Giga-tronics Reports Second Quarter FY 2014 Results

Giga-tronics Reports Second Quarter FY 2014 Results

SAN RAMON, Calif., Nov. 8, 2013 (GLOBE NEWSWIRE) -- Giga-tronics Incorporated
(Nasdaq:GIGA) reported today net sales of $4.0 million for the second quarter
of fiscal 2014, representing two consecutive quarters of increased sales when
compared to net sales of $3.0 million in the first quarter of fiscal 2014, and
$2.8 million in the fourth quarter of fiscal 2013. The increases in net sales
were primarily due to the Microsource business unit's fulfilling scheduled
product shipments associated with long-term contracts from a large aerospace
company. Scheduled shipments under these contracts vary from quarter to
quarter and the company anticipates lower Microsource revenues for the
remainder of fiscal 2014.

Net sales for the six month period ended September 28, 2013 were $7.0 million
compared to $7.5 million for the six month period ended in September 29, 2012.
The decrease in net sales was primarily due to the Giga-tronics division
fulfilling a large order associated with the legacy SCPM switch product in the
first half of fiscal 2013. The SCPM product line was then sold to Teradyne in
the first month of fiscal 2014.

Gross margin for the second quarter of fiscal 2014 was $1.3 million,
representing two consecutive quarters of increased gross margin when compared
to gross margin of $1.1 million in the first quarter of fiscal 2014, and $1.0
million in the fourth quarter of fiscal 2013. The increases in gross margin
were primarily due to the increase in higher margin sales from the Microsource
business unit.

Gross margin for the six month period ended September 28, 2013 was $2.4
million compared to $2.9 million for the six month period ended September 29,
2012. The decrease in gross margin was primarily due to the Giga-tronics
division having consistent fixed factory overhead costs, but lower sales in
the first half of fiscal 2014 compared to the first half of fiscal 2013.

Gross margin percentages were 33% for the second quarter of fiscal 2014, 37%
for the first quarter of fiscal 2014, and 35% for the fourth quarter of fiscal
2013. Gross margin percentages were 35% for the six month period ended
September 28, 2013, and 39% for the six month period ended September 29, 2012.
The fluctuations in gross margin are due to the product mix of Giga-tronics
division sales.

Net loss for both the second quarter of fiscal 2014 and 2013 was $1.1 million,
or $0.21 per fully diluted share. Net loss for both the six month period ended
September 28, 2013 and September 29, 2012 were $1.8 million, or $0.35 per
fully diluted share.

The Company is currently spending approximately $1.0 million to $1.1 million
in research and development per quarter. The majority of these expenses are
associated with the development of the new product platform that is forecasted
to start shipping in the fourth quarter of fiscal 2014. Expenses associated
with the development of the new product platform including preparations for
its manufacturing have significantly contributed to the losses thus far in
fiscal 2014 and all of fiscal 2013. Additionally, during fiscal 2014, the
Company has experienced delays in the development of this product. If the
completion of the product development is delayed further beyond fiscal 2014,
the Company would need to reduce expenses in order to offset the loss of
forecasted revenue.

During the quarter ended September 28, 2013 Giga-tronics received initial
orders of $330,000 from a large aerospace company associated with its new
product platform for which shipments are expected to occur in the fourth
quarter of fiscal 2014, $733,000 for design services and a production bid from
the same aerospace company associated with the Microsource radar filters for a
military aircraft, and $476,000 for a new Switch product from a large defense
contractor that we expect to start shipping next fiscal year.

Mr. John Regazzi, the Company's CEO stated, "I'm pleased to see the two
consecutive quarters of increased net sales and gross margins, due in large
part to the continued progress we are making with Microsourse's long term
aerospace contracts."

Mr. Regazzi concluded, "After the substantial investment we have made in
developing our new product platform, it is exciting to see tangible market
acceptance with the initial order received.We believe the success of our new
product platform is essential for the Company to achieve future top line
growth and ultimately profitability."

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 (888) 424-8151 or
(847) 585-4422, and enter PIN Code 9178731#.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 8, 2013.

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.

This press release contains forward-looking statements concerning
profitability, development of products, future growth, shareholder value,
backlog and shipments.Actual results may differ significantly due to risks
and uncertainties, such as future orders, cancellations or deferrals, disputes
over performance, availability of capital and capital resources, 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 30, 2013, Part I, under the heading "Risk Factors" and Part II,
under the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

