Perceptron (PRCP) 8 Nov 182019 Q1 Earnings call transcript

Good morning and welcome to the Perceptron's First Quarter Fiscal Year 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note today's even is being recorded. I would now like to turn the conference over to Michelle Wright, Corporate Controller and Chief Accounting Officer. Please go ahead Ma'am.

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

which continued Perceptron. with at Late are fiscal first delighted we investors.perceptron.com. in your by year, XXXX our release We yesterday, our interested issued results for available is on quarter website the a

We Form our filed last night. also XX-Q

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

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

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

we about exciting record We make appreciate update. continue we increase continue positioned This to joined thank prior business us top-line satisfying Thank time believe million. delivering $XX.X period. year on first terms results who for improvements. of today's quarter, are our everyone an We which and well more the taking and ever to has of first quarterly in a you, Michelle, learn you quarter revenue had revenue the We represents XX.X% you with requirements from the year. of for to to for our highest fiscal customer the strong

are Plymouth, and received at We in first developments. showcased house response by a our Michigan. headquarters we hear customer of recent products. open and at We chance these positive hosted This our was about our new strong encouraged to customer many improved for customers the see we the

Our are we and customers changing products business with new were how in future. provide and and significantly now to the them the advanced enthusiastic solutions

identify and was Our gross the efficiency to implement cost reflects expand important ability this for profit measures savings quarter to our and metric. further XX.X% which profitability

we continue products to be those benchmark As new products, that should innovative launch and this metric. is to internal accretive our new

have that in annual at We we meeting a for new also announced shareholder's nominated this stand our election to member board quarter December.

annual well growth journey his XX of we as the Bob be very as for and beneficial to are nomination to than It reductions. nominated him strategic forward years and his very excited We be Bob continue long-term Company. We FARO. cost diversification thank will announce push service and time former to the will Perceptron Board who objectives an family members, Jay through continued the for to company in been the wish of personally. Oswald, well exciting continuous is down and more Jay our meeting. improvement Freeland, CEO our of of as me experience our succeed stepping one to following has at to His our

made past accomplishments we the upward of we trajectory. several years, our have proud are over planning to We are and the continue

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

facility. customer to over We the attendance. would product, to of of one a cast our Plymouth showcase customers products little easier XX two measuring live you several event door and held part the tell a were I like vehicle our about machined able by more and demonstrations in to complex our at Now, demonstrations we had measure measuring our We second is rear a technologies to AccuSite made AccuSite a assembly. a new cradle very which

is that systems this We're reminder, in of a As facilities. customer we the the installing XX a already had over their these process in systems. product purchase successful

as measure We glass to of technologies that it without gap correlation. and needing enhanced which algorithms will product using of ability the flush This was system our is rate. also that this Helix platform based improved demo launched evo allow just which and to believe product new win year are launched a had one increase the measure Helix the solution, well has industry-leading solo has as We is ago. over our these demand recently to our on

allow and machine Additionally, automation guide product and This will pursue auto are we to our able they us their our a should floor. deracking as activities automate to solution actively efficiencies This demand open up part. new customers. customers new tending exhibit our manual product factory that a complex and for on was racking is from

few the event. appreciation persistence competitive and our for to it capability. of encouraged leading I after dedication, renewed and to and a a scanner, by share event. would changing customers products. thank Their our no our across are collaborate beta showcasing going team is Attendees impact this also their evo over the IPXX to the part of strong will rate that our part, cut products water and departments having these the all our of speaks to the its market showing like CMM Helix after We the both video the expansions research which with sensor released significant our able the we up received results then enjoyed updates, I them to unique addition to to engineering customers. having into the us to intentionally sensor we business the we knowledge be other our how into docking It a capabilities customers. during of quarters. successful accuracy. sensor to the crashing can't Each left to we ability thank cord we've feedback measure and of talented adds and products Consistent offer broaden sensor of sensor unique and version ruggedness a several the and further development prior on Last, strong financial illustrate enable our scanning appeal its will our advantage were focused to to solutions a including This to we and get with the be shared product remain the enough. VX and past enhance next tank it's weeks. in with we're

