Sevcon Reports Financial Results for Second Quarter Fiscal 2017
16 May 2017 - 8:46AM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the second
quarter of fiscal 2017 ended April 1, 2017.
Management Comments
“Second-quarter revenues increased 19% year over
year, reflecting a record performance by Bassi as well as an extra
month of sales for that business compared with the prior year, and
strong growth in the two-wheel on-road sector,” said Sevcon Chief
Executive Officer Matt Boyle. “Bassi reported $7.0 million in sales
for the quarter compared with $4.0 million in the prior year ($5.3
million in the second quarter of 2016 when the pre-acquisition
month is included). Bassi continues to perform above our
expectations and we expect that momentum to continue in the third
quarter.
“During the second quarter, sales to on-road
customers were up 21% compared with last year due to broad-based
demand for two-wheel vehicles. Sales in the two-wheel sector
increased by more than 200%, while four-wheel sales were lower by
14% due mainly to lower shipments to European OEMs and lower
Engineering services revenue than in the second fiscal quarter of
last year. In the second quarter, we successfully achieved three
key milestones under on-road engineering contracts in addition to
the four achieved in the first quarter, on our way to project
completion, and we expect to reach three milestones in the third
quarter. The seven key milestones from the first half year were
across all projects.
“Growth in On-Road, Other EVs and Chargers was
partially offset by lower sales from the industrial side of the
business, primarily aerial work platforms in Asia. We are seeing
signs of improvement on that side of the business, however. Aerial
work platforms and airport ground support were down by double
digits, while fork-lift trucks and the mining sector were flat and
up mid-single digits over last year, respectively. The Agricultural
business has also been showing signs of a comeback as sales have
increased significantly, albeit off of a very small base.
“We remain very bullish about our revenue
prospects this year. The industrial markets remain soft but are
showing signs of improvement in some sectors. We expect to see
further progress 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,” said Boyle.
Second Quarter Fiscal 2017 Results
Summary
Revenues increased to $15.7 million in the
second quarter of fiscal 2017 from $13.2 million in the second
quarter of fiscal 2016. Foreign currency fluctuations
decreased reported sales in the second fiscal quarter by $1.3
million, or 10%.
- Operating loss was $2.3 million, compared with an operating
loss of $1.7 million in the second quarter last year. Foreign
currency translation had a net positive effect of $0.2 million,
mainly due to the impact of the stronger U.S. dollar on British
pound and euro denominated operating expense than in the prior-year
period. The operating loss reflects the Company’s significant
investment in both engineering and sales and marketing personnel to
capitalize on its 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 $368,000, compared with an
income tax benefit of $90,000 in the prior year period.
- Net loss attributable to common stockholders was $2.3 million,
or ($0.43) per share, after a preferred share dividend of $106,000,
or $0.02 per share, compared with a net loss of $1.7 million, or
($0.43) per share, after a preferred share dividend of $123,000, or
$0.03 per share, in the second quarter of fiscal 2016.
- Adjusted EBITDA, which excludes Bassi acquisition costs, was a
loss of $2.0 million in the second quarter of fiscal 2017, compared
with a profit of $0.02 million in the second quarter of fiscal
2016.
Second Quarter Fiscal 2017 Conference
Call Details
Sevcon has scheduled a conference call to review
its results for the second quarter tomorrow, May 16, 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 www.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 2017 Financial
Highlights |
(In
