TIDMPPIR TIDMPPIX
RNS Number : 9627P
ProPhotonix Limited
26 August 2014
August 26, 2014
ProPhotonix Limited
("ProPhotonix" or "the Company")
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2014
ProPhotonix Limited (London Stock Exchange - AIM: PPIX and PPIR,
OTC: STKR), a designer and manufacturer of LED illumination systems
and laser diode modules with operations in Ireland and the U.K.,
today announces its unaudited interim results for the six months
ended June 30, 2014.
Financial Highlights
-- Revenue increased 13% to $8.3 million (1H 2013: $7.4 million)
-- Revenue increased 11% for Laser diode modules and diodes and 15% for LED systems
-- Gross profit increased 8.0% to $3.2 million (1H 2013: $3.0 million)
-- Gross profit margin decreased to 38.5% (1H 2013: 40.4%)
-- Operating loss decreased to $0.1 million (1H 2013: loss of $1.1(1) million)
-- EBITDA of $0.1 million vs. loss of $0.9(1) million in 2013
-- Order bookings of $8.6 million (1H 2013: $8.4 million)
-- 1.03 Book-to-Bill ratio from existing and new customers
-- Percentage revenue by market sectors: industrial 74%, medical 17%, and security & defense 9%
-- Percentage revenue by geography: 49% Europe, 32% North America and 19% Rest of World
-- Cash balance of $0.3 million (June 30, 2013: $0.7 million);
available credit lines of $1.8 million.
(1) Includes restructuring and non-recurring costs of
$582,000
Tim Losik, President & CEO, Commented:
"During the first half 2014, the Company has experienced an
improvement in business activity with order bookings through the
first six months of 2014 totaling $8.6 million and the June 30,
2014 backlog of unshipped orders, $7.2 million, up 4% since
December 31, 2013. The Company ended the first six months of 2014
with a book-to-bill ratio of 1.03.
"We produced significant improvements in the operating
performance versus the first half 2013, excluding the 2013
restructuring charge of $582K, including: Loss from operations
decreased 73%, EBITDA improved from an adjusted loss of $275,000 to
a profit of $118,000, and Net loss decreased 52%. The improvement
in operating performance is the result of increased revenue,
product mix, cost reductions, and overhead absorption. The
additional actions taken to reduce costs in the first half of 2014,
as previously announced on May 22, 2014, will reduce our break-even
point on a go forward basis. The combination of a reduced
break-even point, increased sales activity and significant new
business opportunities together with the business moving towards
being cash flow positive, all indicate improved prospects for
2015.
"As stated in our annual report for 2013, customer driven
product development activity continues to remain strong. We
completed many of the large customer funded development initiatives
that started in 2013 and expect to begin shipping production orders
from these projects in late 2014 and early 2015. These potential
high volume OEM (custom) applications include illuminators for the
semiconductor, optical sorting, and medical markets.
"During the first half of 2014, we also began working on
additional large customer driven non recurring engineering
opportunities that we anticipate will result in significant
production volumes in 2015 and beyond. These applications include
products in the medical market and additional OEM (custom)
applications in the optical inspection market. We recently
announced two new products adding to our product portfolio, and we
expect additional new product announcements during 2014."
Enquiries:
ProPhotonix Limited Tel: +1 603 870 8220
Tim Losik, President & CEO ir@prophotonix.com
N+1 Singer Tel: +44 (0)207 496
Andrew Craig/ Ben Wright 3000
About ProPhotonix
ProPhotonix Limited, 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 Oclaro, Osram, QSI, Panasonic, and Sony. The Company
serves a wide range of markets including the machine vision,
industrial inspection, security, 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 2014 Financial Results
Revenue for the half year ended June 30 2014 was $8.3 million,
an increase of 13% compared with $7.4 million in the same period of
2013. Gross profit was $3.2 million, an increase of 8% compared to
$3.0 million in the first half of 2013. Gross profit margin
decreased to 38.5% from 40.4% in the same period 2013 due to a
shift in product mix. Foreign currency exchange impact on gross
profit was negligible, however, operating income was negatively
impacted by approximately $0.2 million.
