The Toronto-based firm expects lower revenues in the third quarter as most of its revenues in Q2 came from a single, $12 million order from a Central Asian customer, but hopes revenues will bump up again for the fourth quarter.
The demand for Enablence's business is strong, chief executive Tim Thorsteinson said, adding that it was a difficulty in making forecasts that prompted the company to avoid guidance for this quarter.
The last two quarters, Enablence missed guidance, including for the second quarter. In January, the firm warned that two delayed orders would push down its second-quarter revenues from an expected $40 million to $45 million.
"As an aside, if we had given guidance, everybody would have thought it was a wonderful quarter," Mr. Thorsteinson said in a conference call to analysts Wednesday morning.
The firm will also not provide guidance for the four quarters ending June 30, 2011; before, Enablence had forecast between $140 million and $150 million in revenues and positive earnings before interest, taxes, depreciation and amortization.
In the meantime, the fibre-to-the-home provider will work to reduce its quarterly expenses by between $1 million and $2 million, specifically by reducing staff, consulting costs and other items in relation to its US$50 million takeover of Israel's Teledata Networks last year.
Drawing from an experience in the broadcast market, Mr. Thorsteinson said gross margin improvement would increase revenues in a situation of flat growth, and accelerate revenues should growth do better than that.
"I decided it was neve going to do more than $35 million in the (broadcast) market, and we merged the margins up from 32 to 55 per cent," Mr. Thorsteinson said of his experience. "We can get margin improvement in any market."
The company is also working to diversify its customers, sell more service contracts and consolidate its supply chain on the back of a new component joint venture in Foshan, China.
The venture, called Sunsea-Enablence Optoelectronics, was announced in December and is expected to bring down manufacturing costs once things get going in July, the first quarter of fiscal 2012.
Enablence is currently operating in a 14-month fiscal year; it changed its year end to July 30 from April 30 last year to bring its fiscal year in line with that of Teledata.
The company's systems division fuelled most of the increase in Q2 2011 with $25.7 million in revenues, which included the company's single-largest order ever, for $12 million, to a Central Asian customer.
Enablence's optical components and subsystems division generated $8.8 million in revenues, its highest yet.
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