Sevcon Reports Fourth-Quarter and Full-Year Fiscal 2016 Financial Results
15 Dezembro 2016 - 7:01PM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the fourth
quarter and fiscal year ended September 30, 2016.
Management Comments
“During fiscal 2016 we expanded our extensive
on-road project development pipeline, which we expect to result in
significant future production opportunities and substantial revenue
and profitability growth,” said Sevcon Chief Executive Officer Matt
Boyle. “We have more projects in the pipeline than ever before and
we expect that customer enthusiasm for Sevcon’s capabilities will
continue. Two of the major projects in our pipeline are expected to
go into production in 2017, one in 2019 and one in 2020. One
manufacturer of luxury high-performance sports cars has nearly
doubled the Sevcon content on its program scheduled for production
in 2020. This demonstrates the success of our investments in
engineering to provide high quality solutions for some of the
world’s largest vehicle manufacturers. In the last fiscal year we
added 42 more engineers globally, which represents an 82% increase
in engineering headcount alone. We attract and retain engineering
talent through successful delivery on projects, and we expect that
momentum to continue as a result of our planned investments.
“In the fourth quarter, our on-road business
increased by 16% from the same period last year, but we saw
continued weakness on the industrial side of the business due to
challenging macroeconomic conditions. Our fourth-quarter and annual
results were negatively impacted by lower sales in our traditional,
industrial market segments and the investments we have made for our
future. We believe the payback for these investments, although a
few years away, will be substantial.
“Our Bassi acquisition has performed above our
expectations for 2016, having reported 26% revenue growth
post-acquisition compared with the same eight-month period in the
prior year. Adding Bassi’s state-of-the-art battery charging
technology and power management capabilities to Sevcon’s advanced
control technologies strengthens our ability to deliver the more
integrated solutions that our markets and our customers are
demanding. The Bassi organization was instrumental in winning the
additional vehicle content from the manufacturer of
high-performance sports cars referenced above.
“We are bullish about our prospects as we enter
2017. While we expect challenging conditions in traditional,
industrial markets this year, we expect to see an uptick in our
on-road business as a result of our strong project pipeline. In
fact, we now have six milestones to accomplish on our major
projects between now and the end of fiscal 2017, with the first
targeted for the current quarter. As we look even further out, our
project pipeline and the market demand for electrification
solutions provides us with significant opportunity for growth,”
concluded Boyle.
Fourth Quarter Fiscal 2016 Results
Summary
- Revenues increased to $13.6 million in the fourth quarter of
fiscal 2016 from $10.5 million in the fourth quarter of fiscal
2015, including $4.3 million in revenues from Bassi. Excluding
Bassi, revenues were $1.3 million lower than in the prior-year
period, reflecting continued weakness on the industrials side of
the business. Foreign currency fluctuations decreased reported
sales in the fourth fiscal quarter by $413,000, or 4%, mainly due
to a stronger U.S. dollar compared with both the British pound and
the euro than in the prior-year period.
- Operating loss was $2.9 million, compared with operating income
of $677,000 in the fourth quarter last year. Foreign currency
translation had a net positive effect of $164,000, mainly due to
the impact of the stronger U.S. dollar on British pound and euro
denominated operating expense. The operating loss reflects our
significant investment in both engineering and sales and marketing
personnel to capitalize on our strong and expanding on-road project
pipeline. Production revenues from these programs are expected to
start in 2017.
- There was an income tax charge of $138,000, compared with an
income tax charge of $218,000 in the prior year period.
- Net loss attributable to common stockholders was ($3.0
million), or $0.59 per share, after a preference share dividend of
$106,000, or $0.02 per share, compared with net income of $254,000,
or $0.07 per diluted share in the fourth quarter of 2015. The loss
in the quarter was mainly driven by the investments in the on-road
project pipeline.
- Adjusted EBITDA, which excludes Bassi acquisition costs, was a
loss of ($1.8 million) in the fourth quarter of fiscal 2016,
compared with $0.8 million in the fourth quarter of fiscal
2015.