thousands, except per-share data) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
April 1,2017 |
|
April 2,2016 |
|
April 1,2017 |
|
April 2, 2016 |
Revenues |
|
$ |
15,672 |
|
|
$ |
13,181 |
|
|
$ |
28,215 |
|
|
$ |
22,296 |
|
Gross Profit |
|
|
3,768 |
|
|
|
4,122 |
|
|
|
6,521 |
|
|
|
8,238 |
|
Selling, general and
administrative and research and development expense |
|
|
(6,089 |
) |
|
|
(4,692 |
) |
|
|
(11,261 |
) |
|
|
(8,312 |
) |
Acquisition costs |
|
|
- |
|
|
|
(1,101 |
) |
|
|
- |
|
|
|
(1,417 |
) |
Operating loss |
|
|
(2,321 |
) |
|
|
(1,671 |
) |
|
|
(4,740 |
) |
|
|
(1,491 |
) |
Interest expense |
|
|
(142 |
) |
|
|
(109 |
) |
|
|
(280 |
) |
|
|
(131 |
) |
Interest income |
|
|
18 |
|
|
|
4 |
|
|
|
36 |
|
|
|
12 |
|
Foreign currency gain
(loss) |
|
|
(176 |
) |
|
|
106 |
|
|
|
(618 |
) |
|
|
35 |
|
Loss before income
taxes |
|
|
(2,621 |
) |
|
|
(1,670 |
) |
|
|
(5,602 |
) |
|
|
(1,575 |
) |
Income taxes
benefit |
|
|
368 |
|
|
|
90 |
|
|
|
857 |
|
|
|
79 |
|
Net loss |
|
|
(2,253 |
) |
|
|
(1,580 |
) |
|
|
(4,745 |
) |
|
|
(1,496 |
) |
Net loss attributable
to non-controlling interest |
|
|
68 |
|
|
|
9 |
|
|
|
133 |
|
|
|
47 |
|
Net loss attributable
to Sevcon, Inc. and subsidiaries |
|
|
(2,185 |
) |
|
|
(1,571 |
) |
|
|
(4,612 |
) |
|
|
(1,449 |
) |
Series A Preferred
Share dividends |
|
|
(106 |
) |
|
|
(123 |
) |
|
|
(197 |
) |
|
|
(234 |
) |
Net loss attributable
to common stockholders |
|
|
(2,291 |
) |
|
|
(1,694 |
) |
|
|
(4,809 |
) |
|
|
(1,683 |
) |
Basic loss per
share |
|
$ |
(0.43 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.92 |
) |
|
$ |
(0.45 |
) |
Diluted loss per
share |
|
$ |
(0.43 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.92 |
) |
|
$ |
(0.45 |
) |
Average shares
outstanding - Basic |
|
|
5,294 |
|
|
|
3,911 |
|
|
|
5,254 |
|
|
|
3,709 |
|
Average shares
outstanding - Diluted |
|
|
5,294 |
|
|
|
3,911 |
|
|
|
5,254 |
|
|
|
3,709 |
|
Summarized Balance Sheet Data |
(Dollars in
thousands) (Unaudited) |
|
|
|
|
|
|
|
April 1,2017 |
|
September 30, 2016 |
Cash and cash
equivalents |
|
$ |
5,664 |
|
|
$ |
14,127 |
Receivables |
|
|
13,659 |
|
|
|
12,193 |
Inventories |
|
|
16,356 |
|
|
|
13,666 |
Prepaid expenses and
other current assets |
|
|
4,373 |
|
|
|
3,602 |
Total current
assets |
|
|
40,052 |
|
|
|
43,588 |
Intangible assets |
|
|
8,658 |
|
|
|
9,185 |
Goodwill |
|
|
7,733 |
|
|
|
7,794 |
Other long-term
assets |
|
|
9,337 |
|
|
|
8,406 |
Total assets |
|
$ |
65,780 |
|
|
$ |
68,973 |
|
|
|
|
|
Current
liabilities |
|
$ |
17,806 |
|
|
$ |
16,117 |
Liability for pension
benefits |
|
|
10,624 |
|
|
|
11,511 |
Other long-term
liabilities |
|
|
18,806 |
|
|
|
19,574 |
Stockholders’
equity |
|
|
18,645 |
|
|
|
21,739 |
Non-controlling
interest |
|
|
(101 |
) |
|
|
32 |
Total liabilities and
stockholders’ equity |
|
$ |
65,780 |
|
|
$ |
68,973 |
Reconciliation of GAAP to Non-GAAP
Measures |
(Dollars
in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
(in thousands of dollars) |
|
(in thousands of dollars) |
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017 |
|
April 2,2016 |
|
April 1,2017 |
|
April 2,2016 |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,253 |
) |
|
$ |
(1,580 |
) |
|
$ |
(4,745 |
) |
|
$ |
(1,496 |
) |
Interest expense |
|
|
142 |
|
|
|
109 |
|
|
|
280 |
|
|
|
131 |
|
Interest income |
|
|
(18 |
) |
|
|
(4 |
) |
|
|
(36 |
) |
|
|
(12 |
) |
Income taxes |
|
|
(368 |
) |
|
|
(90 |
) |
|
|
(857 |
) |
|
|
(79 |
) |
Depreciation |
|
|
230 |
|
|
|
179 |
|
|
|
443 |
|
|
|
348 |
|
Amortization of Bassi
intangible assets and fair value adjustments arising from the
acquisition of Bassi |
|
|
268 |
|
|
|
302 |
|
|
|
503 |
|
|
|
302 |
|
|
|
|
(1,999 |
) |
|
|
(1,084 |
) |
|
|
(4,412 |
) |
|
|
(806 |
) |
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bassi acquisition
costs |
|
|
- |
|
|
|
1,101 |
|
|
|
- |
|
|
|
1,417 |
|
Adjusted EBITDA |
|
$ |
(1,999 |
) |
|
$ |
17 |
|
|
$ |
(4,412 |
) |
|
$ |
(611 |
) |
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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