MOCON, Inc. (NASDAQ:MOCO), today reported financial results for the
second quarter and six-months ended June 30, 2016.
Highlights for the second quarter included:
- Overall revenue grew four percent year-over-year. The Package
Testing segment grew by double-digits, IAP & Other grew solidly
and Permeation grew sequentially
- Gross profit as a percent of revenue improved three percentage
points year-over-year
- Net income was $0.8 million, or $0.14 per diluted share,
compared to $0.5 million, or $0.08 per diluted share in the first
quarter of 2016
- Adjusted EBITDA was $2.5 million, a $0.9 million sequential
improvement
- Recorded a $352,000 gain for the sale of the Company’s Texas
lab, formerly known as Microanalytics (“Microanalytics”)
Commenting on the Company’s quarterly performance, MOCON’s
president and chief executive officer, Robert L. Demorest said,
“Overall second quarter revenue was up four percent on a
year-over-year basis and up six percent sequentially. Most of
the sales force disruption we had experienced during the first
quarter is now behind us. Our Package Testing segment continues to
experience strong demand for its products growing 13 percent
year-over-year and our Industrial Analyzers and Other segments met
our expectations, growing at eight percent year-over-year driven
primarily by a 60 percent increase in sensor shipments to our US
based OEM customers. Our Permeation segment improved sequentially
by four percent and was down eight percent year-over-year which is
an improvement from the first quarter’s year-over-year decline of
13 percent. Three percentage points of the second quarter
year-over-year decline in Permeation was attributable to the sale
of Microanalytics, while the remaining five percent was driven by
European orders that were pushed to the third quarter.
Demorest added, “In conjunction with our One MOCON initiative,
the integrations of our European based businesses are near
completion which has changed the leadership needs in our business
as a whole from one that is operationally based toward another that
is designed to fuel growth through our sales strategy. As a result,
we strategically eliminated two senior executive positions in our
company which included our chief operating officer. We are
reinvesting these dollars into our sales growth strategy with the
expected additions of several new positions, one of which will be a
Senior Vice President of Sales and Marketing. In conjunction with
these changes, we recorded a $750,000 realignment charge in our
second quarter of 2016 which was offset in part by a $352,000 gain
on the sale of Microanalytics which was also part of our strategic
realignment efforts.”
2016 Revenue and Earnings Summary
Second quarter 2016 results compared to second quarter 2015:
- Revenue increased four percent as compared to the second
quarter 2015.
- Revenue from foreign customers accounted for 63 percent (38
percent in Europe, 25 percent outside of Europe & the U.S.A.)
of total revenue for the second quarter of 2016 compared to 69
percent (35 percent in Europe, 34 percent outside of Europe &
the U.S.A.) in the second quarter of 2015.
- Realignment expenses were $0.8 million, or five percent of
revenue, in the second quarter of 2016 compared to $0.1 million, or
one percent of revenue, in the second quarter of 2015. The
2016 charge was driven by severance accruals for departures of
certain executives from the Company.
- Operating income was $0.9 million, or five percent of revenue
in the second quarter of 2016 compared to $1.1 million, or seven
percent of revenue in the year-ago quarter.
- Other income was $0.3 million in the second quarter of 2016
compared to Other expense of $0.1 million in the comparable 2015
quarter, driven by a $352 thousand gain on the sale of
Microanalytics.
- Net income was $0.8 million, or $0.14 per diluted share,
compared to net income of $0.6 million, or $0.11 per diluted share
in the year-ago quarter.
- Adjusted EBITDA for the second quarter of 2016 was $2.5 million
compared to $2.0 million in the second quarter of 2015. (See
reconciliation to non-GAAP information below)
Six months ended June 30, 2016 compared to the year ago six
month period:
- Revenue was consistent at $30.4 million for each of the six
month periods.
