Tech/Ops Sevcon Inc (TO, Financial) filed Quarterly Report for the period ended 2009-06-27.
TECH/OPS SEVCON INC. designs manufactures sells and services under the Sevcon name solid-state products which control motor speed and acceleration for battery powered electric vehicles in a number of applications primarily electric fork lift trucks aerial lifts and underground coal-mining equipment. Through another subsidiary located in the United Kingdom Tech/Ops Sevcon manufactures special metalized film capacitors for electronics applications. Tech/Ops Sevcon Inc has a market cap of $8.2 million; its shares were traded at around $2.4635 with and P/S ratio of 0.2. Tech/Ops Sevcon Inc had an annual average earning growth of 76.9% over the past 5 years.
Sales in the third quarter ended June 27, 2009 declined by $5,955,000, or 59%, to $4,060,000 compared to $10,015,000 in the same quarter last year, as customers continue to reduce existing inventory. Volumes shipped were 56% lower. Foreign currency fluctuations, mainly the strengthening of the US dollar against the British Pound and the Euro reduced reported sales by $366,000, or 3%, compared to the third quarter of 2008. In the controls business, volumes shipped were lower in all geographic areas in which the Company operates, except for China. The most significant reduction was in the global demand for industrial vehicles. The Company has seen some stabilization in its markets, which has led to a modest recent recovery in order intake. In addition, new product introduction has led to customer gains in on- road vehicle applications since the beginning of the third quarter; however, there cannot yet be any assurance that these gains will translate into increased sales. In the capacitor business, volumes shipped were 3% lower than during the third quarter last year, which was largely due to lower demand from customers in the industrial sector. Currency changes, mainly the strengthening of the US Dollar against the British Pound, reduced reported total sales in the capacitor business by $105,000, or 20%, from the third quarter of 2008.
Gross profit of $1,481,000 was 36.5% of sales in the third quarter compared to $3,216,000 or 32.1% of sales in the same quarter last year. In June of 2008 the Company took action to close its remaining controls manufacturing activities in the UK and reduce associated overheads. A combination of the savings realized from this action, negotiated material cost reductions and foreign currency fluctuations improved the gross margin percentage. The reduction in gross profit of $1,735,000 was largely due to the lower volume of products shipped, partially offset by the savings achieved in production-related overheads and lower material costs. Foreign currency fluctuations increased reported gross profit by $113,000.
Selling, research and administrative expenses and restructuring charges in the third quarter of 2009 were $2,050,000, a reduction of $1,557,000, or 43%, compared to the same period last year when the Company incurred a restructuring charge of $700,000. Foreign currency fluctuations reduced operating expense by $318,000 or 9%, compared with the same quarter last year. Excluding the impact of currency fluctuations, selling, research and administrative expenses were $539,000, or 15%, lower in the third quarter compared to the same period last year due largely to restructuring actions taken in the third quarter of 2008 and the second quarter of 2009.
There was an operating loss in the third quarter of $569,000, compared with an operating loss of $391,000 in the same period last year when the Company incurred a restructuring charge of $700,000. Lower shipment volumes reduced operating profit by $2,299,000. Foreign currency fluctuations had an overall positive impact of $430,000 in the quarter. Lower overhead costs in cost of sales and lower selling, research and administrative expenses and restructuring charges improved operating profit by $1,691,000 compared to the same quarter last year. In the capacitor business segment, there was an operating profit of $7,000 compared with an operating loss of $82,000 in the third quarter last year.
In the third quarter, interest expense was $5,000, a reduction of $24,000 compared to the prior year. There was a foreign currency gain of $79,000 in the third quarter of 2009 compared to a loss of $27,000 in the same period last year. The foreign currency gain in the third quarter of 2009 was due to the weakening of the US Dollar compared to the British Pound and the Euro during the quarter.
