January 11, 2006 Salem, NH -- StockerYale, Inc. , Inc. has announced a realignment of operations into three core growth businesses: lasers, LEDs, and specialty optical fiber.
According to a press release, the realignment is intended to: accelerate growth of the company's highest gross margin businesses by better leveraging its technology and products; reduce the company's overall cost structure; improve customer focus and responsiveness of the company; and accelerate new product development through more focused R&D efforts.
The company says it will either sell to management or exit certain mature components of its product lines, specifically fiber-optic illumination, galvanometers, and its Singapore subsidiary. The company expects to incur charges, primarily non-cash, of up to $2 million in the fourth quarter of 2005, based on management's decision to exit those areas. Headcount will be reduced by approximately 14%, although core businesses will likely experience selective increases during 2006 to facilitate growth in those areas.
In December 2005, the company completed the sale/leaseback of its Montreal and Salem, New Hampshire 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 the company with approximately $4.8 million in cash, including lease deposits, at year's end.
"These actions have strengthened our balance sheet and reduced our leverage and interest expense," comments Marianne Molleur, chief financial officer of StockerYale. "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."
According to the release, the company's sales in the fourth quarter of 2005, including its mature product lines, were in the range of $4.8 to $5.0 million, which represents a 14% to 19% increase over the fourth quarter in 2004. The growth in revenues was led by a 21% increase in laser sales and a 170% increase in specialty optical fiber revenues. Mature product lines accounted for approximately 17% 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," concludes 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 towards achieving profitability."