Gerber Scientific, Inc. Reports Fiscal 2010 Third Quarter Results
SOUTH WINDSOR, Conn., March 4 /PRNewswire-FirstCall/ -- Gerber Scientific, Inc. (NYSE: GRB) today reported revenue and earnings results for its fiscal 2010 third quarter ended January 31, 2010.
Summary of Results from Continuing Operations for FY 2010 Third Quarter versus FY 2009 Third Quarter
- Reported revenue increased 4.2% to $110.7 million from $106.2 million. The effects of favorable currency exchange increased revenue by approximately $8.5 million, or 8.0%, as compared with the prior year;
- Gross profit was $32.9 million or 29.7% of sales versus $32.2 million or 30.3% of sales. Gross profit and margin in the current quarter were impacted by lower manufacturing cost absorption and a less favorable sales mix, which was moderated by a $2.9 million benefit from favorable currency exchange. Gross profit and margin in the year ago third quarter included severance charges of $0.4 million;
- Selling, general and administrative (SG&A) expenses were $27.3 million, or 24.6% of sales, compared with $27.1 million, or 25.5% of sales. Current quarter SG&A expenses, net of a $1.7 million increase due to currency exchange, were down $1.6 million;
- Operating loss was $0.2 million compared to operating income of $0.2 million in the prior year third quarter. On a currency adjusted basis, the operating loss was $1.4 million, due primarily to restructuring and other charges of $1.2 million, which included $0.5 million of transaction expenses associated with the Yunique Solutions acquisition and $0.7 million of severance related to cost reduction initiatives;
- Loss from continuing operations was $0.8 million, or $0.03 per diluted share, compared to a loss of $1.3 million, or $0.05 per diluted share last year in the third quarter. The lower loss reflects the absence of a $2.3 million non-cash write down of investments in our Supplemental Retirement Plan incurred last year, offset by a $0.5 million decline in operating profit, a reduced tax benefit of $0.6 million, and a $0.7 million increase in interest expense. The increase in interest expense included a $0.4 million non-cash write-off of deferred financing fees. The net loss for the current quarter was $0.8 million, or $0.03 per diluted share, compared with a net loss of $2.2 million, or $0.09 per diluted share last year;
- Net cash flows from operations, less capital expenditures, was $2.5 million, compared with $1.8 million in the prior year, due principally to lower working capital requirements in the current quarter;
- Total outstanding debt was reduced by $6.0 million in the current quarter to $45 million. Total debt has been reduced by $28.5 million since the Company's April 30, 2009 fiscal year end.
"We were pleased with our performance during this fiscal third quarter," said Marc Giles, Gerber Scientific President and Chief Executive Officer. "Since our fiscal 2009 year end, we have reduced our debt by $28.5 million to $45.0 million through tight cost and working capital management and the sales of certain non-core businesses. Though recovery in our US markets continues to progress slowly, our European markets remain stable and we continue to see solid improvement in our Asian markets and remain optimistic about our prospects there."
Outlook and Guidance
"We began our fiscal fourth quarter with the highest backlog level we've seen since the fiscal second quarter of 2009," said Mr. Giles. "We continue to see several encouraging signs including increased quote activity overall for systems, especially from our Asian markets, which is an important growth market for us. We expect the fourth quarter to follow its historical seasonality and to be stronger on a sequential quarterly basis as well as ahead of last year. However, we do anticipate we will incur additional restructuring charges in the fourth quarter as a result of our ongoing efforts to reduce our permanent cost structure and will continue to tightly manage expenses. We are confident that we will be able to leverage our improved cost structure to deliver higher earnings as the economy and our markets rebound."
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 1242962 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 and packaging, apparel and flexible materials, 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.
Cautionary Note Concerning Factors That May Affect Future Results
This news release contains "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. Statements contained in this news release regarding the Company's expected financial condition, results of operations, cash flows, product launches and cost reductions are forward-looking statements that involve risks and uncertainties. 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 under the headings "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Concerning Factors That May Influence Future Results," as well as information included in subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which outline certain important risks regarding the Company's forward-looking statements. These risks include, but are not limited to, delays in the Company's new product development and commercialization, intense competition in markets for each of the Company's operating segments, rapid technological advances, availability and cost of raw materials, continued adverse economic and credit market conditions, volatility in foreign currency exchange rates and fluctuations in interest rates. Actual future results or events may differ materially from these forward-looking statements. The Company expressly disclaims any obligation to update any of these forward-looking statements, except as required by law.
GERBER SCIENTIFIC, INC.
