Perceptron Announce 30 Percent Decline In Order Bookings & Headcount Reductions

Perceptron has announced results for the three months ended Dec. 31, 2019 (fiscal second quarter 2020) with net income of $0.8 million, in the fiscal second quarter 2020, versus $1.6 million,  in the prior-year period.  The second quarter results include severance expenses of $0.5 million.

For the three months ended Dec. 31, 2019, the Company generated net sales of $19.1 million, versus $21.6 million in the prior-year period. Sales in the Americas, Europe and Asia declined 3%, 4% and 33% on a year-over-year basis, respectively, in the period.  Sales of measurement solutions, which represented 92% of total sales in the period, declined 10% in the fiscal second quarter, when compared to the prior-year period.

Total new order bookings declined 30% on a year-over-year basis to $14.4 million in the fiscal second quarter, as bookings within the Americas, Europe and Asia declined 20%, 39% and 15%, respectively, in the period.  In the Americas and Europe, the pivot by automotive OEMs toward new electrical vehicle programs has contributed to a temporary delay in program activity commented the company.  In Asia, lingering trade issues between the United States and China dampened CMM demand.

For the six months ended Dec. 31, 2019, the Company generated net sales of $36.98 million, versus $43.00 million in the prior-year period – a 14% decline.

The year-over-year decline in profitability was due mainly to lower sales in Asia, primarily within the Company’s measurement solutions business.  The lingering impact of U.S. trade disputes with China contributed to lower bookings in the region during the period, although the Company anticipates a recovery in demand during the second half of the current fiscal year.  In Europe, a moderate decline in sales was attributable to a challenging prior-year comparison related to revenue from a large contract at a major automotive OEM in the fiscal second quarter 2019 that was not repeated in the fiscal second quarter 2020.

Management Commentry

“The timing of customer orders fell short of expectations during the first half of fiscal 2020,” stated Jay Freeland, Chairman and Interim CEO of Perceptron.  “However, there is momentum building in the markets we serve.  That, combined with ongoing feedback from our larger customers, leads us to expect an acceleration in our business exiting fiscal 2020 and into fiscal 2021.”

“During the quarter, we introduced a performance improvement plan designed to both refocus and reenergize our business,” Freeland continued.  “This plan is a call to action, one that structures the enterprise for maximum efficiency, with an emphasis on targeted sales growth, technological innovation and efficient cost management.”

“Within our sales organization, we intend to extend our market leadership within the automotive vertical, which currently represents more than 80% of our annualized sales, while diversifying our revenue base into growing non-automotive markets.  We are currently evaluating all of our existing product offerings to determine where and how we want to compete in the markets we serve.”

“We estimate the global spend on 3D metrology technology is approximately $10 billion annually, with the automotive sector representing approximately one-third of this total opportunity,” Freeland added.  “While the automotive vertical will remain a core focus for Perceptron, we intend to allocate additional resources toward capturing meaningful share in the other two-thirds of the addressable market, which includes approximately $7 billion of metrology solutions provided to the aerospace, heavy industry and construction industries.”

“We also have taken action to reduce costs throughout the organization as we position the business for profitable growth,” Freeland said.  “Today, we announced a 10% reduction in our global workforce, which includes planned attrition.  This reduction in force is expected to result in approximately $2.7 million in annualized pre-tax cost savings, beginning in the fourth quarter of our fiscal 2020.”

“We’ve enhanced the Company’s core leadership team by adding Bill Roeschlein as interim CFO and Gianni Trivisonni as the new head of our Coord3 business, two experienced strategic hires and world-class executives with a shared vision for our business,” continued Freeland.  “We are committed to executing on our performance improvement plan, while simultaneously working to identify permanent leaders for the CEO and CFO roles who will lead our organization into its next phase of growth.”

“In the near-term, we anticipate potential volatility in the timing of orders from our automotive OEM customers, consistent with what we experienced in the first half of the year and driven by market conditions within that industry,” Freeland added.  “We expect to have improved visibility around the prospective timing of new electric and autonomous vehicle program launches at major domestic OEMs entering fiscal 2021.  As new automotive platforms are developed, we believe those OEMs will require our solutions to ensure the highest levels of production control and productivity, driven by the accuracy and precision of our offerings, and consistent with growing long-term demand for ‘zero defect’ measurement technologies.”

“Perceptron is a global leader in the metrology space, a brand whose name has become synonymous with innovation and performance excellence,” Freeland concluded.  “Looking ahead, we believe the Company is well-positioned for growth and improved financial performance.”

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