Sevcon Reports Financial Results for Third Quarter Fiscal 2016
03 Agosto 2016 - 6:40PM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the third
quarter of fiscal 2016 ended July 2, 2016.
Third-Quarter Fiscal 2016 Results
Summary
- Revenues increased to $13.9 million, from $10.3 million in the
third quarter of fiscal 2015, a 34% increase that reflected the
acquisition of Bassi, a manufacturer of battery chargers located in
Lugo, Italy, on January 29, 2016. Revenues included $5.1 million by
Bassi. Excluding Bassi, revenues were $1.5 million lower than in
the prior-year period, mainly due to continued weakness on the
industrials side of the business as a result of macro-economic
conditions. Foreign currency fluctuations decreased reported sales
in the third fiscal quarter by $792,000, or 8%, mainly due to a
stronger U.S. dollar compared with both the British pound and the
euro than in the same fiscal period last year.
- Operating loss was $931,000, compared with operating income of
$261,000 in the third quarter last year. Excluding the net negative
impact of foreign currency, the operating result in the third
quarter of 2016 would have been a loss of $711,000.
- There was an income tax benefit of $60,000, compared with an
income tax charge of $83,000 in the year-earlier quarter.
- Net loss attributable to common stockholders was $1.5 million,
or $(0.38) per share, after a preference share dividend of $93,000
or $0.02 per share, compared with net income of $171,000, or $0.04
per share, after a preference share dividend of $110,000, or $0.03
per share, in the prior year. The loss in the quarter was mainly
driven by three elements; approximately $500,000 from currency
translation due to the significant drop in the British pound
following the Brexit vote, $700,000 of non-cash expense from the
amortization of intangible assets and fair value adjustments
arising from the business combination with Bassi, and approximately
$300,000 of higher than initially planned investment in the
business as Sevcon seeks to capitalize on an increasing number of
electrification opportunities.
Nine Month Fiscal 2016 Result
Summary
- Revenues increased to $36.2 million, from $30.6 million in the
third quarter of fiscal 2015, an 18% increase that reflected the
acquisition of Bassi. Revenues included $9.0 million by Bassi for
the five month period since we closed that acquisition. Excluding
Bassi, revenues were $3.4 million lower than in the prior-year
period. Foreign currency fluctuations decreased reported sales by
$1.4 million, or 4%, mainly due to a stronger U.S. dollar compared
with both the British pound and the euro than in the same nine
month period last year.
- Operating loss was $2.4 million compared with operating income
of $1.2 million in the first nine months of fiscal
2015.
- There was an income tax benefit of $139,000 in the period
compared with an income tax charge of $188,000 in the prior-year
period.
- Net loss attributable to common stockholders was $3.2 million,
or $(0.84) per share, after a preference share dividend of $327,000
or $0.09 per share, compared with net income of $881,000, or $0.25
per share, for the first nine months of fiscal 2015, after a
preference share dividend of $335,000, or $0.10 per share.
- Subsequent to the end of the quarter the Company issued
1,124,000 shares of common stock together with warrants to
purchase a further 652,000 shares of common stock, to a small group
of institutional and accredited investors, raising $9.6 million,
net of costs. The Company’s cash balances are currently $12
million.
Management Comments
“Third-quarter revenues increased 34% year over year due to the
contribution from the acquisition of our Bassi unit, which more
than offset slower sales in the traditional controllers and
capacitors businesses as a result of continued end-market
weakness,” said Sevcon Chief Executive Officer Matt Boyle. “While
off-road market performance is not where we would like it to be,
the overall rate of decline has decelerated and we are seeing signs
of improvement, especially with sales to fork lift truck
manufacturers.
“The integration of Bassi is proceeding well and according to
plan and the potential we see in the business is even greater than
we first anticipated,” said Boyle. “We have raised our expectations
and now anticipate more than 20% growth from Bassi in 2016 from the
$16 million in revenue that it reported in 2015.
“Sales to on-road customers were slightly lower in the third
quarter compared with last year, although this business will be
inherently lumpy from quarter to quarter due to the timing of
orders as we ramp up development and production activities. While
revenues from sales for four-wheel applications were down year over
year, the two-wheel market was up by double digits due to increased
motorcycle OEM business.
“We currently have four major projects in our on-road
development pipeline, with two expected to go into production in
2017, one in 2019 and one in 2020. In total, we expect production
revenue to be approximately $166 million over the
five-to-seven-year production lives of the projects, although none
is guaranteed. We have five major milestones to accomplish on these
projects between now and the end of 2017, with the first targeted
for the first quarter of 2017.
“As we approach fiscal 2017, we are encouraged about our future.
Near term, we expect continued challenging off-road market
conditions. Our on-road business will continue to be lumpy,
especially two-wheel, and we hope to see a performance uptick with
four-wheel given our project pipeline,” concluded Boyle.
"Longer-term, our current project pipeline and market interest in
our electrification solutions provides us with significant
opportunity for growth.”
