Giga-tronics Reports Second Quarter FY 2013 Results

Giga-tronics Reports Second Quarter FY 2013 Results

SAN RAMON, Calif., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Giga-tronics Incorporated
(Nasdaq:GIGA) reported today a net loss of $1,064,000 or $0.21 per fully
diluted share for the quarter ended September 29, 2012. This compares with a
net loss of $665,000 or $0.13 per fully diluted share for the comparable
period a year ago. Net sales decreased 17% to $3,405,000 in the second quarter
of fiscal 2013 compared to $4,086,000 in the second quarter of fiscal 2012.
Gross margin decreased by $249,000 over the same quarter last year. Operating
expenses increased 7% or $148,000 in the second quarter of fiscal 2013 over
fiscal 2012 primarily due to a $412,000 (or 65%) increase in product
development expenses to more aggressively invest in new instrument products
and expenses associated with a previously announced restructuring totaling
$92,000. Orders increased 55% in the second quarter of fiscal 2013 to
$3,818,000 from $2,465,000 for the second quarter of fiscal 2012. The increase
in orders is primarily related to orders received from the U.S. government and
from prime contractors.

Net loss for the six month period ended September 29, 2012 was $1,771,000 or
$0.35 per fully diluted share. This compares with a net loss of $1,339,000 or
$0.27 per fully diluted share for the comparable period a year ago. Net sales
decreased 2% to $7,463,000 in the first half of fiscal 2013 compared to
$7,583,000 in the first half of fiscal 2012. Gross margin decreased by $62,000
over the comparable period last year. Operating expenses increased 9% or
$369,000 in the first half of fiscal 2013 over fiscal 2012 primarily due to a
$665,000 increase (or 51%) in product development expenses to more
aggressively invest in new instrument products and expenses associated with a
restructuring totaling $184,000 . Orders increased 56% in the first half of
fiscal 2013 to $12,498,000 from $8,013,000 for the first half of fiscal 2012.
The increase in orders is primarily related to orders received from the U.S.
government and from prime contractors.

Backlog at September 29, 2012 was $8.9 million (approximately $7.1 million
shippable within one year) as compared to $4.1 million (approximately $2.9
million shippable within one year) at September 24, 2011.

Cash and cash equivalents at September 29, 2012 were $2,096,000 compared to
$1,436,000 as of June 30, 2012 and $2,365,000 at March 31, 2012.

Mr. John Regazzi, the Company's CEO stated, "The higher operating loss for the
first six months of FY2013 as compared to the first half of fiscal 2012 is
directly related to the investments we're making in R&D and in restructuring
and consolidation of our Santa Rosa operations to San Ramon, which is
scheduled for completion in May of 2013. Nearly half of the reported operating
loss is due to these expenses which we believe are necessary in order to
position the Company to achieve future revenue growth and profitability". 

Mr. Regazzi continued, "The balance of the reported loss for the first half is
the result of insufficient sales volume relative to our fixed infrastructure.
As previously reported, Giga-tronics is confronting this problem by building
an improved sales organization and sales channel under the leadership of the
Company's new VP of Sales. Although sales remained essentially flat for the
first six months of this fiscal year as compared to the first half of last
year, I see the potential for measurable upside in the next several quarters
as the changes being made in the sales organization for North America and in
expanding our reach internationally take effect."

Mr. Regazzi concluded, "I believe the benefits of these changes will first be
seen in net sales with anticipated revenue growth in the immediate quarters
ahead then with improved gross margins following the relocation of the
Microsource division. Lastly, I anticipate Giga-tronics will return to
profitability following the introduction of the new microwave product in the
first quarter of fiscal 2014."

Giga-tronics will host a conference call today at 4:30 p.m. ET to discuss the
second quarter results. To participate in the call, dial (855) 410-0553 or
(646) 583-7389 and enter PIN Code 905755#.The call will also be broadcast
over the internet at www.gigatronics.com under "Investor Relations". The
conference call discussion reflects management's views as of November 7, 2012
only.

