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Electroglas, Inc. (EGLS) reported its operating results after the bell on Thursday for the second fiscal quarter ended November 29, 2008.
Revenue for the second quarter of fiscal 2009 was $6.4 million, a 24% decrease over the first quarter of fiscal 2009 and a 44% decrease over the second quarter of fiscal 2008. Net loss on a GAAP basis was $4.7 million, or $0.18 per share and $0.17 per share loss on a non-GAAP basis.
Thomas E. Brunton, CFO of Electroglas, commented in a conference call, "Our bookings dried up in the second half of the quarter, well below our normal run rates, as customers remained cautious, had excess capacity and reacted to a very difficult semiconductor climate. Many customers pushed out their order capital buying decisions until 2009. Our margins were negatively impacted by two factors, lower volumes of our 8-inch products with lower ASPs and under-absorption of factory overheads at these lower sales levels."
He added, "We expect revenues in Q3 to be in the $4-$5 million range. We expect our book-to-bill ratio to be positive for the quarter, but visibility at this time is extremely limited. We will continue to focus on our business model, cutting costs and supplying our customers with quality products."
Warren C. Kocmond, Jr., COO of Electroglas, explained, "We have been carefully managing our cash position and have continually reduced expenses where possible. With the drop in revenue, we have been challenged to drop inventory fatster than planned. We have resturctured our Service business and reduced overall headcount by 27%. We expect revenue pressure in the following quarters for our Service business, but we have taken proactive steps from an expense standpoint that will allow us to maintain profitability. This Service business contributes positive operating margins to out bottom line."
Thomas M. Rohrs, Chairman and CEO of Electroglas, noted, "The current market for semiconductor capital equipment is the worst I have ever seen. Most profit-based metrics are relatively useless as the majority of equipment companies are losing. Revenue-based metrics are at their lowest point in 20 years, even among a number of companies with enterprise values. There are others with significant debt payments due in 2009 or struggling for a bailout. In times like these, long term strategies give way to studies of viability and staying. While this meltdown in the equipment market is worse than anyone predicted, it will surely give way to our upturn which could be of dramatic proportions."
He added, "We are making our plans under the assumption that it will be 15-18 months before any recovery, although many analysts expect recovery in 2009. At this time, we are modeling revenues out of $5 million per quarter for the next six quarters. At these revenue levels, we do not see a way to achieve operational profitability. While we are fortunate that we have no debt due for the next 30 months, we will need an additional influx of cash to fund our operating losses. We are diligently working to secure additional cash inflows from our bank line of credit and our technology partners in order to weather this storm."
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