TIDMPPIX
RNS Number : 9059Z
ProPhotonix Limited
06 September 2018
September 6, 2018
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
ProPhotonix Limited
("ProPhotonix" or "the Company")
INTERIM RESULTS FOR THE HALF YEARED JUNE 30, 2018
ProPhotonix Limited (London Stock Exchange - AIM: PPIX &
PPIR, OTC: STKR), a high technology designer and manufacturer of
LED illumination systems and laser diode modules, with operations
in Ireland and the United Kingdom, today announces its unaudited
interim results for the six months ended June 30, 2018.
Financial Highlights
-- Revenue increased 3.9% to $8.8 million (H1-2017: $8.5 million)
-- Gross profit decreased 9.7% to $3.4 million (H1-2017: $3.8
million) mainly due to a reduction in gross margin of 38.6%
(H1-2017: 44.4%)
-- Operating loss of $0.4 million (H1-2017: $0.6 million
operating income) excluding stock compensation expense and
operating income of $0.1 million (H1-2017: $0.7 million)
-- Net loss of $0.5 million (H1-2017: $0.6 million net income)
-- Adjusted EBITDA of $0.2 million (H1-2017: $0.7 million).
Please see the reconciliation of net income to adjusted EBITDA
below.
-- Order bookings of $9.0 million (H1-2017: $8.8 million)
-- Book-to-Bill ratio of 1.03 (H1-2017: 1.01)
-- Percentage revenue by market sectors: 81% industrial, 16%
medical and 3% security & defense (H1-2017: 75% industrial, 22%
medical and 3% security & defense)
-- Percentage revenue by geography: 56% Europe, 31% North
America and 13% Rest of World (H1-2017: 43% Europe, 44% North
America and 13% Rest of World)
Recent Operational Highlights
-- Vision Systems Design 2018 awarded ProPhotonix its Innovators Silver Award in April 2018
-- Expansion of product offering and market applications with
new high powered 405nm and 638nm laser diodes and 3 meter COBRA RGB
line light
-- New four year GBP0.7 million term loan secured for additional
machinery and equipment and expansion of the Company's
manufacturing operations
-- Ed Dolan appointed as CFO in March 2018
Tim Losik, President & CEO, commented:
Financial
"Sales in the first half of 2018 were up 3.9% primarily due to
an increase in Laser & Diode product sales offsetting a modest
decline in LED sales. Gross profit margin fell to 38.6% compared
with 44.4% for the same period in 2017, mainly due to a shift in
product mix. Gross margins are expected to range between 40-45%
going forward but this depends on the mix and volume of sales. In
the first half of 2018 we experienced an operating loss of $0.4
million compared to operating income of $0.6 million in 2017. The
operating loss mainly resulted from increased stock compensation
expense as well as lower profit margins from a shift in product mix
and continued investment to support future growth of the
business."
"On June 14, 2018, the Company announced it had entered into a
GBP700,000 four-year term loan facility with SQN Secured Income
Fund PLC ("SQN"). The proceeds from the loan are to provide
additional working capital and capital expenditure investments in
support of our growth initiatives. Also, as of June 30, 2018, the
Company had $382,000 borrowing availability on its Sales Finance
facility through Barclays Bank. The Directors are comfortable with
the cash flow of the business considering its plans and available
credit facilities."
Strategy
"The strategy of the Company remains established in its OEM
heritage as well as the development of products directed at
specific markets. ProPhotonix has made and will continue to make
investments in commercially attractive OEM opportunities and
product development including UV LED, multi-wavelength devices and
laser technology advances. We continue to concentrate our
engineering capacity in these defined projects and areas that we
believe are poised for fast market expansion."
"The first of these is the UV LED and laser market for various
applications including: printing, curing, bonding, 3D printing,
bio-luminescence, medical microscopy and other applications. The
Company has launched several versions of its COBRA Cure(TM) product
and continues to work with many potential customers in their
applications using this technology. We plan to continue to launch
new higher power products while continuously enhancing our current
product lines to serve this market during 2018 and beyond."
