13th Aug 2012 07:00
13 August 2012
ProPhotonix Limited
("ProPhotonix" or "the Company")
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2012
ProPhotonix Limited (London Stock Exchange - AIM: PPIX and PPIR, OTC: STKR.PK), a designer and manufacturer of LED light engines and laser diode modules with operations in Ireland and the U.K., today announces its unaudited interim results for the six months ended 30 June 2012.
Financial Highlights
·; Revenue decreased 24% to $6.8 million (FY 2011: $8.9 million); majority of reduction due to decline in solar sales
·; LED revenue decreased 37% to $2.9 million (FY 2011: $4.7 million)
·; Gross profit decreased 39.2% to $2.1 million (FY 2011: $3.5 million)
·; Gross profit margin lower at 31.1% (FY 2011: 38.9%)
·; Operating loss increased to $1.7 million (FY 2011: loss of $0.2 million)
·; EBITDA loss of $1.4 million vs. EBITDA of $0.3 million in 2011
·; Order bookings of $7.7 million (FY 2011: $9.6 million)
·; Percentage revenue by market sectors: industrial 76%, medical 17%, and homeland security & defense 7%
·; Percentage revenue by geography: 57% Europe, 28% North America and 15% Rest of World
·; Cash balances of $2.9 million (30 June 2011: $0.6 million)
Operational Highlights
·; Global sales force staffing in USA, UK, Germany and Switzerland completed July 2012
·; Sales distributors appointed in Germany, Taiwan and the USA
·; Introduction of expanded line of high performance LED illuminators for OEMs and machine vision market in June 2012
Mark W. Blodgett, Chairman & CEO, Commented:
"Despite a number of accomplishments during the first half of the year, the period was challenging due to the previously reported dramatic decline in the Company's sales of LED systems to solar equipment manufacturers which started in the autumn of 2011. The loss of the solar business, which now represents less than 2% of sales versus 15%, derives from excess capacity in the solar industry. With the build-out of our global sales force over the last seven months, we are moving expeditiously to replace solar sales and we are pleased with the positive book to bill for the first half of the year. Since the expansion of the sales organisation, North American laser and diode bookings are up 37% versus the first half of 2011.
"In the meantime, management continues aggressively to manage costs and excluding planned sales expenditures which increased 25% year over year, other operating expenses declined in the first half versus the prior year 2011. Furthermore, customer activity is increasing and our engineering team has never been busier working on new OEM driven opportunities. With the expansion of the sales force, we expect a significant sequential increase in revenues in the second half of the year versus the first half of 2012 and a corresponding improvement in overall financial performance of the Company," added Blodgett.
Enquiries:
ProPhotonix Limited Mark W. Blodgett, CEO
| Tel: +44 (0)12 7971 7170 |
N+1 Brewin Andrew Craig/ Ben Wright
XCAP Securities plc (Joint Broker) Jon Belliss
| Tel: +44 (0)20 3201 3710
Tel: +44 (0) 207 101 7070
|
Cubitt Consulting Nicholas Nelson/Madeline Douglas | Tel: +44 (0) 20 7367 5100
|
About ProPhotonix
ProPhotonix Limited, (formerly StockerYale, Inc.) headquartered in Salem, New Hampshire, is an independent designer and manufacturer of diode-based laser modules and LED systems for industry leading OEMs and medical equipment companies. In addition, the Company distributes premium diodes for Opnext, QSI, Sanyo, and Sony. The Company serves a wide range of markets including the machine vision, industrial inspection, defense, sensors, and medical markets. ProPhotonix has offices and subsidiaries in the U.S., Ireland, U.K., and Europe. For more information about ProPhotonix and its innovative products, visit the Company's web site at www.prophotonix.com.
Half Year 2012 Financial Results
Revenue for the half year ended 30 June 2012 was $6.8 million, a decrease of 24% compared with $8.9 million in 2011. Gross profit was $2.1 million, a decrease of 39% compared to $3.5 million in 2011. Gross profit margin decreased to 31.1% from 38.9% in 2011 due to a shift in product mix and lower volumes. The decline in sales, gross profit and margin rate was principally due to absence of sales to several large German solar equipment customers. Foreign currency exchange negatively impacted gross profit margin by $0.2 million.
Operating expenses, excluding intangible amortization charges, totaled $3.7 million versus $3.5 million in 2011. Consistent with our objectives, sales and marketing and research and development (R&D) expenses increased 15% in 2012 over 2011, while general and administrative expenses declined 2% over the same period. The operating loss was $1.7 million, as compared to a $0.2 million loss in 2011. EBITDA was a loss of $1.4 million versus EBITDA in 2011 of $0.3 million. Net loss was $1.8 million compared to the 2011 net loss of $0.5 million.
Strategy and Markets
ProPhotonix consists of two business units: an LED systems manufacturing business based in Ireland (Cork), and a laser modules production and laser diode distribution division located in the United Kingdom (Hatfield Broad Oak). Corporate, marketing and the North American sales activities are based in Salem, New Hampshire, United States of America.
