Perceptron (PRCP) 5 Sep 192019 Q4 Earnings call transcript

Good morning, ladies and gentlemen and welcome to Perceptron’s Fourth Quarter and Fiscal Year 2019 Investor Call. Please note that this call is being recorded. I will now direct the call to Mike Houston, Managing Director with Lambert, Perceptron’s Investor Relations firm. Please go ahead.

Thank you, Nicole. welcome. and morning Good joining company’s conference fiscal financial year and for to fourth and discuss full the results XXXX. the you call Perceptron webcast quarter Thank for the yesterday, at investors.perceptron.com. release, closed After quarter’s issued on website available earnings market the which Perceptron was this will Form XX-K coming filed be The the on days.

are Board, the newly Pecoraro, Perceptron Director Finance of and team, Jay Executive Dave me on members Chief Laura Joining Watza, Chairman Officer; the of appointed Freeland. call today the President and of

prepared team’s Perceptron and with call the begin to will the open up remarks call We then questions.

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

reconciliation press for fiscal otherwise in years which of yesterday’s provided to on be be will in XX. references years comments non-GAAP release, in U.S. will we are this measures that Finally, noted, the Unless a discussed call. dollars June and ended

Executive to over Chief call Officer, Watza. the turn Perceptron’s now will Dave? Dave I

Thank who joined you, has us for Mike and today’s call. you thank everyone to

departure. transition Director of helping who moments like take few our introduce I us with to Laura was would started, Pecoraro, Operations get Michelle’s to we through the Before Financial a

of been team for of more this have prior has she financial variety the XXXX. also joining finance roles than personally are fill since Laura Laura a to role decade a a with have I We in to Perceptron worked as in pleased Perceptron. part

transition. during certainly have her am to glad assistance I the So

our on we update against today, strategic the to make call long-term will business our continued progress and On you I the plan.

financials overview year XXXX. detailed Following and my provide the comments, the Laura quarter fourth a of for will fiscal

newly our his provide Additionally, business. view Chairman, appointed Freeland, update an on of will the Jay

Following remarks, XXXX. with I our Jay’s will outlook fiscal for conclude

a leading progress number but growth which the for continue well our relationships. business fiscal faced Perceptron, a elements XXXX, way us underlying our strategic was develop we on industry believe while for XXXX and advantage success execute longer bookings challenges provide challenging and a will future. returning to as the significant position the we goals. us in products, deep our to of against entered made term maintaining we Fiscal to committed and team our for We fronts, as dedicated we we of revenue. XXXX energized Despite remained our competitive customer year and in pave our business strong unique fundamental These

Similar factors we to the our its our our very has market scale belief that results. by maintained being influenced significantly current is external large last driven that call, softness

our China. sell to and trade and as of One new systems trade costs, between input believe tensions volatility the We is by United particularly have caused Chinese into the we these States more factors the top than escalating these uncertainty compete that the market. line tensions our impacted new

be to toward moving continue also believe and trends that electric We automotive are impacted we shifting in vehicles. the by industry autonomous

on customers to directly of impacts opted they these contemplate technologies businesses, delay OEM areas future automotive their our the our investments which other in have as business. Specifically, impact

value propositions to the these customer Despite longer to will and timing technology subject Perceptron’s that recognized benefit of headwinds term. allow competitive the years last have changes we program in from we our customer’s our and and remains launches, advantage us shifts new we frequency in over believe macro the business While investments order made remains. in timing, several

customer can customers. which for equate quality, integrated substantial our to improve and Our value cycles, downtime launch reduce product shorten solutions

would like over solutions products, the year. a innovative last our fiscal few moments launched of to now to Turning to take I handful have review we a the

product accuracy our around are allows times customer performance. This our we the measurement of constellation and over replacing several expenses robot-mounted the that improve bar the CMM. is sensor, with market one significant past accuracy that by use time-consuming have we and robotic the light omit talked the able believe opportunities product attracts AccuSite to to a additional Our Through about robot’s significantly to year penetration. with completely expand systems we our correlations offers camera the the of their of emitters AccuSite’s

significant to doing customer. on to global product with a make work We this are large the based continue improvements we

am that will our further enhance success proud a us. and of in improvements progress I this field developments of announcing and operations making for anticipate engineering team very the AccuSite several We critical new product. our

large our additional are for in our enables to We the these the level improves by AccuSite interest believe We space global from be market of leader encouraged solutions. enhancements. AutoGauge this several us dramatically customers of and significant

