Sevcon Reports Financial Results for First Quarter Fiscal 2017
February 14 2017 - 4:05PM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the first
quarter of fiscal 2017 ended December 31, 2016.
Management Comments
“First-quarter revenues increased 38% year over
year, reflecting the $5.2 million contribution from our Bassi
acquisition, partially offset by lower sales from the industrial
side of the business due to a continuation of the challenging
macroeconomic headwinds our customers are facing,” said Sevcon
Chief Executive Officer Matt Boyle. “Bassi has performed
above our expectations, having reported 33% revenue growth post
acquisition compared with the same three-month period in the prior
year, and we expect that momentum to continue in the second
quarter.”
“During the first quarter, sales to on-road
customers were up 25% compared with last year, due to demand in
Europe for two wheel vehicles and additional revenues from
engineering services associated with two on-road projects,
respectively. Sales in both the two-wheel and four-wheel sectors
increased by double-digits, although this business will continue to
fluctuate from quarter to quarter due to the timing of orders as we
ramp up development and production activities.”
“Comparing Q1 2017 with Q1 2016, we were
negatively impacted by a combination of factors that adversely
affected gross profit. Sales mix, predominately the increase in
Bassi sales offset by lower industrial market revenues, lowered
gross profit by approximately $1.1 million. Following a change of
requirements by a customer, we recognized $500,000 of potential
additional costs against one project and we are currently
renegotiating the scope of this project. Foreign currency
fluctuations reduced reported gross profit by approximately
$300,000, mainly due to a stronger U.S. dollar compared with both
the British pound and the euro than in the prior-year period.”
“After the close of the first quarter, we
announced a project to provide a bespoke drivetrain to a
Sino/European OEM -- Sevcon's sixth major project in the
development pipeline. The agreement contains two near-term
milestones, including the initial product sample and
proof-of-concept in the current second quarter of fiscal 2017, and
performance testing in the customer's vehicle in the fourth quarter
of fiscal 2017.”
“We remain very bullish about our prospects this
year. While we expect challenging conditions in the industrial
markets in the near-term, we expect to see further improvement in
our on-road business as a result of our strong project pipeline. We
are excited by the confidence that an increasing number of on-road
OEMs are placing in our solutions, and we look forward to meeting
the many milestones we have before us in 2017. As we look
even further out, our project pipeline and the market demand for
electrification solutions provides us with significant opportunity
for growth.”
First Quarter Fiscal 2017 Results
Summary
Revenues increased to $12.5 million in the first
quarter of fiscal 2017 from $9.1 million in the first quarter of
fiscal 2016, reflecting $5.2 million in revenues from Bassi.
Excluding Bassi, revenues were $1.7 million lower than in the
prior-year period, reflecting continued weakness on the industrial
side of the business. Foreign currency fluctuations decreased
reported sales in the first fiscal quarter by $0.9 million, or
10.4%.
- Operating loss was $2.4 million, compared with operating income
of $180,000 in the first quarter last year. Foreign currency
translation had a net positive effect of $0.4 million, 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 2017-2018.
- There was an income tax benefit of $489,000, compared with an
income tax charge of $11,000 in the prior year period.
- Net loss attributable to common stockholders was $2.5 million,
or $0.48 per share, after a preferred share dividend of $91,000, or
$0.02 per share, compared with net income of $11,000, or $0.00 per
share, after a preference share dividend of $111,000, or $0.03 per
share, in the first quarter of fiscal 2016.
- Adjusted EBITDA, which excludes Bassi acquisition costs, was a
loss of $2.4 million in the first quarter of fiscal 2017, compared
with $0.6 million in the first quarter of fiscal 2016.
