Laser Maker’s Profit Up Despite Sales Decline

PLYMOUTH — Rofin-Sinar Technologies Inc. (Nasdaq: RSTI), the Plymouth-based industrial laser maker now facing a proxy contest, reported net income of $6.5 million or 23 cents a share in the first fiscal quarter ended Dec. 31, up from $6.2 million or 22 cents a share in the same quarter of the prior fiscal year.

Revenue was $112.5 million, down from $122.4 million a year earlier.

Rofin-Sinar president and CEO Thomas Merk said in a press release: “Our results in the first quarter demonstrate that our strategy to drive cost improvements and generate shareholder value continues to gain traction. Earnings per share were at the upper end of our guidance range in the first quarter and would have exceeded guidance without the impact of non-recurring costs, mainly related to the proxy contest. Sales in this seasonally slower quarter were broadly in line with last year excluding the impact of the strong U.S. dollar and were negatively impacted by the timing of revenue recognition for one order.”

Merk also said gross margin rose, despite an unfavorable product mix due to lower revenues from micro and marking applications, as well as services and spare parts. And, he said the company “made significant progress towards realizing $5 million of operating cost reductions in fiscal year 2016, through our efficiency and consolidation program commenced in early 2015.”

Merk said the company has successfully tested its new 2.5-kilowatt fiber laser module, which will be launched commercially later this year.

The company said selling, general and administrative expenses were $23 million for the quarter, 20 percent of sales, down from $24.1 million, also 20 percent of sales, a year earlier. Research and development spending was $8.7 million, or 8 percent of sales, down from $10.6 million, or 9 percent of sales, a year earlier.

The company said sales of laser products for macro applications fell 5 percent to $45.3 million, or 40 percent of sales. Sales of laser products for marking and micro applications fell 17 percent to $47.7 million, or 43 of sales. Sales of components rose 14 percent to $19.5 million, or 17 percent of sales.

On a geographical basis, revenues in North America rose 6 percent to $28.7 million and fell 13 percent in Asia (6.6 percent on a constant currency basis), to $34.1 million. Sales in Europe fell 12 percent (1.5 percent on a constant currency basis), to $49.7 million.

The company said order entry for the quarter fell 21 percent to $96.9 million compared to the first quarter of fiscal year 2015, resulting in a backlog of $128.7 million as of Dec. 31. The decrease in order entry was the result of adverse currency movements, which had a negative $18 million impact, and de-bookings in anticipation of cancellations by two Chinese customers because of increased economic uncertainty in China, which had a negative impact of approximately $12 million.

The company said it expects sales in the second fiscal quarter ending March 31 to be between $115 million and $121 million, and earnings per share to be 20 to 26 cents per share.

For the fiscal year ending Sept. 30, the company cut its sales guidance to reflect existing order entry and economic uncertainty in China. The company now expects sales to range between $495 million and $525 million and continues to expect net income profitability at the mid-point of the sales range to be around 8 percent of net sales.

Rofin-Sinar has more than 55,000 lasers installed worldwide among its 4,000 customers, and has production plants in the United States, Germany, the United Kingdom, Seden, Finland, Switzerland, Singapore and China.

For a replay of a conference call discussing these results, visit http://www.rofin.com.

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