Dynasil Corporation of America Reports First Quarter Fiscal 2018 Results
Optics Segment Revenue up 12%
NEWTON, Mass., Feb. 13, 2018 /PRNewswire/ -- Dynasil Corporation of America (NASDAQ: DYSL), a developer and manufacturer of optics and photonics products, optical detection and analysis technology and components for the homeland security, medical and industrial markets, today announced revenue of $9.2 million for the first quarter of fiscal year 2018.
"Revenue for our Optics segment showed a 12% increase for the quarter ended December 31, 2017, as compared to the same period last year," said CEO Peter Sulick. "Unfortunately this was offset by an approximately equivalent revenue decrease in our Research segment. Additionally, we were impacted by the Tax Cuts and Jobs Act signed into law in December, 2017. While we continue to analyze the Act, along with our tax accountants, the reduction of the corporate tax rate from 35% to 21% and the foreign earnings and profit tax from our Hilger UK based subsidiary have resulted in our need to adjust the deferred tax asset of $2.7 million which we recognized in our 1st quarter 2017 by approximately $0.7 million, which has been recognized as tax expense during this quarter."
"We released two recent public announcements which we would like to call to your attention," continued Mr. Sulick. "One, we are entering a new line of business for our optics segment – High Efficiency Anti-Reflective (HEAR) and Diamond-Like Carbon (DLC) coatings on infrared materials. We are investing in both personnel, space and capital for this opportunity, which we believe offers substantial revenue growth for us over the next 3-5 years. This startup operational cost is reflected in a portion of the growth of our operating costs for the quarter over the prior year. Second, after extensive testing and data development, our biomedical subsidiary, Xcede Technologies, filed for a First-In-Human clinical trial of our developmental hemostatic patch. This is a significant milestone along the course of the growth in the value of this asset. The trial will be conducted in the Netherlands by a team of experienced surgeons, well versed in hemostasis trials. We anticipate the trial beginning in the calendar second quarter. This is a significant milestone for this development effort. Increased cost for the pretrial activities represent the remaining growth in our G&A costs."
"One final note," added Mr. Sulick, "we are also investing in a prototype line at our Optometrics subsidiary to do optical assembly for certain of our existing customers. As many of you know, we are largely a component supplier. This is an opportunity to offer a higher level of service incorporating our components into frames or even end products for certain customers desirous of subcontracting out work. We anticipate this line being operational during our third quarter and are engaged in seeking revenue opportunities now for this effort."
Certain key metrics by segment for the current quarter and the same quarter last year are presented below:
| Results of Operations for the Three Months Ended December 31, 2017 |
||||
| Optics |
Contract Research |
Biomedical |
Total |
|
| Revenue |
$ 4,942,000 |
$ 4,247,000 |
$ - |
$ 9,189,000 |
| Gross profit |
1,724,000 |
1,851,000 |
- |
3,575,000 |
| GM % |
35% |
44% |
- |
39% |
| Operating expenses |
1,576,000 |
1,723,000 |
445,000 |
3,744,000 |
| Operating income (loss) |
$ 148,000 |
$ 128,000 |
$ (445,000) |
$ (169,000) |
| Results of Operations for the Three Months Ended December 31, 2016 |
||||
| Optics |
Contract Research |
Biomedical |
Total |
|
| Revenue |
$ 4,405,000 |
$ 4,738,000 |
$ - |
$ 9,143,000 |
| Gross profit |
1,574,000 |
1,951,000 |
- |
3,525,000 |
| GM % |
36% |
41% |
- |
39% |
| Operating expenses |
1,328,000 |
1,740,000 |
381,000 |
3,449,000 |
| Operating income (loss) |
$ 246,000 |
$ 211,000 |
$ (381,000) |
$ 76,000 |
Net income (loss) for the three months ended December 31, 2017 was a loss of $0.8 million, or ($0.05) in basic earnings per share, compared with income of $2.8 million, or $0.17 in basic earnings per share, for the quarter ended December 31, 2016. Dynasil recognized a deferred tax asset and a tax related gain of $2.7 million for the quarter ended December 31, 2016 which represented virtually all of the income recognition for that quarter. A portion of that asset was adjusted downward for the quarter ended December 31, 2017 due to the new US Federal tax act, resulting in a recognized expense of $0.7 million.
