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Electro Scientific Industries, Inc. (Nasdaq:ESIO), an innovator in laser-based manufacturing solutions for the micro-machining industry, today announced a corporate reorganization that is designed to better position ESI for the future. The objective is to simplify the structure, improve execution, and increase consistency of earnings.
The company announced that it is reorganizing its management team from a business unit to a functional structure, relocating sales, service and operations leadership positions to Asia, closing its facilities in Montreal, Canada, and Napa, California, downsizing its Sunnyvale, California facility, and making other select reductions across the company. The actions are expected to be largely completed by the end of June 2017.
The financial impact of the actions is expected to reduce the company's cost structure by $10 to $12 million on an annualized basis and lower its non-GAAP EBITDA breakeven point to approximately $35 million of quarterly revenue once the actions are fully implemented. The company expects pre-tax charges of $6.5 to $8.5 million, of which approximately $5 million is expected to be recorded in the fourth quarter of fiscal 2017.
"We are streamlining our organization and reengineering business processes to transform the way our company gets things done," stated Michael Burger, CEO of ESI. "Our top corporate priorities are to drive adoption of our new products, improve execution and deliver more consistent earnings over time. The new organizational structure should allow us to lower our breakeven revenue level while being more efficient and effective in addressing the long-term needs of our customers within our targeted markets."
As part of this restructuring the company has also created a success model, targeting an adjusted gross margin of 44% and adjusted EBITDA of 8% on an annual basis. The company expects to achieve these levels of performance over the next 8-10 quarters.
The company will hold a conference call today at 11:00 a.m. ET, hosted by CEO Michael Burger and CFO Paul Oldham. The call can be accessed by calling 888-419-5570 (domestic participants) or 617-896-9871 (international participants). The conference ID number is 93151806. A live audio webcast can be accessed at www.esi.com.
About ESI, Inc.
ESI's integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials in ways that differentiate their consumer electronics, wearable devices, semiconductor circuits and high-precision components for market advantage. ESI's laser-based manufacturing solutions feature the micro-machining industry's highest precision and speed, and target the lowest total cost of ownership. ESI is headquartered in Portland, Oregon, with global operations and subsidiaries in Asia, Europe and North America. More information is available at www.esi.com.
