PRCP - Earnings call transcript Q4 2018

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Operator

Good morning, ladies and gentlemen and welcome to Perceptron's Fourth Quarter and Fiscal Year 2018 Investor Call. Please note that this call is being recorded. I would now like to turn the call over to Michelle Wright, Corporate Controller and Chief Accounting Officer. Ms. Wright, please go ahead.

Michelle Wright

Anita. you, Thank welcome. and Good morning Thank you call joining our today. for

XXXX continued Perceptron. with on Late are for fourth delighted file we our in Form your by our results We year release We website yesterday, at is plan interested issued XX-K and later full year, investors.perceptron.com. fiscal which quarter to available the our a today.

Officer. with today Watza, Chief Executive David from President is On Perceptron me the call and

for we will actual call Before the the may independent is I that information of to the information you uncertainties that true forward-looking provided. inform be Private to Reform Act. forward-looking of transcripts some discussing results we Any and that of on that this be made release under upon of as Please based filings see forward-looking risks believe cause begin, need today. information are materially responsible Litigation for Perceptron meaning the to information constitutes by today from differ statements material not the the parties. make SEC and third we our we Securities

financial comments, on for more XXth. in open his will over which press after I we discuss results for June U.S. yesterday’s to will non-GAAP Unless be be noted, then end reconciliation our call. Dave of I our which back are in we will that Dave? references call we in Finally, will provided now measures discussing the detail to turn comments our years, Q&A. fiscal will otherwise dollars. this come release, Plus, and in a the for years to

David Watza

our you for about had our and We and our employees, an eager to update customers, taking appreciate year. to business you which our to am the strong Perceptron. improvements. quarter we time to Michelle, be us financial time our and Thank fiscal on new everyone We who And at learn I thank you It’s another has results. very exciting make on continue exciting to update. you, products, today's joined

toward steps reductions. Perceptron as strategic well and This growth diversification cost continued improving long-term our through quarter additional we objectives, took as

XXXX We how past. have results which are challenging come our of our from we recent proud far fiscal highlight

we're the are excited the developing excited about and our future products more even we we about new creating financial While results, releasing. with we're are

significant systems, me a systems Let for an get in in order installing we with our and these development Europe. already are AutoGauge of systems right technology Monday, X In-Line into path. of of few On the product details new process first X XX AccuSite we the our announced

it represents While this just is path. product our one in order, a milestone significant development

with mentioned accuracy is events I've an earnings quarterly devices, for correlation system our and As that customers time our on expensive first to the consuming it product, data about calls the operator eliminates this need accurate perform absolute prior to providing the in other part.

Helix XXXX, was which field. our November to product, perform first shipped addition, evo In the on continues in to well customers of

We to of products improve the continuously are pleased these new very them. two work and with development we'll

coming the and have line and to new plans product sight In more in year, existing coming the fiscal technologies of addition addition our we portfolio. of products including developments for new

and efforts, in the development we and broaden We and customers. engineering the enable our us continuously which will to to our will research offer products invest solutions

by area in was yielding and see the This million. engineering this just over spend see about the spending year the up and and and our as is research quarter that will You is development results. investment for you $XXX,XXX, increased purposeful, this can $X

achieve growth. We the of and changes full-year long after press closed market press our ongoing the that in release double are our and delivered expand marketplace the and help revenue in results objective issued it review business digit the our performance. quarter ability confident will impact the in the a fourth positive few compete The release. yesterday are of included us the like indicators term our of clear are highlights on we to I'd to to making

another quarter of improving margins at represented process and meaningful in operations step Perceptron. our our the This

Our and $XX.X customer all exceeded and in the of included metrics fourth record the full-year three $XX.X Bookings the revenue, million. bookings Also a for backlog, of were records. were quarter million have bookings, we robust and for were several which quarters, we're million, million, to record $XX bookings on nine quarter our four building we quarters fourth proud a seven and also for as for $XX.X of Company. this year that continue of out clearly the was fiscal well this a want is last result Revenue momentum. note,

continue addition, is and initiatives. revenue. of that strategic to quarters backlog highest consecutive this at time quarter million with This over is have we first Backlog $XX of representative is the our this year-end our metric we million In proud which can had we the block ever. another establish $XX.X on another are building ended three of

solid these let the me the quarter $X.X to numbers. addition year. demand our million XX.X% quarter or growth as details led a you the by customer In in our recorded prior few we in same provide with above were in region, more bookings in on fourth results, Booking Europe

million. in-take XXXX. at quarter XX.X% full-year For this above year's to were year-to-date Europe's is million $X.X the $X.X Both year-to-date our at in the bookings the the quarter for totaled in was Asia, bookings $X.X our were ended this million year, bookings as region. extremely year. $XX strong the order the million, In Americas, period compared fiscal quarter for bookings region and strong last In prior XXXX behind the million, $XX.X of