product initiatives the that in leader non-contact market enhance us We our Gap and position discussed will solutions. improvement solutions. as have also We Flush AutoFit initiatives believe these

the to family, launch We TriCam ability single through added the in are significant And materials we sensor. processing use transparent improvements of made excited laser algorithms. have we designed measure product Helixsolo have next the this our our product evolution for wavelengths image of and the to line. newly different laser represents of Helixsolo our

and of a installation unique customers. headlamps, capabilities four the am improved installation quarter this European Gap proud and by important product this for one us is very team positive the Flushness Flush to dedication quality of at aspect The to new company. hoods, on event display vehicle corners come significant solution. Taken an customers more new OEM the have automotive of in thunders Helixsolo allow of and and our together, all together. of Gap This liftgates our panels including areas first our lamps, been during of capabilities now these were tail measure the our make body, the the of and I

of ACF This and industries our key ACF order industry. is automotive an penetrate the review solutions inline benefit providing AutoGauge solution. development by our measurements appliance next technologies. as believe developed We provide AutoGauge Generation AutoGauge inline of product solutions the us The that automotive. announced AccuSite hand innovative to the at another new our our to for would is this for expanding beyond will and with work Automated I hand genesis evidenced the near-line enabled this our ability We turnkey global automotive beyond in solution manufacturer. will product of enable to win technology to a our Path like believe We solutions AutoGauge enabler broaden will ACF to by recently be

like to robot events reviewing would making I the last more we take time are guidance. which with AutoGuide some And known as commonly solutions,

robotic solutions traditionally results. automated to end the then on manufacturing measure processes where improve of guidance, of has technology suite focused metrology is used the and higher been current Our our automate and complicated

the the the customers. such manufacturing more and the We of enable process to to with robot to that allows customer so and part. are or and our production our existing process Applications precise technology not project execution do part unload not our set us the automating the process fix this of solution assembly. load in leverage capture does require This of augmenting sealer as also the adhesive robotic in simpler requirements have applications, offsetting applications to through resources guidance

Let investments efforts. R&D a moment the in for making to me of growth turn future some are we beyond our

our drive now years It these development in new and In pointed growth addition coming teams the right product have and in will and planning ultimate the is of to through marketing to sales, the and the several the our demand that growth success are for We areas will we these we needed processes keep year, development the marketing past of efforts products. in we and economic invest and continue investing and the that in drive invested business for people are to direction. drive products. sales, us business development collective

Fourth indicator exciting million, for levels increase was increase Americas over and prior these Moving constant excess product basis. more of from in on is for success Quarterly quarter beyond long-term. which regions. I $XX near our headwinds, results higher to our Asia increase year’s and large a to by and in of $XX.X than quarter million, quarter our important were a XX% the represents review bookings part XX% quarter the currency the Despite an briefly of in an our and for to third economic fourth sequential company. bookings the the in want driven quarter. back of the We get developments, intend continued bookings

regulatory with we issues foreign experienced we new We renewed us as booking This enter have uncertainties of activity been year. pace disputes, the with caused exchange the provides currency by in fiscal and trade demand pleased and our optimism headwinds.

was the strategic provided few of that in new a increase Quarterly range XX% was the product of and months revenue we was sequential million, $XX.X change We success from guidance launches with third ago. the continued product success vehicle The uncertain of long-term global growth for despite a at the high-end early see facilitates our quarter wide-sweeping dramatic solve which partners This planning in growth. and revolution our importantly, targets to OEM those for reinforces more production the opportunity for new electric automotive challenges challenges. Perceptron provides industry. the confidence our achieving

OEM guidance robot partners. battery packs month, last two we fact, orders In from different two involving announced

For remain in sustained earnings optimistic we single-digit revenue double-digit growth. high reasons, these and for aspirations growth long-term achieving

new Laura, reaffirm sectors our we are beyond to lead the Before and the developing call opportunities on down want ground I to I further will within automotive the path to in turn confidence automotive.

