LightPath Technologies Inc (LPTH) 2006 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to LightPath Technologies first quarter 2006 conference call. [OPERATOR INSTRUCTIONS] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ken Brizel, President and Chief Executive Officer of LightPath Technologies.

Good afternoon and thank you for joining our conference call today for LightPath Technologies financial and business results for the first quarter of fiscal 2006 which ended in September, on September 30. In the conference call with me is Rob Burrows, our CFO, and Rob will open with the Safe Harbor statement.

Thank you, Ken. Good afternoon and thank you for joining us today. Please note that this conference call is the property of LightPath Technologies and any taping or other commercial reproduction is prohibited without our prior written consent. On the legal side of the equation it's necessary for listeners to be involved -- informed that the following discussion, including the Q&A, will contain forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, and that includes statements about LightPath's perspective market opportunities, future business plans, and possible future financial performance. These forward-looking statements necessarily involve risks and uncertainties.

LightPath's actual results may vary materially. Additional information concerning factors that could cause actual results to differ from forward-looking statements can be found in LightPath's periodic filings with the SEC. The forward-looking statements and associated risks covered during this conference call are based on current expectations and LightPath assumes no obligation to update or revise them, whether as a result of new developments or otherwise. With that in the record, I'll turn the floor back over to Ken Brizel, our President and CEO.

Thank you, Rob. As reported previously, our revenue was higher than the fourth quarter of fiscal 2005 but still below the first quarter of fiscal 2005. We're still feeling some of the cyclic nature of the communications market. The first quarter results and revenues in fiscal 2005 benefited from a temporary up-swing in telecom sales which proceeded to decline substantially in the second half of fiscal 2005 and into the first quarter of the current fiscal year. We anticipate that our continued focus on developing applications in new markets and the ability to compete for higher volume business with our recently announced operation will help us to keep on track and achieving and increase our total year-over-year revenues.

LightPath's fiscal first quarter sales for fiscal 2006 are 2.7 million, which is up 11% from the 2.4 million in the fourth quarter of fiscal 2005, down from 2.95 million in the prior year's first quarter, a decrease of 8%. We had had improved sales in our precision molded glass optics and GRADIUM products which was offset by decreases in isolators and collimators. The LightPath team has been working very hard. Our manufacturing team has made huge efforts over the last year to improve our quality and on-time delivery. I'm very proud to say that we've achieved over 90% on-time delivery across most product lines, even in the face of increasing orders. Over the last few years, our quality has continued to improve with return materials accounting for less than 1% of shipments. Our engineering teams have also been working hard to deliver new product technologies to our customers. 15% of our sales last quarter came from new product development. Our sales and marketing teams have been working to diversify LightPath into new markets. For example, last year 8% of our sales were defense related which increased from nearly 0 over the last few years. This fiscal year we expect to be over 10%.

As I explained in the last annual meeting, just the other day, we've developed a business model and long-term financial objectives to position the growth of the business. We believe that our growth model should be able to track to 20% growth year-over-year, and in an effort to establish a model positioning us toward some of the best run companies in the United States, we're working towards a 20% return on equity over the next five years.

We've aggressive -- we have aggressive goals for the fiscal 2006 to continue to extend our recent gains. We have a supportive Board, a great management group, and many dedicated and hard working employees. We have more work to do, and we face more challenges ahead, particularly during the first half of fiscal 2006. And must execute flawlessly to take full advantage of our opportunities. As I've said before, I'm very optimistic, we're poised for still better performance in this year. Now I'd like to turn the call over to Rob to cover the financial information in more detail.

Thank you, Ken. I'd like toke echo how pleased we are with the continued progress of our sales organization to broaden our customer base, particularly most recently into the industrial and military markets, although we still remain challenged in light of the continuing weakness in telecom orders compared to this time last year. The diversification of our markets drove the rebound from the fourth quarter and helped mitigate the decline in revenue compared to the comparable quarter last year. The results I'll be discussing here are on a consolidated financial statement basis. As we noted in our press release, our first quarter revenue was 2.70 million compared to 2.95, an 8% decrease, this is primarily due to lower orders for our isolator business from telecom customers. The non telecom piece, as we mentioned, continues to expand but was not sufficient to offset the decline from telecom in the quarter.

Our gross profit percentage did increase to 20.4% compared to 19.6 for the same quarter last year. This was driven mainly by continued improvements and reductions in our labor and overhead costs. We are striving for margins in the 30% range and above, and we believe that bringing our China facility on-line and new product initiatives will allow us to reach that level. We continue to work diligently at expense control throughout the business. Our continued efforts to reduce costs by carefully evaluating all expenses in the areas of SG&A and new product development in particular have led to declines excluding amortization of intangibles of about 15% from 2005 levels. This is approximately another $200,000 in quarter over quarter reductions.

Our plans for this year include selectively adding personnel particularly in new product development and sales to support the growth we are projecting. These increases will be mostly offset by savings in other areas such as professional fees, outside services, supplies and facilities costs. For the quarter, our net loss was 0.81 million, or $0.22 per share, this is almost 50% lower than the first quarter of the last fiscal year when we reported a net loss of 1.58 million or $0.49 per share.

Turning to the matter of our cash flows and cash position, we had anticipated an increase in cash used at this quarter coming off a near break-even level in the fourth quarter 2005. Our total operating cash usage was $662,000, compared to $412,000 the prior year. The principal usages were increased inventories and receivable levels. The approximately $300,000 increase in inventory was mainly in our PMO precision molded optics products which was in preparation for ramping additional production in China and an anticipated rebound in sales in the coming quarters. Relatively speaking compared to prior periods our cash usage related to inventory levels in the third and fourth quarter of last year had been only 60 and $90,000 respectively. Our receivable balance ended up slightly higher than expected as well due to a temporary lag in collections from some telecom customers. These have essentially been collected so far this period and we're back on a normal basis with most of these accounts.

Our quarter end cash and cash equivalents was at 1.7 million this compared to fiscal 2005 Q1 cash and equivalents of 2.1 million. We anticipate cash usage will fall in line with our objectives in the coming quarters including achieving a positive cash flow on a quarterly basis. Our balance at -- our cash balance at November 4, which is approximately mid-way through our second quarter, was approximately $1.9 million at that date. I will now turn back to Ken for closing comments.

Thanks again, Rob. Before we leave the call, I'd like to summarize again what we've achieved. We continue to diversify our product lines into new markets, improve our production capacity and performance, design more new products, increase the scale of our production through our new China location as well as expand our geographic sales reach to Asia Pacific markets. I want to thank everybody on the call for their interest and support of LightPath. We'll now open up the lines for questions from our shareholders as well as check whether there's any questions on our Investor Relations website.

Thank you. [OPERATOR INSTRUCTIONS] Gentlemen, it appears there are no questions at this time.

Okay. Well, thank you. On behalf of everyone at LightPath, it was good to speak to you all today, and I look forward to speaking to you next time.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.