Giga-tronics is a publicly held company, traded on the NASDAQ Capital Market
under the symbol "GIGA". Giga-tronics produces instruments, subsystems and
sophisticated microwave components that have broad applications in defense
electronics, aeronautics and wireless telecommunications.

The Giga-tronics Incorporated logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6087

This press release contains forward-looking statements concerning
profitability, backlog, shipments, revenue growth, and improved gross margins.
Actual results may differ significantly due to risks and uncertainties, such
as future orders, cancellations or deferrals, disputes over performance, the
ability to collect receivables and general market conditions. For further
discussion, see Giga-tronics' most recent annual report on Form 10-K for the
fiscal year ended March 31, 2012, Part I, under the heading "Certain Factors
Which May Adversely Affect Future Operations or an Investment in Giga-tronics"
and Part II, under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands except share data)          September 29, 2012 March 31, 2012
Assets                                                        
Current assets:                                               
Cash and cash-equivalents                  $2,096            $2,365
Trade accounts receivable, net of                             
allowance
of $115 and $96, respectively              2,408              1,270
Inventories, net                           4,343              4,700
Prepaid expenses and other current assets  439                328
Total current assets                       9,286              8,663
                                                             
Property and equipment, net                759                611
Other assets                               --                 16
Total assets                               $ 10,045           $9,290
                                                             
Liabilities and shareholders' equity                          
Current liabilities:                                          
Accounts payable                           915                $613
Accrued commission                         72                 129
Accrued payroll and benefits               849                739
Accrued warranty                           156                210
Deferred revenue                           1,976              7
Deferred rent                              70                 59
Capital lease obligations                  73                 20
Other current liabilities                  315                318
Total current liabilities                  4,426              2,095
Long term obligations - deferred rent      390                433
Long term obligations - capital lease      122                15
Total liabilities                          4,938              2,543
Commitments                                                   
Shareholders' equity:                                         
Preferred stock of no par value;                              
Authorized - 1,000,000 shares                                 
Series A - designated 250,000 shares; 0
shares at September 29, 2012 and March 31,                    
2012 issued and outstanding
Series B - designated 10,000 shares; 9,997
shares at September 29, 2012 and 0 shares  1,997               1,997
at March 31, 2012 issued and outstanding;
(liquidation preference of $2,309)
Common stock of no par value;                                 
Authorized - 40,000,000 shares; 5,029,747
shares at September 29, 2012 and March 31, 14,953              14,822
2012 issued and outstanding
Accumulated deficit                        (11,843)           (10,072)
Total shareholders' equity                 5,107              6,747
Total liabilities and shareholders' equity $ 10,045           $9,290


                                             
                                                                     
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)               
                       Three Months Ended     Six Months Ended         
                       September   September  September   September
                        29,         24,        29,         24,
(In thousands except   2012       2011      2012       2011
per share data)
Net sales               $3,405    $4,086   $7,463    $7,583
Cost of sales           2,122      2,554     4,550      4,608
Gross margin            1,283      1,532     2,913      2,975
                                                       
Engineering             1,047      635       1,980      1,315
Selling, general and    1,206      1,562     2,516      2,996
administrative
Restructuring           92         --        184        --
Total operating         2,345      2,197     4,680      4,311
expenses
                                                       
Operating loss          (1,062)    (665)     (1,767)    (1,336)
                                                       
Interest expense, net   (2)        (1)       (2)        (1)
Loss before income      (1,064)    (666)     (1,769)    (1,337)
taxes
(Benefit) provision for --         (1)       2          2
income taxes
Net loss                $(1,064)  $(665)   $(1,771)  $(1,339)
                                                       
Loss earnings per share $(0.21)   $(0.13)  $(0.35)   $(0.27)
– basic
Loss earnings per share $(0.21)   $(0.13)  $(0.35)   $(0.27)
– diluted
                                                       
            
Basic                   5,029      5,006     5,029      5,000
Diluted                 5,029      5,006     5,029      5,000
                                                

CONTACT: Frank Romejko
         Vice President of Finance / Interim Chief Financial Officer
         (925) 302-1014

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