Operating expenses, excluding intangible amortization charges,
totaled $3.3 million versus $3.4 million in 2013 for the comparable
period, excluding the one-time restructuring costs of $582K. Sales
and marketing and research and development (R&D) expenses were
flat in 2014 from the first half 2013 at $1.8 million, while
general and administrative expenses decreased 10% over the same
period, excluding the one-time restructuring charge. The operating
loss was $0.1 million, as compared to a $0.5 million loss in the
same period 2013, excluding the one-time restructuring charge.
EBITDA was $0.1 million as compared to a loss of $0.3 million in
2013, excluding the one-time restructuring charge The net loss was
$0.5 million compared to the first half 2013 net loss of $1.5
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). Company headquarters 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
its strategy to combine its expertise in two key areas of optics:
LEDs and lasers. The Company intends to capitalize on increasing
opportunities in this area by designing and manufacturing high
value, high margin components for global manufacturers of
equipment.
The Company has made significant investments in R&D,
including expanding its R&D team, which now includes a full
complement of optical, mechanical and electrical engineers and
represents over 12% of the Company's total workforce of 91
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 a range of new laser module and LED OEM opportunities
including development for new customer applications. 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 Ended
June 30,
2014 2013
Revenue................................................................
.......................................................................
........ $ 8,319 $ 7,365
Cost of
sales..................................................................
...................................................................... (5,116) (4,393)
Gross
profit.........................................................
...............................................................
.... 3,203 2,972
Operating expenses:
Selling
expenses...............................................................
................................................................... (1,343) (1,317)
General and
administrative.........................................................
.......................................................... (1,476) (2,221)
Research and
development............................................................
..................................................... (465) (473)
Amortization of
intangibles............................................................
....................................................... (61) (60)
Total operating
expenses...............................................................
...................................................... (3,345) (4,071)
Loss from
operations............................................................. (142 (1,099
.............................................................. ) )
Other income / (expense),
net....................................................................
......................................... (91) (393)
Interest
expense................................................................
.................................................................. (149) (95)
Amortization of debt discount and financing
costs..................................................................
............ (102) (6)
Loss from operations before income
tax provision
(benefit).............................................................. (484 (1,593
. ) )
Income tax
benefit................................................................
................................................................ - 74
Net
loss...................................................................
....................................................................... (484 (1,519
...... ) )
Other comprehensive income (loss):
Foreign currency
translation........................................................
................................................... 102 151
Total comprehensive
loss...................................................................
................................................. $ (382) $ (1,368)
Basic and diluted net loss per
share..................................................................
.................................. $ (0.01) $ (0.02)
Basic and diluted weighted average
shares
outstanding............................................................
........ 83,665 76,474
FINANCIAL STATEMENTS
PROPHOTONIX LIMITED
CONSOLIDATED BALANCE SHEETS
(unaudited)
($ in thousands except share and per share data)
For the Periods Ended June 30, 2014 and 2013 2014 2013
Assets
Current assets:
Cash and cash equivalents $ 253 $ 726
Accounts receivable, less allowances of $35 in 2014 and
$92 in 2013 2,648 2,361
Inventories 2,049 1,943
Prepaid expenses and other current assets 198 95
Total current assets 5,148 5,125
Net property, plant and equipment 230 384
Goodwill 482 460
Acquired intangible assets, net 41 156
Other long-term assets 277 448
Total assets $ 6,178 $ 6,573
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
Revolving credit facility $ 1,219 $ 607
Current portion of long-term debt net of unamortized
discount of $18 at June 30, 2014 and
$15 at June 30, 2013 570 -
Capital lease obligations 5 10
Accounts payable 1,612 1,952
Accrued expenses 985 1,755
Total current liabilities 4,391 4,324
Long-term debt, unamortized discount of $17 at June 30,
2014 and $40 at June 30, 2013 2,310 2,442
Long-term capital lease obligation, net of current
portion - 5
Other long-term liabilities 178 178
Total liabilities 6,879 6,949
Stockholders' (deficit) equity:
Common stock, par value $0.001; shares authorized
250,000,000 at June 30, 2014 and 150,000,000
at June 30, 2013; 83,665,402 shares issued and
outstanding at June 30, 2014 and at June 30,
2013 84 84
Paid-in capital 111,417 111,209
Accumulated deficit (112,158) (112,041)
Accumulated other comprehensive income (44) 372
Total stockholders' (deficit) equity (701) (376)
Total liabilities and stockholders' equity $ 6,178 $ 6,573
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
(unaudited)
Six Months Ended
June 30,
2014 2013
Operations
Net
loss.........................................................................................
