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Liquidmetal Technologies, Inc. (LQMT) reported financial results after the close on Wednesday for the the first quarter ended March 31st, 2009.
Revenue for the first quarter was $3.6 million and represents a 22% decrease from the $4.6 million in the fourth quarter of 2008. Revenue in the first quarter of 2008 was $6.77 million. The Company areported a loss per diluted share of $0.06 in the first quarter of 2009 versus a loss of $0.04 in the first quarter of 2008.
Tony Chung, CFO of Liquidmetal Technologies, commented in a conference call, "The decline in Q1 revenues came from our coding business due to lower material sales to our main oil and gas market. However, our gross margins improved to 40% in Q1, compared to 17% in the prior quarter. The gross margin improvement was due to a lower and more variable cost structure that was implemented at our Korean manufacturing facility during the past year, and high royalties that we received from licensing activites.
He added, "We are particularly encouraged that our improved gross margins and lower cost structure will enable us to achieve profitable growth as our business expands and the economy recovers later this year."
John Kang, Chairman of Liquidmetal Technologies, commented, "Mobile phones are a key segment for us within the consumer electronics market. Mobile phone sales were down 5% in Q4 and this negative trend continued in Q1 with handset unit sales falling 13% from a year earlier. A market research firm recently forecasted worldwide sales for mobile phones to decline by 8.3% this year with a recovery in the first half of 2010."
He added, "Our coding business was impacted by a decline in Q1 for the number of active oil rigs, though the pace of this reduction has slowed. Since a year ago, almost 50% of oil rigs have been taken out of service in the U.S."
Mr. Kang explained, "While the overall phone market is projected to decline this year, the Smartphone segment is projected to grow 3.4% in 2009. We believe that the Smartphone market is the segment best suited for us due to the high prices relative to the traditional cell phone, and the feature-rich technology which requires larger LCD screens and structural strength. We believe its important to select product categories that possess positive trends and inherently require the attributes of liquidmetal alloys."
He noted, "It is important to note that the world's top three mobile phone manufacturers all have products incorporating our liquidmental alloys today. This is unique because the industry typically aims to maintain separate supply channels from their competitors."
The Company recently completed a restructuring of its January 2007 convertible notes, which converted $13 million of debt into equity, leaving $7.5 million remaining in long term notes and bringing capital infusion into the Company of $2.5 million.
Mr. Kang commented on the financial restructuring, "Prior to this restructuring, our financial status and overall high debt level had become a burden. It often presented a question for our customers and may have cost us come opportunities in some cases. By reducing the debt level and having a manageable level of debt on the balance sheet, we are on our way to solid health."
He concluded, "While we are hopeful that the bottom of the economic cycle is at hand, we recognize that any recovery will take time. Consequently, we will remain vigilant in controlling costs and being selective when undertaking new projects. We are making progress in terms of profitability despite challenging economic conditions. We believe that we will see solid revenue growth this year and next. We also expect see a gradual pick-up in our business in Q2 and a strong finish in Q3 and Q4."
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