will plan will opportunities and to continue lead and which execute believe we As stakeholders profitable we few its it company to Laura? the the over for enhanced sustainable growth years, our next value. provide enterprise strategic

in XX.X% fourth from XX.X% and QX of were $XX.X Thanks, decrease sequential the the quarter this year. last from Dave. a of increase quarter million, a past Sales fourth

rate an currency prior $X.X unfavorable to fourth of sales the impact million to quarter year’s compared results exchange quarter foreign Our fourth due dollar-euro primarily when fluctuations. had

of million a adjusted in down in compared year. same Asia fourth for had sales to currency to region Our increase were $X.X year. sales in quarter of $X.X of which Sales Europe $X.X X.X% when the prior the from million QX was of million quarter last

to quarter. impacted due was believe to escalating launches the line new the Dave as the we we part $X.X system tension program inline volatility U.S. $X.X Chinese and of As earlier. million compete caused was Americas region, uncertainty by on delays our mentioned the in the sell market. reflects decrease that in million into has and top trade earlier, primarily discussed for to down and OEMs the softness in Sales This the systems China our between

and Europe a decline was the XXXX. our fiscal partially Americas For from a the Asia fiscal X.X% currency by year. for of sales basis, XXXX, our decrease region region The sales constant On our was were decrease increases offset $XX.X million, year-over-year in in X.X%.

cumulative As guidance Under a retrospective our of we modified any method. retained using retrospectively we as the we the of to prior of X, adopted this this Furthermore, July apply change year not results. method, rules XXX July in as X. earnings recorded ASC impacts directly reminder, XXXX will of the transition to

So, revenues outlined fiscal guidelines, starting under under XXXX, with as QX are guidelines the while old financials XXXX still presented presented the under XXX. being new is

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

we of we $X.X of quarter in fiscal reduced level million amount the revenue the adjustment retained net in new recognized and of amount. changes of XXXX backlog have Included rules, quarter adjustment rules, timing the minimize would company costs revenue by prior years. which million a the fiscal recorded same $X in a Under fourth year of earnings net result $XX.X $XX was recognition to revenue experienced these the the mismatches full a revenue The prior XXXX. that and rule the million fiscal the between adjustment gross fiscal in in million in positive transition XXXX. for do first the transition As had

the of is due a same points period decrease to given and XX.X%, fiscal sales primarily fiscal is quarter less of our the basis XXXX our compared down as XXXX. absorption The for XXX to year was mix as Gross fixed lower revenue which cost of fourth percent profit level.

gross past, reduce taken we margin our costs our is the the throughout have quarterly of consistent we to to fiscal back variable actions margin in discussed half will [indiscernible]. provide We the XXXX coming aspiration for gross term both the fixed have believe longer and As in benefit quarters.

margin customer. negatively invest Furthermore, geography margins at opportunities absorption to improved business gross and for lower affected our lower cost XX.X% technologies identify aspects expand us in fiscal well Despite by to mix to as continue return terms of Our our gross margins shift shareholders. future the look of on revenue sales compared we enabling XXXX prior our in were our factors, our these profit volume to to additional of XX.X% as year. provide to all and in was

the in Engineering to include due to primarily supplies results our $X let’s of XXXX to in $X Next, in the the of million which specialized accruals by to This lower XXXX approximately research development turn approximately set of underachieved fourth including compensation. R&D, as our in targets was and were plans development compensation decrease in due fiscal million compared reduction expense this $X related to operating year fiscal the costs the to long-term employee-related an products. utilized our expenses, decreased items. expenses increase $X.X primarily XXXX XXXX. expenses million offset to Engineering year million the employee-related quarter earn incentive our incentive our short and line fiscal fiscal

and Selling, for fiscal related expenses including million employee-related promotion of change million; of general in for costs our $X.X of to plans. year finance expenses expenses incentive to quarter amortization million increase the XXXX. intangibles definite of $X.X $XX recorded compared change by audit compensation certain $X.X compensation the an and expenses, of is our offset and million and for The fiscal $X.X financing due our cost and related an of million expenses and higher short fees incentive an employee-related accruals $XX.X million, approximately fourth sales, and to million legal lower and to the $X by administrative XXXX. million; million; quarter, compared increased impairment long-term live to $X.X building were expense legal marketing increased of sales quarter. offset the fourth promotion, reduction rent of $X.X of including against reduction year aforementioned is accruals This last of $X.X increase charge spending year’s in as in in due were partially primarily SG&A the decreases the partially to million

million, of was as reporting $X intangible recorded the last down that of change operating we quarter non-cash unit our $X as Operating unit. year. asset loss impacting goodwill million from impairment of fiscal $X.X fourth In XXXX the fiscal non-cash for of balances million a balances impairment the which income is net CMM the well of impacting $X.X XXXX, of charge million

net XX, the income of of special impairment items million. other charges after excluding effect As was June giving impairment and and XXXX, XXXX these goodwill for million to net charges, million Operating assets. of company $X.X had fiscal $X.X intangible both $X.X

at ended rate of X% $X down for fiscal and remains XXXX Our no year year from in XX, XXXX at million June million $X.X our – ended Cash primary year XXXX. effective had generation fiscal at us. the XX tax line end million short-term on was XX.X% XXXX, fiscal to of June year. this borrowings a XX, incentive or balance XX, fiscal March for and $X June at $X.X Cash credit million focus compared last XXXX. outstanding at We the slightly

