Perceptron, Inc. (NASDAQ: PRCP), a leading global provider of 3D
automated metrology solutions and coordinate measuring machines,
today announced results for the three months ended Dec. 31, 2019
(fiscal second quarter 2020).
FISCAL 2Q20 SUMMARY
- Net sales of $19.1 million
- Net income of $0.8 million
- Adjusted EBITDA1 of $1.8 million
- Total bookings of $14.4 million
- Total backlog of $33.0 million
- Announces $2.7 million in annualized pre-tax cost savings from
workforce reduction
Perceptron reported net income of $0.8 million,
or $0.08 per fully diluted share, in the fiscal second quarter
2020, versus $1.6 million, or $0.16 per diluted share, in the
prior-year period. The second quarter results include
severance expenses of $0.5 million.
The year-over-year decline in profitability was
due mainly to lower sales in Asia, primarily within the Company’s
measurement solutions business. The lingering impact of U.S.
trade disputes with China contributed to lower bookings in the
region during the period, although the Company anticipates a
recovery in demand during the second half of the current fiscal
year. In Europe, a moderate decline in sales was attributable
to a challenging prior-year comparison related to revenue from a
large contract at a major automotive OEM in the fiscal second
quarter 2019 that was not repeated in the fiscal second quarter
2020.
1 See the attached “Non-GAAP Financial Measures”
for a reconciliation of Adjusted EBITDA to GAAP net income.
MANAGEMENT COMMENTARY
“The timing of customer orders fell short of
expectations during the first half of fiscal 2020,” stated Jay
Freeland, Chairman and Interim CEO of Perceptron. “However,
there is momentum building in the markets we serve. That,
combined with ongoing feedback from our larger customers, leads us
to expect an acceleration in our business exiting fiscal 2020 and
into fiscal 2021.”
“During the quarter, we introduced a performance
improvement plan designed to both refocus and reenergize our
business,” Freeland continued. “This plan is a call to
action, one that structures the enterprise for maximum efficiency,
with an emphasis on targeted sales growth, technological innovation
and efficient cost management.”
“Within our sales organization, we intend to
extend our market leadership within the automotive vertical, which
currently represents more than 80% of our annualized sales, while
diversifying our revenue base into growing non-automotive
markets. We are currently evaluating all of our existing
product offerings to determine where and how we want to compete in
the markets we serve.”
“We estimate the global spend on 3D metrology
technology is approximately $10 billion annually, with the
automotive sector representing approximately one-third of this
total opportunity,” Freeland added. “While the automotive
vertical will remain a core focus for Perceptron, we intend to
allocate additional resources toward capturing meaningful share in
the other two-thirds of the addressable market, which includes
approximately $7 billion of metrology solutions provided to the
aerospace, heavy industry and construction industries.”
“We also have taken action to reduce costs
throughout the organization as we position the business for
profitable growth,” Freeland said. “Today, we announced a 10%
reduction in our global workforce, which includes planned
attrition. This reduction in force is expected to result in
approximately $2.7 million in annualized pre-tax cost savings,
beginning in the fourth quarter of our fiscal 2020.”
“We’ve enhanced the Company’s core leadership
team by adding Bill Roeschlein as interim CFO and Gianni Trivisonni
as the new head of our Coord3 business, two experienced strategic
hires and world-class executives with a shared vision for our
business,” continued Freeland. “We are committed to executing
on our performance improvement plan, while simultaneously working
to identify permanent leaders for the CEO and CFO roles who will
lead our organization into its next phase of growth.”
“In the near-term, we anticipate potential
volatility in the timing of orders from our automotive OEM
customers, consistent with what we experienced in the first half of
the year and driven by market conditions within that industry,”
Freeland added. “We expect to have improved visibility around
the prospective timing of new electric and autonomous vehicle
program launches at major domestic OEMs entering fiscal 2021.
As new automotive platforms are developed, we believe those OEMs
will require our solutions to ensure the highest levels of
production control and productivity, driven by the accuracy and
precision of our offerings, and consistent with growing long-term
demand for ‘zero defect’ measurement technologies.”
