Sipex Reports Second Quarter 2007 Financial Results

August 16, 2007 by Jeff Shepard

Sipex Corp. reported fiscal second quarter operating results. Net sales for the second quarter of 2007 were $18.4 million, up 9% from the first quarter of 2007 net sales of $16.9 million and down 12% from net sales of $21.0 million recorded in the year-ago period. Second quarter 2007 GAAP net loss was $8.0 million, or $0.42 per share, compared with GAAP net loss of $6.3 million, or $0.34 per share, in the previous quarter and GAAP net loss of $6.9 million, or $0.39 per share, in the year-ago period. The second quarter 2007 GAAP net loss included stock-based compensation of $0.9 million, or $0.05 per share.

Second quarter 2007 non-GAAP net loss was $7.2 million, or $0.38 per share, compared to $5.3 million, or $0.29 per share, in the previous quarter and compared to $6.1 million, or $0.34 per share in the second quarter of 2006. Non-GAAP results exclude the impact of stock-based compensation, restructuring, and additional depreciation expense.

"I am encouraged by our top-line results as we further penetrate top tier accounts, and the analog market continues to improve. Our core power business was up 28% in the quarter and interface was up 7.3%. The optics business, which we have put into harvest mode, declined 41% to under $1 million," said Ralph Schmitt, CEO of Sipex. "We did not perform as well in the gross margin area. The improvement in the market drove more commodity business at lower margins. We also had a significant impact due to foundry startup yield issues which now have been resolved. There has been an intense focus on reducing our higher cost inventories, and we made a significant impact in the quarter. Our inventory levels are now at $11.4 million. On a unit basis, we have reduced our inventory over 53 million units in the first half of this year. This is an important activity in order for us to get to the lower cost material at the foundries that will drive our gross margin improvement.

"Sipex’s improved delivery of new products continues with the introduction of 8 new products in the second quarter. Most notable were the completion of the 4.5 to 30V family of highly integrated dc to dc buck controllers that continue to move Sipex up the value added proprietary product curve. Sipex lighting solutions have continued to expand significantly. We now have a simple 2 channel device for low end mobile platforms all the way to a system level, 7-channel product for feature rich handsets."

"We hit a significant milestone in July by being listed on the NASDAQ Global Market. This is a major step in our continuing improvement of Sipex," explained Ray Wallin, CFO of Sipex. "Operating expenses increased in the quarter due primarily to $1.4 million of one-time merger related costs. Cost reductions have continued on an operating basis to bring our operating expenses slightly below $9 million per quarter excluding stock compensation expense and one-time merger related costs."