Business News

Gerber Scientific, Inc. Reports Fiscal 2010 Third Quarter Results

Friday 05. March 2010 - 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