MAY 5--DALSA Corporation (Waterloo, ON, Canada) has reported first-quarter revenues of $36.9 million and net income of $2.7 million, or $0.16 earnings per share, diluted. "Although the first quarter is historically a slower one for the company, we were pleased to see continued robust digital-imaging sales into the semiconductor-inspection and professional photography/broadcast segments, as well as strong MEMS shipments in our semiconductor business," commented Savvas Chamberlain, CEO of DALSA.
In the first quarter, the digital-imaging business posted revenues of $24.1 million, up 0.9% from the first quarter of 2004. Net income was $1.8 million in the first quarter, down $0.8 million compared to the same period last year. Net income for digital imaging was impacted by a $0.9 million or $0.05/share loss from the company's digital cinema initiative, which is expected to be break even for the full year, with income improving as revenue levels increase. The overall outlook for digital imaging remains positive, with the backlog increasing $4.4 million to $42.6 million quarter-over-quarter due to increased order activity.
The semiconductor business posted revenue of $12.8 million in the first quarter, a 1.1% decrease from the same period last year. Net income was $0.9 million, down $0.4 million from the same quarter in 2004. Net income was lower due to an incremental $1 million spent on research and development associated with the launch of the new proprietary MEMS processes.
Management believes that the first quarter was the low point of the industry-wide inventory correction that started in the second half of 2004. In the latter part of the first quarter, the division started to see increased order activity with the book-to-bill ratio also increasing through the quarter. The order backlog was $12.4 million, down from $12.8 million at the end of 2004. Semiconductor sales are expected to increase in the second quarter of 2005. Management continues to expect overall sales growth in 2005, as the new MEMS volume production comes online in the second half of the year and as customers return to their traditional ordering patterns.
Overall, gross margins in the quarter were 40.2%, down 4.1 percentage points from the first quarter of 2004. Margins were lower in the digital-imaging business due to product mix and lower margins in digital cinema. Margins in the semiconductor business were lower due to lower capacity utilization. Management expects overall margins to remain within its target range of 40%--45% throughout 2005.
Cash provided from operating activities was $4.8 million in the quarter compared to $5.9 million in the same period of 2004. Capital expenditures in the quarter, which were mainly related to MEMS facility expansion in Bromont and the purchase of rental inventory in digital cinema, were $8.8 million. The investment in property and equipment resulted in a decrease in the net cash position of the company during the quarter of $3.9 million.
DALSA has acquired all of the issued and outstanding securities of Coreco Inc. pursuant to the previously announced Plan of Arrangement. The company will now begin integrating the new business unit into its operations. Management expects the acquisition to be accretive to earnings in the current year.
The company's financial goals remain unchanged from those originally communicated on January 27, 2005. The company's financial goals for 2005 are $192 million to $208 million in revenue, with net income in the range of $21.0 million to $22.5 million, or $1.22 to $1.31/share, diluted. Management expects revenues in the second quarter of 2005 to be in the range of $40 million to $43 million. These goals do not include any contribution or impact from the DALSA Coreco business.
For further details, please refer to the First Quarter 2005 Financial Statements, accompanying notes, and management's discussion and analysis on the DALSA Web site: www.dalsa.com/investor/2005/DSA_2005Q1_release.pdf.