GSI Group CEO says company expecting strong cash flow in 2011

By Jennifer Lanning Drey

Savannah, Ga., March 28 - GSI Group, Inc. expects to generate strong cash flow in 2011, which will provide the resources to secure the company and allow it to pursue strategic growth alternatives, John Roush, its chief executive officer, said Monday during the company's fourth-quarter and year-end earnings conference call.

GSI reported full-year cash flow used in operations of $4.7 million, which was an improvement from a usage of $25.8 million in 2009.

Glenn Davis, the company's principal financial officer, noted that the improvement came despite the company absorbing significant fees associated with its bankruptcy filing, reorganization and restructuring and interest payments on its debt in 2010.

"Absent these expenditures, the underlying businesses continued to generate significant cash flows, which gives us confidence in the health of our business and its ability to drive profitable growth," he said.

The company ended 2010 with $57 million of cash on hand and $107 million of total debt after emerging from bankruptcy in July 2010.

GSI reported fourth-quarter adjusted EBITDA of $14.4 million, up from adjusted EBITDA of $8.2 million in the fourth quarter of 2009. Full-year adjusted EBITDA was $74.7 million, compared with $23.4 million for 2009.

Fourth-quarter revenues were $91.6 million, up 26% from the same period in 2009. GSI reported full-year revenues of $383.5 million, representing a 51% increase from revenues reported in 2010.

"The fourth quarter was a strong one for the company and capped a year of great progress and strong financial performance," Roush said.

"The company moved beyond the shadow of Chapter 11 and the economic downturn of 2008 and 2009 and has re-established itself in the marketplace and with the financial community," he said.

Looking into 2011, GSI expects business conditions to remain positive and macroeconomic conditions to be favorable, Davis said later in the call.

However, GSI is deferring providing full-year guidance until it reaches a level of maturity and stability that allows it to do so confidently, Davis said.

The company expects its goals for multi-year growth, margin expansion and cash generation to be shaped throughout 2011, Roush said.

Bedford, Mass.-based GSI makes precision motion component products, lasers and laser-based manufacturing systems.

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