MOCON, Inc. (NASDAQ:MOCO), today reported financial results for the
first quarter ended March 31, 2016.
Commenting on the Company’s quarterly performance, MOCON’s
president and chief executive officer, Robert L. Demorest said,
“Overall first quarter revenue was down 4 percent on a
year-over-year basis. Our Package Testing segment met our
expectations growing at 4 percent year-over-year. Our
Industrial Analyzers and Other segment is beginning to
stabilize. Continued pressure on instrument sales to the oil
and gas industry was offset by increased sensor shipments to the
environmental monitoring and worker safety markets, resulting in a
decline of only 2 percent on a year-over-year basis, and
encouragingly it grew 28 percent sequentially.” Demorest
added, “Our Permeation segment declined year-over-year by 13
percent. While disappointing, we believe that much of the
decline was driven by the sales force realignment that we announced
during the fourth quarter of 2015. As part of the plan, we
combined our Permeation sales and marketing teams with Package
Testing. Company-wide, our bookings in the first quarter were
up slightly year-over-year, and therefore, much of the shortfall
was driven by the beginning of the year backlog that was $2.3
million, or 30 percent lower in 2016 than it was at the beginning
of 2015. Our realignment is now complete and our channel
partners’ outlook is positive for our next generation Permeation
instruments. We expect to see sequential improvement throughout the
remainder of 2016.”
First Quarter 2016 Revenue and Earnings
Summary
First quarter 2016 results compared to first quarter 2015:
- Revenue decreased 4 percent as compared to the first quarter
2015.
- Revenue from foreign customers accounted for 68 percent (44
percent in Europe, 24 percent outside of Europe & the U.S.A.)
of total revenue for the first quarter of 2016 compared to 67
percent (41 percent in Europe, 26 percent outside of Europe &
the U.S.A.) in the first quarter of 2015.
- Net income was $0.5 million, or $0.08 per diluted share,
compared to net income of $0.9 million, or $0.16 per diluted share
in the year-ago quarter.
- EBITDA for the first quarter of 2016 was $1.4 million compared
to $2.0 million in the first quarter of 2015. (See reconciliation
to non-GAAP information below)
- Adjusted EBITDA for the first quarter of 2016 was $1.6 million
compared to $1.9 million in the first quarter of 2015. (See
reconciliation to non-GAAP information below)
|
Revenue by Segment ($ in thousands) |
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
Year over Year Growth |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
$ |
|
% |
|
|
Package Testing |
|
$ |
7,002 |
|
|
$ |
6,756 |
|
|
$ |
246 |
|
|
|
4 |
% |
|
|
Permeation |
|
|
5,283 |
|
|
|
6,102 |
|
|
|
(819 |
) |
|
|
-13 |
% |
|
|
Industrial Analyzers and Other |
|
|
2,445 |
|
|
|
2,502 |
|
|
|
(57 |
) |
|
|
-2 |
% |
|
|
Total Revenue |
|
$ |
14,730 |
|
|
$ |
15,360 |
|
|
$ |
(630 |
) |
|
|
-4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the Package Testing segment for the first quarter
ended March 31, 2016 increased 4 percent due primarily to an
increase in demand for on-line and mixer products.
Revenue for the Permeation segment for the first quarter ended
March 31, 2016 declined by 13 percent compared to the year-ago
quarter. The Permeation segment decline is attributable to a
decrease in domestic sales for instruments and a decrease in
consulting service revenue.
Representing the smallest portion of MOCON’s reported revenue,
comprising 16 percent of revenue, the Industrial Analyzers and
Other segment declined 2 percent for the first quarter ended March
31, 2016 compared to the year-ago quarter. The decline in revenue
is primarily due to continued softness in the oil and gas
exploration markets. This decline is offset by an increase in
revenue of approximately $0.5 million from sensor and detectors
which are primarily used in environmental monitoring and worker
safety applications.
Gross Profit and Operating Expense
Commentary
Gross profit was 55 percent of revenue for each of the first
quarters ended March 31, 2016 and 2015. The first quarter 2016
gross profit rate for Permeation was 57 percent compared to 59
percent in 2015. This decrease is primarily a result of lower
consulting revenue which is supported primarily by a fixed cost
structure. The Industrial Analyzers and Other segment gross
profit rate declined to 44 percent compared to 49 percent in the
year-ago quarter due to an increase in sensors and detector revenue
volume which are lower margin products than instruments.
