Gerber Scientific, Inc. Reports Fiscal 2010 Second Quarter Results

SOUTH WINDSOR, CT – December 7, 2009 – Gerber Scientific, Inc. (NYSE: GRB) today reported revenue and earnings results for its fiscal 2010 second quarter ended October 31, 2009. In accordance with U.S. generally accepted accounting principles, FOBA Technology + Services GmbH (“FOBA”), ND Graphics (both sold in September 2009) and Spandex Poland (closed in October 2009) have been reflected as discontinued operations for all periods reported. 

Summary of Results from Continuing Operations for FY 2010 Second Quarter versus FY 2009 Second Quarter

“Despite weak market conditions and difficult year-over-year comparisons, revenue from continuing operations on a sequential basis appears to have stabilized, which gives us further conviction that our markets have bottomed,” said Marc Giles, Gerber Scientific President and Chief Executive Officer. “Equally important, order activity strengthened in the quarter and was up roughly ten percent from the fiscal 2009 fourth quarter with gains across all business segments. We also continued to tightly manage controllable expenses, which resulted in an eight percent, or $2.3 million, decline in SG&A expenses from a year ago – which was on top of a $2.3 million decline last year in the second quarter, when we initiated our aggressive cost cutting actions.”

Mr. Giles added, “We continued to make important progress in the execution of our business strategy by completing the sales of our non-core FOBA and ND Graphics business units, which generated net proceeds of approximately $13.0 million and allowed us to reduce our debt by an additional $9.5 million in the quarter. Year to date, we’ve reduced outstanding debt by $22.5 million and we also successfully amended our credit agreement in November to further increase our flexibility under the facility. As a result of the increased flexibility, we were able to complete the acquisition of Yunique Solutions Inc. last week, a product lifecycle management (PLM) software solutions developer that expands and advances Gerber’s technology platform and capabilities in the fashion industry. Plus, we were able to cease the non-profitable aftermarket operations of a small facility in Poland during the quarter and are continuing to aggressively seek opportunities to lower our cost structure even further.”

Outlook and Guidance

“With the improved quote and order activity during the quarter, we are more optimistic that we are beginning to see a rebound in our markets,” said Mr. Giles. “We’ve seen several encouraging signs in recent weeks including increased quote and order activity overall for systems and aftermarket products, and especially from China, which is an important growth market for us. Several of our business units have also reported increased attendance and a higher level of interest for our new products at recent trade shows. However, we will remain cautious in the near term, especially due to the seasonality of our business, and will continue to tightly manage expenses and limit R&D to sustaining projects until we are more confident that the recovery is fully underway and sustainable. However, when the economy and our markets rebound, we are confident that we will be able to leverage our improved cost structure to deliver higher earnings.”

Quarterly Conference Call

Gerber Scientific’s quarterly earnings conference is scheduled for today at 10:00 a.m. ET.  Please dial 719-325-4834 and provide the operator with confirmation code 1420745 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.

 

 

GERBER SCIENTIFIC, INC. SUMMARY OF OPERATIONS (Unaudited)
		For the Fiscal Quarters Ended October 31,								For the Six Months Ended October 31,
In thousands, except per share data		2009				2008				2009				2008
Revenue:
Product sales		$	103,546			$	123,760			$	197,310			$	252,950
Service sales			16,614				18,793				33,438				37,768
			120,160				142,553				230,748				290,718
Cost of Sales:
Cost of products sold			74,646				88,811				143,430				183,624
Cost of services sold			10,294				12,337				20,071				25,345
			84,940				101,148				163,501				208,969
Gross profit			35,220				41,405				67,247				81,749
Selling, general and administrative expenses			27,817				30,155				51,967				62,718
Research and development			4,532				5,698				8,960				11,931
Operating income			2,871				5,552				6,320				7,100
Other income (expense), net			(394	)			(412	)			(1,399	)			(537	)
Interest expense			(918	)			(748	)			(1,860	)			(1,287	)
Income from continuing operations     before income taxes			1,559				4,392				3,061				5,276
Income tax benefit			(374	)			(1,973	)			(15	)			(1,813	)
Income from continuing operations			1,933				6,365				3,076				7,089
Loss from discontinued operations, net of tax			(1,474	)			(271	)			(2,103	)			(314	)
Net income		$	459			$	6,094			$	973			$	6,775
Basic earnings (loss) per common share:
Continuing operations		$	0.08			$	0.27			$	0.12			$	0.30
Discontinued operations			(0.06	)			(0.02	)			(0.08	)			(0.02	)
Basic earnings per common share		$	0.02			$	0.25			$	0.04			$	0.28
Diluted earnings (loss) per common share:
Continuing operations		$	0.08			$	0.26			$	0.12			$	0.29
Discontinued operations			(0.06	)			(0.01	)			(0.08	)			(0.01	)
Diluted earnings per common share		$	0.02			$	0.25			$	0.04			$	0.28
Weighted average shares outstanding:
Basic			24,907				23,965				24,759				23,865
Diluted			24,956				24,087				24,782				24,047