VANCOUVER, March 15, 2018 /CNW/ - Photon Control Inc.
("Photon Control" or the "Company") (TSX-V: PHO), a leading
developer and supplier of optical measurement technologies to the
global semiconductor industry, has reported its financial results
for the three months and year ended December
31, 2017.
Fourth Quarter and Full Year 2017 Highlights
- Revenue of $11.0 million and
$43.8 million for the quarter and
year, respectively, representing increases of 22% and 36% versus
the prior comparable periods;
- Adjusted EBITDA of $2.9 million
or 26% of revenues and $14.3 million
or 33% of revenues for the quarter and year, respectively,
increased 35% and 36% versus the prior year comparable periods. A
table showing adjustments made to EBITDA is included in this press
release;
- Net income of $2.7 million and
$5.7 million for the quarter and
year, respectively, represent a 96% increase and 13% decline versus
the prior comparable periods. The decline in net income for the
year relates to previously disclosed non-recurring charges;
- Basic earnings per share of $0.02
and $0.05 for the quarter and year,
respectively, represent a 100% increase and 17% decline versus the
prior comparable periods. The decline in earnings per share for the
year relates to previously disclosed non-recurring charges;
and,
- Order backlog grew to a record $18.3
million as at December 31,
2017, increases of 45% and 108% from September 30, 2017 and December 31, 2016 respectively.
"We are pleased to deliver record revenue and Adjusted EBITDA
for the year," said Scott Edmonds,
Chief Executive Officer. "Our fourth quarter and second half
results were slightly above our forecasted levels, reflecting the
robust semiconductor industry, increased customer confidence in
Photon Control, and early results from investments made in
engineering and sales and marketing."
Fourth Quarter and Full Year 2017 Financial
Results
Total revenue for the fourth quarter of 2017
increased 22% from $9.0 million to
$11.0 million, with full year 2017
revenue increasing 36% from $32.2
million to $43.8 million year
over year. The increase in revenue was primarily due to strong
overall market conditions in the semiconductor industry and our
customers' increased confidence in our Company.
Fourth quarter 2017 gross profit increased 16% to $5.0 million versus the prior year quarter, and
2017 full year gross profit increased 44% to $23.3 million versus the prior year period. Gross
margin was 45% for the three months and 53% for the year ended
December 31, 2017 compared to 48% and
50% in the prior year periods, respectively.
Gross margin decreased to 45% for the quarter compared to 48% in
the prior comparable period due to non-cash amortization charges on
intangible assets arising from the acquisition of Photon R&D.
This new, non-cash charge, which has been calculated from the
acquisition date of April 14, 2017 to
December 31, 2017, has been fully
absorbed in the fourth quarter as the Company finalized the
accounting for the transaction in the quarter. The non-cash charge
was partially offset by the benefits of higher overall revenues and
a previously reported change in accounting for the royalties paid
to the former Photon R&D; such royalties are now accounted for
as a business acquisition cost rather than cost of sales as had
been the case in years prior to 2017. Had the non-cash amortization
charge been reflected in each respective period, gross margin would
have been 48%, 51% and 52% in the second, third and fourth quarters
of 2017, respectively.
Gross margin improved to 53% for the year ended December 31, 2017 compared to 50% in 2016, as a
result of higher overall revenues and the net benefit of the change
in accounting for the royalties paid to the former Photon R&D
which exceeded the aforementioned amortization charges on
intangible assets for the year.
Operating expenses of $3.6 million
and $15.5 million for the three
months and year ended December 31,
2017, respectively, include one-time charges of $0.3 million for the fourth quarter of 2017 and
$4.7 million for the full year.
