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22 May 2014
Revenues down nearly 40 per cent year-on-year for the New Jersey optics firm.
US-based Inrad Optics has reported a sharp decline in sales and a much wider loss for the opening quarter of 2014, as it battles to cut operating costs.
Revenues for the three months ended March 31 came in at only $1.9 million, down 38 per cent on the same period in 2013, a result of lower sales to a single major defense customer and a more widespread decline in demand across customers in academic laboratories.
“Sales of optical components decreased by 35 per cent while sales of laser devices/instrumentation products decreased by 44.3 per cent for the three months ended March 31, 2014 compared with the three months ended March 31, 2013,” announced Inrad in its filing with the Securities & Exchange Commission (SEC).
As a result of that and its relatively high level of fixed costs, the company reported a negative gross margin for the latest quarter, and losses widened significantly to $875,000 (from $169,000 a year ago).
That has hit the Northvale, New Jersey, firm’s cash position – it now lists $2 million in cash assets on its balance sheet, down from $2.45 million at the end of December. In 2012, Inrad extended the maturity date of $2.5 million in convertible promissory notes held by a company called Clarex Ltd to April 1, 2015. Those notes bear interest at a rate of 6 per cent.
Transformational change
On the positive side, increased shipments for laser systems and process control and metrology markets partially offset the overall decline, while the closure of Inrad’s Sarasota, Florida, metal optics facility at the end of March should result in some cost savings that will help improve the gross margin figure.
At $2.5 million, bookings in the first quarter of 2014 were also up sharply on the same period last year, thanks to orders from what the company calls a “key defense prime contractor” and two key semiconductor customers.
CEO Amy Eskilson said that she remained “cautiously optimistic” despite the latest results: "Our Q1 bookings were higher than anticipated, and quote activity was also higher compared with the first quarter of 2013,” she noted.
“We continue to add customers and replace legacy, end-of-lifecycle programs with new orders. I am also happy to report that our Sarasota consolidation remains on schedule and on budget. The benefits of that effort will be manifest in the coming months.”
Overall annual reductions in operational costs as a result of the Sarasota closure could be as high as $1 million, reported the firm in a May 15 filing with the SEC.
In a letter to shareholders earlier this month, Eskilson admitted that the company’s performance during 2013 “clearly did not meet our expectations”, as bookings slumped by one-fifth compared with the prior year. She explained that Inrad had suffered as a result of US federal government budget sequestration in March 2013, which effectively halved orders for its metal optics components.
“Positive transformational change and growth is never easy, but our marketplace demands it,” wrote the CEO. “The challenge ahead is significant…we are building a leaner and smarter business.”
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