15 March 2011
ProPhotonix Limited
("ProPhotonix" or "the Company")
PRELIMINARY FULL-YEAR RESULTS
Robust revenue growth, solid margins and increased LED production
capacity
Revenue increased 45%: gross margin up to 38.2%
ProPhotonix Limited, (London Stock Exchange - AIM: PPIX and PPIR, OTC:
STKR.PK), a designer and manufacturer of LED systems and laser modules,
announces its preliminary unaudited financial results for the fourth
quarter and year ended December 31, 2010.
Full-Year 2010:
* Revenue increased 45% to $15.2 million (2009: $10.5 million), up
47% adjusting for impact of currency fluctuation
* LED revenue increased 86% to $6.8 million (2009:$3.7 million)
* Gross margin increased to 38.2% (2009: 30.2%)
* Adjusted EBITDA (excluding AIM listing and related expenses) $0.3
million loss (2009: $2.0 million loss)
* Order bookings $15.1 million
* Percentage revenue by market sectors: industrial 74%, medical
19%, and homeland security & defense 7%
* Percentage revenue by geography: 57% Europe, 32% North America
and 11% Rest of World.
2010 Business Highlights
* Successful flotation on the AIM market of the London Stock
Exchange in December 2010
* Amended Company's term debt on favorable terms
* Four consecutive quarters of sequential growth
* Increased LED production capacity threefold in fourth quarter
* Made significant inroads into medical and solar equipment markets
* Launched the InVisoTM laser product line for the machine vision
market.
Fourth-Quarter 2010:
* Revenue increased by 56% to $4.1 million (Q4 2009: $2.7 million),
up 60% adjusting for impact of currency fluctuation
* Revenue up 6% sequentially versus the third quarter of 2010
* Gross margin 38.7% (Q4 2009: 35.6%) (Q3 2010: 39.9%)
* Adjusted EBITDA break-even vs. $0.2 million loss in 2009 and a
break-even in Q3, 2010,
* Order bookings $3.6 million, ending backlog $5.8 million
* Percentage revenue by market sectors: industrial 78%, medical
16%, and homeland security & defense 6%
* Percentage revenue by geography: 61% Europe, 28% North America
and 11% Rest of World.
Mark W. Blodgett, CEO, said: "I am pleased to announce our first
results since the Company's successful listing on AIM in December
2010. Significant growth in the medical and solar equipment markets,
coupled with increased LED production capabilities, have resulted in
quarter-on-quarter revenue growth throughout the year. There has been
strong demand for our products in Europe."For the fourth quarter
2010, ProPhotonix achieved break-even at an
adjusted EBITDA level. We will continue to grow our existing
operations and remain confident about the Company's future prospects."
The Company will host a conference call at 14:30 G.M.T (10:30 E.D.T.)
today, 15 March 2011. The conference call title is 'ProPhotonix -
Final Results Conference Call' and the details are as follows:
Local number Toll free
United Kingdom +44 (0) 208 515 2302 +44 (0) 800 358 0857
United States +1 480 629 9819 +1 877 941 8631
Enquiries:
ProPhotonix Limited Tel: +44 (0)12 7971 7170
Mark W. Blodgett, CEO ir@prophotonix.com
Libertas Capital Corporate Finance Limited Tel: +44 (0)20 7569 9650
Andrew McLennan / Thilo Hoffmann
Cubitt Consulting Tel: +44 (0) 20 7367 5100
Chris Lane / Alice Coubrough
RD:IR Tel: +44 (0) 20 7492 0500
Isabel Richardson / Thomas Churchill
Chairman and CEO's statement
During 2010, the Company focused on growing its LED operations in
Ireland, including a threefold production capacity expansion in the
fourth quarter, and our laser business in England. The Company
exhibited a significant improvement in its overall financial
performance last year as evidenced by the 45% revenue growth led by an
86% increase in the sale of the Company's LED products. LED revenue
growth and improved capacity utilization, led to an overall improvement
in gross margin to 38.2% from 30.2% the prior year. This represents a
significant accomplishment for the Company, which when combined with
lower corporate overhead and ongoing cost management led to a
significant improvement in overall financial operating performance.