SUMMARY OF OPERATIONS
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
In thousands, January 31, January 31,
except per ------------------- ----------------
share data 2010 2009 2010 2009
---- ---- ---- ----
Revenue:
Product sales $94,794 $88,752 $292,104 $341,702
Service sales 15,877 17,439 49,315 55,207
------ ------ ------ ------
110,671 106,191 341,419 396,909
Cost of Sales:
Cost of products
sold 67,618 63,674 211,048 247,298
Cost of services
sold 10,196 10,291 30,267 35,636
------ ------ ------ ------
77,814 73,965 241,315 282,934
Gross profit 32,857 32,226 100,104 113,975
Selling, general and
administrative
expenses 27,276 27,122 78,987 88,996
Research and
development 4,626 4,847 13,586 16,778
Restructuring and
other expenses 1,194 40 1,450 884
----- --- ----- ---
Operating (loss)
income (239) 217 6,081 7,317
Other income
(expense), net (126) (2,470) (1,525) (3,007)
Interest expense (1,374) (654) (3,234) (1,941)
------ ---- ------ ------
(Loss) Income from
continuing operations
before income taxes (1,739) (2,907) 1,322 2,369
Income tax benefit (981) (1,616) (996) (3,429)
---- ------ ---- ------
(Loss) Income from
continuing operations,
net of taxes (758) (1,291) 2,318 5,798
Loss from discontinued
operations, net
of taxes (51) (941) (2,154) (1,255)
--- ---- ------ ------
Net (loss) income $(809) $(2,232) $164 $4,543
----- ------- ---- ------
Basic (loss)
earnings per
common share:
Continuing
operations $(0.03) $(0.05) $0.09 $0.24
Discontinued
operations - (0.04) (0.08) (0.05)
--- ----- ----- -----
Basic (loss)
earnings per
common share $(0.03) $(0.09) $0.01 $0.19
------ ------ ----- -----
Diluted (loss)
earnings per
common share:
Continuing
operations $(0.03) $(0.05) $0.09 $0.24
Discontinued
operations - (0.04) (0.08) (0.05)
--- ----- ----- -----
Diluted (loss)
earnings per
common share $(0.03) $(0.09) $0.01 $0.19
------ ------ ----- -----
Weighted average
shares outstanding:
Basic 25,195 24,131 24,904 23,953
Diluted 25,195 24,131 24,936 24,064
------ ------ ------ ------
GERBER SCIENTIFIC, INC.
SUMMARY SEGMENT INFORMATION
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
January 31, January 31,
------------------- -------------------
In thousands 2010 2009 2010 2009
---- ---- ---- ----
Sign Making and
Specialty Graphics:
Gerber Scientific
Products $9,341 $11,938 $33,603 $45,457
Spandex 50,267 45,430 159,094 177,122
------ ------ ------- -------
Sign Making and
Specialty Graphics 59,608 57,368 192,697 222,579
Apparel and
Flexible Materials 40,095 36,437 112,249 130,768
Ophthalmic Lens
Processing 10,968 12,386 36,473 43,562
------ ------ ------ ------
Consolidated
revenue $110,671 $106,191 $341,419 $396,909
-------- -------- -------- --------
Sign Making and
Specialty Graphics:
Gerber Scientific
Products $(2,488) $334 $(4,950) $(881)
Spandex 2,730 704 9,255 6,832
----- --- ----- -----
Sign Making and
Specialty Graphics 242 1,038 4,305 5,951
Apparel and
Flexible Materials 4,140 2,778 11,597 11,373
Ophthalmic Lens
Processing (318) 737 2,002 2,625
---- --- ----- -----
Segment operating
income 4,064 4,553 17,904 19,949
Corporate operating
expenses (4,303) (4,336) (11,823) (12,632)
------ ------ ------- -------
Consolidated
operating (loss)
income $(239) $217 $6,081 $7,317
----- --- ------ ------
GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – REVENUE BY PRODUCT TYPE
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
January 31, January 31,
------------------- -------------------
In thousands 2010 2009 2010 2009
---- ---- ---- ----
Equipment and
software revenue $30,523 $30,501 $86,252 $115,484
Aftermarket
supplies revenue 64,271 58,251 205,852 226,218
Service revenue 15,877 17,439 49,315 55,207
------ ------ ------ ------
Consolidated
revenue $110,671 $106,191 $341,419 $396,909
-------- -------- -------- --------
GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – KEY OPERATING RATIOS
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
January 31, January 31,
--------------------- ---------------
2010 2009 2010 2009
---- ---- ---- ----
Gross margin 29.7% 30.3% 29.3% 28.7%
Operating margin (0.2%) 0.2% 1.8% 1.8%
---- --- --- ---
GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – FINANCIAL POSITION
(Unaudited)
January 31, April 30,
In thousands, except ratio data 2010 2009
---- ----
Cash and cash equivalents $7,921 $10,313
Working capital $77,267 $92,839
Total debt $45,000 $73,500
Net debt (total debt less
cash and cash equivalents) $37,079 $63,187
Shareholders' equity $163,642 $148,302
Total capital (net debt
plus shareholders' equity) $200,721 $211,489
Current ratio 1.90:1 2.02:1
Net debt-to-total capital ratio 18.5% 29.9%
---- ----
GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – CASH FLOWS
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
January 31, January 31,
----------------- ---------------
In thousands 2010 2009 2010 2009
---- ---- ---- ----
Net cash provided by
operating activities $3,724 $3,377 $19,478 $6,318
Net cash (used for)
provided by
investing activities $(3,200) $(478) $5,299 $(38,559)
Net cash (used for)
provided by
financing activities $(6,206) $(9,009) $(28,256) $32,628
Depreciation and
amortization $2,106 $2,721 $7,250 $7,547
Capital expenditures $1,239 $1,550 $3,231 $6,471
------ ------ ------ ------
GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – ORDERS BY GEOGRAPHIC LOCATION
(Unaudited)
For the Fiscal For the Nine
Quarters Ended Months Ended
January 31, January 31,
---------------------- -------------------
In thousands 2010 2009 2010 2009
---- ---- ---- ----
North America $29,734 $36,781 $98,032 $118,363
Europe 54,444 52,787 167,876 203,527
Rest of world 27,138 9,928 76,876 58,199
------ ----- ------ ------
Consolidated
orders $111,316 $99,496 $342,784 $380,089
-------- ------- -------- --------
SOURCE Gerber Scientific, Inc.
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