“Perceptron is a global leader in the metrology
space, a brand whose name has become synonymous with innovation and
performance excellence,” Freeland concluded. “Looking ahead,
we believe the Company is well-positioned for growth and improved
financial performance.”
F2Q20 FINANCIAL RESULTS
For the three months ended Dec. 31, 2019, the
Company generated net sales of $19.1 million, versus $21.6 million
in the prior-year period, which included an unfavorable currency
impact of $0.3 million. Sales in the Americas, Europe and
Asia declined 3%, 4% and 33% on a year-over-year basis,
respectively, in the period. Sales of measurement solutions,
which represented 92% of total sales in the period, declined 10% in
the fiscal second quarter, when compared to the prior-year
period.
Total gross profit declined 10% on a
year-over-year basis, or $0.8 million, to $7.1 million in the
fiscal second quarter. Gross profit margin increased 60 basis
points to 37.2%, versus 36.6% in the prior-year period, due mainly
to a more favorable sales mix.
Total bookings declined 30% on a year-over-year
basis to $14.4 million in the fiscal second quarter, as bookings
within the Americas, Europe and Asia declined 20%, 39% and 15%,
respectively, in the period. In the Americas and Europe, the
pivot by automotive OEMs toward new electrical vehicle programs has
contributed to a temporary delay in program activity. In
Asia, lingering trade issues between the United States and China
dampened CMM demand.
LIQUIDITY UPDATE
As of Dec. 31, 2019, the Company had cash and
equivalents of $5.8 million, together with total availability on
outstanding lending facilities of $5.4 million. The Company
had no outstanding debt as of Dec. 31, 2019.
FINANCIAL GUIDANCE
The following statements are based on
Perceptron’s current expectations for the fiscal year ended June
30, 2020. All financial guidance is current as of the time provided
and is subject to change. The following statements are
forward-looking, and actual results could differ materially
depending on market conditions and the factors set forth under
“Forward-Looking Statements” below.
- Revenue is projected to be in the range of $70.0 million to
$75.0 million
- GAAP net income/(loss) is projected to be between break-even
and net income of $2.7 million, or between $(0.00) to $0.28 per
share, on approximately 9.7 million basic and diluted shares
outstanding
- Adjusted EBITDA is projected to be in the range of $3.2 million
to $6.5 million. (See the attached “Non-GAAP Financial
Measures” for a reconciliation of Adjusted EBITDA to GAAP net
income.)
CONFERENCE CALL
A conference call will be held on February 11,
2020 at 8:30 AM ET to review the Company’s financial results,
discuss recent events and conduct a question-and-answer
session. A webcast of the conference call and accompanying
presentation materials will be available in the Investor Relations
section of Perceptron’s website at investors.perceptron.com.
To listen to a live broadcast, go to the site at least 15 minutes
prior to the scheduled start time in order to register, download,
and install any necessary audio software.
To participate in the live teleconference:
Domestic Live: |
877-407-9716 |
International Live: |
201-493-6779 |
ABOUT PERCEPTRON®
Perceptron (NASDAQ: PRCP) develops, produces and
sells a comprehensive range of automated industrial metrology
products and solutions to manufacturing organizations for
dimensional gauging, dimensional inspection and 3D scanning.
Products include 3D machine vision solutions, robot guidance,
coordinate measuring machines, laser scanning and advanced analysis
software. Global automotive, aerospace and other manufacturing
companies rely on Perceptron's metrology solutions to assist in
managing their complex manufacturing processes to improve quality,
shorten product launch times and reduce costs. Headquartered
in Plymouth, Michigan, Perceptron has subsidiary operations in
Brazil, China, Czech Republic, France, Germany, India, Italy,
Japan, Slovakia, Spain and the United Kingdom. For more
information, please visit www.perceptron.com.
