BEDFORD, Mass., Aug. 6, 2014 /PRNewswire/ -- GSI Group Inc. (NASDAQ: GSIG) (the “Company”, “we”, “our”, “GSI”), a global leader and supplier of precision photonics and motion control components and subsystems to the medical equipment and advanced industrial technology markets, today reported financial results for the second quarter of 2014. Unless otherwise noted, all financial results in this press release are GAAP measures from continuing operations. The reported results from continuing operations exclude the operating results of the Company’s Scientific Lasers business, which is classified as discontinued operations.

Second Quarter

During the second quarter of 2014, GSI generated revenue of $96.9 million, an increase of 21.5% from $79.8 million in the second quarter of 2013. The acquisition of JADAK accounted for a 19.5% increase in revenue year over year, and changes in foreign exchange rates contributed to a 1.4% increase in revenue. Excluding the impact of the JADAK acquisition and changes in foreign exchange rates, the Company’s revenue increased 0.6% compared to the second quarter of 2013.

“We are pleased to deliver another strong quarter that saw solid commercial progress across most of our businesses, as evidenced by our new product and customer wins and overall demand for our technologies,” said John Roush, Chief Executive Officer. “Our Laser Products segment was up 8.4%, our Precision Motion segment was up 6.3%, and our Medical Technologies segment was up 57.2%, which included strong organic revenue growth for JADAK.”

In the second quarter of 2014, operating income from continuing operations was $6.5 million, or 6.7% of revenue, compared to $5.4 million, or 6.8% of revenue, in the second quarter of 2013. The increase in operating income from continuing operations was primarily attributable to an increase in gross profit, lower operating expenses as a percentage of revenue and a decrease in restructuring and acquisition related costs.

Diluted earnings per share (“EPS”) from continuing operations was $0.10 in the second quarter of 2014, compared to $0.03 in the second quarter of 2013. Non-GAAP earnings per share, a non-GAAP financial measure that includes the adjustments noted in the reconciliation below, was $0.19 in the second quarter of 2014, compared to $0.14 in the second quarter of 2013.

Adjusted EBITDA, a non-GAAP financial measure that includes the adjustments noted in the reconciliation below, was $14.5 million in the second quarter of 2014, compared to $12.5 million in the second quarter of 2013.

“While we are making great strides with our growth strategies, our manufacturing sites are undergoing some execution challenges, as we ramp up new product introductions, and expand capacity to support new customer wins and meaningful increases in overall demand,” said John Roush. “However, we are investing for growth as we aggressively implement our continuous improvement initiative across our largest manufacturing centers.”

As of June 27, 2014, cash and cash equivalents were $45.0 million, while total debt was $134.8 million. The Company completed the second quarter of 2014 with approximately $89.7 million of Net Debt, a non-GAAP measure as defined in the non-GAAP reconciliation below.

Operating cash flow from continuing operations for the second quarter of 2014 was $17.1 million, compared to $14.2 million in the second quarter of 2013. Operating cash flow from continuing operations, for the first six months of 2014 was $19.9 million, compared to $20.5 million in the first six months of 2013.

Financial Outlook

For the third quarter of 2014, the Company expects revenue from continuing operations of $95 million to $97 million, an increase of 19% to 21%, on a reported basis, compared to the third quarter of 2013. The Company expects Adjusted EBITDA to be in the range of $14.0 million to $15.5 million for the third quarter of 2014.

“We expect to see continued strong demand for our products and technologies over the course of the year. We believe we are well positioned to capture strong secular growth trends in the medical and advanced industrial technology markets,” said John Roush. “We are confident that over time, our continuous improvement initiatives will enable us to drive gross margin expansion and sustainable profitable growth.”

Conference Call Information

GSI Group will host a conference call on Wednesday, August 6, 2014 at 5:00 p.m. EDT to discuss these results. John A. Roush, Chief Executive Officer, and Robert Buckley, Chief Financial Officer, will host the conference call.

To access the call, please dial (877) 482-5124 prior to the scheduled conference call time. The conference ID number is 9924 6443.

A playback of this conference call will be available beginning at 8:00 p.m. EDT, Wednesday, August 6, 2014. The playback phone number is (855) 859-2056 or (404) 537-3406 and the code number is 9924 6443. The playback will remain available until 8:00 p.m. EDT, Wednesday, August 27, 2014.

A replay of the audio webcast will be available four hours after the conclusion of the call on the Investor Relations section of the Company’s web site at www.gsig.com.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures used in this press release are non-GAAP gross profit, gross profit margin, operating income from continuing operations, operating margin, income from continuing operations before income taxes, income from continuing operations, net of tax, diluted earnings per share from continuing operations, Adjusted EBITDA, and net debt.