Third-Quarter Fiscal 2016 Conference Call
Details
Sevcon has scheduled a conference call to review
its results for the third quarter tomorrow, August 4, 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.
Third-Quarter Fiscal 2016
Financial Highlights |
(In thousands except per-share
data) |
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
July
2, |
|
July 4, |
|
July
2, |
|
July 4, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
$ |
13,913 |
|
|
$ |
10,346 |
|
|
$ |
36,209 |
|
|
$ |
30,619 |
|
Gross Profit |
|
|
4,752 |
|
|
|
4,188 |
|
|
|
12,990 |
|
|
|
12,758 |
|
Selling, general and
administrative and research and development expense |
|
|
(5,675 |
) |
|
|
(3,927 |
) |
|
|
(13,987 |
) |
|
|
(11,541 |
) |
Acquisition costs |
|
|
(8 |
) |
|
|
- |
|
|
|
(1,425 |
) |
|
|
- |
|
Operating income
(loss) |
|
|
(931 |
) |
|
|
261 |
|
|
|
(2,422 |
) |
|
|
1,217 |
|
Interest expense |
|
|
(140 |
) |
|
|
(14 |
) |
|
|
(271 |
) |
|
|
(54 |
) |
Interest income |
|
|
4 |
|
|
|
4 |
|
|
|
16 |
|
|
|
20 |
|
Foreign currency gain
(loss) |
|
|
(522 |
) |
|
|
(21 |
) |
|
|
(487 |
) |
|
|
258 |
|
Change in value of cash
flow hedges |
|
|
- |
|
|
|
132 |
|
|
|
- |
|
|
|
(68 |
) |
Income (loss) before
income taxes |
|
|
(1,589 |
) |
|
|
362 |
|
|
|
(3,164 |
) |
|
|
1,373 |
|
Income taxes benefit
(provision) |
|
|
60 |
|
|
|
(83 |
) |
|
|
139 |
|
|
|
(188 |
) |
Net income (loss) |
|
|
(1,529 |
) |
|
|
279 |
|
|
|
(3,025 |
) |
|
|
1,185 |
|
Net loss attributable to
non-controlling interest |
|
|
84 |
|
|
|
2 |
|
|
|
131 |
|
|
|
31 |
|
Net income (loss)
attributable to Sevcon, Inc. and subsidiaries |
|
|
(1,445 |
) |
|
|
281 |
|
|
|
(2,894 |
) |
|
|
1,216 |
|
Series A Preference Share
dividends |
|
|
(93 |
) |
|
|
(110 |
) |
|
|
(327 |
) |
|
|
(335 |
) |
Net income (loss)
attributable to common stockholders |
|
|
(1,538 |
) |
|
|
171 |
|
|
|
(3,221 |
) |
|
|
881 |
|
Basic (loss) income per
share |
|
$ |
(0.38 |
) |
|
$ |
0.04 |
|
|
$ |
(0.84 |
) |
|
$ |
0.25 |
|
Diluted (loss) income per
share |
|
$ |
(0.38 |
) |
|
$ |
0.04 |
|
|
$ |
(0.84 |
) |
|
$ |
0.25 |
|
Average shares outstanding
– Basic |
|
|
4,070 |
|
|
|
3,486 |
|
|
|
3,828 |
|
|
|
3,459 |
|
Average shares outstanding
– Diluted |
|
|
4,070 |
|
|
|
3,577 |
|
|
|
3,828 |
|
|
|
4,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summarized Balance Sheet
Data |
|
|
(in thousands of
dollars) |
|
|
July
2,2016(unaudited) |
|
September 30,
2015(derived from audited statements) |
Cash and cash
equivalents |
|
$ |
4,273 |
|
|
$ |
8,048 |
|
Receivables |
|
|
12,225 |
|
|
|
9,462 |
|
Inventories |
|
|
14,148 |
|
|
|
6,790 |
|
Prepaid expenses and other
current assets |
|
|
3,469 |
|
|
|
3,581 |
|
Total current assets |
|
|
34,115 |
|
|
|
27,881 |
|
Intangible assets |
|
|
10,372 |
|
|
|
- |
|
Goodwill |
|
|
8,604 |
|
|
|
1,435 |
|
Other long-term
assets |
|
|
7,131 |
|
|
|
6,300 |
|
Total assets |
|
$ |
60,222 |
|
|
$ |
35,616 |
|
|
|
|
|
|
Current liabilities |
|
$ |
12,562 |
|
|
$ |
8,357 |
|
Liability for pension
benefits |
|
|
10,527 |
|
|
|
10,963 |
|
Long-term debt and other
long-term liabilities |
|
|
19,488 |
|
|
|
500 |
|
Stockholders’ equity |
|
|
17,692 |
|
|
|
15,712 |
|
Non-controlling
interest |
|
|
(47 |
) |
|
|
84 |
|
Total liabilities and
stockholders’ equity |
|
$ |
60,222 |
|
|
$ |
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 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 for whom we are performing development work may
decide not to commence production or purchase from us, 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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