on we're us to these now to few positive our ongoing We quarter ability digit and their are in press will our long-term performance. and growth. highlights impact marketplace our of confident, investments revenue the indicators to of Results in high-single clear delivered compete achieve business changes expand like review a we this are release. to objective quarter first the making their the I'd of the included help

was for the Perceptron. a and meaningful million. improving quarter for at $XX.X This of our quarter first the operations margins another step is the first process record quarter Revenue $XX.X first were our quarter for the in Bookings of which company. million, represented

recognition was In quarters our the more ended consecutive XXX of by and million the in with the revenue. quarter change over in million. $X.X call. required revenue ever detail is $XX.X Backlog will $XX a backlog time to Michelle, which recognition in addition, four this this million change first at ASU reduced revenue later have impacted had we explain in about

the region, The at realized a more led quarter. a the we me a had with We prior another booking, $X.X addition several impacted order In fiscal Americas, In by in totaled results, $X.X million. in due of that region program the customer too change of behind Asia, $X in million reach ended first Europe customers details this an this continue $X.X be in year's to first slightly our par the in had in canceled few $X.X customers customer prior it size compared program. the bookings first our this Bookings to XXXX the our quarter We the had customer in a of of booking ordered factors resulted you last recorded of were reduction of bookings the many demand million to same million, end strong on sensors, these solid ours. numbers. and million of in quarter and year. of quarter direction quarter our our customer's of these There the one-time large to order. Both quarter provide let year. by the as were

about hearing the it auto this believe that seeing customer into customer our We slowdowns, some we impact see strong sales that Also the new some like more in in our many issues demand. a slowdowns delayed also still we experienced industry. few products others, would are the orders timing occur next quarter. Further, should of potential At point, demand future. we're U.S. any than our on were offset they We products. not for

sold to several alignment scanners. large several products Helix wheel have we For customers, and solo XX recurring over reference, already AccuSite VX as as products well

the Earlier, the first of the booking importance detail exchange to quarter emphasize first will growth. $XX.X impact $XX unfavorable This changes record Michelle early continue high-end $X.X focusing shortly, in million. our of team demand quarter new to guidance year's to revenue million. of previous in of XXXX due We on encouraged $XX by mentioned, some of go the primarily on I the our dollar revenue the on for profitable above million are slightly top-line an prior Currency we but was our to for with had rate. range million compared the products. OUS more

ways the we about upon is have press $XX.X for revenue of in our quarter always and a we our While few the second release, results. good have we progress quarter we improve made looking past guidance million. to years, to million feel this for In offer provides team these $XX.X momentum the that

in we For our digit our year growth. confident to mid-single XXXX, top-line ability achieve fiscal full remain

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

you talk we I toward progress to about plan. our the Now, strategic want made to executing

in flows cash aspiration revenue expand us investment And strategic continuous four business. main expand the our automotive opportunities our hardware to last, efficiencies product intended our to to I've to reinvest As our business. which as advantages that further previously, maximize practices throughout engineering there such high-single to and the offering tenaciously second, us is long-term mentioned third, technical and working broadening our technologies; This addressable lean digit organization. management achieve areas and capabilities software to fund customers, prudent our growth; the we greater elements our capital, can plan; in of continue are growth free we of of pursuing in enables growth cost the of enable

we in I engineering. investment are customer these pleased offering. our In comments, elaborate our on my on to Now, their open making say, showcased house, investment with each the strategic progress. Needless I which I'm will objectives. progress spoke our broaden to product very about earlier That continues of

business. tenaciously prudent As plan, cost areas to flows, cost to on practices maximize strategic reinvest throughout implement additional it plan relates identifies reduce the ways continuously of the The allows growth our focuses the it organization. us in capital and to our the of to last savings, team cash element management of lean third element working strategic pursuing

Our cash we flow a strong This allows to flow long-term of positive operations for to us source first cash will invest was fiscal for $X.X returns which from of believe drive million. our shareholders. the quarter growth, XXXX

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

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

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

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

toward our Thanks Dave. Fiscal forward aspirations. XXXX move continues Perceptron long-term to

financial you. solid the in quarter, with so have me share details first We results the let