First Quarter Fiscal 2017 Conference
Call Details
Sevcon has scheduled a conference call to review
its results for the first quarter tomorrow, February 15, 2017, 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.
|
First Quarter Fiscal 2017 Financial
Highlights |
(In
thousands, except per-share data) |
|
|
Three months ended |
|
December 31, 2016
(unaudited) |
|
January 2,2016(unaudited) |
Revenues |
$ 12,543 |
|
|
$ 9,115 |
|
Gross Profit |
|
2,753 |
|
|
|
4,116 |
|
Selling, general and
administrative expenses |
|
(3,731) |
|
|
|
(2,760) |
|
Research and
development expenses |
|
(1,441) |
|
|
|
(860) |
|
Acquisition costs |
|
- |
|
|
|
(316) |
|
Operating (loss)
income |
|
(2,419) |
|
|
|
180 |
|
Interest expense |
|
(138) |
|
|
|
(22) |
|
Interest and other
income |
|
18 |
|
|
|
8 |
|
Foreign currency
loss |
|
(442) |
|
|
|
(71) |
|
(Loss) income before
income taxes |
|
(2,981) |
|
|
|
95 |
|
Income taxes benefit
(provision) |
|
489 |
|
|
|
(11) |
|
Net (loss) income |
|
(2,492) |
|
|
|
84 |
|
Net loss attributable
to non-controlling interest |
|
65 |
|
|
|
38 |
|
Net (loss) income
attributable to Sevcon, Inc. and subsidiaries |
|
(2,427) |
|
|
|
122 |
|
Series A Preferred
Share dividends |
|
(91) |
|
|
|
(111) |
|
Net (loss) income
attributable to common stockholders |
|
(2,518) |
|
|
|
11 |
|
Basic (loss) income per
share |
$ (0.48) |
|
|
$ 0.00 |
|
Diluted (loss) income
per share |
$ (0.48) |
|
|
$ 0.00 |
|
Average shares
outstanding - Basic |
|
5,214 |
|
|
|
3,429 |
|
Average shares
outstanding - Diluted |
|
5,214 |
|
|
|
3,576 |
|
|
|
|
|
|
|
|
|
Summarized Balance Sheet Data |
(Dollars in
thousands) |
(Unaudited) |
|
|
December 31, 2016 |
|
September 30, 2016 |
Cash and cash
equivalents |
$ 10,400 |
|
|
$ 14,127 |
Receivables |
|
11,144 |
|
|
|
12,193 |
Inventories |
|
14,884 |
|
|
|
13,666 |
Prepaid expenses and
other current assets |
|
3,407 |
|
|
|
3,602 |
Total current
assets |
|
39,835 |
|
|
|
43,588 |
Intangible assets |
|
8,751 |
|
|
|
9,185 |
Goodwill |
|
7,631 |
|
|
|
7,794 |
Other long-term
assets |
|
8,626 |
|
|
|
8,406 |
Total assets |
$ 64,843 |
|
|
$ 68,973 |
|
|
|
|
Current
liabilities |
$ 15,373 |
|
|
$ 16,118 |
Liability for pension
benefits |
|
10,779 |
|
|
|
11,511 |
Other long-term
liabilities |
|
18,470 |
|
|
|
19,573 |
Stockholders’
equity |
|
20,254 |
|
|
|
21,739 |
Non-controlling
interest |
|
(33) |
|
|
|
32 |
Total liabilities and
stockholders’ equity |
$ 64,843 |
|
|
$ 68,973 |
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP Measures |
(Dollars in
thousands) |
(Unaudited) |
|
|
Three months ended |
|
(in thousands of dollars) |
|
|
|
December 31,
2016 |
|
January 2,2016 |
|
|
|
|
Net (loss) income |
$ (2,492) |
|
|
$ 84 |
|
Interest expense |
|
138 |
|
|
|
22 |
|
Interest income |
|
7 |
|
|
|
(8) |
|
Income taxes |
|
(489) |
|
|
|
11 |
|
Depreciation |
|
213 |
|
|
|
169 |
|
Amortization of Bassi
intangible assets and |
|
|
|
fair value adjustments
arising on |
|
|
|
acquisition of
Bassi |
|
235 |
|
|
|
- |
|
|
|
|
|
EBITDA |
$ (2,388) |
|
|
$ 278 |
|
|
|
|
|
Bassi acquisition
costs |
|
- |
|
|
|
316 |
|
Adjusted EBITDA |
$ (2,388) |
|
|
$ 594 |
|
|
|
|
|
|
|
|
|
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, Canada, 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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