With the Company's operations solely located in the British Isles, we
sought and completed the flotation of all our common shares on the
London Stock Exchange's AIM market late in the fourth quarter. In
conjunction with the flotation, the Company placed 7.9 million of
common shares (at GBP0.20 per share), which included the conversion of
term debt to equity. In addition, the Company amended its remaining
term debt on favorable terms.
Based on four consecutive quarters of sequential growth and improved
profitability, the Company is well positioned to build on last year's
solid performance. The balance sheet is stronger, and debt
amortization has been dramatically reduced, which bodes well for the
future. In 2011 we expect to increase our investment in R&D, as well
as strengthen both our product management and sales capabilities. As
part of that effort, six weeks ago we merged our LED and laser sales
forces into one global sales force, which has been organized along
geographic rather than product/application lines. We believe this
strategic shift improves scalability and will allow us to grow faster
in important markets, such as the US and China. Late last year we began
distributing laser diodes from the two leading diode manufacturers in
Korea and Taiwan, which complements our diode offerings from Opnext,
Sayno and Sony. Finally, we are currently evaluating how to best
leverage our unique chip-on-board (COB) LED technology into the general
illumination market where LEDs represent a small percentage of a very
large established market. This represents a significant, long-term
growth opportunity for ProPhotonix.
Full-Year 2010 Financial Results
Total revenue for 2010 was $15.2 million, an increase of 45% (47.0%,
adjusting for currency) compared with $10.5 million in 2009. Gross
profit was $5.8 million, an increase of 84% compared to $3.2 million in
2009. Gross profit margin increased to 38% from 30% in 2009 due to
higher volumes, a more favorable product mix, and productivity
improvement initiatives. Foreign currency exchange impact on gross
profit margin was negligible.
Operating expenses totaled $8.6 million, which included approximately
$0.9 million of charges related to the AIM flotation, debt
restructuring, impairment charge, and facility lease termination
costs. Excluding these charges, the operating expenses increased 8% to
$7.5 million from $6.9 million in 2009, excluding the impairment charge
of $4.4 million. The net loss from continuing operations was $3.0
million, excluding the impairment charge, as compared to $4.9 million
in 2009, excluding the impairment charge. The adjusted EBITDA loss was
$0.3 million versus an EBITDA loss of $2.0 million in 2009. Net loss
of $2.6 million includes a gain on sale of discontinued operations in
the amount of $0.5 million and a loss from discontinued operations in
the amount of $0.1 million. In comparison, the 2009 net loss was $1.2
million, which includes a gain on sale of discontinued operations in
the amount of $4.9 million and a loss from discontinued operations in
the amount of $0.7 million, as well as an impairment charge of $4.4
million.
Fourth Quarter 2010 Financial Results
Total revenue for the fourth quarter of 2010 of $4.1 million increased
56 percent (up 60%, adjusting for currency) from the fourth quarter of
2009. The growth in revenue comprised an increase in our LED segment
of $0.8 million (+79%) over last year and an increase in our laser
segment of approximately $0.6 million (+41%). The impact of foreign
currency exchange year-on-year was negligible. The growth in revenues
is mainly attributable to increased activities in Europe and Asia,
where the Company saw year-on-year increases of approximately 97% and
107% respectively. Bookings for the fourth quarter of 2010 were $3.6
million and backlog was $5.8 million at December 31, 2010.
Gross profit was $1.6 million for the fourth quarter of 2010, an
increase of 70% compared to $0.9 million in the fourth quarter of
2009. Fourth quarter 2010 gross profit margin was 38.7% compared with
35.6% in the comparable quarter in 2009 due to higher volumes, a more
favorable product mix, and productivity improvement initiatives.
Foreign currency exchange impact on gross profit margin was negligible.