Upcoming Investor Presentation
In lieu of a first quarter conference call, Dynasil will provide listen-only audio access to their Annual Stockholders Meeting starting at 10:00 a.m. ET on Thursday, February 22, 2018. Following the adjournment of the Meeting, the Company will host an investor presentation led by Chairman, CEO and President Peter Sulick and featuring RMD's President, Dr. Kanai Shah, CEO of Xcede Technologies, Dr. Linda Zuckerman and Dynasil's Executive Vice President of Photonics, Dr. Gary Bishop. Access to the event is available in listen-only mode via the event page or by visiting the Investor Information section of the Company's website at www.dynasil.com. The event also may be accessed by dialing (888) 346-2613 or (412) 902-4252. For interested individuals unable to join the live event, a webcast replay will be available on the Company's website for one year.
About Dynasil
Dynasil Corporation of America (NASDAQ: DYSL) develops and manufactures optics and photonics products, optical detection and analysis technology and components for the homeland security, medical and industrial markets. Combining world-class expertise in research and materials science with extensive experience in manufacturing and product development, Dynasil is commercializing products including dual-mode radiation detection solutions for Homeland Security and commercial applications and sensors for non-destructive testing. Dynasil has an impressive and growing portfolio of issued and pending U.S. patents. The Company is based in Newton, MA, with additional operations in MA, MN, NY, NJ and the United Kingdom. More information about the Company is available at www.dynasil.com.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements regarding future events and our future results are based on current expectations, estimates, forecasts, and projections and the beliefs and assumptions of our management, including, without limitation, our expectations regarding results of operations, our compliance with the financial covenants under our loan agreements with Middlesex Savings Bank and Massachusetts Capital Resource Company, the commercialization of our technology, including the Xcede patch and our dual mode detectors, the expecting timing of the First-in-Human clinical trial of the Xcede patch, the success of efforts to fund Xcede, results of our pre-clinical and planned clinical trials, regulatory approvals, our development of new technologies including at Dynasil Biomedical, the adequacy of our current financing sources to fund our current operations, our growth initiatives, governmental budgetary and funding matters, our capital expenditures and the strength of our intellectual property portfolio. These forward-looking statements may be identified by the use of words such as "plans", "intends," "may," "could," "expect," "estimate," "anticipate," "continue" or similar terms, though not all forward-looking statements contain such words. The actual results of the future events described in such forward looking statements could differ materially from those stated in such forward looking statements due to a number of important factors. These factors that could cause actual results to differ from those anticipated or predicted include, without limitation, our ability to develop and commercialize our products, including obtaining regulatory approvals, the size and growth of the potential markets for our products and our ability to serve those markets, the rate and degree of market acceptance of any of our products, general economic conditions, costs and availability of raw materials and management information systems, our ability to obtain and maintain intellectual property protection for our products, clinical results of Xcede's programs which may not support further development, competition, the loss of key management and technical personnel, our ability to obtain timely payment of our invoices to governmental customers, changing priorities or reductions in government spending, litigation, the effect of governmental regulatory developments, the availability of financing sources, our ability to comply with our debt obligations, our ability to deleverage our balance sheet, our ability to identify and execute on acquisition opportunities and integrate such acquisitions into our business, and seasonality, as well as the uncertainties set forth in the Company's Annual Report on Form 10-K, filed on December 20, 2017, including the risk factors contained in Item 1A, and from time to time in the Company's other filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Dynasil Corporation of America and Subsidiaries |
