Vicon Industries, Inc. (NYSE MKT:VII), a global producer of
end-to-end security solutions, today announced its financial
results for the second quarter ended March 31, 2016.
Eric Fullerton, Vicon’s CEO said, “The Company’s financial
results for the quarter were very disappointing and included a $6
million write off of goodwill originating from the August 2014
IQinVision business combination. Revenues declined 22% to $8.0
million for this historically weak quarter as the Company
experienced issues with certain of its camera product lines and a
delay in receipt of certain key project orders. Although we have
taken steps to correct these issues, their impact may linger
through the balance of this fiscal year. Based upon these results,
the Company implemented a cost restructuring plan that will phase
in material operating cost reductions over the remaining two
quarters of fiscal 2016. This measure is also intended to refocus
our resources on our more strategic initiatives. In the quarter,
the Company also sold its United Kingdom based operating facility,
generating $1.5 million of net cash proceeds and secured a $3
million asset based credit facility to address its near term
working capital needs.”
“Since 2012, we have made a significant investment in the
development of a completely new and strategically critical video
management system (VMS). The funding of this major development
effort has contributed to the Company’s ongoing operating losses
and depletion of cash reserves. The first release of this new
product is scheduled for October 2016 and is ultimately expected to
significantly enhance the Company’s market competitiveness across
broader market channels. We are very excited about the prospects of
launching this new product offering after many years of development
effort. The ease-of-use, functionality and openness of this new
software platform should be well received by the market. In the
meantime, we will continue to maintain our focus on ongoing market
challenges and execution of other key strategic initiatives.”
Second Quarter Fiscal 2016 Financial Results
Revenues for the second quarter of fiscal 2016 decreased 22% to
$8.0 million as compared to $10.3 million in the second quarter of
fiscal 2015. The $2.3 million decrease in the current quarter
included a $1.3 million, or 17%, decrease in sales in the Americas
market and a $1.0 million, or 36%, decrease in EMEA market sales.
The Americas market was negatively impacted by certain camera line
production issues and the EMEA market experienced a delay in
receipt of certain expected orders that were fulfilled in the
subsequent quarter. Order intake for the current quarter decreased
$4.3 million to $7.3 million as compared to $11.6 million in the
second quarter of fiscal 2015.
Gross profit margins for the second quarter of fiscal 2016
decreased to 33.0% as compared to 38.0% in the second quarter of
fiscal 2015. Principal factors contributing to the margin decrease
were the recognition of $150,000 (1.9%) of additional inventory
provisions relating to the rework and transition of the Company's
IQinVision camera line to a new contract manufacturing partner and
the impact of predominantly fixed indirect production costs on
lower sales (1.6%).
Operating expenses for the second quarter of fiscal 2016
increased $5.5 million to $11.1 million compared with $5.5 million
in the second quarter of fiscal 2015. In the current quarter, the
Company charged off its entire $6.0 million goodwill carrying value
originating from the August 2014 IQinVision business combination.
This noncash charge was principally based upon an updated
assessment of the Company's continuing depressed market valuation
and operating losses. The prior year quarter included $224,000 of
severance charges in connection with a merger related integration
and restructuring plan. Excluding the effects of the current
quarter goodwill writeoff and the prior year quarter severance
charges, operating expenses decreased $244,000 in the current
quarter. The Company recorded a gain on the sale of its United
Kingdom based operating facility of $785,000 in the second quarter
of fiscal 2016.
Net loss for the second quarter of fiscal 2016 was $7.7 million,
or $.82 per basic and diluted share, as compared to a net loss of
$1.8 million, or $.19 per basic and diluted share, in the second
quarter of fiscal 2015. Adjusted non-GAAP net loss for the second
quarter of fiscal 2016 was $2.2 million, or $.23 per basic and
diluted share, as compared to adjusted non-GAAP net loss of $1.3
million, or $.14 per basic and diluted share, in the second quarter
of fiscal 2015. Please refer to the presentation at the end of the
table of operations for a reconciliation of our second quarter GAAP
net loss to our adjusted non-GAAP net loss for such periods.
About Vicon
Vicon Industries, Inc. (NYSE MKT:VII) is a global producer of
video management systems and system components for use in security,
surveillance, safety and communication applications by a broad
range of end users. Vicon’s product line consists of various
elements of a video system, including video management software,
recorders and storage devices and capture devices (cameras).
Headquartered in Hauppauge, New York, the Company also has
principal offices in San Juan Capistrano, California and the United
Kingdom. More information about Vicon, its products and services is
available at www.vicon-security.com.