SAFE HARBOR STATEMENT
Certain statements in this press release may be
“forward-looking statements” within the meaning of the Securities
Exchange Act of 1934, including our expectation as to our fiscal
year 2020 and future results, operating data, new order bookings,
revenue, expenses, net income and backlog levels, trends affecting
our future revenue levels, the rate of new orders, the timing of
revenue and net income increases, including from new products which
we have recently released or have not yet released, the timing of
the introduction of new products, customer demand for our metrology
solutions, conditions in our principal geographic markets,
including the Americas and China, the amount of cost savings from
reductions in global workforce and other performance improvement
actions and our ability to fund our fiscal year 2020 and future
cash flow requirements. Whenever possible, we have identified
these forward-looking statements by words such as “target,” “will,”
“should,” “could,” “believes,” “expects,” “anticipates,”
“estimates,” “prospects,” “outlook,” “guidance” or similar
expressions. We claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 for all of our forward-looking
statements. While we believe that our forward-looking
statements are reasonable, you should not place undue reliance on
any such forward-looking statements, which speak only as of the
date made. Because these forward-looking statements are based
on estimates and assumptions that are subject to significant
business, economic and competitive uncertainties, many of which are
beyond our control or are subject to change, actual results could
be materially different. Factors that might cause such a
difference include, without limitation, disruptions to our
operations due to our global workforce reduction, risks associated
with effectively controlling operating expenses, including failure
to achieve anticipated cost savings from the global workforce
reduction and other cost reduction initiatives or to reduce costs
to the level originally anticipated to avoid disruptions to our
operations, the impact of such changes on booking and revenue
levels, the risk that actual charges from the global workforce
reduction differ from our assumptions used in estimating the
charges and the risks and uncertainties discussed from time to time
in our periodic reports filed with the Securities and Exchange
Commission, including those listed in “Item 1A: Risk Factors” of
our Annual Report on Form 10-K for fiscal 2019 and our Quarterly
Report on Form 10-Q for the quarterly period ended December 31,
2019. Except as required by applicable law, we do not
undertake, and expressly disclaim, any obligation to publicly
update or alter our statements whether as a result of new
information, events or circumstances occurring after the date of
this report or otherwise.
--- Financial Tables Follow ---
|
PERCEPTRON, INC. |
SELECTED FINANCIAL DATA |
(Unaudited, In Thousands Except Per Share Amounts) |
|
|
|
|
|
|
|
Condensed Income
Statements |
Three Months Ended |
Six Months Ended |
|
December 31, |
December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(As Revised) |
|
|
|
(As Revised) |
Net
Sales |
$ |
19,132 |
|
|
$ |
21,553 |
|
|
$ |
36,982 |
|
|
$ |
42,995 |
|
Cost of
Sales |
|
12,001 |
|
|
|
13,703 |
|
|
|
22,809 |
|
|
|
26,853 |
|
Gross Profit |
|
7,131 |
|
|
|
7,850 |
|
|
|
14,173 |
|
|
|
16,142 |
|
Operating
Expenses |
|
|
|
|
|
|
|
Selling, General and
Administrative Expense |
|
4,309 |
|
|
|
4,942 |
|
|
|
8,552 |
|
|
|
9,577 |
|
Engineering, Research and
Development Expense |
|
1,632 |
|
|
|
2,080 |
|
|
|
3,460 |
|
|
|
4,278 |
|
Severance, impairment and
other charges |
|
471 |
|
|
|
(609 |
) |
|
|
471 |
|
|
|
(609 |
) |
Operating Income |
|
719 |
|
|
|
1,437 |
|
|
|
1,690 |
|
|
|
2,896 |
|
Other Income and
(Expenses), net |
|
|
|
|
|
|
|
Interest Expense, net |
|
(43 |
) |
|
|
(29 |
) |
|
|
(67 |
) |
|
|
(56 |
) |
Foreign Currency and Other,
net |
|
123 |
|
|
|
156 |
|
|
|
(55 |
) |
|
|
(46 |
) |
Income Before Income
Taxes |
|
799 |
|
|
|
1,564 |
|
|
|
1,568 |
|
|
|
2,794 |
|
Income Tax (Expense)
Benefit |
|
(48 |
) |
|
|
45 |
