Photon Control Reports First Quarter 2020 Financial Results
— Record Results for Revenue, Net Income and Backlog —
Vancouver, BC, May 6, 2020 – Photon Control Inc. (“Photon Control” or the “Company”) (TSX: PHO), a leading developer and supplier of optical measurement technologies and systems, has reported its financial results for the three months ended March 31, 2020.
First Quarter Highlights:
- Record financial results:
- Revenue of $17.3 million for Q1 2020 versus $8.9 million for Q4 2019;
- Earnings before finance income, accretion expense, income taxes, depreciation, amortization and foreign exchange gain or loss (“EBITDA”) of $7.0 million or 40% of revenue for Q1 2020 versus $2.1 million or 24% of revenue for Q4 2019;
- Net income of $6.6 million for Q1 2020 versus $0.7 million for Q4 2019;
- Record order backlog of $30.9 million at March 31, 2020 versus $20.8 million at December 31, 2019; and,
- Cash and cash equivalents of $41.2 million at March 31, 2020 versus $33.4 million at December 31, 2019.
“Photon Control achieved record financial performance in the first quarter while navigating through the unprecedented challenges presented by the global COVID-19 pandemic,” said Nigel Hunton, Chief Executive Officer. “Our priority is to safeguard the health and safety of our employees and their families, while continuing to provide exceptional service to our customers. Our revenue performance exceeded guidance due to strong near-term industry demand and an acceleration of customer orders related to COVID-19, which occurred in late March. Our results reflect the efforts of our people and our supply chain partners, as well as the fundamental strength of our industry, products and technology.”
First Quarter 2020 Financial Results
Total revenue for the first quarter of 2020 increased 96% to $17.3 million compared to $8.9 million for the fourth quarter of 2019 due to an improved wafer fabrication equipment spending environment and accelerated product shipments in response to the COVID-19 pandemic. Compared to the first quarter of 2019, total revenue for the first quarter of 2020 increased 116% compared to $8.0 million. The Company’s revenues are mainly derived from the semiconductor capital equipment sector, which is highly cyclical in nature.
Gross profit for the first quarter of 2020 increased sequentially to $10.6 million from $4.7 million for the prior quarter, and gross margin increased to 61.2%. The variability in gross margin is a function of numerous factors, including sales volume and product and customer mix. Gross margin of 61.2% for the quarter increased from 52.7% in the first quarter of 2019.
Operating expenses for the three months ended March 31, 2020 increased to $4.1 million compared to $2.6 million for the three months ended December 31, 2019, with the increase primarily attributable to a higher proportion of current year’s incentive compensation costs recognized in the period due to the Company’s record financial performance. Operating expenses of $4.1 million for the quarter increased from $3.5 million in the first quarter of 2019.
Net income for the quarter was $6.6 million or $0.06 per share compared to $0.1 million or $0.01 per share for the fourth quarter of 2019, and $0.1 million or $0.00 per share for the comparable period of 2019.
EBITDA for the three months ended March 31, 2020 was $7.0 million or 40.2% of revenues compared to $2.1 million or 23.9% of revenues in the prior sequential quarter, and $1.5 million or 18.5% of revenues for the same year-ago period. The Company defines EBITDA as earnings before finance income, accretion expense, income taxes, depreciation, amortization and foreign exchange gain or loss.
As at March 31, 2020, cash and cash equivalents were $41.2 million, an increase of $7.8 million from $33.4 million at December 31, 2019. The increase was primarily attributable to the Company’s strong financial performance in the quarter.
Order backlog, defined as the value of sales orders scheduled to be shipped in the next 6 months, was a record $30.9 million at March 31, 2020 compared to $20.8 million at December 31, 2019. The order backlog reflects near-term demand from semiconductor wafer fabrication equipment manufacturers.
“We have a positive outlook on continued strong demand for our technology and products,” said Nigel Hunton, Chief Executive Officer. “Our order backlog is at a record high and, to date, the semiconductor capital equipment market has been relatively resilient in light of the global pandemic. In consideration of the significant risks and uncertainties related to COVID-19 and consistent with our customers not supplying guidance, it would not be prudent to provide financial guidance for Q2 2020 at this time. While there is much uncertainty, Photon Control will continue to prioritize the well-being of our colleagues and their families, serve our essential customers, and execute our growth strategy by selling into new markets. In the meantime, Photon Control is in a strong financial position and has sufficient liquidity to operate through this environment.”
