Synergetics (NSDQ:SURG) is closing a King of Prussia, Penn., manufacturing facility that employs 24 workers, transferring production to an office in O’Fallon, Miss.
The announcement was made the same day that the Missouri medical device maker posted a shrinking bottom line and a 6% increase in sales for its 4th quarter.
"Our plans to close the ‘East’ manufacturing facility and to consolidate the manufacturing operations into our facility in O’Fallon is part of our broader focus on streamlining processes and shifting to a lower-cost operating model," president & CEO David Hable said in prepared remarks. "By centralizing manufacturing operations, we expect to improve production per employee, reduce operating costs and identify efficiencies, all while maintaining the world-class service levels our OEM partners demand."
The manufacturing move is expected to cost $900,000 over the next 14 months but to then yield about $1 million in savings per year beginning 2016, Synergetics reported.
The news hasn’t been great for SURG shares, which have dropped about 3.6% since Synergetics reported its earnings and facility closure yesterday.
The company posted earnings of $1.4 million, or 6¢ per diluted share, on sales of $17.9 million for the 3 months ended July 31, 2013. That compared with profits of $1.9 million, or 8¢ per share, on sales of $16.9 million during the same period in 2012.
Wall Street analysts had projected 4¢ per share in adjusted earnings for the 4th quarter, which Synergetics beat by 2¢. Nonetheless, shares were down 3.6% to $4.39 as of about 1:10 p.m. today.