These declines were offset by a 4 percentage point increase in the
gross profit rate for the Package Testing segment at 58 percent in
Q1 of 2016 compared to 54 percent in Q1 of 2015. The
improvement was driven by increased volume and organizational
changes as part of the Company’s process improvement
initiatives.
Selling, general and administrative expenses were slightly lower
during the first quarter ended March 31, 2016 compared to the
year-ago quarter. Cost reductions from the Company’s
previously announced realignment plan were offset in part by
increased professional fees, new hires made throughout April to
December in 2015, and accrued severance. Research and
development expenses were 8 percent of revenue in the first quarter
2016, compared to 7 percent in the year-ago quarter, which is in
line with the Company’s commitment to continued innovation.
Balance Sheet and Cash Flow Summary
- Cash and cash equivalents declined slightly to $6.0 million at
March 31, 2016 compared to $6.3 million at December 31, 2015.
- Days sales outstanding were 63 in the first quarter of 2016
compared to 52 in the fourth quarter of 2015. The increase was
driven by the timing of revenue within the quarter.
- Total debt was $3.0 million at both March 31, 2016 and December
31, 2015.
About MOCON
MOCON is a leading provider of detectors, instruments, systems
and consulting services to research laboratories, production
facilities, and quality control and safety departments in the
medical, pharmaceutical, food and beverage, packaging,
environmental, oil and gas and other industries worldwide.
See www.mocon.com for more information.
Use of Non-GAAP Financial Measures
MOCON supplements its financial statements to provide investors
with earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and EBITDA plus share-based compensation, impairment of
investment in affiliate, realignment expenses, and foreign currency
transactional losses (“Adjusted EBITDA”), which are not calculated
in accordance with general accepted accounting principles (“GAAP”)
in the United States of America.
MOCON believes that these non-GAAP measures provide useful
information to the Company’s Board of Directors, management and
investors regarding certain trends relating to its financial
condition and operating performance. MOCON’s management uses these
non-GAAP measures to compare the Company's performance to that of
prior periods for trend analyses and planning purposes
The method MOCON uses to produce non-GAAP results is not
computed according to GAAP, is likely to differ from the methods
used by other companies and should not be regarded as a replacement
for corresponding GAAP measures. MOCON urges investors to review
the reconciliation of its non-GAAP financial measures to the
comparable GAAP financial measures that are included in this press
release.
Safe Harbor
This press release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These
forward-looking statements include statements that can be
identified by words such as “will,” “may,” “expect,” “believe,”
“anticipate,” “estimate,” “continue,” “planned”, or other similar
expressions. All forward-looking statements speak only as of
the date of this press release. MOCON undertakes no
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or
otherwise. In addition to the risks and uncertainties of
ordinary business operations and conditions in the general economy
and the markets in which the Company competes, there are important
factors that could cause actual results to differ materially from
those anticipated by the forward-looking statements made in this
press release. These factors include, but are not limited to,
the Company’s ability to realize the cost savings associated with
the realignment plan implemented in 2015, fluctuations in foreign
currency exchange rates, the terms of MOCON’s credit agreement
including financial covenants included therein, dependence on
certain key industries, pricing and lack of availability of raw
materials, crude oil pricing impact on oil exploration activities,
and other factors set forth in the Company’s Annual Report on Form
10-K for the year ended December 31, 2015 and other documents
MOCON files with or furnishes to the Securities and Exchange
Commission.
MOCON's shares are traded on the NASDAQ Global Market
System under the symbol MOCO.MOCON is a registered
trademark of MOCON, Inc.; other trademarks are those of their
respective holders.
