EX-99.1 2 exhibit99_1.htm EXHIBIT 99.1 exhibit99_1.htm

Exhibit 99.1

 
Gerber Scientific, Inc. Reports Fiscal 2010 Third Quarter Results
 
SOUTH WINDSOR, CT – March 4, 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.”
 
 
1
 

 
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.

 

 
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GERBER SCIENTIFIC, INC.
SUMMARY OF OPERATIONS
(Unaudited)
  
   
For the Fiscal Quarters
 Ended January 31,
    
For the Nine Months
Ended January 31,
  
In thousands, 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
  



 
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GERBER SCIENTIFIC, INC.
SUMMARY SEGMENT INFORMATION
(Unaudited)
  
   
For the Fiscal Quarters
 Ended January 31,
    
For the Nine Months
Ended 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 Quarters
 Ended January 31,
    
For the Nine Months
Ended 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 Quarters
 Ended January 31,
    
For the Nine Months
Ended 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
%


 
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GERBER SCIENTIFIC, INC.
SELECTED FINANCIAL DATA – FINANCIAL POSITION
(Unaudited)
  
 
In thousands, except ratio data
  
January 31, 2010
    
April 30, 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 Quarters
 Ended January 31,
    
For the Nine Months
Ended 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 Quarters
 Ended January 31,
    
For the Nine Months
Ended 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
  


 
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