The Company is well positioned to make significant progress on in its strategy to combine its expertise in two key areas of optics: LEDs and lasers. The Company intends to capitalise on increasing opportunities in this area by designing and manufacturing high value, high margin components for global manufacturers of equipment.
As announced last week the Company has completed the strategic build out of its global sales force, which now totals 14 personnel. These include experienced regional sales managers based in the US, UK, Germany and Switzerland where they can better service the majority of existing and potential customers. In addition, the Company has expanded its network of distributors mostly in Asia and smaller European markets.
The Company has made significant investments in R&D, including expanding its R&D team in Cork, which now includes a full complement of optical, mechanical and electrical engineers and represents over 20% of the Company's total workforce of 96 employees. They are focused on continuing to develop proprietary products to meet clearly defined demand from our customers and the markets which we serve. In this regard, progress during the first half included the launch of an expanded LED illuminator product line and the development of a range of new laser module and LED OEM opportunities. Currently, the majority of the Company's R&D and product development activities are specifically tied to future customer requirements.
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
In thousands except share and per share data
(unaudited)
Six Months EndedJune 30,
| ||
2012
| 2011
| |
Revenue.............................................................................................................................................. | $ 6,787 | $ 8914 |
Cost of sales....................................................................................................................................... | 4,679 | 5,449 |
|
| |
Gross profit............................................................................................................................. | 2,108 | 3,465 |
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| |
Operating expenses: | ||
Selling expenses................................................................................................................................ | 1,446 | 1,160 |
General and administrative............................................................................................................... | 1,839 | 1,869 |
Research and development.............................................................................................................. | 428 | 473 |
Amortization of intangibles............................................................................................................. | 60 | 156 |
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| |
Total operating expenses................................................................................................................. | 3,773 | 3,658 |
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| |
Loss from operations........................................................................................................................ | (1,665) | (193) |
Other (income) / expense, net.......................................................................................................... | (22) | 6 |
Interest expense................................................................................................................................. | 142 | 191 |
|
| |
Loss from continuing operations before income tax provision (benefit).................................. | (1785) | (390) |
Income tax provision (benefit)......................................................................................................... | (29) | 73 |
|
| |
Loss from continuing operations.................................................................................................... | (1,756) | (463) |
Loss from discontinued operations, net of tax............................................................................. | - | (19) |
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| |
Net loss............................................................................................................................................... | (1,756) | (482) |
Other comprehensive income (loss): | ||
Foreign currency translation...................................................................................................... | 204 | (70) |
|
| |
Total comprehensive loss................................................................................................................ | $ (1,552) | $ (552) |
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| |
Net loss for diluted net loss per share........................................................................................... | $ (1,756) | $ (482) |
|
| |
Basic and diluted net loss per share from continuing operations............................................. | $ (0.02) | $ (0.01) |
Basic and diluted net loss per share from discontinued operations......................................... | $ (0.00) | $ (0.00) |
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| |
Basic and diluted net loss per share............................................................................................... | $ (0.02) | $ (0.01) |
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Basic and diluted weighted average shares outstanding........................................................... | 76,060 | 52,456 |
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FINANCIAL STATEMENTS
PROPHOTONIX LIMITED
CONSOLIDATED BALANCE SHEETS
(unaudited) ($ in thousands except share and per share data) |
For the Periods Ended June 30, 2012 and 2011
| 2012
| 2011
| |
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 2,953 | $ 568 | |
Accounts receivable, less allowances of $30 in 2012 and $13 in 2011 | 1,976 | 2,423 | |
Inventories | 1,835 | 2,052 | |
Prepaid expenses and other current assets | 285 | 195 | |
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| ||
Total current assets | 7,049 | 5,238 | |
Net property, plant and equipment | 568 | 838 | |
Goodwill | 444 | 508 | |
Acquired intangible assets, net | 265 | 477 | |
Other long-term assets | 35 | 41 | |
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| ||
Total assets | $ 8,361 | $ 7,102 | |
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| ||
Liabilities and Stockholders' Equity (Deficit) | |||
Current liabilities: | |||
Revolving credit facility | $ 752 | $ 798 | |
Current portion of long-term debt | 1,268 | 600 | |
Capital lease obligations | 10 | 10 | |
Accounts payable | 1,559 | 1,469 | |
Income taxes payable | - | 73 | |
Accrued expenses | 921 | 1,137 | |
|
| ||
Total current liabilities | 4,510 | 4,087 | |
Long-term debt, net of current portion | 1,517 | 3,332 | |
Long-term capital lease obligation, net of current portion | 14 | - | |
Other long-term liabilities | 178 | 178 | |
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Total liabilities | 6,219 | 7,597 | |
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Stockholders' equity (deficit): | |||
Common stock, par value $0.001; shares authorized 150,000,000 at June 30, 2012 and December 31, 2011; 76,059,477 shares issued and outstanding at June 30, 2012 and 52,810,174 shares issued at June 30, 2011............................................. | 76 | 53 | |
Paid-in capital | 110,814 | 105,923 | |
Accumulated deficit | (109,373) | (106,657) | |
Accumulated other comprehensive income | 625 | 186 | |
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| ||
Total stockholders' equity (deficit) | 2,142 | (495) | |
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| ||
Total liabilities and stockholders' equity (deficit) | $ 8,361 | $ 7,102 | |