Photon Control will hold a conference call tomorrow (Thursday, May 7, 2020) at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to discuss these results. The call will be hosted by Nigel Hunton, Chief Executive Officer, and Daniel Lee, Chief Financial Officer, followed by a question and answer period.
Please call the applicable conference telephone number approximately 10 minutes prior to the commencement of the call. The conference call will be broadcasted simultaneously and be available for replay. Further information can be found at https://www.photoncontrol.com/investors/
Financial Statements and Management’s Discussion and Analysis
This news release should be read in conjunction with the Company’s condensed interim financial statements and related notes, and management’s discussion and analysis for the three months ended March 31, 2020, copies of which can be found at www.sedar.com.
About Photon Control Inc.
Photon Control Inc. designs, manufactures and distributes a wide range of optical sensors and systems to measure temperature and position. These products improve performance and enable innovation for our customers, and are used in the semiconductor and other high technology industries. Photon Control Inc.’s high quality products provide industry-leading accuracy, reliability and quality in the most extreme conditions and are backed by a team of experts providing a variety of on-site and remote services including custom design, installation, training and support. The Company is headquartered in an ISO 9001:2015 manufacturing facility in Vancouver, BC, has sales and engineering offices in California, and a sales distribution network across the globe. Photon Control Inc. is listed on TSX, trading under the symbol ‘’PHO.” Additional information about the company can be found at https://www.photoncontrol.com/investors/
Investor Relations Contact:
This news release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. These statements generally can be identified by use of forward-looking words such as “may”, “will”, “could”, “would”, “should”, “might”, “expect”, “estimate”, “anticipate”, “intend”, “consider”, “believe”, “plan”, “project”, “assume”, “strategy”, “goals”, “objectives”, “potential”, “possible”, “confident” or “continue” or the negative thereof or similar variations. Such forward-looking statements concern the business and anticipated financial performance of the Company and include, without limitation, the Company’s outlook on the long-term prospects of the market and the Company, the Company’s expectations with respect to its overall order activity, projections of the Company’s revenue, EBITDA, growth in the etch and deposition market, timing of the semiconductor industry cycle, cost structure, and the Company’s ability to build on its financial and operational foundation in the future.
These forward-looking statements are based on certain factors and assumptions, including, without limitation: the Company’s ability to develop, manufacture and sell new products that meet the needs of its customers and gain commercial acceptance; the Company’s ability to continue to sell its products in line with expected quantity, price and delivery times; the Company’s ability to attract new business; continued and future demand for the Company’s products; continued sales to the Company’s major customers; the Company’s operations not being adversely affected by supply, operating, cyber security, litigation or regulatory risks; the Company’s ability to react to the cyclical nature of the semiconductor industry; the Company’s ability to enhance revenue diversification and open new market opportunities; and, the Company’s expectations regarding market risk, including interest rate changes, tax changes and foreign currency fluctuations.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: uncertainties relating to the market for the Company’s products and maintaining a stable level of orders; fluctuations in revenue as a result of volatility in the markets and product mix; risks relating to the Company’s present reliance on its major customers for the majority of its sales; risks relating to the Company’s reliance on the financial health of and timing of cycles in the semiconductor industry; risks relating to the development of competing technologies and the possibility of increased competition; the effect of slow growth in the United States, the Company’s principal market, as well as other economies and other economic trends and conditions in the markets that the Company and its customers serve; risks associated with the spread of the COVID-19 virus; risks associated with the adverse impact of climate change; risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; uncertainties in factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the Company’s products; risks relating to currency fluctuations, particularly between the Canadian and United States dollars; risks in pursuing additional development projects to support existing customers or pursue other business opportunities; and such other risks as are identified in the Company’s Annual Information Form and other disclosure documents filed on SEDAR at www.sedar.com.
The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward-looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward-looking statements. The Company’s forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made.
For the reasons set forth above, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.
Non-GAAP Performance Measures
Items marked with 1 are non-GAAP performance measures and readers should refer to pages 1 and 5 of the Company’s Management’s Discussion and Analysis for the three months ended March 31, 2020.
 See “Non-GAAP Performance Measures”