Sevcon Reports Financial Results for Second Quarter Fiscal 2016
16 Maio 2016 - 5:30PM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the second
quarter of fiscal 2016 ended April 2, 2016.
Second-Quarter Fiscal 2016 Results
Summary
- Revenues increased to $13.2 million, from $10.3 million in the
second quarter of fiscal 2015, a 28% increase that reflected the
acquisition of Bassi, a manufacturer of battery chargers located in
Lugo, Italy, on January 29, 2016. Revenues included sales of $4.0
million by Bassi for the two months of February and March 2016.
Excluding Bassi, sales were $1.1 million lower than the prior-year
period, reflecting continued weakness on the industrials side of
the business as a result of macro-economic conditions, partially
offset by growth in the aerial work platform and airport ground
support categories. Foreign currency fluctuations decreased
reported sales in the second fiscal quarter by $253,000, or 2.4%,
mainly due to a stronger U.S. Dollar compared with both the British
Pound and the Euro than in the prior-year period.
- There was an operating loss of $1.67 million after charging
$1.1 million in acquisition costs associated with Bassi. The Bassi
charger division contributed $0.3 million to operating profit in
the period. Losses were recorded in both the controls and capacitor
divisions due to the sales shortfall year-on-year and continued
investment in sales and research and development to capitalize on
the many opportunities related to the global demand for
electrification.
- The Company recorded an interest expense charge in the quarter
of $109,000 that included interest due on the loan facility used to
fund the cash element of the Bassi acquisition.
- There was an income tax benefit of $90,000 in the second
quarter of fiscal 2016, compared with a charge of $65,000 in the
year-earlier quarter.
- The net loss attributable to common stockholders was
$1,692,000, or $0.43 per share, after a preferred stock dividend of
$122,000 or $0.03 per share, compared with net income of $539,000,
or $0.16 per share, a year earlier.
- We were awarded a multi-year, multi-million dollar contract by
a manufacturer of performance cars in the quarter from which we
recognized engineering services revenue using a “percentage of
completion” accounting method. Engineering services in total
represented 7% of revenue during the quarter, including this
contract award. The contract is for the development of the
controller to allow electrification of the drive system. The
contract covers engineering time and materials and is likely to
last four years. The customer has provided a follow-on non-binding
production forecast that contemplates up to $41 million in product
purchases over a five year period following successful completion
of the development phase; i.e., commencing in 2020. This contract
award is the latest in a series of on-road design wins which
demonstrates the power of our Gen5 platform and Sevcon’s proven
on-road experience.
Six Month Fiscal 2016 Results
Summary
- Revenues were $22.3 million, compared with $20.3 million in the
first six months of fiscal 2015. Excluding the sales recorded in
the Bassi charger division in the second quarter, sales in the
controls and capacitor divisions were $2.0 million lower than in
the prior-year period, reflecting lower demand in the industrials
side of the business. Foreign currency fluctuations decreased
reported sales in the first half of the year by $566,000, or 3%,
mainly due to a stronger U.S. Dollar compared with both the British
Pound and the Euro than in the prior-year period.
- There was an operating loss of $1.5 million, after charging
$1.4 million in acquisition costs associated with Bassi, compared
with operating income of $956,000 in the first six months of last
year. Excluding the one-time acquisition costs and $0.3 million of
operating contribution generated by the newly acquired Bassi
division, there was an operating loss of $0.4 million recorded by
the controls and capacitor divisions, largely reflecting the $2.0
million of lower sales year-on-year in those divisions.
- The Company recorded an interest expense charge in the first
six months of 2016 of $131,000 that included interest due on the
loan facility used to fund the cash element of the Bassi
acquisition.
- There was an income tax benefit of $79,000 in the first six
months of 2016, compared with a charge of $105,000 in the same
period last year.
- The net loss attributable to common stockholders was
$1,683,000, or $0.45 per share, after a preferred stock dividend of
$234,000, or $0.06 per share, compared with net income of $710,000,
or $0.21 per share, for the first six months of fiscal 2015.