favorable This million region the in exchange to the and Asia the when experienced of of Americas prior up total primarily on that is on full-year of shortly, our team slightly Currency top backlog in quarter, backlog Michelle our bookings $X.X up million discussed increased are our into Both Revenues million impact year. three possible. clear higher as than team's importance million. had you more growth. am metrics which million by fiscal $XX.X significant year, in These Asia line at million. range indicators for or of Euro-U.S. would about Without basis, highest go year-on-year best look the in Company the million, is their rate. delivering demand year's non results for loyalty for all while are growth our the versus very this X.X% FX in of Europe the $XX.X emphasize bookings to past efforts X.X%. fourth the resulting I year and of we revenue services, continue will these as bookings $XX had due to not down previously quarter of $X.X well our year's changes last of continue improvements a and fourth detail from to customers. $XX focusing our profitable dollar advances prior on be efforts favorable and If a $X.X products month with level ever. see. slightly, impact these XXXX but the year-over-year of proud period compared was we to

ways past about full team and is are million change far of looking in first that for offered a these faced revenue on million. release, to While for recognition guidance $XX In improve we for year, our the revenue rules progress so we of the that upon results. have we quarter with. we the the always feel our good $XX to Michelle press elaborate will quarter

full our XXXX, For anticipate growth. mid-single year top digit fiscal we line

represent revenues, are our revenue aspirations growth, operating and term and of XX%. results significant digit another gross these longer over single grows faster Our toward high exceeds for in The aspirations. XX% fourth than step sustained quarter revenue profit our that income

Next, talk about I would progress like strategic toward executing to plan. our our

elements mentioned As strategic have are to plan. four I previously, our there main

investment and further competitive software expand to advantages capabilities continuous in technologies. hardware engineering our our First, in

broadening to addressable double which our product to Second, revenue our growth. achieve of aspiration expand enable to automotive opportunities digit intended our our us and offering is customers

tenaciously business. can Third, engineering, of working we enables cash that our the the management including reinvest lean efficiencies we and free continue to the prudent growth organization. Fourth, sales fund such and growth us capital cost of business, development, throughout product greater maximize areas practices in This of pursuing the marketing. flows as

of I I about progress. our engineering product In pleased spoke objectives. with on offering. elaborate of Now broadening we're I'm Needless to strategic our resulting to progress each in and want earlier today, on comments making investment very our my the these say,

year's As focuses us to throughout last on evident implement tenaciously compared clearly element the strategic maximize areas our relates experienced plan, are when you margin our results operating basis prior element in margin points cash this of to The increase it as our third year expansion the our working XXXX, strategic result. this the growth of savings, illustrates and compared business. fiscal plan changes of fiscal lean the to pursing allows improvement. management to Positive is at additional capital this impacting reinvest The year XXX flows look organization. practices to we look prudent to of the clearly cost

our compared long Our cash cash of our $X.X and term research source for allow in The returns fiscal which a believe engineering period. XXXX flows shareholders. million year-to-date development, from to prior flows invest was in $X.X us drive operations of use especially a million for growth the will to we to strong

have and comments committed a talented I few our team. on Now,

changes that have make next this we to for of highly percentage the our necessary We and strategic team years are many before, and around Many plan. firmly needed are And in experienced a our it'll and approximately XXX that right Company team large continue Company, employees them been the changes in improvements. have We to are drives the core said the we have execute I've be believe the steps world as of competencies. the with them as highly educated. for

the customers, to our value add costs across and existing team increase reduce new our identify internal Our efficiencies. customers to potential continues opportunities globe and to

technologically call want back Michelle, macro I Before remind a supplier advancing to the are small I a in view and a turn from we you, huge industries. to

We reputation have automotive an brand with along excellent the technology leading a strong and industry. in name

in have knows that than industry the as automotive well, We space. an base also better, employee not if anyone our

Company development that will for and strategic We next and execute new beyond continue we confident the sectors the that are as we opportunities stakeholders. provide automotive to over now profitable few its the to it road, our the down Michelle, to you. and plan lead automotive, will on years, opportunities sustainable within further are growth path and

Michelle Wright

results the step Thanks Dave. fourth We full Fiscal strong for and Perceptron. year. a quarter definitely had was forward XXXX financial in

share me let and details with into get you. So, the them

the As year. mentioned, in in compared fourth million quarter Dave sales $XX.X million $XX.X to the previously sales of quarter of were last

that revenue line on and we top are dependent subject recognition rules complex timing customer has Our the to. been