One-time charges of $0.3 million in
the fourth quarter of 2017 relate to the final costs of the
Company's relocation to its new manufacturing facility and are in
line with previously forecasted amounts. The $4.7 million of charges for the full year include
$0.9 million for the facility move,
$2.8 million for changes to the Board
of Directors, CEO and leadership team, including certain litigation
costs, and $1.0 million for costs
related to the acquisition of certain assets of Photon R&D and
settlement of all disputes with the former Photon R&D and its
principals. Net of these one-time items, operating expenses were
$2.9 million and $9.2 million for the fourth quarter and full year
of 2017, respectively, compared to $2.0
million and $5.2 million in
the same year-ago periods. The increase in expenses reflects
investments made to enhance the Company's ability to service its
existing revenues and to drive future growth opportunities.
Net income before tax for the quarter was $3.9 million compared to $2.4 million for the prior comparable period,
while for the full year of 2017, net income before tax was
$8.2 million versus $9.4 million for the same year-ago period.
The table below reconciles the net income to adjusted earnings
before interest, taxes, depreciation and amortization, foreign
exchange and non-recurring items ("Adjusted EBITDA"):
|
|
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
2016
|
2017
|
2016
|
Net income for the
period
|
$
2,653
|
$
1,351
|
$
5,692
|
$
6,516
|
Add
(deduct)
|
|
|
|
|
|
Finance
income
|
(35)
|
(24)
|
(176)
|
(137)
|
|
Accretion expense on
contingent consideration
|
639
|
-
|
639
|
-
|
|
Income tax
|
1,255
|
1,056
|
2,557
|
2,869
|
|
Depreciation of
property and equipment
|
268
|
52
|
758
|
163
|
|
Amortization of
intangible assets
|
1,154
|
14
|
1,182
|
55
|
|
Foreign exchange
(gain) loss
|
(145)
|
(398)
|
2,037
|
186
|
|
Relocation
costs
|
313
|
-
|
884
|
-
|
|
Corporate
Changes
|
-
|
-
|
2,953
|
384
|
|
Photon R&D
settlement
|
(3,200)
|
95
|
(2,249)
|
485
|
Adjusted
EBITDA for the period
|
$
2,902
|
$
2,146
|
$
14,277
|
$
10,521
|
Net income and total comprehensive income was $2.7 million or $0.02 per share and $5.7
million or $0.05 per share for
the three months and year ended December 31,
2017, respectively, compared to $1.4
million or $0.01 per share and
$6.5 million or $0.06 per share in the prior year comparable
periods.
As at December 31, 2017, cash on
hand was above forecast at $34.3
million versus $27.0 million
at September 30, 2017 and
$32.5 million at December 31, 2016. The increase during the three
months ended December 31, 2017 was
attributable to the Company's strong operating performance and
early collections from a large customer. The Company noted that its
cash balance increased following the significant one-time
investments made in the first half of 2017, including the fit-out
of the new manufacturing facility and the acquisition of Photon
Control R&D Ltd.
Order backlog (defined as the value of sales orders scheduled to
be shipped in the next 12-months) increased to $18.3 million at December
31, 2017, increases of 45% and 108% from $12.6 million and $8.8
million reported at September 30,
2017 and December 31, 2016
respectively. The increase in order backlog reflects the continued
demand growth occurring in the semiconductor industry, increased
confidence in the Company and early results from investments made
in engineering and sales and marketing.
Business Outlook for the First Quarter of 2018
"We are
forecasting Q1 2018 revenue to be in the range of $12 to $14
million," said Scott Edmonds,
Chief Executive Officer, continuing, "We further expect that our
revenue growth for the year will outperform the consensus estimates
of low double-digit growth for the semiconductor WFE market and
that our 2018 EBITDA margins will be similar to or higher than the
amounts reported in 2017."
Stock Option Grants to Employees and Consultants
The
Company announced that it has granted to certain employees and
consultants an aggregate of 250,000 stock options in the ordinary
course business. The exercise price of the options granted will be
set at the closing price per share on March
14, 2018. The stock options are subject to the terms of the
Company's Stock Option Plan and any applicable regulatory
approvals.
Conference Call
Photon Control will hold a conference
call today (Thursday, March 15, 2018)
at 11:00 a.m. Eastern time
(8:00 a.m. Pacific time) to discuss
these results. The call will be hosted by Scott Edmonds, Chief Executive Officer and
Daniel Lee, Chief Financial Officer,
followed by a question and answer period.