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TECH/OPS SEVCON INC. designs manufactures sells and services under the Sevcon name solid-state products which control motor speed and acceleration for battery powered electric vehicles in a number of applications primarily electric fork lift trucks aerial lifts and underground coal-mining equipment. Through another subsidiary located in the United Kingdom Tech/Ops Sevcon manufactures special metalized film capacitors for electronics applications. Tech/Ops Sevcon Inc has a market cap of $8.2 million; its shares were traded at around $2.4635 with and P/S ratio of 0.2. Tech/Ops Sevcon Inc had an annual average earning growth of 76.9% over the past 5 years.
Highlight of Business Operations:
The Company s pension plans are significant relative to the size of the Company. Pension plan assets were $18,162,000 at September 30, 2008 and the total assets of the Company were $19,755,000 at that date ($15,458,000 at June 27, 2009). Although the plan assets are not included in the assets of the Company, they were equal to 92% of the Company s total assets at September 30, 2008 compared to 117% of the Company s total assets at June 27, 2009. In accordance with SFAS No. 158 the funded status of the pension plans (plan assets less the accumulated benefit obligation) is recognized in the Company s balance sheet as “Liability for pension benefits”, which amounted to $283,000 at June 27, 2009, compared to $378,000 at September 30, 2008.Sales in the third quarter ended June 27, 2009 declined by $5,955,000, or 59%, to $4,060,000 compared to $10,015,000 in the same quarter last year, as customers continue to reduce existing inventory. Volumes shipped were 56% lower. Foreign currency fluctuations, mainly the strengthening of the US dollar against the British Pound and the Euro reduced reported sales by $366,000, or 3%, compared to the third quarter of 2008. In the controls business, volumes shipped were lower in all geographic areas in which the Company operates, except for China. The most significant reduction was in the global demand for industrial vehicles. The Company has seen some stabilization in its markets, which has led to a modest recent recovery in order intake. In addition, new product introduction has led to customer gains in on- road vehicle applications since the beginning of the third quarter; however, there cannot yet be any assurance that these gains will translate into increased sales. In the capacitor business, volumes shipped were 3% lower than during the third quarter last year, which was largely due to lower demand from customers in the industrial sector. Currency changes, mainly the strengthening of the US Dollar against the British Pound, reduced reported total sales in the capacitor business by $105,000, or 20%, from the third quarter of 2008.
Gross profit of $1,481,000 was 36.5% of sales in the third quarter compared to $3,216,000 or 32.1% of sales in the same quarter last year. In June of 2008 the Company took action to close its remaining controls manufacturing activities in the UK and reduce associated overheads. A combination of the savings realized from this action, negotiated material cost reductions and foreign currency fluctuations improved the gross margin percentage. The reduction in gross profit of $1,735,000 was largely due to the lower volume of products shipped, partially offset by the savings achieved in production-related overheads and lower material costs. Foreign currency fluctuations increased reported gross profit by $113,000.
Selling, research and administrative expenses and restructuring charges in the third quarter of 2009 were $2,050,000, a reduction of $1,557,000, or 43%, compared to the same period last year when the Company incurred a restructuring charge of $700,000. Foreign currency fluctuations reduced operating expense by $318,000 or 9%, compared with the same quarter last year. Excluding the impact of currency fluctuations, selling, research and administrative expenses were $539,000, or 15%, lower in the third quarter compared to the same period last year due largely to restructuring actions taken in the third quarter of 2008 and the second quarter of 2009.
There was an operating loss in the third quarter of $569,000, compared with an operating loss of $391,000 in the same period last year when the Company incurred a restructuring charge of $700,000. Lower shipment volumes reduced operating profit by $2,299,000. Foreign currency fluctuations had an overall positive impact of $430,000 in the quarter. Lower overhead costs in cost of sales and lower selling, research and administrative expenses and restructuring charges improved operating profit by $1,691,000 compared to the same quarter last year. In the capacitor business segment, there was an operating profit of $7,000 compared with an operating loss of $82,000 in the third quarter last year.
In the third quarter, interest expense was $5,000, a reduction of $24,000 compared to the prior year. There was a foreign currency gain of $79,000 in the third quarter of 2009 compared to a loss of $27,000 in the same period last year. The foreign currency gain in the third quarter of 2009 was due to the weakening of the US Dollar compared to the British Pound and the Euro during the quarter.
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