Business News
Gerber Scientific, Inc. Reports Fiscal 2009 Fourth Quarter and Full Year Results
Monday 29. June 2009 - Gerber Scientific, Inc. (NYSE:GRB) today reported revenue and earnings results for its fiscal fourth quarter and year ended April 30, 2009.
Summary of Results for FY 2009 Fourth Quarter versus FY 2008 Fourth Quarter
— Reported revenue declined 31% to $120.1 million from $173.7 million.
Core business was down 35.9% including the effects of currency
fluctuations, which decreased revenue $16.9 million, or 9.7%, while
acquisitions completed in the current fiscal year increased reported
revenue by $8.7 million, or 5.0%;
— Gross profit was $33.2 million or 27.7% of sales versus $51.2 million
or 29.5% of sales. The adverse impact of significantly lower sales
volume and unfavorable currency fluctuations more than offset the
incremental gross profit contribution from the recent acquisitions.
2008 gross profit and margin also benefited from $2.3 million of
patent license income;
— Selling, general and administrative (SG&A) expenses declined $6.8
million to $29.4 million, or 24.5% of sales, compared with $36.3
million, or 20.9% of sales. Current quarter SG&A expenses included
$3.1 million of expenses added by recent acquisitions while currency
fluctuations lowered SG&A costs by $3.3 million. The Company also
incurred a $0.5 million non-cash charge to freeze its pension plan and
an increase of $1.8 million in bad debt expense. SG&A expenses,
excluding the impact of these items, were reduced by $9.0 million
year-over-year in the fourth quarter. Additionally, although the
recent acquisitions increased R&D spending by $1.0 million;
consolidated R&D expenses were down $1.6 million;
— Operating loss was $1.3 million, or a (1.1%) operating margin,
compared with $8.2 million of operating income and an operating margin
of 4.7%. Operating results in the current quarter reflected the
significantly lower sales volume and related adverse margin impact;
— The net loss was $2.3 million or $0.10 per diluted share, compared
with net income of $6.1 million or $0.26 per diluted share. Current
quarter net loss included a pre-tax non-operating charge of $0.3
million from the write-off of capitalized debt financing costs related
to the Company’s credit facility amendment. Fourth quarter 2008
results benefited from a $1.3 million pre-tax gain on the sale of a
non-operating asset;
— Net cash flows from operations, less capital expenditures, totaled
$1.7 million versus $9.4 million. The Company recorded positive cash
flow in the quarter due to working capital improvements.
“The sharp global economic downturn that began in the last half of 2008 continued to severely impact our performance in the fiscal fourth quarter,” said Marc Giles, Gerber Scientific President and Chief Executive Officer. “Sales in the fourth quarter, normally our strongest quarter of the year, were essentially flat with the third quarter. The lack of any seasonal rebound indicates that conditions in the markets we serve continued to worsen. Facing this situation, we continued to make substantial progress in lowering our cost structure to combat the downturn, which resulted in the significant year-over-year spending reductions.”
“The decisive actions of our management team to rapidly lower our cost structure are allowing us to weather this unprecedented downturn. We will continue to diligently manage our costs while not diminishing our ability to respond to both our current customer requirements and new business opportunities as our markets rebound. We are intently focused on generating and preserving cash through working capital management and are currently considering several asset sales that could generate proceeds of up to $20 million, which would allow us to substantially improve our liquidity and flexibility under our existing credit facility.”
Outlook and Guidance
“The Company continues to experience delays in orders from its customers and overall weaker demand due to the global recession and depressed credit markets, which has limited our customers’ access to capital,” said Mr. Giles. “The continued volatility in the global economy and lack of market visibility makes it difficult to forecast our customers’ purchasing patterns with high certainty, and, as a result, our future performance. Therefore, until our markets stabilize and we gain better visibility, we will not provide sales and earnings guidance. Although we continue to be very cautious in our near term outlook, we have begun to see some encouraging signs in quote and order activity, which may indicate that we are near or at the bottom of the recessionary cycle. Nevertheless, while we believe our revenue level has stabilized, we do not expect to see any significant improvement in business conditions until the last half of our fiscal year 2010. Moreover, we believe that the strength of our product lines, our diversified business model and our more streamlined organization will allow us to return to a growth path quickly when our markets begin to rebound. In the mean time, we will continue to prudently manage all aspects of our business and remain focused on cash generation.”