MOCON Reports First Quarter Results
May 07 2015 - 4:00PM
Business Wire
Highlights:
- Net Income increased 24 percent to
$908,000 as compared to the year ago quarter
- Revenue increased 9 percent
year-over-year on a Constant Currency basis, (flat as
reported)
- Fully diluted earnings per share of
$0.16, a $0.03 improvement year-over-year
MOCON, Inc. (NASDAQ:MOCO), today reported financial results for
the first quarter ended March 31, 2015.
Commenting on the Company’s performance, MOCON’s president and
CEO, Robert L. Demorest said, “On a Constant Currency basis, our
first quarter revenue grew 9 percent and our Permeation and Package
Testing business segments continue to meet our growth expectations.
While our top line comparisons are being effected by foreign
currency translation, there is much less of an effect on our bottom
line. We have significant costs that are not denominated in U.S.
dollars, which provides a natural currency hedge and helps to
mitigate the negative affect of a strengthening dollar on our
operating income. The year-over-year decline in our Industrial
Analyzers business is not surprising given the current economic
situation in the oil and gas industry. We believe that the current
headwinds we are facing with the weak euro and low oil prices do
not represent long-term challenges to our business and we look
forward to the remainder of 2015 with continued strengthening of
our business fundamentals.”
First Quarter 2015 Revenue and Earnings Summary
First quarter 2015 results compared to first quarter 2014:
- Reported revenue was flat year-over
year. On a Constant Currency basis, revenue increased 9 percent
compared to the year ago quarter.
- EBITDA for first quarter of 2015 was
$2.0 million compared to $1.7 million in the first quarter of 2014.
See reconciliation to GAAP Net Income below.
- Revenue (as reported) from foreign
customers accounted for 67 percent (41 percent in Europe, 26
percent outside of Europe & the U.S.A.) of total revenue for
the first quarter of 2015 compared to 73 percent (41 percent in
Europe, 32 percent outside of Europe & the U.S.A.) in the first
quarter of 2014.
Revenue by Segment ($ in
thousands)
Three Months Ended March 31,
Currency 2015
Year-over-Year
Year over
Year
impact on Revenue at Constant As
Reported Growth 2015 Growth Constant
Currency 2015 2014 $
%
$ Currency Growth % Package Testing
$ 6,756 $ 6,624 $ 132
2 % $ (1,051 ) $
7,807 18 % Permeation 6,102
5,849 253 4 % (319 )
6,421 10 % Industrial Analyzers and
Other 2,502 2,840
(338 ) -12 % -
2,502 -12 % Total Revenue $
15,360 $ 15,313 $ 47
0 % $ (1,370 ) $
16,730 9 %
Revenue growth for the Permeation segment was 10 percent on a
Constant Currency basis and increased 4 percent as reported. The
positive comparison is attributable to an increase in demand in the
USA for the new generation of oxygen permeation instrumentation,
which was introduced to the marketplace during the second half of
2014. Revenue from the Package Testing segment increased 18 percent
on a Constant Currency basis and increased 2 percent as reported
due to an increase in headspace and mixer products and accessories.
The decrease in the Industrial Analyzer and Other segment was
attributable to the recent declines in oil and gas exploration.
Gross Profit, Operating Expenses and Other Income
Commentary
Gross profit was 55 percent of revenue for the first quarter of
2015 which is consistent with the Company’s targeted gross margin
rate and 40 basis points greater than reported in the first quarter
of 2014. The slight increase in the gross margin rate is driven
primarily from favorable product mix in the Company’s Package
Testing segment offset by increased warranty expense in the
Industrial Analyzer and Other segment and foreign exchange pricing
impacts in our Permeation segment for instruments made in the
U.S.A.
Selling, general and administrative expenses were slightly
higher during the first quarter of 2015 compared to the same period
in 2014 due primarily to increased personnel and compliance costs.
Other Income was $251,000 during the first quarter of 2015 compared
to Other Expense of $57,000 during first quarter of 2014, which was
primarily driven by a realized foreign currency translation gain of
$278,000.
Balance Sheet and Cash Flow Summary
- Cash and cash equivalents were $5.3
million on March 31, 2015 compared to $6.3 million on December 31,
2014. $0.6 million of the $1 million decline was driven by the
softening of the euro and Danish krone while the remainder was
driven by usage of cash for investing and financing activities in
excess of cash provided by operations.
- Net cash provided by operations was
$0.8M compared to $2 million in the first quarter of 2014 primarily
driven by a $1.3 million decline in accounts payable.
- Days sales outstanding were 55 for the
first quarter of 2015, a 12 day improvement compared to 67 in the
first quarter of 2014 and up slightly from 52 days in the fourth
quarter of 2014.
- Total debt was $4.3 million on March
31, 2015 compared to $4.6 million on December 31, 2014.
About MOCON
MOCON is a leading provider of detectors, instruments, systems
and consulting services to research laboratories, production
facilities, and quality control and safety departments in the
medical, pharmaceutical, food and beverage, packaging,
environmental, oil and gas and other industries worldwide. See
www.mocon.com for more information.