- Revenue from foreign customers accounted for 65 percent (41
percent in Europe, 24 percent outside of Europe & the U.S.A.)
of total revenue for the first half of 2016 compared to 68 percent
(38 percent in Europe, 30 percent outside of Europe & the
U.S.A.) in the first half of 2015.
- Net income was $1.3 million, or $0.22 per diluted share,
compared to net income of $1.6 million, or $0.27 per diluted share
in the first half of 2015.
- Adjusted EBITDA for the first half of 2016 was $4.1 million
compared to $3.9 million in the first half of 2015. (See
reconciliation to non-GAAP information below)
Revenue by Segment ($ in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
Year-over-Year Growth |
|
|
|
Year-over-Year Growth |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
$ |
|
% |
|
|
2016 |
|
|
|
2015 |
|
|
$ |
|
% |
|
|
Package Testing |
$ |
7,328 |
|
|
$ |
6,473 |
|
|
$ |
855 |
|
|
|
13 |
% |
|
$ |
14,331 |
|
|
$ |
13,229 |
|
|
$ |
1,102 |
|
|
|
8 |
% |
|
|
Permeation |
|
5,483 |
|
|
|
5,966 |
|
|
|
(483 |
) |
|
|
-8 |
% |
|
|
10,766 |
|
|
|
12,068 |
|
|
|
(1,302 |
) |
|
|
-11 |
% |
|
|
Industrial Analyzers and Other |
|
2,820 |
|
|
|
2,610 |
|
|
|
210 |
|
|
|
8 |
% |
|
|
5,264 |
|
|
|
5,112 |
|
|
|
152 |
|
|
|
3 |
% |
|
|
Total Revenue |
$ |
15,631 |
|
|
$ |
15,049 |
|
|
$ |
582 |
|
|
|
4 |
% |
|
$ |
30,361 |
|
|
$ |
30,409 |
|
|
$ |
(48 |
) |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the Package Testing segment for the three and six
months ended June 30, 2016 increased 13 percent and eight percent,
respectively, compared to the year-ago periods due increased demand
for leak, mixer and on-line products.
Revenue for the Permeation segment for the three and six months
ended June 30, 2016 declined by eight percent and 11 percent
compared to the year-ago periods respectively. We recorded
$160,000 less in odor and aroma consulting revenue during the three
months ended June 30, 2016 as a result of the sale of
Microanalytics and our June 30, 2016 backlog included an additional
$600,000 for European orders when compared to historical levels. In
addition to the second quarter impact, the year-to-date results
were further impacted by the disruption that occurred during the
first quarter of 2016 as a result of a US sales force
realignment.
Our Industrial Analyzers and Other segment grew eight percent
and three percent year-over-year for the three and six months ended
June 30, 2016, respectively. The growth is primarily a result
of an increase in revenue from sensor and detectors of
approximately $0.5 million and $1.0 million, for the three and
six-month periods ended June 30, 2016, respectively. The increase
in revenue was offset by continued softness in the oil and gas
exploration markets.
Gross Profit, Operating Income and Operating Expense
Commentary
For the three-months ended June 30, 2016 and 2015,
gross profit was 56 percent and 53 percent of revenue, and
operating income was five percent and seven percent of revenue,
respectively. Five percent, or $750,000, of the second
quarter’s operating expenses were in realignment expenses
attributable to executive changes discussed above.
The gross profit rate for our Package Testing
segment increased by two percentage points to 56 percent in the
current quarter, compared to 54 percent in the year ago period, due
to increased volumes and process improvement initiatives. The gross
profit rate for our Permeation segment increased to 60 percent from
57 percent as compared to the prior year quarter due to customer
mix and a reduced cost structure to support our consulting
revenue. Our Industrial Analyzers and Other segment gross
profit rate for the current quarter increased by four percentage
points to 48 percent compared to 44 percent in the prior year
quarter due to efficiencies gained as a result of the increased in
volume of OEM sensor and detector related revenue as well as
product cost reduction initiatives that were introduced during the
three months ended June 30, 2016.
