PRCP - Earnings call transcript Q2 2019

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Operator

Good day and welcome to the Perceptron's Second Quarter Fiscal Year 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michelle Wright, Corporate Controller and Chief Accounting Officer. ahead. go Please

Michelle Wright

much, you very morning welcome and Thank joining Allison. our Thank for call everyone. you Good today.

release yesterday, We are Perceptron issued results Late in our XXXX available fiscal at be to second year, a for we which our glad that and investors.perceptron.com. you our continued with quarter the on is interested website results.

We also filed our night. Form XX-Q last

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

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

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

David Watza

thank our make I'm excited us the we business and to long-term you update to everyone to Thank joined call. on who very our plan. continue for and progress strategic you against today's you, has Michelle,

well markets our line currently our morning, key an be participate and will the update outlook. on against our plan our of performance strategic and this a we last elements customers prepared some top updates of and my providing on review review our as people remarks as progress During I these, in, a

Let’s start with the strategic plan.

four customers; there capabilities are technical automotive broadening reminder offering the management cost to lean product efficiencies organization; tenaciously to our throughout fourth, we greater continuous our pursuing a continue advantages; investment of As our third, elements; cash second, key our further engineering as in expand such working practices on free maintaining and flows the company our this stakeholders. this improving of will and of all advancing value benefit as in is of technology. capital the growth we can At focus the the enterprise that reinvest of our business, our heart maximize plan first, total

by launch new for Our proposition provide growth our us AccuSite in with company the for improved value the Solutions, of and both is In-line interest the existing in this because significant advancement correlation. technologically greatly including a for and improved this our We believe solution efficiencies product Near-line significant is platform advancing both need customers. technological customer eliminating should

beyond to believe our sync and AccuSite routines our base customer to significant also with support. our We artificial of be path customer internal of interest automated path as customer variety There reduce our intelligence. path to the enable also potentially to due larger the systems sell automatically in product, product robust generate technology and improve in able to market. to a ability us have gauging will for this generation are solutions sell looking this is our on that help the uses for product we current This this to well delivering as We should of its measurement ways product ability costs we scale. current

increases will by This will significant and will class believe painted for strength And believe attention our launching. in greatly define and our solo that that provided of many measuring car. to to provides value it for advancement Solutions. that profitability our critical our us and measurement as the offer We’ve products high and head customers Helix is pioneered competency a as improve Measurement first this such surfaces gaining assemblies solutions AutoGuide chump a our current lamps software. taken by we the our of lastly, tail assembled from already the years significantly this to in of this relates of that we’re technology, that current the us as ago the newly most enabled lamps then with customer scanning This and for flush customers. another head gives ours demo measure to tail we measure expand technological lamps, We be all products. product tending chrome gap can in current vehicles. technology, guidance our company advancing process we’re help the improvements of in which for Americas Off-Line the [ph] the fit technology made ability use finish robot product Best and our Europe is core solution recent combination We’ve sold our beyond our the Another solo the it value advancing customers. our our solutions suite unique improve machine the rate technology. of CMM to with in systems We and including the Helix on final for seeing China, our with lamps interest technology designed ability and product, touch CMM fully win new in area smaller a

reduce Helix described. and a time new of In December, to have utilizing completely magnitude. software and evo existing what press we pictures are by sensors of installation I detail the that with issued order provides have these an redesigned you our release We products

the appears new have products this the a year and Now the for we we business that prior time from market update in in and cycle. approximately region the very with in. quarter it our currently at on grew an hit Sales markets participate good customers the period European XX% that

help way. in product continue experience started our active customer in our and Asia, We believe our for by to thanks begun talented made am fiscal go with very This grew very product exciting how the second our some by for and development renewed large This that of this focused them using projects lost next products the We recently product. products important may pleased has so showcasing to us all support We large our of pleased and over with be developments its well customer Chinese head-to-head welcome part to global just the impact path. more as many our this in year rates. to very in markets prior technology back big very our is have uncertainty engineering recent market on successes. new This customers, all competitor possible the continue one was note be and workforce. in years product In of have approximately recent macro our quarter I for the impressed sales of several we’ll thanks team put they Execution One very our headwinds project. the to markets as our us. is to and competition, developments against war our these significantly process AccuSite period progressing. we're competitor. make been launching over a a place project the be exchange we unfavorable to the I infrastructure ago with I necessary strategy, win AccuSite significant of and to believe development compete a a We're customer to from despite our to is trade will local what helped XX% several solid the for this with European adjustments first additional years, we’ll developments this very in market. and to that us new the expect successfully far

in flush We with customers our improved Asia success confident and Feedback our new continues we and remain position. from market positive have to AccuSite. the be in had region solution as early gap our

