ProPhotonix finishes year slightly ahead of already disappointing expectations

LED and laser systems designer and manufacturer ProPhotonix reported full-year results “slightly ahead” of guidance on Friday, with revenue decreasing 8% to $16.4m.

The AIM-traded firm said gross profit in the year ended 31 December was down 20% to $6.3m, while its gross profit margin fell to 38.7% from 44.6%.

Its operating loss was $1m for the year, swinging from a profit of $1.2m in 2017, while its adjusted EBITDA slid to to $0.3m from $2.0m.

ProPhotonix said its net loss totalled $1.3m, compared to profits of $2m a year earlier.

Its available borrowing capacity from the revolving credit facility was $0.2m at year-end, narrowing from $0.4m year-on-year.

Order bookings totaled $16.1m for the period, down from $19.6m, while the company’s order backlog decreased to $6.8m from $7.3m and its book-to-bill ratio was 0.98, falling from 1.11.

Looking at its market sectors, ProPhotonix said industrial accounted for 77% of its revenue, while medical made up 19%, and homeland security and defense was 4%.

By geography, 48% of revenue came from Europe, with 36% from North America and 16% from the rest-of-world countries.

“2018 has been a challenging year for the company with setbacks in revenue, gross profit, and net income,” said ProPhotonix president and chief executive officer Tim Losik.

“As announced in a trading update released by the company on 2 November, the directors provided revised estimates for 2018 with revenue of $16m and a net loss of $2m.

“Actual revenue and net loss were slightly better than those described in November.”

Losik said that the sales decrease over 2017 was due largely to the decline in business with one customer's delayed new product launch; while the fall in gross profit was primarily from unabsorbed manufacturing overhead due to lower sales volumes

In addition, he said research and development costs rose $0.2m to $1.0m, in line with its budget, while selling, general, and administrative costs advanced $0.4m, primarily due to increased stock-based compensation expenses, a non-cash movement in foreign currency exchange loss of $0.3m and zero tax benefit in 2018 compared to $0.5m in the prior year.

“These factors all contributed to the profit profile of the company.

“The balance sheet remains consistent with the prior year with cash at year end of $1.9m, [down from] $2.2m, and a current ratio of 1.68 compared to 1.62 at year end 2017.”