Earnings out yesterday: biz.yahoo.com
GSI Lumonics Reports Third Quarter
Profit, Backlog Increase
KANATA, Ontario, Nov. 3 /PRNewswire/ -- GSI Lumonics Inc., (Nasdaq: GSLI, Toronto: LSI) today reported
financial results in U.S. dollars for the three and nine months ended October 1, 1999.
Net earnings for the third quarter were $2.0 million (6 cents basic, 6 cents fully diluted) on sales of $78.0 million.
Driven by more favorable product mix and sales improvements in certain markets, gross profit in the third quarter was
$30.5 million (39% margin). Research and development expenses were $8.1 million (10% of sales), while selling,
general and administrative expenses were $19.0 million (24% of sales).
GSI Lumonics was formed March 22, 1999 as a result of a merger between General Scanning and Lumonics. To
conform with U.S. GAAP and to reflect the purchase accounting method used to transact the merger, results for the first
11 weeks of 1999 and all of 1998 are those of Lumonics only. Therefore, third quarter and nine months results of 1998
do not provide a meaningful basis for comparison, although they are provided in the financial statements attached.
Order backlog at October 1, 1999 was $81 million, up 11% from $73 million at the end of the second quarter.
``We're pleased with third quarter performance in three ways,' said Charles D. Winston, GSI Lumonics Chief
Executive Officer. ``First, it's a distinct improvement over the net loss incurred in the second quarter this year of $3.8
million and means we're running on schedule with our earnings recovery program. Second, we achieved sequential
growth of 13% in sales and 16% in bookings over the second quarter. Third, with stronger order backlog and
bookings, we have positive momentum going into the final quarter of 1999. Overall this was a pivotal quarter in our
long-term drive to make GSI Lumonics a substantially profitable growth company. The challenge is to build from
here.'
Third quarter sales remained well diversified by geography and industrial market. The largest contributors to third
quarter sales were electronics (21%), medical (19%), components (15%), parts and service (13%) and semiconductor
(12%). By region, the United States was the largest sales contributor at 52%, followed by Europe (22%), Japan (13%),
Asia (7%) and Canada (5%).
For the nine months ended October 1, 1999, sales were $185.9 million and gross profit was $61.4 million (33%
margin). Gross margin for the nine months reflects $3 million of inventory provisions taken in the first quarter and
comparatively weaker market conditions in the first half of 1999 compared to the third quarter. During the first quarter
of 1999, the company also took a $19.6 million restructuring charge related to integrating the two companies. A
one-time charge of $13 million was also booked in the first quarter to expense in-process research and development.
Including these restructuring and one-time expenses, net loss for the nine months ended October 1, 1999 was $37.3
million ($1.28 per share basic and fully diluted). Research and development expenses for the nine months were $20
million (11% of sales) while selling, general and administrative expenses totaled $49.6 million (27% of sales).
Liquidity and Financial Condition
Cash and cash equivalents totaled $26.7 million and short-term operating loans were $14.6 million at October 1, 1999
compared to $24.2 million of cash and loans of $7.3 million at December 31, 1998 and $38.1 million of cash and loans
of $21.6 million at July 2, 1999. Working capital was $99.0 million at third quarter end compared to $86.0 million at
December 31, 1998 and $93.9 million at the end of the second quarter of 1999.
Outlook
``We anticipate a positive conclusion to 1999 with a profitable fourth quarter based on backlog entering the quarter,'
said Winston. ``We're cautiously optimistic that general market conditions will continue to improve and although the
semiconductor market is showing some signs of recovery, we likely won't see strong market demand there until 2000.
This presents an ongoing challenge that we are working to offset through our market diversification strategy and our
continued focus on improving efficiencies to make profitability more durable.'
To position GSI Lumonics for the future, Mr. Winston said, ``we have started action to re-deploy capital to areas
offering strong long-term potential. For example, we revised our sales strategy in Japan by acquiring a distribution
business from our strategic partner, Sumitomo Heavy Industries, and we secured a new OEM agreement with SHI as
well. We also announced our plan to divest the operating assets of a small, non-strategic ply-lay-up templating
business. These kinds of initiatives will continue as we build more solid platforms for profitable growth and more
clearly define our future.'
Other News
Mr. Winston also announced today an appointment and two resignations. Warren Scott Nix President, Chief Operating
Officer, has resigned as a Director and will leave the Company January 1, 2000 and Yukihito Takahashi, Managing
Director, Sumitomo Heavy Industries, Ltd. has stepped down as Director of GSI Lumonics.
Joining the Board of Directors is Bill Waite, retired President and Chief Executive Officer of Siemens Electric Limited in
Canada.
``We're very grateful to both Mr. Nix and Mr. Takahashi who have both made substantial contributions to our
Company,' said Mr. Winston. ``Scott Nix has served in a variety of senior management roles since 1993 and was a
guiding force in our recent merger and subsequent successful integration. Yukihito Takahashi has been a Director since
1997 and has brought unique and valuable insights to the Board.
``Bill Waite is an equally outstanding business executive who not only brings a wealth of international business
experience but is very familiar with the laser systems industry, having served as a Director of Lumonics for three years.
We welcome Bill and extend our thanks to Scott and Takahashi-san.'
Mr. Winston will assume the role of President (as well as Chief Executive Officer) effective immediately. |