|
|
MOCON, INC. |
|
SUMMARY CONSOLIDATED FINANCIAL
DATA |
|
(in Thousands, Except Per Share
Data) |
|
|
|
|
|
|
|
|
STATEMENT OF OPERATIONS
DATA: (unaudited) |
|
|
|
|
|
|
|
|
Quarters Ended March 31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
Revenue |
|
|
|
|
|
|
Products |
|
$ |
11,384 |
|
|
$ |
12,169 |
|
|
|
Services |
|
|
2,812 |
|
|
|
2,504 |
|
|
|
Consulting |
|
|
534 |
|
|
|
687 |
|
|
|
Total revenue |
|
|
14,730 |
|
|
|
15,360 |
|
|
|
Cost of
revenue |
|
|
|
|
|
|
Products |
|
|
4,970 |
|
|
|
5,281 |
|
|
|
Services |
|
|
1,174 |
|
|
|
1,053 |
|
|
|
Consulting |
|
|
482 |
|
|
|
547 |
|
|
|
Total cost of
revenue |
|
|
6,626 |
|
|
|
6,881 |
|
|
|
Gross profit |
|
|
8,104 |
|
|
|
8,479 |
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
6,138 |
|
|
|
6,271 |
|
|
|
Research and
development expenses |
|
|
1,203 |
|
|
|
1,069 |
|
|
|
Operating
income |
|
|
763 |
|
|
|
1,139 |
|
|
|
Other income
(expense), net |
|
|
(35 |
) |
|
|
251 |
|
|
|
Income before income
taxes |
|
|
728 |
|
|
|
1,390 |
|
|
|
Income tax
expense |
|
|
240 |
|
|
|
482 |
|
|
|
Net income |
|
$ |
488 |
|
|
$ |
908 |
|
|
|
Net income per
common share: |
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
|
Diluted |
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
5,797 |
|
|
|
5,742 |
|
|
|
Diluted |
|
|
5,816 |
|
|
|
5,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
BALANCE SHEET DATA: (unaudited) |
|
|
|
|
|
|
March 31, 2016 |
|
December 31, 2015 |
Assets: |
|
|
|
|
Cash and marketable
securities |
|
$ |
5,962 |
|
|
$ |
6,344 |
|
Accounts receivable,
net |
|
|
10,228 |
|
|
|
8,786 |
|
Inventories |
|
|
7,726 |
|
|
|
7,790 |
|
Other current
assets |
|
|
1,834 |
|
|
|
1,782 |
|
Total current
assets |
|
|
25,750 |
|
|
|
24,702 |
|
Property, plant and
equipment, net |
|
|
5,841 |
|
|
|
5,995 |
|
Goodwill, intangibles and
other assets |
|
|
17,003 |
|
|
|
16,722 |
|
Total assets |
|
$ |
48,594 |
|
|
$ |
47,419 |
|
Liabilities and
Shareholders’ Equity: |
|
|
|
|
Notes payable,
current |
|
|
63 |
|
|
|
65 |
|
Other current
liabilities |
|
|
9,833 |
|
|
|
9,535 |
|
Total noncurrent
liabilities |
|
|
4,365 |
|
|
|
4,348 |
|
Shareholders’
equity |
|
|
34,333 |
|
|
|
33,471 |
|
Total liabilities and
shareholders’ equity |
|
$ |
48,594 |
|
|
$ |
47,419 |
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CASH
FLOW DATA: (unaudited) |
|
March 31, 2016 |
|
March 31, 2015 |
|
|
|
|
|
|
|
Net cash
provided by operations |
|
$ |
93 |
|
|
$ |
794 |
|
|
Net cash used
in investing activities |
|
|
(102 |
) |
|
|
(501 |
) |
|
Net cash used
in financing activities |
|
|
(578 |
) |
|
|
(772 |
) |
|
Effect of
exchange rate changes |
|
|
205 |
|
|
|
(553 |
) |
|
Net increase in
cash |
|
|
(382 |
) |
|
|
(1,032 |
) |
|
Cash beginning
of year |
|
|
6,344 |
|
|
|
6,332 |
|
|
Cash end of
year |
|
$ |
5,962 |
|
|
$ |
5,300 |
|
|
|
|
|
|
|
|
MOCON, INC. |
NON-GAAP RECONCILIATION |
(in Thousands, Except Share
Data) |
|
|
|
|
|
|
|
|
Quarters Ended March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
488 |
|
|
$ |
908 |
|
|
Interest expense,
net |
|
|
26 |
|
|
|
27 |
|
|
Income tax
expense |
|
|
240 |
|
|
|
482 |
|
|
Depreciation and
amortization |
|
|
689 |
|
|
|
605 |
|
|
|
|
|
|
|
|
EBITDA |
|
|
1,443 |
|
|
|
2,022 |
|
|
Share-based
compensation |
|
|
186 |
|
|
|
161 |
|
|
Foreign currency
transaction loss (gain) |
|
|
9 |
|
|
|
(278 |
) |
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
1,638 |
|
|
$ |
1,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For More Information Contact:
Elissa Lindsoe, CFO
763-493-6370 / www.mocon.com
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