Sevcon Reports Financial Results for Third Quarter Fiscal 2017
Management Comments
“Third-quarter revenues increased 33% year over year, reflecting strong growth at our Bassi charger business as well as robust demand for products for the four-wheel on-road sector,” said
“We continue to be encouraged by the progress we are making in our on-road business as we continue to build our strong project pipeline. After the close of the quarter, we announced four new on-road contracts, including the start of production at a Chinese automotive manufacturer where we supply Gen5 controllers. If this Chinese automotive program is successful, it could be worth up to
Third-Quarter Fiscal 2017 Results Summary
Revenues increased to
- Operating loss was
$3.3 million , compared with an operating loss of$0.9 million in the third 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, 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 growing on-road project pipeline. Production revenues from these programs are expected to start in 2017-2018. Also included in the operating loss in the quarter is approximately$1.1 million relating to professional fees and costs associated with the previously announced, proposed acquisition byBorgWarner . - There was an income tax benefit of
$269,000 in the third quarter of 2017 compared with$60,000 in the prior-year period. - Net loss attributable to common stockholders was
$3.0 million , or($0.56) per share, after a preferred share dividend of$102,000 , or$0.02 per share, compared with a net loss of$1.5 million , or($0.38) per share, after a preferred share dividend of$93,000 , or$0.02 per share, in the third quarter of fiscal 2016. The net loss for the third quarter of fiscal 2017 includes$1.1 million in expenses related to the Company’s proposed acquisition byBorgWarner . - Adjusted EBITDA, which excludes both the costs associated with the proposed acquisition by
BorgWarner and Bassi acquisition costs, was a loss of$1.3 million in the third quarter of fiscal 2017, which was equivalent to the loss$1.3 million , in the third quarter of fiscal 2016.
Third Quarter Fiscal 2017 Financial Highlights
(In thousands, except per-share data)
Three months ended (Unaudited) |
Nine months ended (Unaudited) |
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July 1, 2017 |
July, 2 2016 |
July 1, 2017 |
July, 2 2016 |
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Revenues | $ | 18,556 | $ | 13,913 | $ | 46,771 | $ | 36,209 | |||||||
Gross Profit | 4,632 | 4,752 | 11,153 | 12,990 | |||||||||||
Selling, general and administrative and research and development expense |
(7,920 |
) |
(5,675 |
) |
(19,181 |
) |
13,987 |
||||||||
Acquisition costs | - | (8 | ) | - | (1,425 | ) | |||||||||
Operating loss | (3,288 | ) | (931 | ) | (8,028 | ) | (2,422 | ) | |||||||
Interest expense | (216 | ) | (140 | ) | (496 | ) | (271 | ) | |||||||
Interest income | 13 | 4 | 49 | 16 | |||||||||||
Foreign currency gain (loss) | 317 | (522 | ) | (301 | ) | (487 | ) | ||||||||
Loss before income taxes | (3,174 | ) | (1,589 | ) | (8,776 | ) | (3,164 | ) | |||||||
Income taxes benefit | 269 | 60 | 1,126 | 139 | |||||||||||
Net loss | (2,905 | ) | (1,529 | ) | (7,650 | ) | (3,025 | ) | |||||||
Net loss attributable to non-controlling interest | 14 | 84 | 147 | 131 | |||||||||||
Net loss attributable to Sevcon, Inc. and subsidiaries | (2,891 | ) | (1,445 | ) | (7,503 | ) | (2,894 | ) | |||||||
Series A Preferred Share dividends | (102 | ) | (93 | ) | (299 | ) | (327 | ) | |||||||
Net loss attributable to common stockholders | (2,993 | ) | (1,538 | ) | (7,802 | ) | (3,221 | ) | |||||||
Basic loss per share | $ | (0.56 | ) | $ | (0.38 | ) | $ | (1.47 | ) | $ | (0.84 | ) | |||
Diluted loss per share | $ | (0.56 | ) | $ | (0.38 | ) | $ | (1.47 | ) | $ | (0.84 | ) | |||
Average shares outstanding – Basic | 5,366 | 4,070 | 5,291 | 3,828 | |||||||||||
Average shares outstanding – Diluted | 5,366 | 4,070 | 5,291 | 3,828 |
Summarized Balance Sheet Data
(Dollars in thousands) (Unaudited)
July 1, 2017 |
September 30, 2016 |
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Cash and cash equivalents | $ | 2,318 | $ | 14,127 | ||
Receivables | 16,456 | 12,193 | ||||
Inventories | 17,072 | 13,666 | ||||
Prepaid expenses and other current assets | 4,723 | 3,602 | ||||
Total current assets | 40,569 | 43,588 | ||||
Intangible assets | 8,971 | 9,185 | ||||
Goodwill | 8,142 | 7,794 | ||||
Other long-term assets | 11,104 | 8,406 | ||||
Total assets | $ | 68,786 | $ | 68,973 | ||
Current liabilities | $ | 22,541 | $ | 16,117 | ||
Liability for pension benefits | 10,702 | 11,511 | ||||
Other long-term liabilities | 19,267 | 19,574 | ||||
Stockholders’ equity | 16,391 | 21,739 | ||||
Non-controlling interest | (115 | ) | 32 | |||
Total liabilities and stockholders’ equity | $ | 68,786 | $ | 68,973 |
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
Three months ended (in thousands of dollars) |
Nine months ended (in thousands of dollars) |
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July 1, 2017 |
July, 2 2016 |
July 1, 2017 |
July, 2 2016 |
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Net loss | $ | (2,905 | ) | $ | (1,529 | ) | $ | (7,650 | ) | $ | (3,025 | ) | |||
Interest expense | 216 | 140 | 496 | 271 | |||||||||||
Interest income | (13 | ) | (4 | ) | (49 | ) | (16 | ) | |||||||
Income taxes | (269 | ) | (60 | ) | (1,126 | ) | (139 | ) | |||||||
Depreciation | 242 | 110 | 685 | 557 | |||||||||||
Amortization of Bassi intangible assets and | |||||||||||||||
fair value adjustments arising from the | |||||||||||||||
acquisition of Bassi | 336 | 786 | 839 | 989 | |||||||||||
EBITDA | (2,393 | ) | (1,265 | ) | (6,805 | ) | (1,363 | ) | |||||||
BorgWarner and Bassi acquisition costs | 1,114 | 8 | 1,114 | 1,425 | |||||||||||
Adjusted EBITDA | $ | (1,279 | ) | $ | (1,257 | ) | $ | (5,691 | ) | $ | 62 |
Non-GAAP Financial Measures
Definitive Agreement to be Acquired by
On
The transaction is expected to close in the fourth calendar quarter of 2017, is contingent on the approval of Sevcon’s stockholders, and is subject to the satisfaction or waiver of certain other closing conditions. The transaction is not subject to a financing condition.
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 the pendency of the proposed
About
Contact:David Calusdian Sharon Merrill Associates 1 (617) 542 5300 SEV@InvestorRelations.comMatt Boyle President and CEO 1 (508) 281 5503 matt.boyle@sevcon.com