Management Comments
“We reported strong revenue growth in the second
fiscal quarter due to the acquisition of Bassi, which more than
offset slower sales of our traditional controllers and capacitors,”
said Sevcon Chief Executive Officer Matt Boyle. “The lower
traditional sales were due to continued weakness on the industrial
side of the business as a result of macro-economic conditions and
customers reducing inventory. In addition, we reported lower sales
for on-road applications due to reduced demand from US customers
and lower revenue from engineering services compared with a year
ago.”
“Our Bassi acquisition performed excellently and
ahead of our expectations and the integration is proceeding well.
Bassi reported $4 million in sales since the January 29
acquisition, representing record months for the business. Adding
Bassi’s state-of-the-art battery charging technology and power
management capabilities to Sevcon’s advanced control technologies
significantly strengthens our ability to deliver the more
integrated solutions that our markets and our customers are
demanding.”
“The multi-year on-road design contract that we
secured from an automotive manufacturer is one of several similar
design wins that give us confidence for significant sales growth in
the future.”
“We expect continued growth from Bassi
throughout the year, and we are taking steps to increase production
and accelerate that growth even further. While our on-road business
will continue to be lumpy in the immediate future, our robust sales
pipeline portends well for the long-term. We expect our industrial
sales to stabilize and begin to improve in the second half of the
year after customers work through excess inventory. We are
executing well on our strategy to capitalize on the many
opportunities related to the global demand for electrification, and
we look forward to making further progress as we proceed in fiscal
2016,” concluded Boyle.
Second-Quarter Fiscal 2016 Conference
Call Details
Sevcon has scheduled a conference call to review
its results for the second quarter tomorrow, May 17, 2016 at 9:00
a.m. ET. Those who wish to listen to the conference call webcast
should visit the investor relations section of the company’s
website at http://ir.sevcon.com. The live call also can be accessed
by dialing (877) 407-5790 or (201) 689-8328 prior to the start of
the call. If you are unable to listen to the live call, the webcast
will be archived on the company’s website.
Second-Quarter Fiscal 2016 Financial Highlights
(In thousands except per-share
data)
|
Three months ended |
|
Six months ended |
|
(Unaudited) |
|
(Unaudited) |
|
April 2, |
|
Apr 4, |
|
April 2, |
|
Apr 4, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
Revenues |
$ |
13,181 |
|
|
$ |
10,340 |
|
|
$ |
22,296 |
|
|
$ |
20,273 |
|
Gross Profit |
|
4,123 |
|
|
|
4,561 |
|
|
|
8,238 |
|
|
|
8,570 |
|
Selling, general and
administrative and research and development expense |
|
(4,692 |
) |
|
|
(3,887 |
) |
|
|
(8,312 |
) |
|
|
(7,614 |
) |
Acquisition costs |
|
(1,101 |
) |
|
|
- |
|
|
|
(1,417 |
) |
|
|
- |
|
Operating (loss)
income |
|
(1,670 |
) |
|
|
674 |
|
|
|
(1,491 |
) |
|
|
956 |
|
Interest expense |
|
(109 |
) |
|
|
(14 |
) |
|
|
(131 |
) |
|
|
(40 |
) |
Interest income |
|
4 |
|
|
|
11 |
|
|
|
12 |
|
|
|
16 |
|
Foreign currency gain
(loss) |
|
106 |
|
|
|
235 |
|
|
|
35 |
|
|
|
279 |
|
Change in value of cash
flow hedges |
|
- |
|
|
|
(200 |
) |
|
|
- |
|
|
|
(200 |
) |
(Loss) income before
income taxes |
|
(1,669 |
) |
|
|
706 |
|
|
|
(1,575 |
) |
|
|
1,011 |
|
Income taxes benefit
(provision) |
|
90 |
|
|
|
(65 |
) |
|
|
79 |
|
|
|
(105 |
) |
Net (loss) income |
|
(1,579 |
) |
|
|
641 |
|
|
|
(1,496 |
) |
|
|
906 |
|
Net loss attributable to
non-controlling interest |
|
9 |
|
|
|
12 |
|
|
|
47 |
|
|
|
29 |
|
Net (loss) income