Full Year Fiscal 2016 Results
Summary
- Revenues increased by 21% to $49.8 million in fiscal 2016 from
$41.1 million for fiscal 2015, primarily due to a $13.4 million
contribution from Bassi. Foreign currency fluctuations decreased
reported sales by $1.7 million, or 4%, mainly due to a stronger
U.S. dollar compared with the British pound and the euro in the
prior year.
- Increased research and development expense, driven largely by
increased engineering headcount to capture substantial potential
future opportunities, led to higher operating expense. The higher
operating expense, together with intangible asset amortization
costs and acquisition costs related to Bassi, led to an operating
loss of $5.3 million compared with operating income of $1.9 million
in fiscal 2015.
- There was an income tax benefit of $1,000 in fiscal 2016,
compared with an income tax charge of $406,000 in fiscal 2015. The
low effective tax rate is principally due to the acquisition costs
of Bassi being nondeductible and that the Company’s U.K. subsidiary
elected to receive refundable tax credits related to certain
research and development incentives in the U.K., which have been
recorded in operating loss as they are refunded without regard to
actual tax liability.
- Net loss attributable to common stockholders was ($6.2
million), or $1.51 per share, after preference share dividends of
$433,000, or $0.08 per share, compared with net income of $1.1
million, or $0.32 per diluted share, for fiscal 2015.
- Adjusted EBITDA, which excludes Bassi acquisition costs, was a
loss of ($1.7 million) for fiscal 2016 compared with $2.6 million
for fiscal 2015.
Fourth Quarter and Full Year Fiscal 2016
Conference Call Details
Sevcon has scheduled a conference call to review
its results for the fourth quarter and fiscal 2016, today, December
15, 2016 at 5:00 p.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.
Fourth Quarter and Full Year Fiscal 2016
Income Statement (In
thousands, except per-share data)
|
|
Three months ended |
|
Twelve months ended |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
September 30,2016 |
|
September 30,2015 |
|
September 30,2016 |
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
13,592 |
|
|
$ |
10,523 |
|
|
$ |
49,801 |
|
|
$ |
41,142 |
|
Gross Profit |
|
|
3,118 |
|
|
|
3,076 |
|
|
|
16,108 |
|
|
|
15,834 |
|
Selling, general and
administrative expense and |
|
|
|
|
|
|
|
|
research and
development expense |
|
|
(5,920 |
) |
|
|
(2,399 |
) |
|
|
(19,907 |
) |
|
|
(13,940 |
) |
Acquisition costs |
|
|
(110 |
) |
|
|
- |
|
|
|
(1,535 |
) |
|
|
- |
|
Operating (loss)
income |
|
|
(2,912 |
) |
|
|
677 |
|
|
|
(5,334 |
) |
|
|
1,894 |
|
Interest expense |
|
|
(152 |
) |
|
|
(22 |
) |
|
|
(423 |
) |
|
|
(76 |
) |
Interest income |
|
|
- |
|
|
|
11 |
|
|
|
16 |
|
|
|
31 |
|
Foreign currency gain
(loss) |
|
|
274 |
|
|
|
(140 |
) |
|
|
(213 |
) |
|
|
118 |
|
Other income and
expense |
|
|
87 |
|
|
|
46 |
|
|
|
87 |
|
|
|
(22 |
) |
(Loss) income before
income taxes |
|
|
(2,703 |
) |
|
|
572 |
|
|
|
(5,867 |
) |
|
|
1,945 |
|
Income taxes
(provision) benefit |
|
|
(138 |
) |
|
|
(218 |
) |
|
|
1 |
|
|
|
(406 |
) |
Net (loss) income |
|
|
(2,841 |
) |
|
|
354 |
|
|
|
(5,866 |
) |
|
|
1,539 |
|
Net (income) loss
attributable to non-controlling interest |
|
|
(78 |
) |
|
|
5 |
|
|
|
53 |
|
|
|
36 |
|
Net (loss) income
attributable to Sevcon, Inc. and subsidiaries |
|
|
(2,919 |
) |
|
|
359 |
|
|
|