Moving year strong a several programs customer begin. programs a new were region, we experienced until the gap there's months and first ending after demand, six years several as to softening in some large of fiscal current the Americas of have our

to by large continue announcements few global closely monitor a the recent automotive We OEMs.

vehicles. Our visibility has pivot electric been reduced autonomous toward by their

longer opportunities our product development region. believe more efforts that performance marketplace. we electric autonomous of expanded However, the for us in large to product term confident important new remain for and we the improve that programs this new will our will portfolio lead number Also, in vehicles

comments Next, our a few people. about

internalize we and plan. We the the apply priorities very product to new executing obtaining but forward. and our in engaged at market, pleased our purchase on structure our with ability of understand their team a in talented They're focusing and new improving orders, our getting and of as company this to Directors. Board strategic diverse Perceptron. These improving also very not proceed Perceptron, I'm long-term only have employees at development, our company, comments the exposure products cost

prove addition of am shareholder the as seek support company direction me and pleased the opportunities enhance we organization. better executive to with positioned to of the collaboration a to Freeland, former With FARO guide as board’s the and and of CEO Jay the recent strategic Technologies, and I now provided President value. we're value the the team additional

line rates. metrics second revenue currency the headwind Now, exchange is of million will the you for than quarter of higher I year, top and $X.X bookings, $XX.X fiscal on our Bookings were despite million, the this update foreign backlog. prior

recorded by Excluding prior the the in both the compared million the increased ended record in quarter of bookings demand year. $XX Bookings million, we bookings quarter year’s bookings million up at of were million $X.X slightly record quarter booking our Europe approximately prior quarter $X.X prior totaled million. in In second million as our ahead same impact $X our Americas year. $X a This our bookings, would quarter for achieved the in quarter of higher the a or of the of same in when quarter led $X.X were customer regional the despite the these in by than second region, the rates second to for have compared last record Asia, million In headwinds. year. is of currency second Asia, bookings exchange the X% to $X.X

quarter million was this quarter. as level timing programs due order in year's decrease region. new for quarter. impact revenue the decreased do the to prior The $X.X not was $XXX,XXX million, the believe of by fluctuations for old of the second primarily we an previously, rate compared to starting. mentioned Revenue foreign exchange to this continue between and We gap second in a increase $XX.X programs or I ending, X.X% slow As expect

quarters to consecutive $XX.X Asia five this the of Europe's record over ended the is note with that we at addition, have had second revenue year's In region. time, Backlog second $XX.X million, was of backlog this at $XX.X for increased quarter in Also when $XX first to million compared last at million. a million ever the revenue. quarter quarter

Americas $X.X down million down year year from ago. record was a $XX a of from one million $XX.X high Asia million. $X from was at million The ago backlog

in had $X.X total this backlog reminder, million. required an resulted implement revenue July a of as X, of which All on to were rules impact backlog the XXXX And on company recognition million. a new of adverse $XX.X

ways and While for have million to quarter we release, revenue our of a have made past the quarter provides, organization. upon this offered momentum results, $XX press guidance team these the our $XX to In about the we of we which progress years, for we improve the that feel third always is million. few value will good enhance looking the

expectations earlier, the will see year. of uncertainty. year are growth fiscal a as our significant period exchange impact fluctuation revenue. currency year that mentioned full we note this be of XXXX, essentially with full estimate Of the get our in having our revenue until flat tempering on through For we We revenue prior we

the exchange current $X.X of Chinese impact Our rate U.S. full exchange the the million to dollar currency being as rate. in well over unfavorable majority dollar estimate is year U.S. impact with a estimated euro of rates could have this that yuan changes as due

XX% Our another quarter long-term XX% revenue step of operating exceeds high-single income in that it represent digit aspirations. exceeds Gross our aspirations estimate profit revenues. sustained revenues, Results to growth. of are significant towards and for second these gross revenue

