ESI Posts Solid Q1 Fiscal 2016 Results

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Electro Scientific Industries, Inc., an innovator of laser-based manufacturing solutions for the microtechnology industry, today announced results for its fiscal 2016 first quarter ended June 27, 2015. Financial measures are provided on both a GAAP and non-GAAP basis, which excludes the impact of purchase accounting, equity compensation, and other items.

First quarter revenue was $43.1 million, compared to $37.6 million in the fourth quarter of 2015 and $35.0 million in the first quarter of last fiscal year. GAAP net loss was $6.4 million or $0.20 per share. Non-GAAP net loss was $4.5 million or $0.14 per share.

“Overall, the first quarter was another quarter of solid progress toward our corporate revitalization as we grew our revenues, introduced key new products, controlled spending, improved earnings and generated positive cash flow from operations,” stated Ed Grady, president and CEO of ESI. “We continued to expand our product portfolio, leveraging common architectures, with the introduction of the JadeTM low-cost laser micromachining platform. JadeTM is adaptable to a range of configurations for different applications, and is targeted specifically at the China market.”

Bookings for the first quarter were $41.9 million, compared to $40.0 million in the prior quarter and $47.2 million last year. Grady continued, “Bookings reflected solid performance in our core business, with continued strong demand for our interconnect products and sequential growth in micromachining and service. Our LumenTM platform contributed with a new design win in the first quarter, and we are seeing additional customer interest early in the second quarter.”

GAAP gross margin was 36%. Non-GAAP gross margin was 37%, compared to 38% in the prior quarter. Operating expenses were $21.5 million, which included $1.4 million of purchase accounting and stock compensation, and $0.2 million of one-time charges related to the Topwin acquisition and the Chelmsford facility closing. On a non-GAAP basis operating expenses were $19.9 million, compared to $20.6 million last quarter. Non-GAAP operating loss was $4.1 million, compared to $6.4 million in the fourth quarter.

Balance Sheet and Cash Flow

At quarter end, cash and investments were $58.5 million, up $0.9 million from last quarter. The company generated $2.3 million in cash from operations during the quarter. Inventories increased by $0.6 million, and trade receivables increased by $5.3 million. Accounts payable increased by $6.9 million.

Second Quarter 2015 Outlook

Revenues for the second quarter of fiscal 2016 are expected to be between $42 and $47 million. Non-GAAP loss per share is expected to be $0.10 to $0.15.

Grady concluded, “We continued to make progress against our long-term plan to grow revenue, achieve breakeven and return ESI to sustained profitable growth. In the past year we have leveraged ESI common architectures and technology to develop a strong portfolio of flexible modular systems to serve multiple applications in the micromachining, PCB, and semiconductor processing industries. Over the next year we expect to further expand our product portfolio, which will enable us to achieve our goal of tripling our addressable market and drive revenue growth for many years to come. At the same time, we are optimizing our cost structure and driving lean programs across the company. As our new products gain traction in the market we expect top line growth, combined with our focus on cost control, to enable us to achieve our objective of returning the company to growth and profitability.”

About ESI

ESI’s integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials in ways that differentiate their consumer electronics, wearable devices, semiconductor circuits and high-precision components for market advantage. ESI’s laser-based manufacturing solutions feature the micro-machining industry’s highest precision and speed, and target the lowest total cost of ownership. ESI is headquartered in Portland, Ore., with global operations from the Pacific Northwest to the Pacific Rim. More information is available at www.esi.com.