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Original Source: FD (FAIR DISCLOSURE) WIRE
. Barry Hollingsworth, Stratos Lightwave, Inc., CFO . Andy Harris, Stratos Lightwave, Inc., President, CEO . Michael Coady, B. Riley & Co., Analyst . Chris McFadden, Goldman Sachs, Analyst . Steve Balman, Analyst . Rob Amman, RK Capital, Analyst
The Co. reported 2Q07 net revenues of $23.2m and an operating income of $255,000 vs. an operating loss of $1.7m in 2Q06.
A. Key Data From Call 1. 2Q07 net revenues = $23.2m. 2. 2Q07 operating income = $255,000. 3. 2Q07 consolidated GM = 37.9%. 4. 2Q07 opex = $8.6m. 5. 2Q07 CapEx = $300,000. 6. 2Q07 avg. DSO for trade AR = 57. 7. Cash and short-term investments at the end of 2Q07 = $26.1m.
8. 2Q07 share repurchase = 97,000 shares at a cost of just under
S1. 2Q07 Financial Review (B.H.) 1. Highlights: 1. Net revenues were $23.2m. 1. 22% increase from $19m in 2Q06. 2. 10% sequential increase. 2. Revenues included $196,000 of royalty fees for the licensing of active and passive optical patents.
1. Currently has 132 patents issued and an additional 25 patents pending. 3. End markets of sales were as follows: 1. Telecom and enterprise, 43%. 1. Enterprise includes the storage area network market, datacom market, and private business networks. 2. 36% of sales went to the military market. 3. 21% of sales went to other categories such as industrial, medical, and video. 4. RF Microwave sales contributed $11m, representing 13% increase
over 2Q06, and 6% sequential increase. 1. The largest customer within the RF Microwave group was Lockheed Martin representing about 6% of total sales in 2Q07. 2. Other large customers within RF Microwave included General Dynamics, EDO Corporation, and the national telephone co. in Mexico, Telmex. 3. RF Microwave GM was 38.8% vs. 38% in 1Q07 and 43.6% in 2Q06. 5. The optical side of the business contributed $12m of product sales, 29% increase over 2Q06 and 13% increase sequentially. 1. Sales within the optical group were just about evenly distributed between active and passive products. 2. The largest customer in the optical group was EDO Corporation, had about 9% of sales. 3. GM on the optical side was 37.1% vs. 23.7% in 1Q07 and 28% in 2Q06. 6. On a consolidated basis: 1. The Co.'s largest customer in 2Q07 represented 7% of
consolidated sales. 7. Consolidated cost of sales were $14.4m.
8. Of this amount: 1. Direct materials represented 54%.
2. Direct labor was 16%. 3. Factory overhead was 30% of cost of sales. 9. Consolidated GM was 37.9% vs. 35.5% in 2Q06 and 30.7% in 1Q07. 1. The sequential increase in consolidated GM was due primarily to changes in product mix, ongoing cost reductions, and selected price increases particularly in optical products. 2. Expenses: 1. Opex was $8.6m vs. $7.9m in 2Q06, and $8.4m in 1Q07, excluding restructuring charges the Co. had in 2Q06.
2. Total D&A was $2.2m. 3. CapEx was $300,000. 1. The excess depreciation over CapEx was largely due to the historical purchase of software and computer equipment. 2. Approx. $2.5m of annual depreciation or about $600,000 per qtr. will be going away beginning in 1Q08 because STLW is getting to the tail end of some of its fixed asset lives. 4. Of $2.2m in 2Q07 D&A: 1. $650,000 was in cost of sales. 2. $1.6m in Opex, primarily in G&A. 5. Of $3.7m in G&A expense, about $1.4m was D&A. 3. Income & DSO:
1. Operating …