Sevcon, Inc. (Nasdaq:SEV) (“Sevcon” or the “Company”) today sets
the record straight for its stockholders, customers, suppliers,
employees and other constituents about the significant actions your
Board of Directors and management team have undertaken to best
position the Company for future growth and maximize shareholder
value. This communication is occasioned by the Company’s need to
respond to a proposal by a dissident director and former Executive
Chairman who, along with the activist hedge fund that he operates,
Meson Capital LP (“Meson”), seeks to nominate a slate of directors
at the 2017 Annual Meeting of Stockholders.
Your Board’s Strategic Plan is Yielding Impressive
Results
The Company is currently benefitting from a step-change in
end-user demand for electrification solutions world-wide. Customers
look to Sevcon to help migrate existing internal combustion systems
to hybrid and pure electric systems. Your Board recognized the
advent of this market shift over two years ago and collaboratively
crafted a well-defined strategic plan to best position the Company
to participate in, and take market share in the context of this
market opportunity and in doing so, create sustainable, long-term
shareholder value. That strategy – which involves growing the
company rapidly, both organically and through acquisitions – is now
being successfully implemented.
2016 was a banner year for development of Sevcon’s business. It
started well with the acquisition, in January, of the Bassi charger
business that allows us to address both onboard and infrastructure
charging opportunities. The Bassi segment has performed above our
expectations, with fiscal 2016 revenue growth of 26%
post-acquisition. 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 customers are demanding.
Unlike most companies in our sector, we can also offer
infrastructure charging: a fast-emerging opportunity driven by OEMs
and utilities who recognize that electric vehicle and hybrid sales
are facilitated by the availability of reliable charging
systems.
Sevcon’s other major successes during 2016 have come from an
accelerating volume of significant contract wins from some of the
world’s principal automotive manufacturers and Tier 1 suppliers.
Our Board made the strategic decision to support new and potential
customers in their drive to electrification. Many new
customers – mainly on-road vehicle manufacturers – require custom
products to meet their specific needs. We are rapidly exploiting
this demand -- engineering reliable solutions for them -- in
addition to selling our traditional, generic products. Sevcon
now has more projects in the pipeline than ever before – with
projects expected to go into production in 2017, 2019, and 2020 –
and we expect that customer enthusiasm for Sevcon’s capabilities
will continue. In fact, one manufacturer of luxury high-performance
sports cars recently nearly doubled the Sevcon content on its
program scheduled for production in 2020.
Positioning the Company for rapid growth, however, comes at the
cost of short-term profitability as the Company invests in its
future. Following your Board’s carefully-considered strategy, we
are investing at historically high levels in engineering resources
because we believe that this will continue to place us at the
forefront of electrification and maintain our favorable market
position. Due to the global scarcity of specialized
engineering skills, we decided proactively to seek, attract and
integrate engineering talent ahead of contract wins to prepare
ourselves for future projects and substantial production revenues.
We have successfully achieved these talent acquisitions in the past
year, nearly doubling the size of our engineering department. This
has helped us win more electrification projects. We have also
established several “engineering outposts” around the globe,
creating a pipeline of engineering recruits that ensures local
support and positions the Company to meet the growing demands of
our customers. The Board is fully supportive of this
entrepreneurial, strategic approach, and we have raised substantial
capital during 2016 in pursuit of these exciting opportunities.
It is an exciting time for Sevcon as we endeavor to reap the
benefits of our strategic decisions.
Dissident Director’s Aggression Toward the Company is
Misguided
Sevcon also responds today to the unfortunate attempt of
director Ryan Morris to re-assert himself in the boardroom,
following his dismissal on December 6, 2015 from the position of
Executive Chairman. Mr. Morris has nominated six individuals in an
attempt to take control of your Board, which can only derail the
tremendous gains our Company has experienced over the past year.
