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Giga-tronics (NASDAQ:GIGA)

Q4 2013 Earnings Call

June 27, 2013 4:30 pm ET

Executives

John R. Regazzi - Chief Executive Officer, President and Director

Steven Lance - Chief Financial Officer, Vice President of Finance and Secretary

Operator

Hello, and welcome to the Giga-tronics Fourth Quarter Earnings Conference Call. [Operator Instructions] Today, I am pleased to present Giga-tronics CEO, John Regazzi. Please go ahead.

John R. Regazzi

Thank you. Good afternoon, and thank you for joining our quarterly earnings conference call. The late scheduling of this call was due to my decision to give the company's new CFO the opportunity to gain sufficient familiarity with the business and the time to thoroughly review our numbers before accepting responsibility for their integrity.

I will be discussing the company's quarterly and year-end performance before opening the call to questions. But first, I'd like to introduce Mr. Steve Lance, our new Vice President of Finance and Chief Financial Officer, who joined Giga-tronics last month.

Steve has 25 years of financial experience in software and manufacturing companies, both public and private. Most recently, he was the Vice President of Finance at Taulia, a software startup in San Francisco. Before that, Steve was the Vice President of Finance and Administration at Sugar CRM, where he helped lead the company to profitability. Steve has also held financial management positions at a number of Silicon Valley companies, including Sum-Total Systems, ADAC Laboratories, Phoenix Technologies and KLA-Tencor. Plus, Steve is a Certified Public Accountant in the State of California. Steve will replace Mr. Frank Romejko, who will be leaving the company next month due to a retired -- scheduled retirement.

I will now turn the call over to Steve, who will read our Safe Harbor statement.

Steven Lance

Thank you, John. This conference call contains forward-looking statements concerning profitability, backlog of orders, shipments and the likelihood of realizing certain tax benefits. Actual results may differ significantly due to risks and uncertainties, such as future orders, cancellations or deferral of orders, disputes of a performance, the ability to collect receivables and general market conditions.

For further discussion, see the most recent annual report filed by Giga-tronics on Form 10-K for the fiscal year ended March 31, 2012, Part I, under the heading Certain Factors Which May Adversely Affect Future Operations or an Investment in Giga-tronics; and Part II, under the heading Management's Discussion and Analysis of Financial Conditions and Results of Operations.

John, I'll turn it back to you.

John R. Regazzi

Thank you, Steve. An approximately $2.8 million in revenue for the quarter, Giga-tronics posted a net loss of $1,570,000, or $0.31 per fully diluted share. And for the fiscal year ending March 30, 2013, Giga-tronics incurred a net loss of $4,206,000, or $0.84 per fully diluted share, on revenue of $14,187,000.

These losses continue to be the result of the company's stated twin strategies of restructuring itself to better align our fixed overhead expenses with the current sales volume and of the need for continued investment in new product development, which we believe is necessary to achieve future revenue and growth and profitability.

Total R&D investments for the current fiscal year increased 48% over the prior year and represented 30% of sales, which is more than twice what would be considered normal. We also incurred more than $400,000 in restructuring expense this past fiscal year and we've continued incurring expenses associated with the Microsource move during the first quarter of the current fiscal year. However, I am pleased to finally report that the move of our Microsource operation has been completed as of the end of May 2013. This has been a complex move and I'm very pleased with the outcome in how both organizations handled the tasks. Our ability to properly handle sensitive data has been certified by the Department of Defense and we have been approved by our customer to begin shipment of Microsource products from the San Ramon facility.

We anticipate significant operating savings going forward beginning in the second quarter of the current fiscal year, which we think will move the company towards break-even performance. The new product program, which is the other leg of our strategy, continues to make progress in R&D and it remains on track for introduction this fiscal year.

With that, I'd like the to open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] We have no questions at this time.

John R. Regazzi

Okay. Ayisha, thank you. I really appreciate everybody's continued interest in the company and look forward to talking to you again next quarter.

Operator

Thank you. Ladies and gentlemen, this concludes our conference today. Thank you, all, for participating. You may now disconnect your lines.

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