SOUTH WINDSOR, Conn., Aug. 27 /PRNewswire-FirstCall/ -- Gerber
Scientific, Inc. (NYSE:GRB) today reported revenue and earnings
results for its fiscal 2010 first quarter ended July 31, 2009. In
accordance with U.S. generally accepted accounting principles, FOBA
Technology + Services GmbH ("FOBA") has been reflected as a
discontinued operation for all periods reported. The sale of FOBA
was announced by the Company on August 3, 2009 and is expected to
close in early September. FOBA was acquired in October 2008 as part
of the acquisition of Virtek Vision International, Inc. Summary of
Results from Continuing Operations for FY 2010 First Quarter versus
FY 2009 First Quarter -- Reported revenue declined 24.6% to $119.7
million from $158.9 million. Core business was down 27% including
the effects of currency fluctuations, which decreased revenue $11.6
million, or 7.3%, while acquisitions completed after the fiscal
2009 first quarter increased reported revenue by $3.8 million, or
2.4%; -- Gross profit was $33.6 million or 28.1% of sales versus
$42.0 million or 26.5% of sales. The adverse impact of
significantly lower sales volume and unfavorable currency
fluctuations was moderated by the ongoing benefit from cost
reduction and efficiency measures initiated during fiscal 2009; --
Selling, general and administrative (SG&A) expenses declined
$8.8 million to $25.4 million, or 21.2% of sales, compared with
$34.2 million, or 21.5% of sales. Current quarter SG&A expenses
included $1.1 million of expenses from the recent acquisitions
while currency fluctuations lowered SG&A by $2.2 million.
SG&A expenses, excluding the impact of these items, were
reduced by $7.7 million year-over-year in the first quarter due to
expense reduction initiatives. Additionally, while R&D spending
included $0.4 million from the recent acquisitions, consolidated
R&D expenses were down $1.8 million; -- Operating income was
$3.8 million, or a 3.2% operating margin, compared with $1.6
million of operating income and an operating margin of 1.0%.
Operating results in the current quarter reflected a gross profit
margin improvement of 160 basis points and the positive benefit of
lower SG&A expenses, moderated by the impact of significantly
lower sales volume; -- Income from continuing operations was $1.3
million or $0.05 per diluted share in the current quarter, compared
with $0.7 million or $0.03 per diluted share in the same period of
last year; -- Net income was $0.5 million or $0.02 per diluted
share in the current quarter, compared with $0.7 million or $0.03
per diluted share. Current quarter net income included the loss
from discontinued operations, net of tax, of $0.8 million, or $0.03
per diluted share; -- Net cash flows from operations, less capital
expenditures, totaled $13.3 million versus cash usage, net of
capital expenditures, of $7.2 million, or a positive swing of $20.5
million, due principally to effective working capital management
and lower operating expenses; -- Total outstanding debt was reduced
by $13 million from fiscal 2009 year end to $60.5 million. "While
we continued to experience weakness across most of our markets, as
evidenced by the 17% constant currency sales decline in our first
quarter, we were pleased to report increases in our gross profit
margin, operating income and income from continuing operations -
which is directly related to the measures we implemented in fiscal
2009 to lower costs and improve operating efficiencies," said Marc
Giles, Gerber Scientific President and Chief Executive Officer.
"These measures, combined with strong working capital management
and a heightened focus on cash generation, resulted in a
year-over-year improvement of more than $20 million in operating
cash flow, less capital expenditures, and allowed us to reduce our
total debt by $13 million." Mr. Giles continued, "As we reported
last quarter, we have also been reviewing several potential asset
sales that could generate proceeds of up to $20 million, which
would allow us to further reduce our outstanding debt and increase
our flexibility under the existing credit facility. To that end, we
recently announced we have reached an agreement to sell FOBA
Technology + Services GmbH. We are pleased to report that we just
received clearance from the German Cartel Office and expect to
close the transaction next week, which will generate approximately
$8.0-$8.5 million in net cash proceeds." Outlook and Guidance
"While weak demand has persisted across most of the markets we
serve due to the continued uncertainty about when the economic
recovery will begin, we are seeing some encouraging signs of
improved activity in this difficult economic cycle," said Mr.