attributable to Sevcon, Inc. and subsidiaries |
|
(1,570 |
) |
|
|
653 |
|
|
|
(1,449 |
) |
|
|
935 |
|
Series A Preference Share
dividends |
|
(122 |
) |
|
|
(114 |
) |
|
|
(234 |
) |
|
|
(225 |
) |
Net (loss) income
attributable to common stockholders |
|
(1,692 |
) |
|
|
539 |
|
|
|
(1,683 |
) |
|
|
710 |
|
Basic (loss) income per
share |
$ |
(0.43 |
) |
|
$ |
0.16 |
|
|
$ |
(0.45 |
) |
|
$ |
0.21 |
|
Diluted (loss) income per
share |
$ |
(0.43 |
) |
|
$ |
0.14 |
|
|
$ |
(0.45 |
) |
|
$ |
0.19 |
|
Average shares outstanding
- Basic |
|
3,911 |
|
|
|
3,466 |
|
|
|
3,709 |
|
|
|
3,446 |
|
Average shares outstanding
- Diluted |
|
3,974 |
|
|
|
4,912 |
|
|
|
3,791 |
|
|
|
4,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarized Balance Sheet Data
|
(in thousands of dollars) |
|
April 2, |
|
September 30, |
|
2016 |
|
2015 |
|
(unaudited) |
|
(derived from audited statements) |
|
|
|
|
Cash and cash
equivalents |
$ |
6,726 |
|
|
$ |
8,048 |
|
Receivables |
|
10,988 |
|
|
|
9,462 |
|
Inventories |
|
13,256 |
|
|
|
6,790 |
|
Prepaid expenses and other
current assets |
|
3,673 |
|
|
|
3,581 |
|
Total current assets |
|
34,643 |
|
|
|
27,881 |
|
Intangible assets |
|
10,505 |
|
|
|
- |
|
Goodwill |
|
8,835 |
|
|
|
1,435 |
|
Other long-term
assets |
|
8,479 |
|
|
|
6,300 |
|
Total assets |
$ |
62,462 |
|
|
$ |
35,616 |
|
|
|
|
|
Current liabilities |
$ |
11,953 |
|
|
$ |
8,357 |
|
Liability for pension
benefits |
|
11,428 |
|
|
|
10,963 |
|
Long-term debt and other
long-term liabilities |
|
20,094 |
|
|
|
500 |
|
Stockholders’ equity |
|
18,950 |
|
|
|
15,712 |
|
Non-controlling
interest |
|
37 |
|
|
|
84 |
|
Total liabilities and
stockholders’ equity |
$ |
62,462 |
|
|
$ |
35,616 |
|
|
|
|
|
|
|
|
|
About Sevcon, Inc.
Sevcon is a global supplier of control and power
solutions for zero-emission, electric and hybrid vehicles. Its
products control on- and off-road vehicle speed and movement,
integrate specialized functions, optimize energy consumption and
help reduce air pollution. Sevcon’s recently acquired Bassi
Division produces battery chargers for electric vehicles; power
management and uninterrupted power source (UPS) systems for
industrial, medical and telecom applications; and electronic
instrumentation for battery laboratories. The company supplies
customers from its operations in the U.S., U.K., France, Germany,
Italy, China and the Asia Pacific region, as well as through an
international dealer network. Visit www.sevcon.com and
www.bassi-srl.eu.
Forward-Looking Statements
Statements in this release about the Company’s
anticipated financial results and growth, as well as those about
the development of its products and markets, including without
limitation statements about the benefits that may be obtained from
certain customer contracts, are forward-looking statements that are
based on management’s present expectations and involve risks and
uncertainties that could cause actual results to differ materially
from those projected. Important factors that could cause these
statements not to be realized include that we may not be able to
successfully integrate and manage the Bassi business, the Bassi
acquisition may not further our business strategy or results as we
expect, we may not be able to successfully complete the development
of the controllers contracted by particular customers, the
manufacturers may decide not to commence production, and the
markets for the particular vehicles may not develop as the
manufacturers hope. Additional important factors are set forth
under “Risk Factors” and elsewhere in the Forms 10-K and 10-Q we
file with the SEC.
Contact:
David Calusdian
Sharon Merrill Associates
1 (617) 542 5300
SEV@InvestorRelations.com
Matt Boyle
President and CEO
1 (508) 281 5503
matt.boyle@Sevcon.com
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