SAN JOSE, Calif., March 19, 2009 (GLOBE NEWSWIRE) -- Electroglas, Inc. (Nasdaq:EGLS), a leading supplier of wafer probing and software solutions for the semiconductor industry, today reported its operating results for the third fiscal quarter ended February 28, 2009.
Revenue for the third quarter of fiscal 2009 was $2.2 million, a 65% decrease from the second quarter of fiscal 2009 and an 81% decrease from the third quarter of fiscal 2008. Net loss on a GAAP (Generally Accepted Accounting Principles) basis was $4.5 million, or a $0.17 per share loss on both a GAAP and non-GAAP basis. A reconciliation of non-GAAP operating results to GAAP results is included below.
"Clearly we are disappointed in these quarterly results," stated Warren Kocmond, Chief Executive Officer. "In spite of salary reductions of 15% and a 15% reduction in force this was not enough to compensate for the precipitous drop in revenue. Our customers stopped buying in early 2009 as their near term business outlook weakened and fear spread throughout the world economy. We are getting very little visibility from customers as to when business conditions will improve.
"We are adjusting to these business realities and have additional plans in place to dramatically lower our break even point which should return us to positive gross margins this quarter. We are looking at every segment of our business and infrastructure to make additional cuts and preserve our cash resources. We will not be holding a conference call discussing the third quarter results and our fourth quarter outlook due to the unpredictability of the current market. In the next several days the Company will have further announcements detailing these steps.
"As we had disclosed in a previous press release we are continuing our efforts with Needham and Company in exploring strategic options for the Company. Finally, our MCAT (Motion Control for Advanced Technology) platform continues to mature in several applications and we believe this represents a reasonable upside revenue opportunity for us when the global economy recovers."
About Electroglas
Electroglas is a leading supplier of innovative wafer probers and software solutions for the semiconductor industry. For more than 40 years, Electroglas has helped integrated device manufacturers (IDMs), wafer foundries and outsourced assembly and test (OSAT) suppliers improve the overall effectiveness of semiconductor manufacturers' wafer testing. Headquartered in San Jose, California, the Company has shipped more than 16,500 systems worldwide. Electroglas' stock trades on the NASDAQ Capital Market under the symbol "EGLS." More information about the Company and its products is available at www.electroglas.com
Safe Harbor Statement
This news release contains forward-looking statements including statements relating to Electroglas' business for the fourth fiscal quarter of 2009, gross margins, cash preservations, expense reductions, strategic options and our MCAT business. These forward-looking statements involve risks and uncertainties including, but not limited to, the risk of continued adverse changes in global and domestic economic conditions, continued downturn in the semiconductor and electronics industries, a continued downturn or decrease in customer utilization rates, unforeseen technical difficulties related to the development and manufacture of Electroglas' products, and a failure of its new products to achieve broad market acceptance as a result of competing technologies and an inability to successfully market our precision motion control technology to users outside the wafer probing market. Electroglas assumes no obligation to update this information. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Electroglas' business in general, see the risk disclosures in Electroglas' SEC filings, including its most recent annual report on Form 10-K for the year ended May 31, 2008, its quarterly reports on Form 10-Q and periodic reports on Form 8-K filed from time to time with the SEC.
ELECTROGLAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
(unaudited)
Three months ended Nine months ended
------------------ -------------------
Feb. 28, March 1, Feb. 28, March 1,
2009 2008 2009 2008
------- ------- -------- --------
Net sales $ 2,219 $11,553 $ 16,973 $ 33,425
Cost of sales 2,893 8,635 15,297 23,813
------- ------- -------- --------
Gross margin (674) 2,918 1,676 9,612
------- ------- -------- --------
Operating expenses:
Engineering, research
and development 1,675 2,355 5,445 6,814
Sales, general and
administrative 2,385 3,372 8,119 10,711
Restructuring and
impairment charges 70 149 590 608
------- ------- -------- --------
Total operating expenses 4,130 5,876 14,154 18,133
------- ------- -------- --------
Operating loss (4,804) (2,958) (12,478) (8,521)
Interest expense, net (576) (461) (1,658) (808)
Other expense, net (187) (205) (586) (502)
------- ------- -------- --------
Loss before provision
(benefit) for income taxes (5,567) (3,624) (14,722) (9,831)
Provision (benefit) for
income taxes (1,020) 124 (995) 548
------- ------- -------- --------
Net loss $(4,547) $(3,748) $(13,727) $(10,379)
======= ======= ======== ========
Net loss per share, basic
and diluted $ (0.17) $ (0.14) $ (0.52) $ (0.39)
======= ======= ======== ========
Shares used in basic and
diluted calculations 26,627 26,385 26,589 26,353
======= ======= ======== ========
Reconciliation of GAAP to Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (GAAP), Electroglas also discloses non-GAAP results of operations that exclude certain unusual charges, gains, or benefits. Electroglas reports non-GAAP results to better assess and reflect operating performance. These results are provided as a complement to results provided in accordance with GAAP. Management believes the non-GAAP measures help indicate underlying trends in Electroglas' business, and management uses non-GAAP measures to establish operational goals. Non-GAAP information should not be considered superior to or as a substitute for GAAP measures or data prepared in accordance with GAAP.
The following is a reconciliation of GAAP net loss and gross margin to non-GAAP net loss and gross margin (in thousands, except per share amounts):
(unaudited) (unaudited)
Three months ended Nine months ended
----------------------------------------
Feb. 28, March 1, Feb. 28, March 1,
2009 2008 2009 2008
------- ------- -------- --------
GAAP net loss $(4,547) $(3,748) $(13,727) $(10,739)
Non-GAAP adjustments:
Duplicate factory costs (1) -- 818 -- 1,572
Restructuring and
impairment charges (2) 70 149 590 608
------- ------- -------- --------
Non-GAAP net loss $(4,477) $(2,781) $(13,137) $ (8,559)
======= ======= ======== ========
Non-GAAP net loss per share,
basic and diluted $ (0.17) $ (0.11) $ (0.49) $ (0.32)
======= ======= ======== ========
(unaudited) (unaudited)
Three months ended Nine months ended
----------------------------------------
Feb. 28, March 1, Feb. 28, March 1,
2009 2008 2009 2008
------- ------- -------- --------
GAAP gross margin $ (674) $ 2,918 $ 1,676 $ 9,612
Non-GAAP adjustments:
Duplicate factory costs (1) -- 818 -- 1,572
------- ------- -------- --------
Non-GAAP gross margin (674) 3,736 1,676 11,184
------- ------- -------- --------
Net sales $ 2,219 $11,553 $ 16,973 $ 33,425
======= ======= ======== ========
GAAP gross margin -30% 25% 10% 29%
======= ======= ======== ========
Non-GAAP gross margin -30% 32% 10% 33%
======= ======= ======== ========
(1) Freight, travel and overhead costs associated with the Company's
move from internal manufacturing in Singapore to contract
manufacturing with Flextronics in China.
(2) During Q2 and Q3 2009, the Company accrued restructuring costs
for a reduction in work force in the United States and Asia.
During Q1 2009, the Company accrued restructuring costs for a
reduction in work force in the United States. During Q1 2008,
the Company accrued restructuring costs related to the retention
of employees in its Singapore factory of $0.1 million. The
Company also recorded a liability for a reduction in work force
in Europe of $0.2 million during Q1 2008.
ELECTROGLAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
February 28, May 31,
2009 2008
----------- --------
(unaudited) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 4,956 $ 16,541
Accounts receivable, net 2,809 9,419
Inventories 7,032 5,533
Prepaid expenses and other current assets 2,051 4,396
-------- --------
Total current assets 16,848 35,889
Property, plant and equipment, net 1,829 2,724
Goodwill 1,942 1,942
Other assets 2,412 2,806
-------- --------
$ 23,031 $ 43,361
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $ 1,570 $ 6,848
Accrued liabilities 3,649 5,717
Deferred revenue 511 826
Line of credit borrowing 500 --
-------- --------
Total current liabilities 6,230 13,391
Convertible subordinated notes 24,180 23,610
Other non-current liabilities 1,629 2,442
Stockholders' equity (deficit) (9,008) 3,918
-------- --------
$ 23,031 $ 43,361
======== ========
(1) Derived from the Company's audited consolidated financial
statements as of May 31, 2008.