versus $0.3 million last year. On a currency adjusted basis, operating income was $0.1 million;
• Loss from continuing operations was $1.1 million, or $0.04 per diluted share, compared to a loss of $0.9 million, or $0.04 per diluted share last year in the fourth quarter. Net loss for the current quarter was $1.6 million, or $0.06 per diluted share, compared with a net loss of $2.3 million, or $0.09 per diluted share last year; the loss reflects a decrease of $0.3 million in interest expense due to a $0.3 million charge in connection with a debt refinancing recorded last year, higher operating income of $1.4 million, offset by income tax expense of $1.5 million this year in the fourth quarter, versus a tax benefit of $0.5 million last year in the fourth quarter, due primarily to foreign tax provision adjustments;
• Net cash flows from operations, less capital expenditures, increased $2.7 million to $4.4 million, from $1.7 million in the prior year, due principally to effective working capital management;
• Total outstanding debt was $45 million. Total debt has been reduced by $28.5 million since the Company's April 30, 2009 fiscal year end.

"Both the sequential and year-over-year improvement in our key financial metrics for the fiscal fourth quarter gives us continued optimism that we've turned the corner on the depressed economic cycle that has challenged us for the past year and a half," said Marc Giles, Gerber Scientific President and Chief Executive Officer. "On a currency adjusted basis, fourth quarter revenue year-over-year was up seven percent and up 14 percent on a sequential quarterly basis, reflecting higher demand for equipment, software and aftermarket products. In addition, due to our continued focus on manufacturing cost controls and working capital improvements, our gross margin was up 50 basis points year-over-year in the fourth quarter, or 10 basis points on a currency adjusted basis. Moreover, our total inventory was down an additional $7 million from our fiscal third quarter and we more than doubled our cash flow from operations, less capital expenditures, year-over-year in the fourth quarter.

Outlook and Guidance

"Overall, we are encouraged by our fiscal fourth quarter performance and by current business and market indicators," said Mr. Giles. "Orders in our fiscal fourth quarter and our order backlog at year end were both at their highest levels since the fiscal 2009 second quarter.  Market demand appears to be on the rise as we are seeing increased quote and order activity across most of our business lines.

In the Apparel and Industrial segment, fourth quarter revenues were the highest we've recorded since our fiscal 2009 second quarter. The segment is reporting increased quote and order activity across several product lines and geographic regions – especially from China and Brazil. Equally gratifying, Yunique Solutions, a small software unit we acquired last November, has added seven new customers since our closing of the transaction. Gerber Coburn, our Ophthalmic Lens Processing unit, which has been challenged by weak market conditions in the U.S. retail eyewear industry, recently attended an annual industry conference during which they booked their highest level of orders compared to the previous four conferences. While demand from the markets served by our Sign Making and Specialty Graphics segment remains uneven, Spandex aftermarket sales, on a constant currency basis, were up for the first time since mid fiscal 2009 and sequential quarterly sales at Gerber Scientific Products were up 24 percent in the fourth quarter. All of these indicators give us more comfort that we're on the path to recovery."

Giles further commented, "We continue to execute on our strategy to streamline our global operations and reduce our permanent cost structure, and recently announced a consolidation of certain U.S. production facilities in the Northeast. While that means we are incurring charges associated with the restructurings, the longer term benefit will be a substantially improved cost structure that will allow us to, if current market trends continue, deliver higher earnings."

Quarterly Conference Call

Gerber Scientific's quarterly earnings conference is scheduled for today at 10:00 a.m. ET.  Please dial 719.325.4794 and provide the operator with confirmation code 9353340 to participate in the call in a listen only mode. The Company will also provide a live webcast of the call which may be accessed through the Company's website (www.gerberscientific.com).  A webcast replay of the call will also be available for ninety days, as well as a conference call transcription, which will be available three business days after the conference call, on the Company's website under the Investor Relations tab.

About Gerber Scientific, Inc.

Gerber Scientific, Inc. (http://www.gerberscientific.com) is a leading international supplier of sophisticated automated manufacturing systems for the sign making, specialty graphics, packaging, apparel, industrial, and ophthalmic lens processing industries.  Headquartered in South Windsor, Connecticut, the Company operates through four primary businesses:  Gerber Scientific Products, Spandex, Gerber Technology and Gerber Coburn.

Forward-looking Statements

Any statements in this news release not relating to historical matters are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements contained in this news release involve risks and uncertainties regarding the Company's expected financial condition, results of operations and cash flows. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, readers are referred to the Company's filings with the Securities and Exchange Commission, including but not limited to, the information included in Gerber Scientific's Annual Report on Form 10-K for the fiscal year ended April 30, 2009, which outlines certain important risks regarding the Company's forward-looking statements, as well as information included in subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Actual future results or events may differ materially from these forward-looking statements. The forward-looking statements contained in this release are made as of the date of this release and the Company expressly disclaims any obligation to update any of these forward-looking statements, except as required by law.

SOURCE Gerber Scientific Inc.