13 Mar 2013
Thanks to growing demand for both CO2 and fiber lasers, the US company reports a 6% rise in laser sales in the latest quarter.
Restructured laser and precision scanning company GSI Group saw sales of lasers rise in its most recent quarter, despite an overall decrease in its wider business.
The Bedford, Massachusetts, firm reported laser sales of $27.8 million for the closing quarter of 2012, up 6% from the same period in 2011. While the total was dragged down by slower demand for specialty lasers from the scientific community, sales of industrial CO2 and fiber lasers were up strongly.
Fiber lasers is one of GSI’s priority areas for investment, with cash saved through the company’s recent “12 x 12” restructuring effort being funneled into the development of higher-power sources at UK subsidiary JK Lasers and a reduced bill of materials.
CEO John Roush told investors that GSI’s new “FL4” fiber laser architecture would be the key to ramping that part of the business sustainably, and he is hopeful that the development would be completed by the end of this year.
Although rising demand saw annual fiber laser sales grow by a factor of three in 2012 – admittedly from a low base – Roush added that the company was to some degree “gating” sales of the products while the new lower-cost architectures remain in development.
Describing economic conditions as “still choppy” and noting that a number of customers, particularly in the area of microelectronics, were unable to commit to long-term orders that would improve revenue visibility, Roush and the GSI team are basing their 2013 financial guidance on the expectation of little change in the macroeconomic picture.
Thanks to its $82.5 million cash acquisition of NDS Surgical Imaging in mid-January, GSI now has a much more significant chunk of its sales revenues coming from the medical equipment sector. But, as noted by Carl Zeiss Meditec recently, the impact of changes to the US healthcare system is already being felt, with customers placing fewer orders.
NDS specializes in high-performance displays used by surgeons in the operating room and also by radiologists, including a patent-pending color-correction technology.
Roush said that the integration of NDS was progressing “extremely well”, but with demand down on prior expectations and the risk that the new subsidiary would also lose market share with a major European OEM customer, GSI has cut its forecast for overall sales this year by $10 million.
However, in the long run Roush expects GSI to benefit from the trends towards greater integration of imaging technologies in the operating room, and by the increased adoption of minimally invasive surgical techniques such as laparoscopies – where images of abdominal organs and tissues are relayed to a display.
“The medical equipment market does appear to be experiencing headwinds related to the implementation of the 2.3% medical device tax, and the uncertainty around Medicare and Medicaid reimbursement rates for this year,” said the CEO. “We've seen a similar dynamic in the GSI medical printers business where order rates in 2013 are down over 30 percent versus a year ago.”
Partly resulting from that uncertainty, GSI’s full-year revenues are now expected to come in at between $345 million and $355 million, along with an adjusted EBITDA of between $50 million and $55 million.
Those figures are based on continuing operations, though it is entirely possible that with a new credit agreement in place GSI may make further acquisitions before the end of the year.
“We have a solid foundation on which we can drive growth and improvement,” said Roush as he rounded up the full-year results investor call. “Our agenda for 2013 is clear. We'll complete the successful integration of NDS and look to follow-on with additional growth initiatives and acquisitions within the medical components space.
“We will continue to invest on our other growth platforms of scanning solutions and fiber lasers, both of which entail organic growth investment and possible acquisitions into those platforms.”
He concluded: “It's true that economic uncertainty remains a significant part of the landscape in which we operate. I don't expect that to change anytime soon. We've factored that into our plans as best we can. If the fiscal concerns that plague major nations make progress and the macro environment improves, that will be an upside to our plans and our estimates.”
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