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

to not which method, XXX, Our of sales the by cumulative were the we retrospective ASC the quarter retained in the of year affected impact will July modified directly be XXXX using prior we Furthermore, as we method. the recorded rules results. adopted earnings. adoption restating of Under transition changing X, this any

revenue with presented XXXX another old be while year QX will fiscal still results under rules presented are So results new these and ASC adopt the the by XXXX the starting rules, XXX. are under

our the of methods, to X, two in prior another. for transition XXXX As operation July directly a subsequent not and are one result choice results of compatible period to

disclose required be the rule. to yesterday. as if we was to old can we in XX-Q are revenue that found results hypothetical follow fiscal However, X footnote filed for have the results The hypothetical in recognition continued XXXX

As previously rules XXX, than rules. faster disclosed, to the under revenue previous allow us revenue recognition does ASC the recognize

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

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

the fluctuation. the multiple booked had X, of impact the $X.X was recognized and fiscal increase the we which perform that our by the year's to Solutions, waited in we experience. In-Line element the million revenue for XXXX our by formal of Off-Line first was our has X, accounting our for quarter. adoption between capitalize of into due in under to Americas we last region the $X.X our fiscal as quarter some we Furthermore, million, commissions costs buy-off to the Measurement of as an XXX primarily the profit Solutions. that up paid $X.X our as cost The three timing to Asia XXXX. Gross due our compared The changes that sales primarily $X.X until quarter the as the these Sales to same had million. And of earnings timing revenue in of Solutions from that is primarily we region. XXXX to this was we Measurement of $X.X on was paid quarter to Off-Line this In-Line the million, cost Europe the service. as to down rules. as impact over million region that our to quarter revenue XX.X%, of minimizing second that to and All first goods for impact solutions, for due for $XXX,XXX The primarily first of adjustment are recognized warranty quarter the Near-Line runs sales was due and in of Near-Line up increase mix prior start XXX a partially XXXX customer million. in we due fiscal sales sold In-Line region increased XXXX, fiscal received which offset the also to first points This our and same and quarter our sales strong in commission the revenue prior of million mismatches extent dollar-euro million Sales for rate in Added July the a of of retained to services of revenue certain impact Measurement backlog July the previously $X our year, year for Getting $XXX,XXX increase Solutions, we increased employees these fiscal occur basis were FX period to the percentage as the of our increases Measurement recognition. XXX to the of elements well $X.X of used a to the and of to prior quarter the revenue expenses Solutions. Near-Line and decreased a an details, to Under time our saw must decrease Services. is and related revenue This well a time. service increased in element when XXXX Solutions, Value primarily on an of the $X.X very first unfavorable is Scanning compared higher XD exchange highest of then sales XXXX is which Europe $X.X all Second, XXX, at from million. by for Measurement

XXXX gross fourth up However, is XX.X%. of to this level profit quarter the compared up of fiscal

in our discussed gross have past, the XX%. we As for terms longer above consistent aspiration levels is profit

We continue an XX% to quarter-over-quarter. demonstrate upward improvements and trend towards

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

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

in the We've were to to for $X.X As a when we've the up expenses especially $X.X new developing as already the a relates we and products. have million previously show first. investments first is products are compared results well, marketing in our quarter. XXXX making investment for chance been over the compared ago, to year's new quarter we the us gave held of we focused this weeks investing expenses few a on and as which Events increased discussed, million prior And as the up year's months. it that described been Customer G&A Sales to that $XXX,XXX flat here bit last on past the were deliberate last Dave years. highly we've first several quarter, of were several focused introduced

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

of for which of operating impacted was a our tax offset quarter costs we expense the first employee-related a audit was tax for income quarter legal first XXXX location, the XXXX, quarter effective quarter had first We Chinese fees. in compared in onetime increases to of quarter and withholding XXXX. for We the by the of $X.X fiscal income had the recorded in of a for compared tax the Operating first fiscal to quarter which level flat $XXX,XXX. decrease fiscal fiscal XXXX. rate million For the our