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

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

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

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

Michelle Wright

Dave. Thanks,

reviewed details. Dave our has past this fiscal Now the financial results the that the of me get strategy quarter business the let of rest into and

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

year's Furthermore, As results. the Under recorded not in of this will we earnings Xst. modified retained July we any a cumulative restate rules XXX method of directly adopted X, the to ASC using of reminder, we've retrospective as method. as the transition prior July impact XXXX of the change

have revenue rule, revenues presented the under under ASC starting XXXX XXXX new old rule year QX, still XXX. while So are fiscal with as presented outlined under been the results

As faster previous to rules individual by on under previously an us basis. recognize the ASC project project allow than recognition the XXX revenue disclosed, rules revenue

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

First, we recognize a the amount that we the finished could deliver of X, old GAAP solutions. element for when Starting limited terms, customer we invoiced regardless our multiple we July we amount customer the our recognize XXXX, invoicing can to element in the revenue. under were rules, by

element for our the recognized until we buyout that timing that services from customer was over impact the XXXX retained $X Second we revenue fluctuation. revenue to earnings is time impact that previously July talked these million as an million. that multiple of compared to had revenue a quarter, we quarter experience. X, The revenue rate backlog that adjustment and all time. the recognize to element on the decrease to XXXX. FX about service and for July dollar-euro we’ve The changes of the to we between receive at $XX.X element for the second year’s Dave These the the million solutions, the prior formal revenue when of cost of $XXX,XXX, waited in for unfavorable are mismatches booked impact services. perform XXX, minimizing was due sales primarily and The exchange X, we of Under used $X.X the

$X our from XD well Off-Line a In-Line mark then quarter in Sales an increase Scanning for as by Our and by Off-Line last million $X.X Europe Solutions $X.X had as partially by In-Line Scanning to upset increase regions region. during the region highest the for Near-Line is as in and to and This $X.X quarter our as due primarily same is to in Solutions, decrease in Solutions, higher Solutions, second well due decrease Near-Line sales added very America quarter Measurement year, as our well a Measurement million million, which the million of Sales increased Solutions. value our Measurement results In-Line so due down region, for higher our partially Measurement primarily quarter. Measurement primarily XD were Solutions, as Solutions. offset strong decreases Asia our second services. our million, to up Near-Line to of decrease in million sales Europe our and $X $X.X in a this These in

we certain earlier, Gross for sales compared and Dave accounting increase expenses warranty fiscal of softness of in second revenue our seeing some up basis are the in cost XXXX sales a fiscal timing the explained and percentage believe of is due in XXXX The but year XX which cost by as as bookings, as profit was temporary. primarily is to quarter partially the the goods the quarter, America both points XX.X%, same We and this mix of offset under sold rules. of is prior period fiscal lower XXXX. to for

As aspects -- stakeholders. expand the at look we us technologies to gross will and longer our for allow above provide for and in shareholders continuously improved margins, consistent all business returns discussed find past, to aspiration is our have XX%. to we in invest term our future ways which quarterly Therefore, to margin of our

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

we've As of results. that quarter compared year’s focused are and new developing products this we year's as quarter, when employee several the higher for costs drive the previously second compared increase deliberate expenses highly past products Sales were $XXX,XXX up second the to in on support quarters. and $X.X we've prior $X.X discussed, flat improved This XXXX were we year-over-year second will expenses is new reflects costs investment G&A quarter. believe to were last and introduced quarter. million marketing the for million marketing to

quarter fiscal fiscal reminder, secret XXXX, fixed. in which footprint issued we the small pay had a As fees. that quarter second countries, trade that the judge the in XX legal with we that we the $XXX,XXX for with we means Operating order the summary from against have to In operating up covers million, quarter case which for that is income XXXX. defendant’s and filed defendant Perceptron In for XXXX. cost of a $X.X company to January a are here a the million us $X.X of was public second compared level largely judgment the are settled XXXX income

fiscal of XXXX charge restructuring accrual the charges. other the quarter and second in and $XXX,XXX we $XX,XXX. net with As we fiscal we to a a recorded severance adjustment XXXX Both result original as defendant were of in had second $XXX,XXX. we of the the for XXXX by XXXX. January second a fiscal of quarter settled charge due Therefore quarter reduced payment of our that the in took of judgment recorded In a them

accrual quarter was As of had second income the fiscal a of compares of to This quarter less of adjustment, million for the $XXX,XXX. operating $X.X of operating recurring expense quarter a $X.X tax the the than XXXX. fiscal recurring We for second result million. XXXX income for