"ProPhotonix also continues to focus on market requirements for
multi-wavelength devices and systems, both laser and LED solutions.
Increasingly, customers are seeking multi-wavelength solutions
requiring innovative optics, complex electronics, on-board sensing
capabilities and sophisticated software control. We see
opportunities which include a broad range of applications in
printing, microscopy, industrial inspection and sorting, solar
simulation and security markets."
Enquiries:
ProPhotonix Limited Tel: +1 603 893 8778
Tim Losik, President & CEO ir@prophotonix.com
Cantor Fitzgerald Europe
(Nominated Adviser and Broker) Tel: +44 (0)207 894 7000
David Foreman
Richard Salmond
Half Year 2018 Financial Results
Revenue for the half year ended June 30, 2018 was $8.8 million,
an increase of 3.9% compared with $8.5 million in the same period
of 2017. Gross profit was $3.4 million, a decrease of 9.3% compared
to $3.8 million in the first half of 2017. Gross profit margin fell
to 38.6% compared with 44.4% for the same period in 2017, mainly
due to a shift in product mix.
Operating expenses totaled $3.8 million versus $3.2 million for
the comparable period. Sales and marketing expenses increased $0.2
million to $1.4 million primarily due to increased stock
compensation of $0.2 million. General and administrative expenses
increased $0.4 million to $2.1 million primarily due to increased
stock compensation of $0.3 million. Research and development
expenses remained relatively flat to the prior year at $0.4
million.
The combination of reduced gross profit and increased operating
expenses resulted in an operating loss of $0.4 million, compared
with an operating profit of $0.6 million in the first half of
2017.
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, stock-based compensation and impairment charges) was
$0.2 million, as compared to $0.7 million in the first half of
2017. Please see the reconciliation of net income to adjusted
EBITDA below.
Net loss was $0.5 million, as compared to $0.6 million of net
income in the first half 2017.
The balance sheet continues to strengthen and as compared to
June 30, 2017, net assets increased by $2.1 million (45%) primarily
from the generation of net cash flow of $0.9 million and the
recognition of a deferred tax asset of $0.5 million. As of June 30,
2018, the Company held a net cash position of $486,000 versus a net
debt position as of June 30, 2017 of $360,000.
PROPHOTONIX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF Income AND COMPREHENSIVE
INCOME
In thousands except share and per share data
(unaudited)
Six Months Ended
June 30,
2018 2017
Revenue $ 8,839 $ 8,511
Cost of sales (5,431) (4,736)
Gross profit 3,408 3,775
Operating expenses:
Selling expenses (1,363) (1,153)
General and administrative (2,063) (1,621)
Research and development (414) (430)
Total operating expenses (3,840) (3,204)
(Loss) income from operations (432) 571
Other (expense) income, net (54) 73
Interest expense (21) (29)
Amortization of debt discount and financing costs - (18)
(Loss) income before income tax (507) 597
Income tax - -
Net (loss) income (507) 597
Other comprehensive income:
Foreign currency translation (42) 17
Total comprehensive (loss) income $ (549) $ 614
Net (loss) income per share:
Basic net (loss) income per share $ (0.005) $ 0.007
Diluted net (loss) income per share $ (0.005) $ 0.006
Shares used in per share calculation - basic 93,000 90,825
Shares used in per share calculation - diluted 109,191 1 107,760
FINANCIAL STATEMENTS
PROPHOTONIX LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands except share and per share data
(unaudited)
For the Periods Ended June 30, 2018 and 2017 2018 2017
Assets
Current assets:
Cash and cash equivalents $ 3,033 $ 831
Accounts receivable, less allowances of $52 in 2018 and
$21 in 2017 3,159 2,393
Inventories 2,761 2,495
Prepaid expenses and other current assets 439 397
Total current assets 9,392 6,116
Net property, plant and equipment 738 577
Goodwill 413 403