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PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
(unaudited)
Six Months EndedJune 30,
| ||
2012
| 2011
| |
Operations | ||
Net loss................................................................................................................................ | $ (1,756) | $ (482) |
Loss from discontinued operations, net of tax...................................................................... | - | (19) |
|
| |
Loss from continuing operations.......................................................................................... | (1,756) | (463) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation......................................................................................... | 63 | 148 |
Depreciation and amortization.................................................................................. | 208 | 323 |
Foreign exchange gain............................................................................................... | 220 | 8 |
Provision for inventories........................................................................................... | 12 | 27 |
Provision for bad debts.............................................................................................. | 25 | 12 |
Other change in assets and liabilities: | ||
Accounts receivable................................................................................................... | 347 | (283) |
Inventories................................................................................................................ | (208) | (81) |
Prepaid expenses and other current assets.................................................................. | (4) | 43 |
Accounts payable....................................................................................................... | 147 | (634) |
Income taxes payable................................................................................................ | (29) | 73 |
Accrued expenses....................................................................................................... | 170 | (223) |
|
| |
Net cash used in operating activities.............................................................................. | (805) | (1,123) |
Net cash used in discontinued operations.............................................................................. | - | (19) |
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| |
Net cash used in operating activities.............................................................................. | (805) | (1,142) |
Financing | ||
Net proceeds from sale of common stock............................................................................. | - | 98 |
Net borrowing of revolving credit facility............................................................................. | 104 | 134 |
Principal repayment of long-term debt................................................................................. | (366) | (314) |
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| |
Net cash used in financing activities.............................................................................. | (262) | (82) |
Investing | ||
Purchase of plant and equipment.......................................................................................... | (48) | (48) |
|
| |
Net cash used in investing activities.............................................................................. | (48) | (32) |
Effect of exchange rate on cash........................................................................................... | 2 | 29 |
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| |
Net change in cash and equivalents............................................................................ | (1,113) | (1,243) |
Cash and equivalents, beginning of period............................................................................. | 4,066 | 1,811 |
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Cash and equivalents, end of period.................................................................... | $ 2,953 | $ 568 |
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Supplemental disclosure of cash flow information: | ||
Cash paid for interest........................................................................................................... | $ 127 | $ 191 |
Assets acquired under lease arrangement............................................................................... | $ 27 | $ - |
Cash paid for taxes............................................................................................................... | $ - | $ 15 |
Notes to unaudited Interim Results
Basis of Presentation
The Company financial reports are issued under United States Generally Accepted Accounting Principles (GAAP). The Accompanying unaudited condensed consolidated financial reports reflect all adjustments of a normal recurring nature necessary for a fair statement of the (i) results of operations and comprehensive income (loss) for the six month periods ended 30 June 2012 and 2011; (ii) the financial position at 30 June 2012 and 30 June 2011; and (iii) the cash flows for the six month period ended 30 June 2012 and 2011. These interim results are not necessarily indicative of results for a full year or any other interim period.
Cautionary Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including without limitation, those with respect to ProPhotonix's goals, plans and strategies set forth herein are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: uncertainty that cash balances may not be sufficient to allow ProPhotonix to meet all of its business goals; uncertainty that ProPhotonix's new products will gain market acceptance; the risk that delays and unanticipated expenses in developing new products could delay the commercial release of those products and affect revenue estimates; the risk that one of our competitors could develop and bring to market a technology that is superior to those products that we are currently developing; and ProPhotonix's ability to capitalize on its significant research and development efforts by successfully marketing those products that the Company develops. Forward-looking statements represent management's current expectations and are inherently uncertain. All Company, brand, and product names are trademarks or registered trademarks of their respective holders. ProPhotonix undertakes no duty to update any of these forward-looking statements.
Use of Non-GAAP Financial Measures
The Company provides non-GAAP financial measures, such as EBITDA, to complement its consolidated financial statements presented in accordance with GAAP. Non-GAAP financial measures do not have any standardized definition and, therefore, are unlikely to be comparable to similar measures presented by other reporting companies. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial and operating performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses, gains and losses that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance, which management uses to evaluate financial performance for purposes of planning for future periods. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.
The Company uses EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation and impairment charges) as a non-GAAP financial measure in this press release. A reconciliation of net loss to EBITDA for the six months ended June 30, 2012 and 2011 is as follows:
(in thousands) | |||
Six Months Ended June 30, | |||
2012 | 2011 | ||
Net Loss | (1,756) | (482) | |
Loss from discontinued operations | - | 19 | |
Plus: | |||
Interest and other expense, net | 120 | 197 | |
Depreciation | 148 | 167 | |
Intangible asset amortization | 60 | 156 | |
Stock based compensation | 63 | 148 | |
Tax provision (benefit) | (29) | 73 | |
EBITDA gain (loss) | (1,394) | 278 | |
Related Shares:
ProphotonixPPIX.L