Act of impact Tax As Jobs completely tax calculated. credits concluded offset update tax finalized any the from transition foreign our the have our Cuts analysis Perceptron tax on and an the of we and transition that

that payments will other taxes don't are anticipate a evaluate, this tax. under Perceptron. any law we that taxes those do making not continuing we to are cash There this we few to at believe time, other but So this be material for

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

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

Second, borrowings on XX, Chemical with of outstanding line. June credit on million this credit December we outstanding XXXX. of Bank line had $X XXXX, XXXX end had at we the At December our at $X.X no million or XX,

The a Finally, was cash amount quarter in $X.X flow of provided use quarter. from second XXXX and in million of and focus cash generated million inflow of XXXX for to cash cash primary net in primarily from due inventory Cash operations from deferred us. income prior to year’s a the remains compared generation the of $X.X second was operations in revenue. QX, our

We open continue call the May us third improve for strong over year fiscal your with who’ll we operator, back XXXX. initiatives the will Allison? in and implemented of that, turn the call we've discuss the I that when years question, us several year quarter to our Please to have And our value. finish strategic join positioned shareholder well fiscal the to believe past XXXX

Operator

Horn Thank Christopher go you. Our Van Riley ahead. B. [Operator will question FBR. Please come instructions] first from of

Christopher Horn

taking call. for Thanks morning. Good the

David Watza

Good morning, Chris.

Christopher Horn

and $XX little about what we to that And a $XX the the you that if $XX guidance versus wondering gave. million range? $XX you somewhere was there? happen between kind talk could of the million million are has takes the for I million bit what or of for in puts Could into get to

David Watza

and that a us have The work in we a past there. the successful good timing then, million, in they a bit are question. then, sight we when of want talked like bit business affect exchange also the have little a our that. that's do Generally subject quarter. little within. turns we've That things for we with of we've obviously, there -- to And of have Chris, next rates.And line pretty customer of bit been about we of things backlog range $XX reasonable staying

Christopher Horn

you and it in guess, I clarity could new the then, Europe? headwinds was citing suppliers And on industry a growth -- is Are -- over just more it. are there little got kind there. you give what Okay, share specifically what rolling on on was going was going European taking business other of on, a bit or

David Watza

working of a don't development that I demand really that's would that that are time won great pretty being us. you I lot product would in of helping question. for it we’ve you a down and some that's of We tell for in tell large and this there. busy well us. interest also products. our projects new Yes, slowing period, our Europe delivered in We're see over that's type the really there's

Christopher Horn

new new kind just markets. it. or What new think for And that that a categories margins wrong, correct get factors said Okay, new target you maybe maintaining of -- of is there but continued multiple there's end all I just jumps you combination got those. -- driving will or What's the in future. or or it product be you really that you new regions? back -- it of gross to XX% then, is there maybe anything kind business level if one your a heard me you're or out Is I

David Watza

in focus our taking The that sight we see of all cost have line have savings things out current of accretive on to to and margins; fixed new of first third, I we cost tell you costs; point the further and would of our a future. pretty will I current products leveraging are our that we relentless Chris, would second, be

Christopher Horn

you the disclose Chinese then automotive and you so much just from exposure? time. me last one for Have OEM disclosed you it. your or And OEM, Got can thank ever

David Watza

about us. numbers is And big really over would in never our a automotive I a you that for that car that the that’s say would third separately. when you opportunity I quantified that’s a China, portion part occasion good think globally. tell we’ve But of Yes, very

Christopher Horn

you the it, Got time. so thank much for

David Watza

Yes, time. Appreciate thanks Chris. your

Operator

[Operator Instructions] go Please ahead. come of next question from [indiscernible] Milap Partners will Our Jamie [ph].

Unidentified Analyst

morning. good guys, Hey

David Watza

Good morning, Jamie.