Deferred tax asset 463 -
Other long-term assets 380 81
Total assets $ 11,386 $ 7,177
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility $ 1,560 $ 1,085
Current portion of long-term debt, net 181 -
Accounts payable 2,051 1,566
Accrued expenses 2,037 1,756
Current portion of capital lease 100 98
Total current liabilities 5,929 4,505
Long-term debt, net of debt acquisition charges 684 -
Long-term capital lease obligations, net of current
portion 122 104
Total liabilities 6,735 4,609
Stockholders' Equity:
Common stock, par value $0.001; shares authorized
250,000,000 at June 30, 2018 and at June
30, 2017; 93,000,402 shares issued and outstanding at
June 30, 2018 and 90,825,402 at June
30, 2017 93 91
Paid-in capital 113,531 112,378
Accumulated deficit (109,945 ) (110,881 )
Accumulated other comprehensive income 972 980
Total stockholders' equity 4,651 2,568
Total liabilities and stockholders' equity $ 11,386 $ 7,177
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
(unaudited)
Six Months Ended
June 30,
2018 2017
Operations
Net (loss) income $ (507) $ 597
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation 559 118
Depreciation 91 33
Foreign exchange loss (gain) 32 (175)
Amortization of debt discount and financing costs - 7
Provision for inventories 3 43
Provision for bad debts 38 13
Other change in assets and liabilities:
Accounts receivable (164) 106
Inventories (561) (204)
Prepaid expenses and other current assets (199) (79)
Accounts payable 469 (7)
Accrued expenses 284 (185)
Other assets and liabilities (142) (6)
Net cash (used) provided by operating activities (97) 261
Financing
Exercise of options and warrants 3 229
Net borrowing (repayment) of revolving credit facility 345 (53)
Capital lease 40 (41)
Debt issuance costs (42) -
Net borrowing (principal repayment) of long-term debt 865 (425)
Net cash provided by (used in) financing activities 1,211 (290)
Investing
Purchase of plant and equipment (201) (112)
Net cash used in investing activities (201) (112)
Effect of exchange rate on cash (30) 61
Net change in cash and equivalents 883 (80)
Cash and equivalents, beginning of period 2,150 911
Cash and equivalents, end of period $ 3,033 $ 831
Supplemental disclosure of cash flow information:
Cash paid for interest $ 21 $ 29
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
In thousands
(unaudited)
Common Stock
-------------------
Accumulated
Other Total
Paid in Deferred Accumulated Comprehensive Stockholders'
Shares Par $0.001 Capital Compensation Deficit Income Equity
------- ---------- --------- ------------ ----------- ------------- -------------
Balance
December
31, 2017 92,565 $93 $112,987 $(18) ($109,438) $1,014 $4,638
Net profit - - - - (507) - (507)
Translation
adjustment - - - - - (42) (42)
Exercise of
options 135 0 3 - - - 3
Deferred
compensation 300 0 48 (48) - - 0
Share based
compensation - - 492 67 - - 559
Balance June
30, 2018 93,000 93 $113,530 $1 ($109,945) $972 $4,651
======= ========== ========= ============ =========== ============= =============
Notes to unaudited Interim Results
Basis of Presentation
The Company financial reports are issued under the recognition
and measurement principles of United States Generally Accepted
Accounting Principles (GAAP). The accompanying unaudited condensed
consolidated financial reports reflect all adjustments of a normal
recurring nature necessary for a fair statement of the (i) results
of operations and comprehensive (loss) income for the six month
periods ended June 30, 2018 and 2017; (ii) the financial position
at June 30, 2018 and June 30, 2017; and (iii) the cash flows for
the six month period ended June 30, 2018 and 2017. These unaudited
interim results are not necessarily indicative of results for a
full year or any other interim period. Copies of this announcement
are available on the Company's website at www.prophotonix.com.
Revenue Recognition
From 1 January 2018, the Company will adopt ASC 606, Revenue
from Contracts with Customers.
