Vancouver, BC, November 5, 2020 – Photon Control Inc. (“Photon Control” or the “Company”) (TSX: PHO), a leading manufacturer of fiber optic measurement solutions to the semiconductor industry, is pleased to announce its financial results for the three and nine months ended September 30, 2020.
Highlights for the third quarter 2020 were as follows:
- Revenue of $16.3 million (Q319: $8.7m) and record year-to-date revenue of $49.7 million (2019: $23.9m);
- EBITDA of $6.2 million (Q319: $2.4m) or 38% (Q319: 28%) of revenue and record year-to-date EBITDA of $19.1 million (2019: $5.1m);
- Net income of $3.6 million (Q319: $1.5m) and record year-to-date net income of $12.9 million (2019: $1.7m);
- Basic earnings per share of $0.03 (Q319: $0.01) and year-to-date basic earnings per share of $0.12 (2019: $0.02);
- Gross margins of 62% (Q319: 55%) and year-to-date gross margin of 61% (2019: 54%);
- Cash and cash equivalents of $46.6 million at September 30, 2020, increased $13.2 million from December 2019.
“We have delivered a very strong performance through the first nine months of the year. The global pandemic has accelerated the digital transformation of the economy and Photon Control continued to benefit from the demand for high-performance computing and 5G infrastructure that positively impacts the semiconductor industry. We have exceeded our best-ever year in terms of both income and revenue, and we are only three-quarters of the way through the year,” said Nigel Hunton, Chief Executive Officer.
The Company’s revenues are chiefly derived from the semiconductor capital equipment sector and capital expenditures in Wafer Fabrication Equipment (“WFE”) has continued at record levels in 2020.
Third Quarter and Year-to-Date 2020 Financial Results
Total revenue for Q320 increased to $16.3 million (Q319: $8.7m) and for the year-to-date period, revenue increased to $49.7 million (2019: $23.9m). The increase in revenue was a result of an improved wafer fabrication equipment spending environment.
Gross profit for Q320 increased to $10.2 million (Q319: $4.8m), or 62% (Q319: 55%) of revenue (referred to as gross margin). For the year-to-date period, gross profit increased to $30.5 million (2019: $12.9m), or 61% (2019: 54%) of revenue. The increase in gross margin was a result of amortizing fixed costs of production over higher sales volumes and the realization of cost savings in variable cost of production from supply chain initiatives.
Operating expenses for Q320 increased to $4.5 million (Q319: $3.1m), and for the year-to-date period, operating expenses increased to $12.5 million (2019: $10.2m). This was a result of investments in research and development which increased to $1.5 million (9% of revenue) for Q320 and $3.9 million for the year-to-date period (8% of revenue). Additionally, the Company continued to focus on sales and marketing efforts to develop new and existing markets which has resulted in higher costs compared with previous periods.
Net income for Q320 was $3.6 million or $0.03 per share (Q319: $1.5m or $0.01). For the year-to-date period, net income was $12.9 million or $0.12 per share (2019: $1.7m or $0.02).
EBITDA for Q320 was $6.2 million or 38% of revenue (Q319: $2.4m or 28%). For the year-to-date period, EBITDA was $19.1 million or 38% of revenue (2019: $5.1m or 21%).
As at September 30, 2020, cash and cash equivalents were $46.6 million, an increase of $13.2 million from $33.4 million as at December 31, 2019. The increase was primarily attributable to the Company’s strong financial performance in the year.
Order backlog, defined as the unfilled value of sales orders received or scheduled for fulfillment, was $27.0 million at September 30, 2020, compared to $29.7 million at June 30, 2020. The decrease in order backlog is consistent with the normalization of revenue post COVID-19.
Nigel Hunton, CEO, remarked “Our order backlog reflects that the semiconductor capital equipment market outlook remains both resilient and robust. Our expectation for Q4 2020 are revenues of between $12 to $14 million which is down on the first three quarters of 2020 but would still represent record Q4 revenues.
While there remains uncertainty in the market due to COVID-19, Photon Control will continue to prioritize the well-being of our colleagues and their families, serve our essential customers, and execute our growth strategy. Photon Control is in a strong financial position, has continued to show strong operational execution through this environment, and we continue to enhance shareholder value. I want to thank all our stakeholders including our customers, employees and suppliers in enabling us to deliver yet another strong quarter.”
Photon Control will hold a conference call today (November 5, 2020) at 11:00 am Eastern time (8:00 am Pacific time) to discuss these results. The call will be hosted by Nigel Hunton, Chief Executive Officer, and Damian Towns, Chief Financial Officer, followed by a question and answer period.
Please call 1-800-319-4610 or +1-604-638-5340 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 and nine months ended September 30, 2020, copies 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 industry. 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 manufacturing, sales and engineering offices in California and a sales distribution network around 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 growth outlook.
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.
 The Company defines EBITDA as earnings before finance income, accretion expense, income taxes, depreciation, amortization and foreign exchange gain or loss. See “Non-GAAP Performance Measures” in the MD&A.