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

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

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

at million flat million XX, from XX, at fairly First, and XXXX, $X.X at and up from September investments $X XXXX June short-term September cash the XX, were level $X.X XXXX. million

balance Second, previous our at September at our the had June credit of Chemical September current of Under of with end or line XX. XX, we Bank, at $XXX,XXX we no outstanding outstanding line on had with XXXX. Bank Comerica credit

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

the that believe to to relates XXXX. on year to discuss your like we long-term for who Rocco? it join are when our back fiscal goals our our start us turn quarter second I With the to track we as as that, the invite right XXXX. of in to you operator open will the fiscal we'll continue February We call I'd will call questions.

from first ahead. Please Greg Palm of Craig-Hallum [Operator Capital. go Instructions] Thank you. comes Today's question

off you Any standpoint Thanks the specifically morning. the know to taking start little the Good a what I just with region. sense Thanks. cancellation color timing? on questions. in more from Americas Dave, for first, in wanted bit customer was impact the maybe bookings

you I'd if I in more probably on front of I The Yeah, for one-time thing that about we would the tell million. items at the focus us. is specific see $X together, it's demand looked them you

and pretty what us demand pipeline gives the We them, confidence year. have strong all chasing we're – a after we're of very regions in so the for that's

some terms back in know year if bounce timing, know here December And can color of us right expect if I it's we don't specifically, if or or it calendar help, the on would expecting should how but away XXXX? you're quarter if is a I don't you on through lingers maybe give

our as of view far bookings QX? for As

yeah. Bookings,

years, We're bully of when tell we it's in at Greg, demand I they last only would and new just it's lot and and I in forward. I – seeing the orders than put customer the timing products all. softer normal, a guess look if just will periodically the you mean and quarter just of for overall, those have you few demand numbers us going the front

So, I feel about confident year. the very

a you comment and understand kind the history like of on and totally maybe a sales of this as the that guess what on current around sounds to event maybe of the for it sales I of used these well. recent of moving or some I Was event went demo from new or the just are offerings? tough. customer know cycles the more potential quarter some products some Great. the you can is specifically thing really new volatility know and quarter,

the like Yeah, our building doing. is in was needed that's we and activity beyond in customers process, to It question. definitely – of and the the that. great a just It's the all are first-step ongoing the get a kind show things them we

building, and out out into our them telling them reaching new getting to story. bringing are them We customers, to the our

the they new for thing know important that products here applications the them. is and have and and to things me The all all we going services on

exciting It's tell and cycle. would it was on, of together, very the and company team very a pull whole you customers that going the for really that these – we So, seeing fantastic. what show thing it's have I part was

terms hear. sales some from of great these cycles, products? be of near about thinking and the kind just contribution we in That's how mean newer I of to longer-term should And

time That's cycle. several this down We it hill. ago, lead customers to seeing work seeing of started just steam. building me, another validated excitement longer but It solid at We've great process what time. their forward. months the I as clear sale question. it of do very will and rolling and can matter in feedback our me we the the snowball a kind for It in gather view It's do, clear soon it's enough a a just happen that was can't path

And anyway, one, really impressive the but of luck a it's I going it more to addition not guys just Freeland. really guess I'll recently question, Jay forward. Board I and guess leave observation wish an just last you there

to I'm to that. going Jay. have on excited very I'm Greg, jump

him the our knows walk you he – to whole doing. I mouth, He's we're here. his to was I the what him in to in excited have would around don't we're team pretty had day right about words excited doing. things want market, got that put is had him around show in saw but able he the we tell experience And we're Jay. demos, think so what I great right the and all We

at what bring could and days his understand FARO, table. knew he the agree. I him I to from

Thanks time. great a best forward. going that's think for of Anyways, luck addition. I So,

always appreciate attention. your you we Greg, Thank much.

for the over back question-and-answer Ladies session. gentlemen, I'd final and remarks. team to concludes turn like any management to the this it

Great. attention Rocco. Thank and Thanks to you, business. your again our for time

to should think too. about be in are on we quarter months second again. excited Thanks you few future and look results a very forward are our We progress our you We when issued. updating

Thank today's call attending all and we has concluded you. presentation. now you thank Today's conference for

now and day. You have wonderful a lines may your disconnect