Operating expenses totaled $2.0 million, net of an impairment charge of
$0.2 million, an increase of 35% versus $1.5 million in the fourth
quarter of 2009, net of an impairment charge of $4.4 million. The
increase in expenses primarily relates to increased selling expenses
associated with the 56% revenue growth. The net loss from continuing
operations was $0.4 million, net of an impairment charge of $0.2
million, as compared to a net operating loss of $0.6 million for the
fourth quarter 2009, net of the impairment charge of $4.4 million.
EBITDA was nearly break-even for the quarter, net of a debt
restructuring charge, as compared to $0.2 million loss for the fourth
quarter of 2009. Net income of $0.2 million includes a gain on sale of
discontinued operations to the amount of $0.6 million and the
impairment charge of $0.2 million. In comparison, the 2009 net income
was $2.6 million, which includes a gain on sale of discontinued
operations of $4.9 million and a loss from discontinued operations of
$0.5 million, as well as an impairment charge of $4.4 million.
As a part of completing the flotation on the London Stock Exchange's
AIM, the Company sold approximately 3.8 million shares of common stock
for cash, raising $1.2 million. In addition, one of the debt holders
converted an additional $1.3 million of debt to common stock resulting
in the issuance of an additional 4.0 million shares of common stock.
Listing and issuance costs totaled approximately $1.0 million, of which
$0.7 million was expensed in the second and third quarters of 2010 and
the remaining amount was recorded against the proceeds from the sale.
In addition to the Placing Proceeds and debt conversion, the Company
amended the payment obligations of its remaining term debt. Prior to
the amendments, a total of $4.3 million of debt was due for repayment
in full between November 2010 and October 2011. The amendments result
in $1.6 million to be paid out over two years through December 2012 and
$2.7 million to be paid over a five year period through June 2015
(interest only payments through June 2012 with principal payable
monthly over a three year period beginning in July, 2012 and ending in
June, 2015).
Outlook
The general rebound in the world economy in 2010, along with a
significant increase in sales to the solar production equipment
industry, increased sales 51% in the industrial market. Sales to the
medical sector increased 91% year over year as the Company's LED
products shifted into production with two key medical customers, and
laser sales to a world leading medical imaging company increased over
the course of the year. Sales of LED light sources to all markets
should benefit from the fact that they are significantly more energy
efficient and longer lasting than traditional light sources such as
halogen, metal halide and fluorescent. Industrial customers are
becoming increasingly cognisant of the benefits of our LED systems. We
are hopeful these trends will continue in 2011. The general
illumination market is in the midst of a major transition and we see
this as long-term growth opportunity for the Company. LED lighting
currently represents less than 3% of the $100 billion lighting market
and is expected to increase significantly over the next decade.
ProPhotonix currently manufactures high performance LED light engines,
which means very compact, high-brightness light sources, for the
industrial inspection and medical markets and will explore ways in
which this energy efficient technology can be commercialized for the
general illumination market. This may include end-user products, as
well as joint ventures with established lighting providers that can
incorporate our COB LED components into their products.
Safe Harbor Statement
This press release contains forward-looking statements. All statements
other than statements of historical fact, including without limitation,
those with respect to ProPhotonix's goals, plans and strategies set
forth herein are forward-looking statements. The following important
factors and uncertainties, among others, could cause actual results to
differ materially from those described in these forward-looking
statements: uncertainty that cash balances may not be sufficient to
allow ProPhotonix to meet all of its business goals; uncertainty that
ProPhotonix's new products will gain market acceptance; the risk that
delays and unanticipated expenses in developing new products could
delay the commercial release of those products and affect revenue
estimates; the risk that one of our competitors could develop and bring
to market a technology that is superior to those products that we are
currently developing; and ProPhotonix's ability to capitalize on its
significant research and development efforts by successfully marketing
those products that the Company develops. Forward-looking statements
represent management's current expectations and are inherently
uncertain. All Company, brand, and product names are trademarks or
registered trademarks of their respective holders. ProPhotonix
undertakes no duty to update any of these forward-looking statements.
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