EmailSatCon (SATC $2.07 -0.47) lowered its second quarter revenue guidance
to $45 million to $47 million from $50 million to $60 million versus the $55.85
million Capital IQ Consensus Estimate; the narrowed revenue range reflects the
continued impact of changes in government incentives in the company's higher
margin markets in Europe as well as delays on a few projects that have been
pushed into the third quarter.
The company also revised its gross margin estimate for the quarter, which is now
expected to be between 7% and 11%, below the company's previously announced
guidance of 17% to 20%. Second quarter gross margin was affected by the lower
rev range, and the effects of the slowdown in the European market. Additionally,
the company incurred one-time expenses relating to the revaluation of material
due to lower component costs, an excess inventory provision, and a non-recurring
expense associated with a major project in North America.
This project, along with an increase in accounts receivable reserves, will also
impact the company's second quarter operating expenses. To further support its
margin expansion efforts, the company announced today that it conducted a global
restructuring of its workforce that resulted in a 15% reduction in staff. This
is expected to provide the co with compensation-related cash savings of approx.
$5.0 million per year, beginning in the third quarter of 2011. The company
expects to record a pre-tax charge of ~$1.0 million in the second quarter
related to this initiative.
The company also announced that it entered into a securities purchase agreement
with an institutional investor whereby it raised $16 million in gross proceeds
through the issuance of subordinated convertible notes maturing July 1, 2013.
than one year.
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