GAAP currently rules are to disconnects of under Specifically, follow timing we cost required sold. the between some revenue that and recognition cause U.S. goods sales can

we that ASU XXX that be we rules some the for believe analysis our will following the finalize X, XXXX, cease. we timing As of starting July under will mismatches

under two there us. the to applies it main differences Specifically, are revenue in XXX of recognition as timing

in First, the solutions. by we customer under were invoiced we GAAP, amount could all the for we amount limited our element multiple our recognize

the forward the to in something deliver that invoice can we Going terms, regardless when we of recognize revenue. customer

as will us there the X, for calls calculate XXXX to July method changes impact and of transition for all the three timing revenue our a to is All cost and between the that modified revenue. chose earnings. of net the the XXX retrospective element we we capitalize Second, mismatches adjustment which service minimize buy-off directly recognizing one-time these retain paid previously time. a paid will service. we we of under received We of one-time record We that customer anticipate the and that between $X.X our time these somewhere formal to perform within commission multiple in this revenue the revenue services until be solutions, $X.X million for earning prior adjustment for to $X.X at extent retain will adjustments elements recognized a the that commissions to from Furthermore, million over the adjustments revenue gross million the the of will the positive element Under waited to that related million. recognition. XXX, employees be we $X.X range and and must be net net

an the fourth recognition primarily get impact we've had revenue the compared discussed FX fluctuations. new let's favorable rate prior quarter quarter to dollar-euro when due $XXX,XXX the that fiscal results. In to to year's sales exchange the Now back our quarter rules, on fourth fourth of XXXX,

to quarter increase $X.X the a region. year In-Line as Measurement sales of our up our and from this an services. Solutions, Asia from was had million, million was region for and by Measurement primarily same well added of Europe Measurement million to which this This In-Line million so increase Americas fourth of year for increased well due Our of very million as and million Near-Line increases region for last region, Europe higher primarily $X.X the the was highest Near-Line Solutions. to in for to decrease our our Sales value $X.X Near-Line In-Line as is Off-Line sales strong Solutions, to quarter. $X.X due quarter second as primarily This in Sales $X.X $X.X Solutions. in due Measurement down end

the were For fiscal offset to cost goods XXXX, higher was XX.X%, percentage period of to XXXX. sale primarily as compared on the volumes cost. X.X% which of profit the fiscal a certain $XX.X our flat Sales by an and increased fourth expenses Gross of XXXX, in a was quarter the for fiscal mix sales million, sales the regions sold same were quarter over due and including of revenue all increase year-over-year warranty of basis. this timing up for our

our margin XXXX have for in profit fiscal basis is consistent goal the increase representing As from the XX.X%, last this quarter above we believe an totaled and towards We terms that in fiscal gross we point levels gross discussed X.X% for XXX a profit sales. past, aspiration progress made year our as XX%. longer

continue the recognize progress margins proud are have are in some are in efforts development be so quarters, may we results. of able these the there margins that to our expand past our and we we the quarterly choppiness to we continue our While need fund to significant in of to several we cognizant made

XXXX. line Next, about items. includes R&D, expense expenses, fiscal let's operating million to increased Engineering turn our to in the $X.X the quarter which $XXX,XXX fourth of

deliberate discussed, highly this is we focused we've as developing are As previously new on investment products.

as the mentioned we technology. are regarding the there of believe AutoGauge press announcements were expenses As up of higher We the well, as types year’s new returns relates over AccuSite as better fourth year. R&D with that This continuing already the example on installing additional release million new introduced in benefit been focused it past and the fourth especially and margins ultimately investing and discussing been to investments of million the compared for several $X.X future a products products our resulting quarter prior developing XX we’ve see results been compared We’ve fourth levels, is here higher the just with issued new past bit the $XXX,XXX on systems to Sales were these reflect sales in more of we we success that months. are $X.X XXXX, quarter. we in marketing to a Dave last in when G&A the for we for our a a shareholders. inline expenses quarter, be as to Monday the one of year's the that will quarter.

which area. countries, that As are XX in fixed covers costs this largely that a with small we’re company public a means have footprint that the reminder, we

fiscal fourth costs, as incentive increases of including outside XXXX quarter as we accounts. had for our quarter allowance an contractors, our in compared to the in of employee-related For increase fiscal well fourth doubtful and compensation the XXXX, utilizing

and the However, these income operating increases reported operating $X.X compares of fourth Reported This million for of $X a in to million offset by legal recurring and fiscal XXXX. income decrease was income $X.X were of the million. a fees. quarter recurring for operating quarter