....................................... $ (484) $ (1,519)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based
compensation.........................................................................
................ 114 75
Depreciation and
amortization.........................................................................
......... 146 167
Foreign exchange
gain.................................................................................
.............. 88 154
Amortization of debt discount and financing
costs..................................................... 95 6
Loss on disposal of
assets...............................................................................
............ 4 12
Deferred
taxes................................................................................
........................... - (74)
Provision for
inventories..........................................................................
................. 48 77
Provision for bad
debts................................................................................
.............. 22 62
Other change in assets and liabilities:
Accounts
receivable...........................................................................
........................ (132) (235)
Inventories..........................................................................
...................................... (111) (17)
Prepaid expenses and other current
assets.................................................................. 22 138
Accounts
payable..............................................................................
......................... 82 (23)
Accrued
expenses.............................................................................
.......................... (313) 685
Net cash used in operating
activities.............................................................................. (419) (492)
Financing
Net borrowing of revolving credit
facility............................................................................. 101 (44)
Proceeds from long-term debt
issuance................................................................................. 175 640
Principal repayment of long-term
debt................................................................................. (4) (310)
Debt issuance
costs........................................................................................
....................... - (358)
Net cash used in financing
activities.............................................................................. 272 (72)
Investing
Purchase of plant and
equipment....................................................................................
...... (18) (9)
Net cash used in investing
activities.............................................................................. (18) (9)
Effect of exchange rate on
cash.........................................................................................
.. 16 21
Net change in cash and
equivalents..........................................................................
.. (149) (552)
Cash and equivalents, beginning of
period............................................................................. 402 1,278
Cash and equivalents, end of
period.................................................................... $ 253 $ 726
Supplemental disclosure of cash flow information:
Cash paid for
interest.....................................................................................
...................... $ 149 $ 70
Common stock issued in connection with
financing.............................................................. $ - $ 193
Warrants issued in connection with
financing....................................................................... $ - $ 55
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY / (DEFICIT)
(in thousands)
Common Stock
Total
Par Paid in Accumulated Accumulated Other Stockholders'
Shares $0.001 Capital Deficit Comprehensive Income Equity (Deficit)
Balance
December 31,
2013 83,665 $ 84 $ 111,302 $ (111,674) $ (146) $ (434)
Net loss (484) (484)
Translation
adjustment..
..... 102 102
Share based
compensation - - 114 - - 114
Balance June
30, 2014 ... 83,665 $ 84 $ 111,417 $ (112,158) $ (44) $ (701)
Values may not add due to rounding
Notes to unaudited Interim Results
Basis of Presentation
The Company financial reports are issued under the recognition
and measurement principles of 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 June 30, 2014 and 2013; (ii) the financial position
at June 30, 2014 and June 30, 2013; and (iii) the cash flows for
the six month period ended June 30, 2014 and 2013. 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, 2014 and 2013 is as follows:
(in thousands)
Six Months Ended June 30,
2014 2013
------------ --------------
Net Loss (484) (1,519)
Plus:
Interest and other expense, net 240 488
Amortization of debt discount and financing costs 102 6
Depreciation 85 107
Intangible asset amortization 61 60
Stock based compensation 114 75
Tax benefit - (74)
EBITDA gain (loss) 118 (857)
Restructuring and nonrecurring charges - 582
---- ------
Adjusted EBITDA gain (loss) 118 (275)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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