We continue implemented the several that the initiatives to believe years over positioned we growth. us have well strategic for have long-term past

that, Jay his now call share Jay? turn to Freeland remarks. over With to the prepared Chairman, I our will

the commitments, performance technical by quarter, should prospects in positive. long-term financial competency in driving bookings in very the morning, company unique My and good the in very combined am feel should the Her my executing market particularly forward that on on the achieving time, us the well. good and and the for I company’s with as also everyone. company. I useful is sector the the Sujatha automotive and Like at her. background industries a Perceptron’s including and dedicated add I space believe thank perspective to Kumar as importantly years step Rich encouraged her Laura Perceptron remained growth meaningful of collection serve experiences. service Marz appointment Dave, and transformation Thanks, industry well focus his technology adjacent working penetration, the board am I board’s pleased in to of itself to lend many like serve fourth The board well. look experience the and would to to of for Perceptron very I core to on same our but share goals. our to will background the broadening catalyst with of for be a

be Starting to next company be capabilities, of immediately company’s I progress Perceptron is accelerate towards Dave, further long-term of work the and our of working plenty to will board point an owns goals. and our shape team amazing there with should X the am maximize a starting and going opportunity. today over of your working X Look, portfolio asses that vision of value months, sits done, rest not destination. his to to and the cutting-edge closely be but technologies lot be is there strategic and the I considered Where portfolio. also the the Dave with the to

I will the closing that, back Dave his With remarks. hand for call to over

Jay. Thanks,

Committee of objective. our forward identify in the of profile; the existing end, forward recent top footprint key near-term company’s and said review competitive development As identify markets. leverage goal believe to long-term Perceptron growth before, execute will of channels had growth the by guidance goal opportunities our the individual that growth that our the enhancing sales as the potential confidence the two, I and team providing to number our our We path our continue was and of there robot identify significant those for three, our to field undertaken steps opportunities upsides value and a are product automotive one, other operations Among for led and expert our to remains expand Perceptron our management strategic and to further strong. and path value creation has market I optimize To plan with as is that aggressively in team; well growth and business development opportunities execute significant expand within Strategic with global This organization. maximizing the of on mode have Perceptron’s line addressable Planning activities a shareholders. hiring input

product the will believe enhance coming look of to I years value. AccuSite the initiatives. forward over path said our continuing quarters enabler key and As earlier, be a these forward We we shareholder growth to

the Before of moving review Q&A guidance for would fiscal to to portion outlook the call, our I like XXXX. and

We are fiscal the targeting an of increase to the range XXXX XX% over bookings results. in XX% in

We with range mid operating full to as we to to to would margin XXXX percentage I the thank also our fiscal growth dedication for team continued their expect year for expect single-digit global income like the the Perceptron XXXX company’s and Last, single-digit in success. revenue fiscal in be compared range. mid

over I for now the to will turn Q&A. the call operator

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

morning. bookings the guess in as have was start within concentrated September seen customers you obviously in the it a broad-based, and with far thus June the of nice am bounce handful back you Yes, quarter? Thanks. curious would good that guess just I I I characterize quarter, more what

Yes.

I were many In Asia, So earlier was mentioned more year prior. stuff that I would in few delayed focused Americas, just it we that and a in would the expecting say, across I kept as it say was getting it customers. within broad-based that customers the was

been in give previously any we those go that for can delayed should how are of September or the orders you maybe to about are shaping quarter not? assume left that you still some bookings up us sense had talking And

Yes.

face linear of bookings to our tend all. extremely not out quarter, the within be So, at sporadic, but my

are We opportunities. a chasing of lot

excited are the think ready a I from are about helping call headed. for lot We we new not really Greg booking quarter are are we products am where of you a and where standpoint. We to our us.

scope, details in give Okay, is fair market weeks appliance customers’ view customer, within a of talk global for an the of for there that press size around the opportunity the that, within any mean, additional whether some few us of maybe release your sales and of cycle enough. I about A view least can manufacturer, back or order you you competitors? how that I at orders kind that opportunity is guess a

the – about this think our we so, other in industries. orders one When Greg. is of Yes,

excited it are that about from perspective. We

It order be not excited out It’s to a a about helps it We the with of AutoGauge huge such size think of people nice door our that is in And we product has opportunity that in getting think ACF a perspective to is it’s from there have are quite market. other also excited lots they a execute gets lot the order, by it. large a done. a customer the that of customer foot opportunities. we what have beyond global working it us the and the we bit right