What Mr. Morris has not mentioned in his and Meson’s recent press
release is that the Board had already positioned him to work
constructively within Sevcon to help manage our exciting
opportunities, but that did not lead to a constructive outcome for
the Company. Mr. Morris was made Executive Chairman in August 2016
and was tasked with gathering strategic input for the CEO and Board
and advancing external strategic initiatives as well as supporting
Sevcon’s senior management by optimizing internal oversight and
overall management accountability. However, we found that, instead
of carrying out these duties, Mr. Morris was both inserting himself
into internal affairs, causing confusion and inefficiency among
management, and spending a great deal of effort trying to push
certain directors off the Board. As a result, your Board acted by
the unanimous vote of the other directors to remove Mr. Morris from
the Executive Chairman position.
Mr. Morris has now nominated six persons who, he hopes, would
allow him to take control of the Board. That appears to be his true
agenda, since his prescription for the Company’s growth seems to be
to continue a strategy your Board is already pursuing. Yet, an
overhaul of the Board’s composition will only slow the momentum our
Company has generated in 2016.
Your Board is confident that the stockholders will see through
Mr. Morris’s tactics and will focus on the Company’s exciting path
forward. We favor channeling all of our internal efforts and
resources towards taking advantage of market opportunities rather
than diverting our resources to respond to the unfortunate attempts
of a dissident director to regain a modicum of control from his
prior position with the Company. Management’s attention is on
executing the strategic plan developed, with Mr. Morris’s input as
a current director on the Board, to grow the business in an
entrepreneurial fashion driven by a long-term focus on EBITDA
growth and above-trend returns on invested capital.
Safe Harbor Statement
This letter contains forward-looking statements, including
guidance for future financial performance, that are based on
management’s current expectations and are subject to various risks
and uncertainties, many of which are outside our control. They
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 Form 10-K we filed with the Securities and Exchange
Commission (“SEC”) on December 23, 2016.
Important Additional Information
Sevcon intends to file a definitive proxy statement (the “2017
Proxy Statement”) and WHITE proxy card with the SEC in connection
with the solicitation of proxies for the 2017 Annual Meeting of
Stockholders. Sevcon intends to nominate its current directors,
other than Mr. Morris, and its founder, Marvin Schorr, for election
to the Board at the 2017 Annual Meeting. In addition, Sevcon,
certain of its directors, and its executive officers will be
participants in the solicitation of proxies from stockholders for
the 2017 Annual Meeting. Information regarding Sevcon’s directors
and executive officers and their respective interests in Sevcon by
security holdings or otherwise is set forth in Sevcon’s preliminary
proxy statement for the 2017 Annual Meeting, filed with the SEC on
December 28, 2016. Additional information can also be found
in Sevcon’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2016, filed with the SEC on December 24, 2016, and in
Sevcon’s Quarterly Reports on Form 10-Q for the first three
quarters of the 2016 fiscal year filed with the SEC on February 16,
2016, May 23, 2016, and August 12, 2016, respectively. BEFORE
MAKING ANY VOTING DECISION, STOCKHOLDERS ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING
THE COMPANY'S DEFINITIVE 2017 PROXY STATEMENT AND ANY SUPPLEMENTS
THERETO BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Stockholders will be able to obtain a copy of the definitive 2017
Proxy Statement and other documents filed by the Company, when they
become available, free of charge from the SEC's website at
www.sec.gov, by request to Sevcon, Inc., 155 Northboro Road,
Southborough, MA 01772 Attn: Corporate Secretary, telephone: (508)
281-5500, or from the Company's website,
http://ir.sevcon.com/sec.cfm.
About Sevcon
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 newly acquired Bassi Division produces battery
chargers for electric vehicles; power management and uninterrupted
power source 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. Learn
more about Sevcon at www.sevcon.com/.
Contacts:
Matt Boyle
President and CEO
011 44 7802 260706
matt.boyle@Sevcon.com
Matt Goldfarb
Chairman of the Board
(917) 664-0051
Sono Group NV (NASDAQ:SEV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sono Group NV (NASDAQ:SEV)
Historical Stock Chart
From Jul 2023 to Jul 2024