The Company believes that the non-GAAP financial measures provide useful and supplementary information to investors regarding the Company’s quarterly performance. It is management’s belief that these non-GAAP financial measures are particularly useful to investors because of the significant changes that have occurred outside of the Company’s day-to-day business in accordance with the execution of the Company’s strategy. This strategy includes streamlining the Company’s existing operations through site and functional consolidations, strategic divestitures, expanding the Company’s business through significant internal investments, and broadening the Company’s product and service offerings through acquisition of innovative and complementary technologies and solutions. The financial impact of certain elements of these activities, particularly acquisitions, divestitures, and site and functional restructurings, are often large relative to the Company’s overall financial performance, which can adversely affect the comparability of its operating results and investors’ ability to analyze the business from period to period.

The Company’s Adjusted EBITDA, a non-GAAP financial measure, is used by management to evaluate operating performance, communicate financial results to the Board of Directors, benchmark results against historical performance and the performance of peers, and evaluate investment opportunities including acquisitions and divestitures. In addition, Adjusted EBITDA is used to determine bonus payments for senior management and employees. Accordingly, the Company believes that this non-GAAP measure provides greater transparency and insight into management’s method of analysis.

Non-GAAP financial measures should not be considered as substitutes for, or superior to, measures of financial performance prepared in accordance with GAAP. They exclude charges that have a material effect on the Company’s reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company’s financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Safe Harbor and Forward-Looking Information

Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements contained in this news release that do not relate to matters of historical fact should be considered forward-looking statements, and are generally identified by words such as “expect,” “intend,” “anticipate,” “estimate,” “believe,” “future,” “could,” “should,” “plan,” “aim,” and other similar expressions. These forward-looking statements include, but are not limited to, management’s plans and objectives for future operations, expenditures and product development; implementation of continuous improvement initiatives; expectations regarding anticipated financial performance; business prospects; anticipated sales performance; industry trends; market conditions; and other statements that are not historical facts.

These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, but not limited to, the following: economic and political conditions and the effects of these conditions on our customers’ businesses and level of business activity; our significant dependence upon our customers’ capital expenditures, which are subject to cyclical market fluctuations; our dependence upon our ability to respond to fluctuations in product demand; our ability to continually innovateand successfully commercialize our innovations; failure to introduce new products in a timely manner; customer order timing and other similar factors beyond our control; disruptions or breaches in security of our information technology systems; changes in interest rates, credit ratings or foreign currency exchange rates; risk associated with our operations in foreign countries; our increased use of outsourcing in foreign countries; our failure to comply with local import and export regulations in the jurisdictions in which we operate; our exposure to the credit risk of some of our customers and in weakened markets; our reliance on third party distribution channels; violations of our intellectual property rights and our ability to protect our intellectual property against infringement by third parties; risk of losing our competitive advantage; our failure to successfully integrate recent and future acquisitions into our business; our ability to make divestitures that provide business benefits; our ability to attract and retain key personnel; our restructuring and realignment activities and disruptions to our operations as a result of consolidation of our operations; product defects or problems integrating our products with other vendors’ products; disruptions in the supply of certain key components or other goods from our suppliers; production difficulties and product delivery delays or disruptions; our compliance, or our failure to comply, with various federal, state and foreign regulations; changes in governmental regulation of our business or products; our failure to implement new information technology systems and software successfully; our failure to realize the full value of our intangible assets; our ability to utilize our net operating loss carryforwards and other tax attributes; changes in tax laws, and fluctuations in our effective tax rates; being subject to U.S. federal income taxation even though we are a non-U.S. corporation; any need for additional capital to adequately respond to business challenges or opportunities and repay or refinance our existing indebtedness, which may not be available on acceptable terms or at all; volatility in the market price for our common shares; our ability to access cash and other assets of our subsidiaries; the influence over our business of certain significant shareholders; provisions of our articles of incorporation may delay or prevent a change in control; our significant existing indebtedness may limit our ability to engage in certain activities; and our failure to maintain appropriate internal controls in the future.

Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect the Company’s operating results and financial condition are discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, our subsequent filings with the Securities and Exchange Commission (“SEC”), and in our future filings with the SEC. Such statements are based on the Company’s beliefs and assumptions and on information currently available to the Company. The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this document except as required by law.

About GSI

GSI Group Inc. designs, develops, manufactures and sells precision photonics and motion control components and subsystems to Original Equipment Manufacturers (“OEM”) in the medical equipment and advanced industrial technology markets. The Company’s highly engineered enabling technologies include laser sources, beam delivery products, optical data collection and machine vision technologies, medical visualization and informatics solutions, and precision motion control products. It specializes in collaborating with OEM customers to adapt its component and subsystem technologies to deliver highly differentiated performance in their customers’ applications. GSI Group Inc.'s common shares are quoted on NASDAQ under the ticker symbol “GSIG”.

More information about GSI is available on the Company’s website at www.gsig.com. For additional information, please contact GSI Group Inc. Investor Relations at (781) 266-5137 or InvestorRelations@gsig.com.

GSI Group Inc.
Investor Relations Contact:
Robert J. Buckley
(781) 266-5137