Okay.

a any more what is get that for sort maybe kind market they a of don’t the but changes more time? battery today, of a areas just role to and with know, is then applications more trying of curious maybe and I what other are of EVs over what of gotten, market the sense of importantly, serving of there orders sit of play size inline just in, is So the initial that your you the order for shifts opportunity the you in. the It vehicles, electric have packs some sounds associated can expansion core about validation like as kind

answer couple Yes, am going I a Greg, to things. of

so Having our customers. to the I global industry with with share large want have a customer believe and that of potential globally about us going and a talk world AutoGauge to I also teams are into go to linked to about very the the other we – with get, that’s that you us know we around We markets. something future something newer foot different that, help to us we these door on the help want enable in can some talk ACF to And customers. new back in other these solution. that go can gives First, that wins do

which So in and I our think into it position also has that to you part of leadership am think a value being about believe us asking that that I solutions the we are about, excited about solution AutoGauge about set that. AccuSite market. back helped When push I add

it is gets do the more opportunity, it provide, to So studies time-consuming other OEMs products. with it an just and of that up-sell that value is we our It the really expenses rid can customer. the have correlation to adds value

Good. luck for forward. Alright, that’s it us. and going Thanks good

Yes. Thanks, Greg.

question from B. comes Horn FBR. go Van Riley next Our Please Chris ahead. of

my for Thanks morning. Good taking call.

Good morning, Chris.

single-digit I that growth, don’t you there? just to little you – anymore kind well detail based of as are into wanted if pipeline could a dig we guidance as backlog calling that you maybe you mid see bit, the on is some of partially for mind, the revenue provide

making the that’s we that there are Chris. in Yes, about a are there. some good assumptions Actually, economy question,

economy continues that assuming global U.S. not that are back and slower economies recession. step the grow and albeit do economy the a to the pace We at into European

to in progress have products in and growth they make of some We current years. in will help? year of believe quality assuming that OEMs and are continue the our the the new their also we Does that more past business than invest

mixed from you maybe what operating is correct the mainly And there this going is to to year, mid saw driven as operating up Thanks. does. significantly to a or is it, are it tailwind going or look adjustments at then single-digit help margins, volume that you forecasting well? expense that are be It some are there that that’s way

going Yes, the line I top main say would be the revenue. of is to driver that

of cost us give we a costs work costs just we And departments you product the year. of that middle also, continue next at run-rate will the drop all so looking the initiative announced culture. all on looking regions business of a throughout full impact business and our part know, at costs, We becoming that’s reduction as in May, our to

standpoint jump drops margin obviously that its sell without of is I I continue revenue. appropriate, company don’t some wouldn’t or will a whether through otherwise. there you in from improve is continue directly mind, short to to too. will that amount efficiency costs come to there some the even of if think Yes, bringing to level the [indiscernible] opportunity but the is revenue, the that and we

think I out see would that. even with you margin improvement

that a a are competitive got been this price – component about Thank you competitive are you Okay, really you from mean, bookings what prospective, solution, forecasting a your from obviously you have winning on are in it. are increase for quarter, maybe offering you continued technology is How I differentiated solid competing color. standpoint? the a bookings, seeing

Chris, Yes, that’s good another really question.

and would We have need for few Helixsolo the way four got I Flush improved corners. value leapfrogged new measure and launched helping the Gap been I have algorithm. have don’t the we of against the able measure something our solution competition. to but customers And because definitely that our to as us but globally, same the years about some that with algorithms us underestimate of and I say transparent very over lasers are to been product OEMs. the being will in That’s orders competition And feel tell and us you I investments we materials, with I AccuSite now will of you really that that’s is our delusive as tell the our well our good for that able multi-colored our to competitors ahead technology win past the our the

Thank time. you for much the for Okay, me. it got it. so That’s

Chris. you, thank Yes,

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

call. in for joining year us company you, and full today our your for Nicole. and fourth you everyone for quarter Thank interest Thank our

we us forward look fiscal to in strategic that to plan I strong are We we you and again the it talking certainly implementing provide and towards XXXX pleased with first beyond. resources the long-term remain after will quarter. progress growth made our to we continued confident the need deliver fiscal

is Thank for now concluded. presentation. attending conference today’s The you

now You disconnect. may