                                                                   
GIGA-TRONICS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                      September 28, March 30,
(In thousands except share data)                     2013        2013
Assets                                                              
Current assets:                                                     
Cash and cash-equivalents                              $396          $1,882
Trade accounts receivable, net of allowance of $60 and 1,962         1,666
$35, respectively
Inventories, net                                       3,653         4,560
Prepaid expenses and other current assets              481           501
Total current assets                                   6,492         8,609
Property and equipment, net                            904           751
Total assets                                           $7,396        $9,360
Liabilities and shareholders' equity                                
Current liabilities:                                                
Line of credit                                         $--        $577
Accounts payable                                       1,051         788
Accrued payroll and benefits                           936           1,047
Deferred revenue                                       1,165         2,278
Deferred rent                                          93            81
Capital lease obligations                              82            66
Other current liabilities                              405           505
Total current liabilities                              3,732         5,342
Long term obligation - line of credit                  595           280
Long term obligations - deferred rent                  292           341
Long term obligations - capital lease                  82            89
Total liabilities                                      4,701         6,052
Commitments and contingencies                          --          --
Shareholders' equity:                                               
Convertible preferred stock of no par value;                        
Authorized - 1,000,000 shares                                       
Series A - designated 250,000 shares; 0 shares at
September 28, 2013 and March 30, 2013 issued and       --          --
outstanding
Series B - designated 10,000 shares; 9,997 shares at
September 28, 2013 and March 30, 2013 issued and       1,997         1,997
outstanding; (liquidation preference of $2,309)
Series C - designated 3,500 shares; 3,425.65 shares at
September 28, 2013 and March 30, 2013 issued and       457           457
outstanding; (liquidation preference of $500)
Series D - designated 6,000 shares; 5,111.86 shares at
September 28, 2013and no shares March 30, 2013 issued 457           --
and outstanding; (liquidation preference of $858)
Common stock of no par value;                                       
Authorized - 40,000,000 shares; 5,181,247 shares at
September 28, 2013 and 5,079,747 at March 30, 2013     16,058        15,132
issued and outstanding
Accumulated deficit                                    (16,274)      (14,278)
Total shareholders' equity                             2,695         3,308
Total liabilities and shareholders' equity             $7,396        $9,360
                                                                   

                                                                 
GIGA-TRONICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                         Three Month Periods Ended
                                         
                                         September 28, June 29, March 30,
(In thousands except per share data)    2013           2013       2013
Net sales                                 $3,950         $3,037     $2,778
Cost of sales                             2,629          1,913      1,818
Gross margin                              1,321          1,124      960
                                                                 
Operating expenses:                                               
Engineering                               955            1,106      1,123
Selling, general and administrative       1,295          1,313      1,273
                                                                 
Restructuring                             129            195        135
Total operating expenses                  2,379          2,614      2,531
                                                                 
Operating loss                            (1,058)        (1,490)    (1,571)
                                                                 
Gain on sale of product line              --             816        --
Other income                              --             8          11
                                                                 
Interest expense, net                     (19)           (13)       (10)
Loss before income taxes                  (1,077)        (679)      (1,570)
Provision for income taxes                --           2          --
Net loss                                 $(1,077)       $(681)     $(1,570)
                                                                 
Loss per common share – basic             $(0.21)        $(0.13)    $(0.31)
Loss per common share – diluted           $(0.21)        $(0.13)    $(0.31)
                                                                 
Weighted average common shares used in                            
per share calculation:
Basic                                     5,060          5,052      5,030
Diluted                                   5,060          5,052      5,030
                                                                 

                                                               
GIGA-TRONICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                            Three Month Periods Ended Six Month Periods Ended
                            September   September   September  September
                             28,         29,         28,        29,
(In thousands except per    2013         2012         2013        2012
share data)
Net sales                    $3,950       $3,405       $6,987      $7,463
Cost of sales                2,629        2,122        4,542       4,550
Gross margin                 1,321        1,283        2,445       2,913
                                                               
Operating expenses:                                             
Engineering                  955          1,047        2,061       1,980
Selling, general and         1,295        1,206        2,609       2,516
administrative
Restructuring                129          92           324         184
Total operating expenses     2,379        2,345        4,994       4,680
                                                               
Operating loss               (1,058)      (1,062)      (2,549)     (1,767)
                                                               
Gain on sale of product line --           --           816         --
Other income                 --           --           8           --
                                                               
Interest expense, net        (19)         (2)          (31)        (2)
                                                               
Loss before income taxes     (1,077)      (1,064)      (1,756)     (1,769)
Provision for income taxes   --         --          2           2
Net loss                    $(1,077)     $(1,064)     $(1,758)    $(1,771)
                                                               
Loss per common share –      $(0.21)      $(0.21)      $(0.35)     $(0.35)
basic
Loss per common share –      $(0.21)      $(0.21)      $(0.35)     $(0.35)
diluted
                                                               
Weighted average common
shares used in per share                                        
calculation:
Basic                        5,060        5,029        5,056       5,029
Diluted                      5,060        5,029        5,056       5,029
                                                               

CONTACT: Steven D. Lance
         Vice President of Finance/Chief Financial Officer
         slance@gigatronics.com
         (925) 302-1056

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