Special Note Regarding Forward-looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements relating to (i) our restructuring plan
expectations, (ii) our technology, new product launch and market
channel plans and (iii) our future cash flow and strategies. These
forward-looking statements are based on management's current
expectations and are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set
forth in or implied by such forward looking statements. These risks
and uncertainties include, but are not limited to: current and
future economic conditions that may adversely affect our business
and customers; potential fluctuation of our revenues and
profitability from period to period which could result in our
failure to meet expectations; our ability to maintain adequate
levels of working capital; our ability to successfully maintain the
level of operating costs; our ability to obtain financing for our
future needs should there be a need; our ability to incentivize and
retain our current senior management team and continue to attract
and retain qualified scientific, technical and business personnel;
our ability to expand our product offerings or to develop other new
products and services; our ability to generate sales and profits
from current product offerings; rapid technological changes and new
technologies that could render certain of our products and services
to be obsolete; competitors with significantly greater financial
resources; introduction of new products and services by
competitors; challenges associated with expansion into new markets;
failure to stay in compliance with all applicable NYSE MKT
requirements that could result in a delisting of our common stock;
and, other factors discussed under the heading "Risk Factors"
contained in our Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on May 29, 2014. All information
in this press release is as of the date of the release and we
undertake no duty to update this information unless required by
law.
-Financial Tables on Following Pages-
Table of Operations
Vicon Industries, Inc.
Condensed Statements of
Operations
(Unaudited)
Three Months Ended Six Months Ended March 31, March 31,
2016 2015 2016
2015 Net sales $ 7,998,000 $ 10,269,000 $ 18,879,000 $
20,446,000 Gross profit 2,639,000 3,905,000 6,910,000 7,676,000
Operating expenses: Selling, general and administrative
expense 3,726,000 4,085,000 7,657,000 8,383,000 Engineering and
development expense 1,340,000 1,225,000 2,658,000 2,532,000
Goodwill impairment 6,016,000 — 6,016,000 — Restructuring charges —
224,000 — 573,000 Total operating
expenses 11,082,000 5,534,000 16,331,000 11,488,000
Operating loss (8,443,000 ) (1,629,000 ) (9,421,000 ) (3,812,000 )
Gain on sale of building 785,000 — 785,000 — Loss
before income taxes (7,658,000 ) (1,770,000 ) (8,636,000 )
(3,951,000 ) Income tax expense — — —
— Net loss $ (7,658,000 ) $ (1,770,000 ) $
(8,636,000 ) $ (3,951,000 )
Loss per
share:
Basic $ (.82 ) $ (.19 ) $ (.92 ) $ (.43 ) Diluted $ (.82 ) $ (.19 )
$ (.92 ) $ (.43 )
Shares used in
computing loss per share:
Basic 9,341,000 9,154,000 9,336,000 9,127,000 Diluted 9,341,000
9,154,000 9,336,000 9,127,000
The Company evaluates performance based on net loss and per
share results excluding stock compensation expense, the charge off
and amortization of acquired intangible assets, restructuring
charges and other non-recurring expenses and gains, which it
believes is useful to investors in evaluating ongoing results since
they are either non-cash or non-recurring in nature. Reporting
these adjusted results is not in accordance with U.S. generally
accepted accounting principles (GAAP). The following table provides
a reconciliation of reported net loss and related per share results
to adjusted non-GAAP net loss and related per share results.
(Unaudited) (Unaudited) Three Months Ended Six Months Ended
March 31, March 31,
2016 2015
2016 2015 GAAP net loss $
(7,658,000 ) $ (1,770,000 ) $ (8,636,000 ) $ (3,951,000 ) Adjusting
items: Stock compensation expense 146,000 164,000 299,000 311,000
Amortization of acquired intangible assets 129,000 108,000 259,000
216,000 Restructuring charges — 224,000 — 573,000 Gain on sale of
building (785,000 ) — (785,000 ) — Goodwill impairment 6,016,000
— 6,016,000 — Adjusted non-GAAP net
loss $ (2,152,000 ) $ (1,274,000 ) $ (2,847,000 ) $ (2,851,000 )
Net loss per share - diluted $ (.82 ) $ (.19 ) $ (.92 ) $
(.43 ) Adjusting items: Stock compensation expense .02 .02 .03 .04
Amortization of acquired intangible assets .01 .01 .03 .02
Restructuring charges — .02 — .06 Gain on sale of building (.08 ) —
(.08 ) — Goodwill impairment .64 — .64 —
Adjusted non-GAAP net loss per share $ (.23 ) $ (.14 ) $
(.30 ) $ (.31 ) Diluted shares outstanding 9,341,000
9,154,000 9,336,000 9,127,000
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version on businesswire.com: http://www.businesswire.com/news/home/20160519006658/en/
Vicon Investor RelationsCindy Schneider,
631-650-6201IR@vicon-security.com
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