Use of Non-GAAP Financial Measures
MOCON’s management evaluates its financial results on a constant
currency basis which is calculated by adjusting the current period
reported revenue to the comparative period’s currency translation
rate (“Constant Currency”) and believes that investors may want to
consider this impact on the Company’s performance. In addition,
MOCON supplements its financial statements to provide investors
with earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and EBITDA plus share-based compensation and foreign
currency transactional losses (“Adjusted EBITDA”), which are not
calculated in accordance with general accepted accounting
principles (“GAAP”) in the United States of America.
MOCON believes that these non-GAAP measures provide useful
information to the Company’s Board of Directors, management and
investors regarding certain trends relating to its financial
condition and operating performance. MOCON’s management uses these
non-GAAP measures to compare the Company's performance to that of
prior periods for trend analyses and planning purposes In addition,
revenue on a Constant Currency basis is used to assess the revenue
growth component of MOCON’s Incentive Pay Plan.
The method MOCON uses to produce non-GAAP results is not
computed according to GAAP, is likely to differ from the methods
used by other companies and should not be regarded as a replacement
for corresponding GAAP measures. MOCON urges investors to review
the reconciliation of its non-GAAP financial measures to the
comparable GAAP financial measures that are included in this press
release.
Safe Harbor
This press release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements that can be identified by words such
as “will,” “may,” “expect,” “believe,” “anticipate,” “estimate,”
“continue,” “planned”, or other similar expressions. All
forward-looking statements speak only as of the date of this press
release. MOCON undertakes no obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. In addition to the risks and
uncertainties of ordinary business operations and conditions in the
general economy and the markets in which the Company competes,
there are important factors that could cause actual results to
differ materially from those anticipated by the forward-looking
statements made in this press release. These factors include, but
are not limited to, the performance of Dansensor, worldwide
economic conditions and fluctuations in foreign currency exchange
rates, the terms of our credit agreement including financial
covenants included therein, dependence on certain key industries,
pricing and lack of availability of raw materials, crude oil
pricing impact on oil exploration activities, and other factors set
forth in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2014 and other documents MOCON files with
or furnishes to the Securities and Exchange Commission.
MOCON's shares are traded on the NASDAQ Global Market System
under the symbol MOCO.MOCON is a registered trademark of MOCON,
Inc.; other trademarks are those of their respective holders.
MOCON, INC. SUMMARY CONSOLIDATED FINANCIAL
DATA (in Thousands, Except Per Share Data)
STATEMENT OF
OPERATIONS DATA: (unaudited)
Quarters Ended March 31, 2015
2014 Revenue Products $ 12,169
$ 11,841 Services 2,504
2,801 Consulting 687 671
Total revenue 15,360
15,313 Cost of revenue Products
5,281 5,442 Services 1,053 1,025
Consulting 547 457
Total cost of revenue 6,881
6,924 Gross profit 8,479 8,389
Selling, general and administrative expenses
6,271 6,143 Research and development expenses
1,069 1,125 Operating income
1,139 1,121 Other income (expense), net
251 (57 ) Income before
income taxes 1,390 1,064 Income tax
expense 482 334
Net income $ 908 $ 730
Net income per common share: Basic $
0.16 $ 0.13 Diluted $
0.16 $ 0.13 Weighted average common shares
outstanding: Basic 5,742 5,641
Diluted 5,837 5,778
CONDENSED BALANCE
SHEET DATA: (unaudited)
March 31, 2015
December 31, 2014 Assets: Cash and
cash equivalents $ 5,300 $ 6,332
Accounts receivable, net 9,350 9,877
Inventories 8,934 8,705 Other current
assets 3,288 2,587 Total current
assets 26,872 27,501 Property, plant and
equipment, net 5,744 5,562 Goodwill,
intangibles and other assets 17,304
19,446 Total assets $ 49,920 $
52,509 Liabilities and Shareholders’ Equity:
Revolving lines of credit $ 3,285 $
3,300 Notes payable, current 969 983
Other current liabilities 10,925 11,166
Total noncurrent liabilities 2,438 2,587
Shareholders’ equity 32,303
34,473 Total liabilities and shareholders’ equity
$ 49,920 $ 52,509
CONDENSED CASH
FLOW DATA: (unaudited)
March 31, 2015 March 31, 2014 Net cash
provided by operations $ 794 $
1,968 Net cash used in investing activities
(501 ) (101 ) Net cash used
in financing activities (772 ) (1,530
) Effect of exchange rate changes
(553 ) (8 ) Net
increase (decrease) in cash (1,032 ) 329
Cash beginning of year 6,332
4,133 Cash end of year $
5,300 $ 4,462
MOCON, INC. NON-GAAP RECONCILIATION (in Thousands,
Except Share Data) Quarters
Ended March 31, 2015 2014
Net income $ 908 $ 730
Interest expense, net 27 55 Income
tax expense 482 334 Depreciation and
amortization 605 628
EBITDA 2,022 1,747 Share-based
compensation 161 143 Foreign currency
transaction loss (gain) (278 )
2 Adjusted EBITDA $ 1,905
$ 1,892
MOCON, Inc.Elissa Lindsoe,
763-493-6370CFOwww.mocon.com
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