StockerYale to Realign Operations
SALEM, N.H., Jan. 11, 2006 -- StockerYale Inc. announced Tuesday it will realign its operations into three core businesses -- lasers, LEDs and specialty optical fiber.
The company said it will either sell to management or exit certain mature components of its product lines, specifically fiber optic illumination, galvanometers and its Singapore subsidiary. As a result of these changes, its work force will be reduced by approximately 14 percent, it said, adding that its core businesses will "likely experience selective increases during 2006 to facilitate growth in those areas."
It said it expects the actions to accelerate growth of its most profitable businesses, reduce costs, improve its customer focus and accelerate new product development through more focused R&D efforts. It expects to incur charges, primarily non-cash, of up to $2 million in the fourth quarter 2005, based on management's decision to exit those areas.
In December, StockerYale completed the sale/leaseback of its Montreal and Salem, N.H., manufacturing facilities ($7.8 million net), prepaid all of its convertible and bank term debt ($7.2 million) and completed a $4 million long-term debt financing, leaving it with approximately $4.8 million in cash, including lease deposits, at year end.
"These actions have strengthened our balance sheet and reduced our leverage and interest expense," said Marianne Molleur, CFO. "We will seek further reductions in our debt to provide the company with improved financial flexibility. We recognize that we must continue to explore all opportunities to improve the financial performance of the company," she added.
Sales in the fourth quarter 2005, including the company's mature product lines, were in the range of $4.8 million to $5 million, a 14 to 19 percent increase over the fourth quarter in 2004. The growth in revenues was led by a 21-percent increase in laser sales and a 170-percent increase in specialty optical fiber revenues. Mature product lines accounted for approximately 17 percent of revenues in the fourth quarter, but they contributed a significantly smaller percentage of gross margin.
"We intend to focus operational resources on our three core growth businesses, cut costs and provide a stronger platform for future growth initiatives," said Mark Blodgett, StockerYale's chairman and CEO. "The company expects to build customer and shareholder value by more effectively allocating people and resources to our fastest-growing product lines where we have a clear, differentiated value proposition. This strategy will allow the company to better respond to market opportunities for our products, and, most importantly, to improve our progress toward achieving profitability," Blodgett added.
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