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Metrologic Announces Second Quarter Earnings Will Fall Short of Company and Analyst Expectations.

Business Editors

BLACKWOOD, N.J.--(BUSINESS WIRE)--July 10, 2001

Weak US Economy Cited for Industrial Scanner

and Large End-User Booking Delays

Metrologic Instruments, Inc. (NASDAQ-NMS:MTLG), a leading manufacturer of bar code scanner and high-speed automated data capture solutions using laser, holographic and vision-based technologies, today reported that it expects sales and earnings for the three months ended June 30, 2001 to be less than the Company's and securities analysts' expectations.

Citing delays in anticipated Industrial, OEM ("original equipment manufacturers") and large end-user scanning sales opportunities primarily in North America resulting from the weak US economy, the Company stated that it expects sales increased 22% to approximately $28.1 million for the three months ended June 30, 2001, compared with $23.1 million for the same period a year ago. The delays in these industrial and large end-user sales opportunities in North America were offset by sales from recently acquired Adaptive Optics Associates, Inc. ("AOA"), and increases in sales from Metrologic's European and Asian operations. Company and securities analyst expectations for sales for the three months ended June 30, 2001 were $31 million to $33 million.

Commenting on the sales shortfall, Thomas E. Mills IV, Metrologic's President and COO stated, "While we are very disappointed with the continued delays of many of our larger sales opportunities in North America, it is important to note that the vast majority of these opportunities are still expected to be consummated in 2001. The present economic environment, particularly in the North American industrial and OEM markets, has caused the timing of expected orders to be more unpredictable than usual."

Continued Mr. Mills, "It is important to note that Metrologic's Point-of-Sale ("POS") scanner business remains strong globally, including in North America, with an 8% sequential increase in sales compared with the three months ended March 31, 2001. Also, sales of our North American distributors have also reported increases to their customers of Metrologic's scanners in this second quarter. Globally, sales from our European operations are expected to have increased by over 30% in local currency terms in the second quarter, 23% in US dollars, and sales from our Asian-based operations, including our new office in Japan, also experienced strong growth in this second quarter. Metrologic's base POS business remains strong."

The Company also expects positive cash flow from operations of over $2.0 million for the three months ended June 30, 2001, compared with cash used in operations of ($6.0) million for the same period a year ago, an increase of approximately $8.0 million not considering foreign currency effects. For the six months ended June 30, 2001 the Company expects positive cash flow from operations of approximately $9.0 million, compared with cash used in operations of ($9.2) million for the same period a year ago, an increase of over $18.0 million not considering foreign currency effects.

Overall borrowings also decreased for the three months ended June 30, 2001 to approximately $41.5 million, representing a $2.5 million decrease since March 31, 2001 and a $6.7 million decrease since the date of the AOA acquisition. Due to the anticipated net loss, the Company will be in default with regard to certain covenants in its loan agreements with its banks, but is presently in discussions with its banks with respect to obtaining a waiver of those defaults. In addition, the Company is reviewing converting the current working capital facility to an asset-based arrangement. The Company believes that an asset-based arrangement would provide it more flexibility to finance the Company's working capital needs.

The Company expects operating income of $0.4 million for the three months ended June 30, 2001, compared with $1.8 million for the same period a year ago. Cumulative EBITDA for the past four quarters is expected to be approximately $8.0 million. The Company expects to have a net loss, after interest expense and goodwill amortization relating to the acquisition of AOA, for the three months ended June 30, 2001 of between ($0.14) and ($0.17) per diluted loss per share. The Company and securities analysts expected net income of between $0.07 and $0.09 diluted earnings per share, for the three months ended June 30, 2001. This compares with net income of $0.21 diluted earnings per share, for the same period a year ago. The Company expects to announce its financial results on August 9, 2001.

Commenting on the second quarter financial results, Mr. C. Harry Knowles, Chairman and CEO stated, "Even though some of our larger sales opportunities slipped past the second quarter, the Company remains financially strong as accounts receivable and inventories continued to be reduced, resulting in positive cash flow from operations of over $2.0 million. In April 2001, the Company reduced headcount by approximately 10% and other operating costs aggregating approximately $6 million on an annualized basis. The full benefit of these cost reductions will start to be reflected in the third quarter of 2001. We have taken corrective measures to restore the Company to profitability notwithstanding the weak value of the euro compared to the US dollar, including price increases of our products sold in Europe."

About Metrologic

Metrologic designs, manufactures and markets bar code scanning and high-speed automated data capture solutions using laser, holographic and vision-based technologies. Metrologic offers expertise in 1D and 2D bar code reading, optical character recognition, image lift, and parcel dimensioning and singulation detection for customers in retail, commercial, manufacturing, transportation and logistics, and postal and parcel delivery industries. In addition to its extensive line of bar code scanning and vision system equipment, the Company also provides laser beam delivery and control systems to semi-conductor and fiber optic manufacturers, as well as a variety of highly sophisticated optical systems. Metrologic products are sold in more than 100 countries worldwide through Metrologic's sales, service and distribution offices located in North and South America, Europe and Asia. For more information please call 1-800-ID-METRO or visit www.metrologic.com.

Forward-Looking Statement

Forward-looking statements contained in this release are highly dependent upon a variety of important factors which would cause actual results to differ materially from those reflected in such forward looking statements. Specifically, the factors that could affect this outlook include: Metrologic's ability to integrate AOA with other Metrologic subsidiaries, and realize anticipated impact on results of operations; foreign currency fluctuations with the US dollar; the timing, introduction and market acceptance of Metrologic's new products; pricing pressures; competitive factors; sales cycles of Metrologic's products; Metrologic's ability to control manufacturing and operating costs which affect future profitability; technological changes in the scanner industry, specifically holographic scanners; availability of patent protection for Metrologic's holographic scanners and other products; general economic conditions, the disposition of legal issues and Metrologic's ability to obtain waivers with respect to covenants with its bank loan agreement and to convert the loans to an asset-based facility. When used in this release and documents referenced, the words "believe," "forecast," "expects," "expected" and similar expressions as they relate to Metrologic or its management, are intended to identify such forward looking statements. For additional factors, please see Metrologic's reports filed with the Securities and Exchange Commission.
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Publication:Business Wire
Geographic Code:1USA
Date:Jul 10, 2001
Words:1192
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