ASC 606 outlines principles for the measurement and recognition
of revenue from contracts with customers, with the core principle
being that revenue should be recognized at an amount that reflects
the consideration to which an entity expects to be entitled in
exchange for the transfer of goods and services to the customer. In
order to achieve this objective, the standard sets out a five-step
model:
1. Identify the contract(s) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations.
5. Recognise revenue when or as the entity satisfies a performance obligation.
The standard also covers the accounting for the incremental
costs of obtaining a contract and the costs to fulfil a contract,
together with presentation and disclosure requirements.
The impact of applying ASC 606 to the Company's financial
statements has been assessed by income stream and no changes in
revenue recognition policies will be required.
All contracts at June 30, 2018 were deemed to have normal
requirements that included only currently offered warranty periods.
There were no contracts in backlog that carried an enhanced
performance criteria clause, which would require the entity to
treat the revenue recognition differently than under ASC 605.
Cautionary Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements
other than statements of historical fact, including without
limitation, those with respect to ProPhotonix's goals, plans and
strategies set forth herein are forward-looking statements. The
following important factors and uncertainties, among others, could
cause actual results to differ materially from those described in
these forward-looking statements: uncertainty that cash balances
will be sufficient to allow ProPhotonix to meet all of its business
goals; uncertainty that ProPhotonix's new products will gain market
acceptance; the risk that delays and unanticipated expenses in
developing new products could delay the commercial release of those
products and affect revenue estimates; the risk that one of our
competitors could develop and bring to market a technology that is
superior to those products that we are currently developing; and
ProPhotonix's ability to capitalize on its significant research and
development efforts by successfully marketing those products that
the Company develops. Forward-looking statements represent
management's current expectations and are inherently uncertain. All
Company, brand, and product names are trademarks or registered
trademarks of their respective holders. ProPhotonix undertakes no
duty to update any of these forward-looking statements.
Use of Non-GAAP Financial Measures
The Company provides non-GAAP financial measures, such as
adjusted EBITDA, to complement its consolidated financial
statements presented in accordance with GAAP. Non-GAAP financial
measures do not have any standardized definition and, therefore,
are unlikely to be comparable to similar measures presented by
other reporting companies. These non-GAAP financial measures are
intended to supplement the user's overall understanding of the
Company's current financial and operating performance and its
prospects for the future. Specifically, the Company believes the
non-GAAP results provide useful information to both management and
investors by identifying certain expenses, gains and losses that,
when excluded from the GAAP results, may provide additional
understanding of the Company's core operating results or business
performance, which management uses to evaluate financial
performance for purposes of planning for future periods. However,
these non-GAAP financial measures are not intended to supersede or
replace the Company's GAAP results.
The Company uses adjusted EBITDA (earnings before interest,
taxes, depreciation, amortization, stock-based compensation and
impairment charges) as a non-GAAP financial measure in this press
release. A reconciliation of net income to adjusted EBITDA for the
six months ended June 30, 2018 and 2017 is as follows:
In thousands
Six Months Ended June
30,
2018 2017
------------- ---------
Net (loss) income $(507) $597
Plus:
Interest and other (income) expense,
net 75 (33)
Amortization of debt discount and
financing costs - 7
Depreciation 91 33
Stock based compensation 559 118
Adjusted EBITDA $218 $722
------------- ---------
About ProPhotonix
ProPhotonix Limited, headquartered in Salem, New Hampshire, is a
high technology designer and manufacturer of LED illumination
systems and laser diode modules for industry leading OEMs and
medical equipment companies. In addition, the Company distributes
premium diodes for Ushio, Osram, QSI, and Panasonic. The Company
serves a wide range of markets including the machine vision,
industrial inspection, security, and medical markets. ProPhotonix
has offices and subsidiaries in the U.S., Ireland, U.K., and
Europe. For more information about ProPhotonix and its innovative
products, visit the Company's web site at www.prophotonix.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFSEARIEIIT
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