Selling, general and administrative expenses were slightly
higher during the three and six months ended June 30, 2016 compared
to the year-ago periods. Cost reductions from the Company’s
2015 realignment plan were offset by increased professional fees,
new hires made prior to the realignment and inflation related to
personnel costs. Research and development expenses were 8 percent
and 7 percent of revenue in the second quarters of 2016 and 2015,
respectively, which is in line with the Company’s commitment to
continued innovation.
Balance Sheet and Cash Flow Summary
- Cash and cash equivalents increased to $6.8 million at June 30,
2016 compared to $6.3 million at December 31, 2015.
- Days sales outstanding were 60 in the second quarter of 2016
compared to 63 in the first quarter of 2016. The improvement was
driven by the timing of revenue within the quarter.
- Total debt was $2.5 million at June 30, 2016 compared to $3.0
million at December 31, 2015.
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 supplements its financial statements to provide investors
with earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and EBITDA plus share-based compensation, gain on sale
of business, realignment expenses, 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
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 Company’s ability to realize the cost savings associated with
the realignment plan implemented in 2015, fluctuations in foreign
currency exchange rates, the terms of MOCON’s 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, 2015 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 June 30, |
|
Six Months Ended June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenue |
|
|
|
|
|
|
|
|
Products |
$ |
12,244 |
|
|
$ |
12,032 |
|
|
$ |
23,628 |
|
|
$ |
24,201 |
|
|
Services |
|
2,702 |
|
|
|
2,338 |
|
|
|
5,514 |
|
|
|
4,842 |
|
|
Consulting |
|
685 |
|
|
|
679 |
|
|
|
1,219 |
|
|
|
1,366 |
|
|
Total revenue |
|
15,631 |
|
|
|
15,049 |
|
|
|
30,361 |
|
|
|
30,409 |
|
|
Cost of
revenue |
|
|
|
|
|
|
|
|
Products |
|
5,085 |
|
|
|
5,497 |
|
|
|
10,055 |
|
|
|
10,783 |
|
|
Services |
|
1,294 |
|
|
|
1,016 |
|
|
|
2,468 |
|
|
|
2,064 |
|
|
Consulting |
|
481 |
|
|
|
511 |
|
|
|
963 |
|
|
|
1,058 |
|
|
Total cost of
revenue |
|
6,860 |
|
|
|
7,024 |
|
|
|
13,486 |
|
|
|
13,905 |
|
|
Gross profit |
|
8,771 |
|
|
|
8,025 |
|
|
|
16,875 |
|
|
|
16,504 |
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
5,870 |
|
|
|
5,707 |
|
|
|
12,008 |
|
|
|
11,978 |
|
|
Research and
development expenses |
|
1,298 |
|
|
|
1,126 |
|
|
|
2,501 |
|
|
|
2,195 |
|
|
Realignment
expenses |
|
750 |
|
|
|
128 |
|
|
|
750 |
|
|
|
128 |
|
|
Operating
income |
|
853 |
|
|
|
1,064 |
|
|
|
1,616 |
|
|
|
2,203 |
|
|
Other income
(expense), net |
|
309 |
|
|
|
(113 |
) |
|
|
274 |
|
|
|
138 |
|
|
Income before income taxes |
|
1,162 |
|
|
|
951 |
|
|
|
1,890 |
|
|
|
2,341 |
|
|
Income tax
expense |
|
373 |
|
|
|
305 |
|
|
|
613 |
|
|
|
787 |
|
|
Net income |
$ |
789 |
|
|
$ |
646 |
|
|
$ |
1,277 |
|
|
$ |
1,554 |
|
|
