Stockeryale Reports Second-Quarter 2009 Financial Results
Stockeryale announced its financial results for the second quarter ended June 30, 2009. Total revenues for the second quarter of 2009 of $ 6.0 million decreased 30% (decreased 24%, adjusting for currency) from the second quarter of 2008. The year-over-year decrease was due to lower demand for laser products (35%), of which approximately 6 percentage points were due to the negative impact of foreign currency translation. This decrease was partially offset by a 25% increase in the Company's specialty optical fiber business.
Bookings for the second quarter of 2009 were $ 7.0 million and backlog was $ 10.3 million at June 30, 2009. "In a global economy that continues to remain challenging, Stockeryale made significant progress during the quarter," stated Mark W. Blodgett, Chairman and CEO. "We are executing through the recession by aggressively controlling costs and driving working capital improvements, while continuing to focus on penetrating higher margin, high growth medical, bio-medical and defense markets."
Gross profit was $ 2.0 million for the second quarter of 2009, a 30% decrease compared to the $ 2.9 million in the second quarter of 2008. Second quarter 2009 gross margin was 33.7% compared with 34% in the comparable year-ago quarter. The decline in gross profit results from lower net sales which was partially offset by lower costs resulting from cost reduction initiatives taken during the past nine months and includes the positive impact of foreign currency translation of approximately $ 251,000 versus the prior year.
Operating expenses totaled $ 2.7 million for the second quarter of 2009, a decrease of 34% over the $ 4.1 million in the second quarter of 2008. The decrease in expenses versus the prior year was primarily due to no acquisition costs for Virtek Vision International of $ 307,000, lower costs due to cost reduction initiatives of approximately $ 560,000, and favorable foreign currency impact of approximately $ 400,000. Operating loss was $ 0.9 million compared with operating losses of $ 1.6 million for the second quarter of 2008. Operating losses decreased due to actions taken to decrease the Company's cost structure as well as a $ 0.7 million benefit from favorable foreign currency translations.
EBITDA for the quarter was $ (43,000) as compared to $ (106,000), excluding one time charges of $ 332,000, for the second quarter of 2008.
"While revenues were negatively impacted by both foreign exchange and weak global demand, particularly in the automated inspection market, we were pleased with the growth in defense sales in the quarter," stated Blodgett. "Defense sales increased 49% as compared to the second quarter of 2008, as we commenced shipments of lasers to BAE Systems; and year-to-date, defense sales increased 40% compared to the prior year. EBITDA improved versus the second quarter of 2008, excluding the one time acquisition related charges incurred in 2008, despite 24% lower sales on a currency adjusted basis. This reflected management's focus on continuous operational improvement, as well as the benefit of foreign currency exchange. We took steps late in the fourth quarter of 2008 and additional steps in the first and second quarters of 2009 to reduce our annual cost structure by approximately $ 3.8 million, without sacrificing either our R&D initiatives or customer applications capabilities."
Outlook: "While we experienced a meaningful increase in orders during the quarter, we expect the environment will continue to be challenging in the near-term. We remain focused on increasing market share, new customer development and customer retention, particularly in the medical and bio-medical instrumentation fields. With our new line of custom fiber assemblies, fiber coupled laser modules and patented beam shaping optics, we are moving into production for several of the world's leading medical equipment, flow cytometry and cell sorting companies in 2009. Medical/bio-medical sales are expected to increase in the second half of 2009 and into 2010. In addition, we expect defense sales as a percentage of total revenues will continue to grow in 2009, as demonstrated by our Q2, 2009 results showing an increase over Q2, 2008 from 6.6% of total sales to 14.1% of total sales." added Blodgett.
"Our priorities remain clear and achievable. We remain focused on selling new, higher margin products, and continue to seek opportunities to further reduce the Company's cost structure, while improving the Company's balance sheet through effective working capital management and financing activities. We have clearly seen the positive impact of our efforts on our financial results over the last year and the economy notwithstanding, we expect the Company to continue to strengthen its product portfolio and brand identity in the photonics industry," concluded Blodgett.