Please call the conference telephone number approximately 10
minutes prior to the commencement of the call. The conference
call will be broadcast simultaneously and available for replay
here.
Toll-Free Number: 1-877-407-9716
International Number: 1-201-493-6779
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This news release should be read in conjunction with the
Company's consolidated financial statements and related notes for
the year ended December 31, 2017, and
management's discussion and analysis for the three months and year
ended December 31, 2017, copies of
which can be found at www.sedar.com.
About Photon Control Inc.
Photon Control Inc. designs,
manufactures and distributes a wide range of optical sensors and
systems to measure temperature and position. These products are
used by the world's largest Wafer Fabrication Equipment ("WFE")
manufacturers and end users in the semiconductor and related
industries. Photon Control Inc.'s high quality products provide
industry leading accuracy, speed and quality in the most extreme
conditions and are backed by a team of experts providing a variety
of on-site and remote services including custom design,
installation, training and support. Headquartered in an ISO
9001:2015 manufacturing facility in Vancouver, BC, Photon Control Inc. is listed
on the TSX Venture Exchange, trading under the symbol ''PHO."
Additional information about the company can be found at
www.photon-control.com/investors.html.
Forward-Looking Statements
This news release
contains "forward-looking statements" within the meaning of
applicable Canadian securities legislation. These statements
generally can be identified by use of forward looking words such as
"may", "will", "expect", "estimate", "anticipate", "intend",
"consider", "believe" or "continue" or the negative thereof or
similar variations. Such forward-looking statements concern the
business and anticipated financial performance of the Company and
include, without limitation, the Company's expectations with
respect to the overall order activity for the balance of the year
and the Company's ability to build on its financial and operational
foundation in the future.
These forward-looking statements are based on certain factors
and assumptions, including, without limitation: the Company's
ability to successfully complete new purchase orders along the
timelines expected; continued and future demand for the Company's
products; continued sales to the Company's major customers; the
continued financial health of the semiconductor industry; and the
Company's ability to continue and further enhance revenue
diversification and open new market opportunities.
Forward-looking statements are subject to a variety of known
and unknown risks, uncertainties and other factors which could
cause actual events or results to differ from those expressed or
implied by the forward-looking statements, including, without
limitation: additional measures and controls may not be implemented
as expected or along the timelines anticipated; uncertainties
relating to the market for the Company's products and maintaining a
stable level of orders; fluctuations in revenue as a result of
volatility in the markets and product mix; risks relating to the
Company's present reliance on its major customers for the majority
of its sales; risks relating to the Company's reliance on the
financial health of the semiconductor industry; risks relating to
the development of competing technologies and the possibility of
increased competition; the effect of slow growth in the United States, the Company's principal
market, as well as other economies and other economic trends and
conditions in the markets that the Company and its customers serve;
risks associated with technical difficulties or delays in product
introductions, improvements, implementation; uncertainties in
product pricing or other initiatives of the Company and its
competitors; uncertainties in factors that may result in a
reduction in capital expenditures and/or delayed buying decisions
affecting demand for the Company's products; risks relating to
currency fluctuations, particularly between the Canadian and
United States dollars; and risks
in pursuing additional development projects to support existing
customers or pursue other business opportunities.
The foregoing assumptions, risks and uncertainties are not
exhaustive of the items that may affect our forward-looking
statements. Should underlying assumptions prove to be incorrect or
one or more of these risks and uncertainties materialize, actual
results may vary materially from those described in the
forward-looking statements. The Company's forward-looking
statements are based on beliefs, expectations and opinions of
management on the date the statements are made.
For the reasons set forth above, readers should not place
undue reliance on forward-looking statements. The Company
undertakes no obligation to update or revise any forward-looking
statements included herein if these beliefs, estimates and opinions
or other circumstances should change, except as otherwise required
by applicable law.
SOURCE Photon Control Inc.