Electro Scientific Industries Inc. (ESIO, Financial) filed Quarterly Report for the period ended 2009-09-26.
Electro Scientific Industries Inc. and its subsidiaries provides electronics manufacturers with equipment necessary to produce key components used in wireless telecommunications computers automotive electronics and many other electronic products. Additionally they produce a family of mechanical and laser drilling systems for production of printed wiring boards and advanced electronic packaging as well as machine vision products for manufacturers of semiconductors electronics and other products. Electro Scientific Industries Inc. has a market cap of $287.4 million; its shares were traded at around $10.52 with and P/S ratio of 1.9.
Gross margin was 34.1% on net sales of $27.6 million for the second quarter compared to 26.4% on net sales of $22.6 million for the prior quarter. The increase in gross margin percentage reflects the benefit from higher sales volume and factory utilization as well as a favorable product and service mix compared to the prior quarter. Included in cost of sales in both quarters were $0.3 million of amortization of intangible assets acquired in the acquisition of New Wave Research, Incorporated (NWR) in July, 2007.
Net operating expenses increased $3.9 million to $18.8 million in the second quarter compared to $14.9 million in the prior quarter. This increase was primarily driven by a one-time receipt of $4.5 million in the prior quarter of net proceeds from a merger termination fee. Excluding the net merger termination proceeds, net operating expenses decreased $0.6 million due to a $0.3 million decrease in share-based compensation, timing of project expenses between quarters and continued efforts to manage our cost structure. In our third quarter of fiscal 2010, we expect net operating expenses to increase as the quarter will include fourteen weeks rather than the usual thirteen weeks and also due to the partial reinstatement of temporary pay reductions.
Net loss for the second quarter was $6.1 million or $0.22 per basic and diluted share, compared to a net loss of $5.5 million or $0.20 per basic and diluted share in the prior quarter.
Selling, service and administration (SS&A) primarily consists of labor and other employee-related expenses including share-based compensation expense, travel expense, professional fees, sales commissions and facilities costs. SS&A expenses were $11.4 million for the quarter ended September 26, 2009, a decrease of $2.4 million compared to $13.7 million in the quarter ended September 27, 2008. The decrease in SS&A expenses was primarily attributable to restructuring and cost management activities completed in 2009. These actions have included company-wide reductions in force and related decreases in compensation and labor-related costs. Additionally, we have implemented several temporary cost reduction measures including salary reductions, furloughs, and elimination of the Company match of 401(k) contributions. The impact of these reductions was partially offset by an increase of $0.8 million in SS&A share-based compensation expense. Share-based compensation expense increased compared to the same quarter of the prior year primarily due to the incremental cost of the Companys annual stock grant. In our third quarter, we expect SS&A expenses to increase as the quarter will include fourteen weeks rather than the usual thirteen weeks and also due to the partial reinstatement of temporary pay reductions.
The income tax benefit for the quarter ended September 26, 2009 was $2.9 million on pretax loss of $9.0 million, an effective tax rate of 32.1%. Comparatively, the income tax benefit was $2.4 million on a pretax loss of $6.6 million for the quarter ended September 27, 2008, an effective tax rate of 37.3%.
Read the The complete ReportESIO is in the portfolios of Third Avenue Management.
Electro Scientific Industries Inc. and its subsidiaries provides electronics manufacturers with equipment necessary to produce key components used in wireless telecommunications computers automotive electronics and many other electronic products. Additionally they produce a family of mechanical and laser drilling systems for production of printed wiring boards and advanced electronic packaging as well as machine vision products for manufacturers of semiconductors electronics and other products. Electro Scientific Industries Inc. has a market cap of $287.4 million; its shares were traded at around $10.52 with and P/S ratio of 1.9.
Highlight of Business Operations:
Net sales increased $5.0 million for the second quarter to $27.6 million compared to $22.6 million for the prior quarter. This increase reflects improvements in each of our product groups.Gross margin was 34.1% on net sales of $27.6 million for the second quarter compared to 26.4% on net sales of $22.6 million for the prior quarter. The increase in gross margin percentage reflects the benefit from higher sales volume and factory utilization as well as a favorable product and service mix compared to the prior quarter. Included in cost of sales in both quarters were $0.3 million of amortization of intangible assets acquired in the acquisition of New Wave Research, Incorporated (NWR) in July, 2007.
Net operating expenses increased $3.9 million to $18.8 million in the second quarter compared to $14.9 million in the prior quarter. This increase was primarily driven by a one-time receipt of $4.5 million in the prior quarter of net proceeds from a merger termination fee. Excluding the net merger termination proceeds, net operating expenses decreased $0.6 million due to a $0.3 million decrease in share-based compensation, timing of project expenses between quarters and continued efforts to manage our cost structure. In our third quarter of fiscal 2010, we expect net operating expenses to increase as the quarter will include fourteen weeks rather than the usual thirteen weeks and also due to the partial reinstatement of temporary pay reductions.
Net loss for the second quarter was $6.1 million or $0.22 per basic and diluted share, compared to a net loss of $5.5 million or $0.20 per basic and diluted share in the prior quarter.
Selling, service and administration (SS&A) primarily consists of labor and other employee-related expenses including share-based compensation expense, travel expense, professional fees, sales commissions and facilities costs. SS&A expenses were $11.4 million for the quarter ended September 26, 2009, a decrease of $2.4 million compared to $13.7 million in the quarter ended September 27, 2008. The decrease in SS&A expenses was primarily attributable to restructuring and cost management activities completed in 2009. These actions have included company-wide reductions in force and related decreases in compensation and labor-related costs. Additionally, we have implemented several temporary cost reduction measures including salary reductions, furloughs, and elimination of the Company match of 401(k) contributions. The impact of these reductions was partially offset by an increase of $0.8 million in SS&A share-based compensation expense. Share-based compensation expense increased compared to the same quarter of the prior year primarily due to the incremental cost of the Companys annual stock grant. In our third quarter, we expect SS&A expenses to increase as the quarter will include fourteen weeks rather than the usual thirteen weeks and also due to the partial reinstatement of temporary pay reductions.
The income tax benefit for the quarter ended September 26, 2009 was $2.9 million on pretax loss of $9.0 million, an effective tax rate of 32.1%. Comparatively, the income tax benefit was $2.4 million on a pretax loss of $6.6 million for the quarter ended September 27, 2008, an effective tax rate of 37.3%.
Read the The complete ReportESIO is in the portfolios of Third Avenue Management.