|||
| Consolidated Balance Sheets (Unaudited) |
|||
| ASSETS |
December 31, 2017 |
September 30, 2017 |
|
| Current Assets |
|||
| Cash and cash equivalents |
$ 961,000 |
$ 2,415,000 |
|
| Accounts receivable, net |
3,750,000 |
3,407,000 |
|
| Costs in excess of billings and unbilled receivables |
1,230,000 |
1,317,000 |
|
| Inventories, net of reserves |
4,491,000 |
4,326,000 |
|
| Prepaid expenses and other current assets |
792,000 |
973,000 |
|
| Total current assets |
11,224,000 |
12,438,000 |
|
| Property, Plant and Equipment, net |
7,377,000 |
7,032,000 |
|
| Other Assets |
|||
| Intangibles, net |
978,000 |
987,000 |
|
| Deferred tax asset |
2,109,000 |
2,642,000 |
|
| Goodwill |
5,951,000 |
5,940,000 |
|
| Security deposits |
58,000 |
58,000 |
|
| Total other assets |
9,096,000 |
9,627,000 |
|
| Total Assets |
$ 27,697,000 |
$ 29,097,000 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
| Current Liabilities |
|||
| Current portion of long-term debt |
$ 1,840,000 |
$ 2,007,000 |
|
| Capital lease obligations, current |
78,000 |
91,000 |
|
| Accounts payable |
1,899,000 |
2,380,000 |
|
| Deferred revenue |
34,000 |
129,000 |
|
| Accrued expenses and other liabilities |
2,336,000 |
2,667,000 |
|
| Total current liabilities |
6,187,000 |
7,274,000 |
|
| Long-term Liabilities |
|||
| Long-term debt, net of current portion |
1,358,000 |
1,045,000 |
|
| Capital lease obligations, net of current portion |
68,000 |
81,000 |
|
| Deferred tax liability |
236,000 |
234,000 |
|
| Other long-term liabilities |
163,000 |
38,000 |
|
| Total long-term liabilities |
1,825,000 |
1,398,000 |
|
| Stockholders' Equity |
|||
| Dynasil stockholders' equity |
18,302,000 |
18,971,000 |
|
| Noncontrolling interest |
1,383,000 |
1,454,000 |
|
| Total stockholders' equity |
19,685,000 |
20,425,000 |
|
| Total Liabilities and Stockholders' Equity |
$ 27,697,000 |
$ 29,097,000 |
| Dynasil Corporation of America |
|||||
| Three Months Ended |
|||||
| December 31, |
|||||
| 2017 |
2016 |
||||
| Net revenue |
$ 9,189,000 |
$ 9,143,000 |
|||
| Cost of revenue |
5,614,000 |
5,618,000 |
|||
| Gross profit |
3,575,000 |
3,525,000 |
|||
| Operating expenses: |
|||||
| Sales and marketing |
279,000 |
266,000 |
|||
| Research and development |
308,000 |
196,000 |
|||
| General and administrative |
3,157,000 |
2,987,000 |
|||
| Total operating expenses |
3,744,000 |
3,449,000 |
|||
| Income (loss) from operations |
(169,000) |
76,000 |
|||
| Interest expense, net |
43,000 |
67,000 |
|||
| Income (loss) before taxes |
(212,000) |
9,000 |
|||
| Income taxes (benefit) |
660,000 |
(2,730,000) |
|||
| Net income (loss) |
(872,000) |
2,739,000 |
|||
| Less: Net loss attributable to noncontrolling interest |
(75,000) |
(69,000) |
|||
| Net income (loss) attributable to common stockholders |
$ (797,000) |
$ 2,808,000 |
|||
| Net income (loss) |
$ (872,000) |
$ 2,739,000 |
|||
| Other comprehensive income (loss): |
|||||
| Foreign currency translation |
35,000 |
(295,000) |
|||
| Total comprehensive loss |
$ (837,000) |
$ 2,444,000 |
|||
| Less: comprehensive income (loss) attributable to |
|||||
| noncontrolling interest |
(75,000) |
(69,000) |
|||
| Total comprehensive income (loss) attributable to |
|||||
| common stockholders |
$ (762,000) |
$ 2,513,000 |
|||
| Basic net income (loss) per common share |
$ (0.05) |
$ 0.17 |
|||
| Diluted net income (loss) per common share |
$ (0.05) |
$ 0.17 |
|||
| Weighted average shares outstanding |
|||||
| Basic |
17,047,690 |
16,808,729 |
|||
| Diluted |
17,047,690 |
16,808,729 |
|||
Contact:
Patty Kehe
Corporate Secretary
Dynasil Corporation of America
Phone: 617.668.6855
[email protected]
SOURCE Dynasil Corporation of America
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