Sevcon Reports Financial Results for Third Quarter Fiscal 2017
August 14 2017 - 4:15PM
Sevcon, Inc. (Nasdaq:SEV) reported financial results for the third
quarter of fiscal 2017 ended July 1, 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 Sevcon Chief Executive Officer Matt Boyle. “Bassi
reported a 63% year-over-year increase in revenues to a quarterly
record of $8.2 million. In the controls business, third-quarter
sales to on-road customers were up 60% compared with last year,
with sales in the two-wheel sector up 39% and sales to the
four-wheel sector up 68%. Off-road sales were up 3% in the quarter
with growth from the “Other EV” sector more than offsetting lower
sales to most industrial end markets.
“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 $40 million over four years. In addition,
we received new orders from three European high-performance
automobile manufacturers with estimated engineering services
contracts worth approximately $4.8 million,” said Boyle.
Third-Quarter Fiscal 2017 Results
Summary
Revenues increased to $18.6 million in the third
quarter of fiscal 2017 from $13.9 million in the third quarter of
fiscal 2016.
- 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 by
BorgWarner.
- 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 by
BorgWarner.
- 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) |
|
|
|
|
|
July 1,2017 |
|
July, 22016 |
|
July 1,2017 |
|
July, 22016 |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
July 1,2017 |
|
July, 22016 |
|
July 1,2017 |
|
July, 22016 |
|
|
|
|
|
|
|
|
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
Sevcon uses EBITDA and adjusted EBITDA, which
are non-GAAP financial measures that exclude from net loss the
items listed in the table above, 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.
Definitive Agreement to be Acquired by
BorgWarner
On July 17, 2017, Sevcon, Inc. announced
that it had entered into a definitive merger agreement
with BorgWarner Inc. that provides
for BorgWarner to acquire all of the outstanding shares
of Sevcon’s common stock for $22.00 per share in cash and
all of the outstanding shares of Sevcon’s Series A Convertible
Preferred Stock for a price per share on an as-converted basis
equal to the common stock. Accrued dividends on the preferred
stock will be paid before closing. The total transaction value,
including the assumption of indebtedness, is expected to be
approximately $200 million at the closing of the
transaction.
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
BorgWarner acquisition which may disrupt our operations, 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. Furthermore, the
proposed acquisition by BorgWarner is subject to various
conditions, including without limitation the approval of the merger
agreement by our stockholders that may not be satisfied. 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
Sono Group NV (NASDAQ:SEV)
Historical Stock Chart
From Apr 2024 to May 2024
Sono Group NV (NASDAQ:SEV)
Historical Stock Chart
From May 2023 to May 2024