TIDMPPIX TIDMPPIR
RNS Number : 8404H
ProPhotonix Limited
19 March 2015
March 19, 2015
ProPhotonix Limited
("ProPhotonix" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED DECEMBER 31, 2014
Annual General Meeting Date
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 United
Kingdom, today announces its unaudited preliminary results for the
year ended December 31, 2014.
Annual General Meeting
The Company will hold the Annual General Meeting of the
Shareholders on May 14, 2015 at
2:00 PM British Summer Time at the offices of K&L Gates LLP,
One New Change, London
EC4M 9AF. The Record date is set at March 20, 2015 for all
shareholders of record.
Financial Highlights
-- Revenue increased 5.3% to $16.4 million
-- Gross profit increased 7.6% to $6.4 million
-- Gross profit margin improved to 39.1%
-- Operating profit of $0.1 million versus operating loss of $1.2 million in 2013(1)
-- EBITDA profit of $0.6 million versus loss in 2013 of $0.7 million(1)
-- Percentage revenue by market sectors: industrial 73%, medical
16%, and homeland security & defense 11%
-- Percentage revenue by geography: 52% Europe, 31% North America and 17% Rest of World
-- Available borrowing capacity of $1.9 million from its loan facilities at December 31, 2014.
(1) Includes $582,000 non-recurring charges
Tim Losik, President & CEO, Commented:
"Our financial performance has dramatically improved during
2014. Revenue grew a modest 5% while operating income improved by
$1.3 million ($0.7 million adjusted for 2013 one- time charges) and
EBITDA improved similarly by $1.3 million ($0.7 million adjusted
for the 2013 one-time charges of $0.6 million). Growth in revenue,
improvement in the gross margin rate, and elimination of costs, all
factor into the continued financial improvement of ProPhotonix. I
am pleased with the revenue growth in 2014, but more importantly,
the improvement in operating income and EBITDA. 2014 has been a
landmark year in a number of respects - we have achieved three
consecutive half-yearly periods of positive EBITDA, our first full
year of positive operating income in nearly two decades and our
first full year of positive EBITDA in fourteen years.
"Order bookings in 2014 declined 9% from 2013 to $16.1million
and the book-to-bill ratio ended at 0.98 (2013: 1.13). Our order
backlog at December 31, 2014 was down 20% from 2013 to $5.6
million. Several factors contributed to the decline in bookings and
backlog, including: (1) customers' reluctance to place large
blanket orders opting instead for smaller short-cycle orders, (2)
business softness and delays in several industrial customers (3)
foreign currency exchange rate changes from the end of 2013 to the
end of 2014, and (4) as compared to 2013, several large
non-recurring engineering (NRE) orders received in 2013 and
completed in 2014 for which we now await production orders from
these customers based on their go-forward schedules. The Euro to
USD and GBP to USD exchange rates, as of March 18, 2015, have
eroded by 20% and 10% respectively from the 2014 average and 13%
and 5% respectively since the beginning of the year. The effect of
the strengthening dollar may negatively impact 2015 revenue growth
on a comparative basis when Euro and GBP denominated revenue is
translated into USD.Putting this in perspective, 2014 revenue would
be $14.5 million using the March 18, 2015 exchange rates. EBITDA
will likely be less impacted due to the translation of costs at
lower exchange rates, our natural operating hedges in the locations
we operate within and the supply chain we utilize."
Full Year 2014 Financial Results
Revenue for the year ended December 31, 2014 was $16.4 million,
an increase of 5.3% compared with $15.6 million in 2013. Gross
profit was $6.4 million compared to $6.0 million in 2013. Gross
profit margin increased to 39.1% from 38.3% in 2013 due to a shift
in product mix and an increase in volume.