(5,813 |
) |
|
|
1,575 |
|
Series A Preference
Share dividends |
|
|
(106 |
) |
|
|
(105 |
) |
|
|
(433 |
) |
|
|
(440 |
) |
Net (loss) income
attributable to common stockholders |
|
|
(3,025 |
) |
|
|
254 |
|
|
|
(6,246 |
) |
|
|
1,135 |
|
Basic (loss) income per
share |
|
$ |
(0.59 |
) |
|
$ |
0.08 |
|
|
$ |
(1.51 |
) |
|
$ |
0.33 |
|
Diluted (loss) income
per share |
|
$ |
(0.59 |
) |
|
$ |
0.07 |
|
|
$ |
(1.51 |
) |
|
$ |
0.32 |
|
Average shares
outstanding – Basic |
|
|
5,126 |
|
|
|
3,498 |
|
|
|
4,148 |
|
|
|
3,469 |
|
Average shares
outstanding – Diluted |
|
|
5,126 |
|
|
|
4,958 |
|
|
|
4,148 |
|
|
|
4,929 |
|
Summarized Balance Sheet Data(Dollars in
thousands)(Unaudited)
|
|
September 30,
2016 |
|
September 30,2015 |
Cash and cash
equivalents |
|
$ |
14,127 |
|
$ |
8,048 |
Receivables |
|
|
12,193 |
|
|
9,462 |
Inventories |
|
|
13,666 |
|
|
6,790 |
Prepaid expenses and
other current assets |
|
|
3,602 |
|
|
3,581 |
Total current
assets |
|
|
43,588 |
|
|
27,881 |
Intangible assets |
|
|
9,185 |
|
|
- |
Goodwill |
|
|
7,794 |
|
|
1,435 |
Other long-term
assets |
|
|
8,406 |
|
|
6,300 |
Total assets |
|
$ |
68,973 |
|
$ |
35,616 |
|
|
|
|
|
Current
liabilities |
|
$ |
16,118 |
|
$ |
8,357 |
Liability for pension
benefits |
|
|
11,511 |
|
|
10,963 |
Other long-term
liabilities |
|
|
19,573 |
|
|
500 |
Stockholders’
equity |
|
|
21,739 |
|
|
15,712 |
Non-controlling
interest |
|
|
32 |
|
|
84 |
Total liabilities and
stockholders’ equity |
|
$ |
68,973 |
|
$ |
35,616 |
Reconciliation of GAAP to Non-GAAP Measures
(Dollars in thousands)(Unaudited)
|
|
Three months ended |
|
Twelve months ended |
|
|
(in thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
|
September 30,2016 |
|
September 30,2015 |
|
September 30,2016 |
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(2,841 |
) |
|
|
354 |
|
|
$ |
(5,866 |
) |
|
$ |
1,539 |
|
Interest expense |
|
|
152 |
|
|
|
22 |
|
|
|
423 |
|
|
|
76 |
|
Interest income |
|
|
- |
|
|
|
(11 |
) |
|
|
(16 |
) |
|
|
(31 |
) |
Income taxes |
|
|
138 |
|
|
|
218 |
|
|
|
(1 |
) |
|
|
406 |
|
Depreciation |
|
|
175 |
|
|
|
167 |
|
|
|
732 |
|
|
|
637 |
|
Amortization of Bassi
intangible assets |
|
|
251 |
|
|
|
- |
|
|
|
983 |
|
|
|
- |
|
Amortization of fair
value adjustments arising on |
|
|
|
|
|
|
|
|
acquisition of
Bassi |
|
|
227 |
|
|
|
- |
|
|
|
484 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
(1,898 |
) |
|
$ |
750 |
|
|
$ |
(3,261 |
) |
|
$ |
2,627 |
|
|
|
|
|
|
|
|
|
|
Bassi acquisition
costs |
|
|
110 |
|
|
|
- |
|
|
|
1,535 |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
(1,788 |
) |
|
$ |
750 |
|
|
$ |
(1,726 |
) |
|
$ |
2,627 |
|
|
Non-GAAP Financial Measures
Sevcon uses EBITDA and adjusted EBITDA, which
are non-GAAP financial measures, in this news release. The
Company reports these metrics because they are key measures used by
its management and Board of Directors to evaluate the ongoing
performance of the business and to develop short and long-term
operational plans. Accordingly, the Company believes that EBITDA
and adjusted EBITDA provide useful information to investors and
others in understanding and evaluating Sevcon’s operating results
in the same manner as its management and Board of Directors.
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.
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.
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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