Giles. "Although capital equipment sales remain very unpredictable,
sequential aftermarket revenue has improved noticeably indicating
increased equipment use - and a positive sign regarding the
recovery in our markets. Furthermore, quote and order activity has
improved, but it is still difficult to close transactions due to
the lack of credit availability and economic uncertainty. As a
result, we don't expect to see any measurable improvement in our
top line until the last half of fiscal 2010. Nevertheless, we do
believe our revenue level has stabilized, as substantiated by
essentially flat sequential sales performance from the fiscal 2009
fourth quarter, and expect to be back on track to deliver improved
earnings performance in the last half of the fiscal year. Until we
gain more traction in our markets, we will remain focused on
prudently managing our business and generating cash to improve our
liquidity and balance sheet to position the Company to rebound as
the recovery begins. " Quarterly Conference Call Gerber
Scientific's quarterly earnings conference is scheduled for today
at 10:00 a.m. EDT. Please dial 719-325-4834 and provide the
operator with confirmation code 4462326 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
(http://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 Quarters Ended July 31,
----------------------------- In thousands, except per share data
2009 2008 -------- -------- Revenue: Product sales $102,774
$139,807 Service sales 16,928 19,051 -------- -------- 119,702
158,858 Costs of Sales: Cost of products sold 76,073 103,594 Cost
of services sold 9,988 13,220 -------- -------- 86,061 116,814
Gross profit 33,641 42,044 Selling, general and administrative
expenses 25,422 34,211 Research and development 4,428 6,233
-------- -------- Operating income 3,791 1,600 Other income
(expense), net (945) (128) Interest expense (1,017) (614) --------
-------- Income from continuing operations before income taxes
1,829 858 Income tax expense 488 177 -------- -------- Income from
continuing operations 1,341 681 Loss from discontinued operations,
net of tax benefit of $49 (827) --- -------- -------- Net income
$514 $681 -------- -------- Basic earnings (loss) per common share:
Continuing operations $0.05 $0.03 Discontinued operations (0.03)
--- -------- -------- Basic earnings per common share $0.02 $0.03
-------- -------- Diluted earnings (loss) per common share:
Continuing operations $0.05 $0.03 Discontinued operations (0.03)
--- -------- -------- Diluted earnings per common share $0.02 $0.03
-------- -------- Weighted Average Common Shares Outstanding: Basic
24,611 23,766 Diluted 24,612 24,026 -------- -------- GERBER
SCIENTIFIC, INC. SUMMARY SEGMENT INFORMATION (Unaudited) For the
Fiscal Quarters Ended July 31, ----------------------------- In
thousands 2009 2008 -------- -------- Sign Making and Specialty
Graphics: Gerber Scientific Products $19,426 $23,934 Spandex 53,713
70,435 -------- -------- Sign Making and Specialty Graphics 73,139
94,369 Apparel and Flexible Materials 35,060 48,949 Ophthalmic Lens
Processing 11,503 15,540 -------- -------- Consolidated revenue
$119,702 $158,858 -------- -------- Sign Making and Specialty
Graphics: Gerber Scientific Products $(750) $(1,163) Spandex 2,938
3,303 -------- -------- Sign Making and Specialty Graphics 2,188
2,140 Apparel and Flexible Materials 4,159 3,666 Ophthalmic Lens
Processing 695 115 -------- -------- Segment operating income 7,042
5,921 Corporate operating expenses (3,251) (4,321) --------
-------- Consolidated operating income $3,791 $1,600 --------
-------- GERBER SCIENTIFIC, INC. SELECTED FINANCIAL DATA - REVENUE
BY PRODUCT TYPE (Unaudited) For the Fiscal Quarters Ended July 31,
----------------------------- In thousands 2009 2008 --------
-------- Equipment and software revenue $26,966 $43,123 Aftermarket
supplies revenue 75,808 96,684 Service revenue 16,928 19,051
-------- -------- Total revenue $119,702 $158,858 -------- --------
GERBER SCIENTIFIC, INC. SELECTED FINANCIAL DATA - KEY OPERATING
RATIOS (Unaudited) For the Fiscal Quarters Ended July 31,
----------------------------- In thousands 2009 2008 --------
-------- Gross profit margin 28.1% 26.5% Operating margin 3.2% 1.0%
-------- -------- GERBER SCIENTIFIC, INC. SELECTED FINANCIAL DATA -
FINANCIAL POSITION (Unaudited) July 31, April 30, In thousands,
except ratio amounts 2009 2009 -------- -------- Cash and cash
equivalents $11,623 $10,313 Working capital $87,745 $92,839 Total
debt $60,500 $73,500 Net debt (total debt less cash and cash
equivalents) $48,877 $63,187 Shareholders' equity $162,520 $148,302
Total capital (net debt plus shareholders' equity) $211,397
$211,489 Current ratio 1.91:1 2.02:1 -------- -------- GERBER
SCIENTIFIC, INC. SELECTED FINANCIAL DATA - CASH FLOWS (Unaudited)
For the Fiscal Quarters Ended July 31,
----------------------------- In thousands 2009 2008 --------
-------- Cash flows provided by (used for) operating activities
$14,473 $(4,974) Cash flows used for investing activities $(2,104)
$(5,855) Cash flows (used for) provided by financing activities
$(12,412) $11,912 Depreciation and amortization $2,636 $2,407
Capital expenditures $1,160 $2,206 -------- -------- GERBER
SCIENTIFIC, INC. SELECTED FINANCIAL DATA - ORDERS BY GEOGRAPHIC
LOCATION (Unaudited) For the Fiscal Quarters Ended July 31,
----------------------------- In thousands 2009 2008 --------
-------- North America $40,203 $53,323 Europe 56,759 81,480 Rest of
world 23,266 29,696 -------- -------- Consolidated orders $120,228
$164,499 -------- -------- DATASOURCE: Gerber Scientific, Inc.
CONTACT: Michael R. Elia, Exec. VP and CFO, +1-860-644-1551, or
Melodye Demastus, Investor Relations, +1-614-771-8810, Web Site:
http://www.gerberscientific.com/
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