Michelle Wright

Jamie. Morning,

Unidentified Analyst

from just a Americas and -- rate? can you and Just kind little us do you we can granularity couple about those on that give a come more how the guys get high timing of bookings low to bookings run can double-digit single-digit me, talked on you think orders back the back quickly

David Watza

would on what’s we’re we much some new of it’s pleased tell China. I background driven Yes, it you lasting a large in have soft have last don’t obviously products really of with [indiscernible] longer, bookings number it things there’s on. we Jamie now. a you really little and programs on, is but the between few naturally that to don’t as customers is give a and all with giving we We pause and the us by the see push really just region a over back that had having -- lot in happening that know right And to going guidance our Europe go bit

Unidentified Analyst

side think doing Yes, the too Americas front. XXXX guess, back all top return it’s you is do on comes the is and later, growth fair with getting to look it fiscal just line? the I say to without think that mean job a timing on you a you currency granular sooner than great given I the equal that on else guys are

David Watza

yes. absolutely That -- our be would

Unidentified Analyst

versus just line say more is me, of you operating comp year buried a the couple leverage just of And XXXX. for the given the half top slightly about income from you you numbers? your Okay. the have outlook of that of fiscal the kind up some then those kind flat can to guys in you to XX-Q of on have hit the back tough for talk And

David Watza

has of on all we’re I’ve very of the headwind continue for push our margins. drive very Naturally cost and on been this our hard cost, Jamie. that. us been we currency pushing And and a we’ve while very fixed to everything we’ve we’re of to we -- so Yes, careful and on challenged focused can all said

So…

Unidentified Analyst

anything R&D? But half on or of abnormal the year first the SG&A was there side in the

David Watza

I’d mean, our because invest of products that I significant that’s future. point know Nothing the we in continuing new out, we’re development to

probably can sales a and bit the definitely So past, of think a pay-off. but getting that’s from you feedback in see that getting as field we’re we’re it’s little is the as we the percentage higher been making the a results

Unidentified Analyst

Right.

So, I guess, just you uplift where margin the trying understand on XX% guys getting mean side I'm revenue it and year to you guys a margin is was basis I of on last your six comp months? in gross have are for income the or the delta? second Where first versus half, on half operating the recurring down was the the the is

David Watza

some bottom headwind we’re Jamie, the it it’s in top the at currency line. despite the cost in add that through talking does line drop about. on It’s the cost and margins and

Unidentified Analyst

lastly, expectation to that? kind guess, you Okay. discount Thanks is a spot of currency headwinds kind kind We I rate real? the for what or Are of can for follow-up your of offline. quantifying -- just But that. is some currency? what guys forecasting are

David Watza

So, the business essentially, we're -- not of Jamie, just forecasting rates. take we

take just rates forecasts we and current out. So those

Unidentified Analyst

remind a X% Or change to And us line? it it. the what easier on for XX% you it? mean can change Got you in quantify currency, however you just just the would make guys top

David Watza

second. one want back to… to to Jamie, on me I’ve I that. get don't Give you

Unidentified Analyst

right. All

Let sheet. me balance just have guys free one you squeeze debt more,

Asia. if the are back. believe coming you Europe been in You guys that truly and progress making Americas have good And

the and the of [ph] to cash does take business, of Just it given selloff in advantage sense potentially your generation make in shares? place the put buyback a

David Watza

the with that's that work I'll Yes, so something question. that's an interesting Obviously, to board consider.

in in the pulling call, mentioned to levels enhance engaged As very we shareholder need I to, the the value. board’s

Unidentified Analyst

Dave. up I’ll time guys. right, offline for all Thanks Okay, the follow

David Watza

Jamie, the thanks questions. for

Unidentified Analyst

You got it.

Operator

question-and-answer our the turn back conference remarks. session. conclude for this Watza to over will At this to Dave like I'd gentlemen, closing and Ladies time any

David Watza

progress Thank you. to look our you on future too. to issues. our in you a our and very again for your our should quarter business. think are excited months, Thank time third and updating results XXXX forward be we We fiscal when few We're attention about you

Operator

conference Ladies and thank now for concluded. you the presentation. is gentlemen We today's attending

lines. You your now may disconnect

Perceptron (PRCP) 12 Feb 192019 Q2 Earnings call transcript