Operating expenses, excluding intangible amortization charges,
totaled $6.2 million versus $7.0 million in 2013. Sales and
marketing expenses were flat to the same period last year, while
general and administrative and research and development expenses
were reduced by approximately $0.8 million, or 17% over the same
period with 2013 including restructuring and one-time charges of
$0.6 million. The Company achieved an operating profit of $0.1
million, as compared to a $1.2 million loss in 2013 and EBITDA
profitability of $0.6 million versus a loss of $0.7 million in
2013, including the $0.6 million restructuring and one-time
charges. Net loss was $1.3 million compared to the 2013 net loss of
$1.2 million, mainly due to non cash foreign currency translation
charges.
The balance sheet continues to strengthen. Term debt was reduced
by $293,000 in accordance with the various loan facilities. Total
net available credit from the Company's various loan facilities was
$1.9 million as of December 31, 2014. The Directors are comfortable
with the funds flow of the business considering its plans and
available credit facilities.
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 business located in the
United Kingdom (Hatfield Broad Oak). Corporate headquarters and the
North American sales activities are based in Salem, New Hampshire,
USA. The fundamental strategy of the Company is growth in revenue
through its existing customers, new customer activity, and new
product and market expansion. ProPhotonix' short-term strategy is
to reach sustained positive EBITDA, cash flow, and net income as
soon as possible. These goals will be accomplished through a
relentless focus on cost management and most importantly through
revenue growth.
ProPhotonix growth in the medium-term will be accomplished with
new customer wins and the conversion of development orders into
long run production orders. Prophotonix is also focused on
expansion into new markets and new products. The Company
continuously evaluates new product development and additions to the
sales offering in an effort to increase customer satisfaction and
provide solutions. During 2014 and early 2015, the Company
introduced nine new products/capabilities and added eight new laser
diodes to its product offering.
ProPhotonix sells its products principally into three markets:
industrial (primarily machine vision illumination), medical, and
homeland security and defense. The Company foresees growth
opportunities in all three markets it serves which are briefly
described below:
Industrial (Machine Vision)
Within the industrial market, machine vision is the term used to
describe computerized analysis for controlling manufacturing
processes, for example automated inspection. In terms of quality
and speed, lighting is often a critical component in machine vision
and the Company manufactures both LED systems and lasers designed
specifically for this market. The recently enhanced 3D Pro Laser
line generators and improved LED line light family specifically
address this market.
Medical
The Company has experienced successes in the medical (including
dental) market and has gained a foothold in the sector, supplying a
variety of applications with current customers, including the world
leader in stationary imaging equipment, a portable x-ray equipment
manufacturer, a dental imaging manufacturer and also a pioneer in
the manufacturing of devices offering eye tracking capability
utilizing ProPhotonix's custom infrared LED arrays. The Company
intends to broaden its product marketing effort in the medical
field since it offers significant long-term revenue growth
opportunities.
Homeland Security & Defense
LED systems, laser modules and laser diodes are used in a wide
variety of applications in the security and defense fields. The
Company currently supplies several defense sighting manufacturers
in the US and Europe, as well as leading manufacturers of Auto
Number Plate Recognition systems. This market offers significant
growth opportunities for ProPhotonix over the next several years
and the Company is currently marketing its laser and LED
capabilities to additional security and optical character
recognition systems companies in this market space.
Outlook
ProPhotonix begins 2015 in a strong position, having completed
many of the development projects that were in process at the
beginning of 2014, and we are now well positioned to start
receiving production orders to increase our overall revenue.
Potential high volume OEM (custom) applications include
illuminators for the semiconductor, optical sorting, 3D printing,
and UV curing markets. Recent booking trends, the macroeconomic
environment and foreign exchange rate impacts cause us to be
cautious for the first half of 2015, but we remain very positive
about our business pipeline and confident in our ability to achieve
continued positive momentum toward our profitability
objectives.
Enquiries:
ProPhotonix Limited Tel: +1 603 870 8220
Tim Losik, President and CEO ir@prophotonix.com
N+1 Singer Tel: +44 (0) 207 496
Ben Wright, Richard Salmond 3000
Nominated Adviser and Broker
About ProPhotonix
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