$X.X for XX%. For increase the was XXXX, $X.X XXXX. operating was XXX% increase million million, to of compared fiscal XXXX an our XXXX Recurring of in reported fiscal income fiscal year $X.X to million compared operating fiscal income an

with any were we not substantially quarter plan fourth completed therefore XXXX the quarter fiscal did and improvement other we During original during impairment of financial XXXX. and have disclosed severance that of our we second charges the

by adjustments expense charge payments For $X.X the the the fiscal a case trade the tax partially write-off. had attorney and million. award in primarily in are net a of the quarter year, our finalization we inventory we offset the severance fees for final plaintiff $XXX,XXX We the of took secrets that for of of for

established discussed, when expense jurisdictions. allowances against any have as some the that valuation not previously have full we This tax have tax we tax tax each of effective period, against we pretax to have in net we impacts deferred especially our locations in income several our assets rate income. do recognize As

the As to process and an update transition on are impact the the Cuts Perceptron Act, analysis our Tax we of from the Jobs finalizing of in tax.

this the so rules our anticipate credits making our for are law we this material at tax based few continuing do current foreign transition any not tax However, other of interpretation would taxes on Perceptron. under don't those we calculated, evaluate offset cash we to be completely There other we time but that believe that that this any payments taxes tax. to are believe would

a open the I for items. to call want Before I couple questions, on touch last of

and investments from First, down XXXX. $X.X June XX, short-term from March up $X.X XXXX at but at million $X.X million XXXX XX, at XX, cash million were June

we nothing credit to with of previous outstanding XX. million our line XXXX. line Second, compared Under this XX, at Chemical million outstanding at we June of with on $X.X outstanding June Bank, under end had line credit had $X.X at our Comerica of current credit the Bank March

based accounts the income expenses. Cash Furthermore, us. for in net generated expect remains from million of $X.X to due was operations from operations year's inflow in in provided in quarter. a and first quarter levels. our collections The prior fourth was the credit generation million primarily the cash XXXX and on focus current quarter, flow of receivable XXXX primary cash cash Finally, we fourth QX, to compared from strong $X.X inventories use our

as path our financial believe Please year including We fiscal by continue metrics, well backlog. we as XXXX, bookings, shown revenue the our begin that profitability, on and as to record we right as November quarter discuss when for will questions. in fiscal us to our your XXXX. Anita? operator over will With the who open year that, call the I we back are call join of turn first the

Operator

question Group. Instructions] first go comes [Operator Craig-Hallum Capital from today Greg Please ahead. The with Palm

Greg Palm

itself, the to the Or just curious guidance was gave little was I the guess, a was of you timing of on revenue more in a quarter of cause what I start, for previous came detail range. it I high-end the thing? just there? biggest obviously bit the above surprise mean,

David Watza

faster Under expecting stuff weren't we get we There bill expecting. than Yes. system through. were some that old of And bit to the we to [buy-offs] through of rules, revenue some that that the [ph] the there we expecting. was a flowed came things weren't fully recognition were customer were the able

So were big the two those I'd say, drivers.

Greg Palm

were there And I math more just standpoint? and competitive environment what I about seeing - importantly from you a Asia a quarterly record, the by my are can overall think you sales mean, talk probably

David Watza

Asia for is us. a pretty competitive area

that We I've help to should But our product have our part good some business. Greg tell development competitors. of strong you only got that

market team a that's We obviously especially be few China see there ago have was strong lots with in that China, years upside a new of specifically and And pursuing. we're in a we Asia, products a to bit. great down

it's pretty well us. for Now going

Greg Palm

And is a seeing customers you're or by new that of specifically? customers existing in region your that driven bunch

David Watza

our lot It's China. been existing of I say I new have there. a we to for decade. mainly customers over We've in say wouldn't want a customers.

continuing that. we're relationships most have that So always although the we would to need, say - I develop of we

Greg Palm

the products, from the release implies know, new lastly things from just guess other traction are new you day well. starting to press the some me, with that I going get

desire What standpoint? help standpoint? terms hearing you what customers kind asking they from curious how can new technology of broadly out from are sort product their are to you a develop of in you them for Just of applications, from a

David Watza

Yes.

years, last thing. what of in right we bit product very we sales the in you our months customer than through tricky we that that that over we've leads and the we're team are doing we the always that and all and What the see. of year beginning excitement the the developing our very the And had marketing to several big are among developments the know the And different I more the OEMs global is for have think very past having conversations our get be we and and getting we're over contacts invest. So of Greg, is wants a that are the developing? in Obviously filter mainly would because to impactful much we few for that pretty they're information more from all are of to and and fortunate as and get we what take we they'll customers that all you just products continue the next of a them. from this customers tell what information

beginning as time to said at it the at an call, I So of it's Perceptron. the be exciting

Operator

would session. question-and-answer back Watza now Dave over remarks. closing I like our to concludes for any turn conference to This the

David Watza

again and Well, time thank you attendance to our for your business.

about We think we progress our when our again. are in are future you excited fiscal look issued. a forward and results of first XXXX you, very should on you We quarter updating Thank our to too. few be months

Operator

Thank This concluded. today’s attending now conference for has presentation. you

disconnect. You now may

Perceptron (PRCP) 30 Aug 182018 Q4 Earnings call transcript