|
|
|
(191 |
) |
|
|
(231 |
) |
|
|
|
|
|
|
|
|
Net
Income |
$ |
751 |
|
|
$ |
1,609 |
|
|
$ |
1,377 |
|
|
$ |
2,563 |
|
|
|
|
|
|
|
|
|
Income Per Common
Share |
|
|
|
|
|
|
|
Basic |
$ |
0.08 |
|
|
$ |
0.17 |
|
|
$ |
0.14 |
|
|
$ |
0.27 |
|
Diluted |
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.14 |
|
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding |
|
|
|
|
|
|
|
Basic |
|
9,693 |
|
|
|
9,615 |
|
|
|
9,674 |
|
|
|
9,588 |
|
Diluted |
|
9,698 |
|
|
|
9,691 |
|
|
|
9,687 |
|
|
|
9,731 |
|
|
|
|
|
|
|
|
|
*During fourth
quarter of fiscal 2019, the Company identified an error related to
the accounting for our deferred tax liabilities associated with
certain amortizable intangible assets acquired in 2015. The error
related to not appropriately reducing the associated deferred tax
liabilities for the tax effect of amortization of the intangible
assets since 2016. The error was immaterial to our previously
issued financial statements, but the cumulative correction would
have had a material effect on the 2019 financial statements.
Accordingly, the results for the three and six months ended
December 31, 2018 throughout this earnings announcement have been
adjusted to incorporate the revised amounts, where applicable. The
revision reduced income tax expense and increased net income by
approximately $62,000 and $124,000 for the three and six months
ended December 31, 2018, respectively, in the Condensed Income
Statements for that period. These changes are reflected in this
earnings announcement in the columns labeled as revised. |
|
PERCEPTRON, INC. |
SELECTED FINANCIAL DATA |
(In Thousands) |
|
|
|
|
Condensed Balance
Sheets |
December 31, |
|
June 30, |
|
|
2019 |
|
|
2019 |
|
(Unaudited) |
|
|
Cash and Cash Equivalents |
$ |
5,763 |
|
$ |
4,585 |
Short-Term Investments |
|
448 |
|
|
1,431 |
Receivables, net |
|
33,890 |
|
|
33,043 |
Inventories, net |
|
9,417 |
|
|
10,810 |
Other Current Assets |
|
2,023 |
|
|
1,529 |
Total Current Assets |
|
51,541 |
|
|
51,398 |
|
|
|
|
Property and Equipment,
net |
|
6,399 |
|
|
6,538 |
Goodwill and Other Intangible
Assets, net |
|
3,524 |
|
|
3,557 |
Right of Use Assets |
|
3,853 |
|
|
- |
Long-Term Deferred Income Tax
Asset |
|
814 |
|
|
620 |
Long-Term Investments |
|
725 |
|
|
725 |
Total Non-Current Assets |
|
15,315 |
|
|
11,440 |
|
|
|
|
Total Assets |
$ |
66,856 |
|
$ |
62,838 |
|
|
|
|
Accounts Payable |
$ |
6,674 |
|
$ |
7,397 |
Deferred Revenue |
|
5,722 |
|
|
6,649 |
Reserves for Severance and
Other Charges |
|
404 |
|
|
44 |
Short-Term Operating Lease
Liability |
|
501 |
|
|
- |
Other Current Liabilities |
|
5,940 |
|
|
6,111 |
Total Current Liabilities |
|
19,241 |
|
|
20,201 |
|
|
|
|
Long-Term Taxes Payable |
|
8 |
|
|
114 |
Long-Term Deferred Income Tax
Liability |
|
14 |
|
|
41 |
Long-Term Operating Lease
Liability |
|
3,404 |
|
|
- |
Other Long-Term
Liabilities |
|
844 |
|
|
556 |
Total Long-Term Liabilities |
|
4,270 |
|
|
711 |
|
|
|
|
Total Liabilities |
|
23,511 |
|
|
20,912 |
|
|
|
|
Shareholders'
Equity |
|
43,345 |
|
|
41,926 |
Total Liabilities and Shareholders' Equity |
$ |
66,856 |
|
$ |
62,838 |
|
|
|
|
|
|
|
|
PERCEPTRON, INC.NON-GAAP
FINANCIAL MEASURES
While Perceptron’s results under Generally
Accepted Accounting Principles in the United States of America
(“U.S. GAAP”) provide significant insight into our operations and
financial position, Perceptron’s management supplements its
analysis of the business using “Adjusted EBITDA”. This is a
non-GAAP financial measure. Management believes this non-GAAP
financial measure, when taken together with the corresponding GAAP
measure, provides incremental insight into the underlying factors
and trends affecting our performance because it excludes the
effects of financing, investment, and other non-operating
activities that management believes are not representative of our
core business. However, it should be viewed as supplemental
data, rather than as a substitute or an alternative to the
comparable GAAP measure. The tables below present a
reconciliation of the non-GAAP measures to the most directly
comparable financial measure calculated in accordance with
GAAP.