Net income per
common share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.14 |
|
|
$ |
0.11 |
|
|
$ |
0.22 |
|
|
$ |
0.27 |
|
|
Diluted |
$ |
0.14 |
|
|
$ |
0.11 |
|
|
$ |
0.22 |
|
|
$ |
0.27 |
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
5,794 |
|
|
|
5,750 |
|
|
|
5,793 |
|
|
|
5,746 |
|
|
Diluted |
|
5,817 |
|
|
|
5,846 |
|
|
|
5,813 |
|
|
|
5,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
BALANCE SHEET DATA: (unaudited) |
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
|
Assets: |
|
|
|
|
Cash and marketable
securities |
$ |
6,789 |
|
|
$ |
6,344 |
|
|
Accounts receivable,
net |
|
10,449 |
|
|
|
8,786 |
|
|
Inventories |
|
7,655 |
|
|
|
7,790 |
|
|
Other current
assets |
|
1,518 |
|
|
|
1,782 |
|
|
Total current
assets |
|
26,411 |
|
|
|
24,702 |
|
|
Property, plant and
equipment, net |
|
5,588 |
|
|
|
5,995 |
|
|
Goodwill, intangibles and
other assets |
|
16,446 |
|
|
|
16,722 |
|
|
Total assets |
$ |
48,445 |
|
|
$ |
47,419 |
|
|
Liabilities and
Shareholders’ Equity: |
|
|
|
|
Notes payable,
current |
$ |
60 |
|
|
$ |
65 |
|
|
Other current
liabilities |
|
10,299 |
|
|
|
9,535 |
|
|
Total noncurrent
liabilities |
|
3,702 |
|
|
|
4,348 |
|
|
Shareholders’
equity |
|
34,384 |
|
|
|
33,471 |
|
|
Total liabilities and
shareholders’ equity |
$ |
48,445 |
|
|
$ |
47,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CASH
FLOW DATA: (unaudited) |
June 30, 2016 |
|
June 30, 2015 |
|
|
|
|
|
|
Net cash
provided by operations |
$ |
1,499 |
|
|
$ |
2,127 |
|
|
Net cash
provided by (used in) investing activities |
|
160 |
|
|
|
(933 |
) |
|
Net cash used
in financing activities |
|
(1,708 |
) |
|
|
(1,046 |
) |
|
Effect of
exchange rate changes |
|
494 |
|
|
|
(461 |
) |
|
Net increase in
cash |
|
445 |
|
|
|
(313 |
) |
|
Cash beginning
of year |
|
6,344 |
|
|
|
6,332 |
|
|
Cash end of
year |
$ |
6,789 |
|
|
$ |
6,019 |
|
|
|
|
|
|
|
MOCON, INC. |
|
NON-GAAP RECONCILIATION |
|
(in Thousands) |
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
789 |
|
|
$ |
646 |
|
|
$ |
1,277 |
|
|
$ |
1,554 |
|
|
Interest expense,
net |
|
15 |
|
|
|
37 |
|
|
|
41 |
|
|
|
64 |
|
|
Income tax
expense |
|
373 |
|
|
|
305 |
|
|
|
613 |
|
|
|
787 |
|
|
Depreciation and
amortization |
|
698 |
|
|
|
615 |
|
|
|
1,387 |
|
|
|
1,220 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
1,875 |
|
|
|
1,603 |
|
|
|
3,318 |
|
|
|
3,625 |
|
|
Share-based
compensation |
|
189 |
|
|
|
162 |
|
|
|
375 |
|
|
|
322 |
|
|
Gain on sale of
business |
|
(352 |
) |
|
|
- |
|
|
|
(352 |
) |
|
|
- |
|
|
Realignment
expenses |
|
750 |
|
|
|
128 |
|
|
|
750 |
|
|
|
128 |
|
|
Foreign currency
transaction loss (gain) |
|
28 |
|
|
|
75 |
|
|
|
37 |
|
|
|
(203 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
2,490 |
|
|
$ |
1,968 |
|
|
$ |
4,128 |
|
|
$ |
3,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For More Information Contact:
Elissa Lindsoe, CFO
763-493-6370 /
www.mocon.com
Mocon (NASDAQ:MOCO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Mocon (NASDAQ:MOCO)
Historical Stock Chart
From Apr 2023 to Apr 2024