|
PERCEPTRON, INC. |
RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA |
(Unaudited, In Thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
(As Revised) |
|
|
|
(As Revised) |
|
|
|
|
|
|
|
|
Net
Income |
$ |
751 |
|
$ |
1,609 |
|
|
$ |
1,377 |
|
$ |
2,563 |
|
Interest Expense, net |
|
43 |
|
|
29 |
|
|
|
67 |
|
|
56 |
|
Income Tax Expense
(Benefit) |
|
48 |
|
|
(45 |
) |
|
|
191 |
|
|
231 |
|
Depreciation and amortization
expense |
|
484 |
|
|
567 |
|
|
|
964 |
|
|
1,134 |
|
Severance, impairment and
other charges |
|
471 |
|
|
(609 |
) |
|
|
471 |
|
|
(609 |
) |
Adjusted
EBITDA |
$ |
1,797 |
|
$ |
1,551 |
|
|
$ |
3,070 |
|
$ |
3,375 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA, for
the periods presented, represents net income before interest
expense, net; income tax expense (benefit); and depreciation and
amortization expense, severance costs, impairment charges and
litigation settlements. Adjusted EBITDA does not represent net
income, as that term is defined under GAAP, and should not be
considered as an alternative to net income as an indicator of our
operating performance. Adjusted EBITDA is not intended to be
measures of free cash flow available for management or
discretionary use as such measures do not consider certain cash
requirements such as capital expenditures, tax payments and debt
service requirements. |
|
|
|
|
PERCEPTRON, INC. |
FISCAL YEAR 2020 OUTLOOK |
RECONCILIATION OF NET INCOME TO ADJUSTED
EBITDA |
(Unaudited, In Thousands Except Per Share Amounts) |
|
|
|
|
|
Low |
- |
High |
Net Income |
$ |
- |
- |
$ |
2,700 |
Interest Expense, net |
|
100 |
- |
|
100 |
Income Tax Expense |
|
- |
- |
|
600 |
Depreciation and amortization
expense |
|
2,000 |
- |
|
2,000 |
Severance, impairment and
other charges |
|
1,100 |
- |
|
1,100 |
Adjusted
EBITDA |
$ |
3,200 |
- |
$ |
6,500 |
|
|
|
|
Adjusted EBITDA, for
the period presented, represents net income before interest
expense, net; income tax expense; and depreciation and amortization
expense, severance costs, impairment charges and litigation
settlements. Adjusted EBITDA does not represent net income, as that
term is defined under GAAP, and should not be considered as an
alternative to net income as an indicator of our operating
performance. Adjusted EBITDA is not intended to be measures of free
cash flow available for management or discretionary use as such
measures do not consider certain cash requirements such as capital
expenditures, tax payments and debt service requirements. |
|
|
|
|
Contact:
Investor Relationsinvestors@perceptron.com
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