QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of Incorporation) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
$0.01 per share |
The |
☒ |
Smaller reporting company |
|||||
Accelerated filer |
☐ |
Emerging growth company |
||||
Non-accelerated filer |
☐ |
Common Stock, $.01 par value |
||||
Class B Common Stock, $.01 par value |
Page |
||||
1 |
||||
2 |
||||
3 |
||||
4 |
||||
5 |
||||
6 |
||||
18 |
||||
27 |
||||
27 |
||||
29 |
||||
29 |
||||
29 |
||||
30 |
||||
EX-31.1 SECTION 302 CERTIFICATION OF CEO |
||||
EX-31.2 SECTION 302 CERTIFICATION OF CFO |
||||
EX-32.1 SECTION 906 CERTIFICATION OF CEO |
||||
EX-32.2 SECTION 906 CERTIFICATION OF CFO |
March 31, 2020 |
December 31, 2019 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, less allowance of $ |
||||||||
Inventories, net |
||||||||
Other current assets |
||||||||
Total current assets |
||||||||
Long-term deferred tax assets, net |
||||||||
Long-term investments, net |
||||||||
Property, plant and equipment, net |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities and Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued compensation and benefits |
||||||||
Accrued expenses |
||||||||
Short-term lease liabilities |
||||||||
Sales allowances |
||||||||
Income taxes payable |
||||||||
Short-term deferred revenue and customer prepayments |
||||||||
Total current liabilities |
||||||||
Long-term deferred revenue |
||||||||
Contingent consideration obligations |
||||||||
Long-term income taxes payable |
||||||||
Long-term lease liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 1 0 ) |
||||||||
Equity: |
||||||||
Vicor Corporation stockholders’ equity: |
||||||||
Class B Common Stock |
||||||||
Common Stock |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Treasury stock, at cost |
( |
) | ( |
) | ||||
Total Vicor Corporation stockholders’ equity |
||||||||
Noncontrolling interest |
||||||||
Total equity |
||||||||
Total liabilities and equity |
$ | $ | ||||||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Net revenues |
$ | |
$ | |
||||
Cost of revenues |
|
|
||||||
Gross margin |
|
|
||||||
Operating expenses: |
||||||||
Selling, general and administrative |
|
|
||||||
Research and development |
|
|
||||||
Total operating expenses |
|
|
||||||
(Loss) income from operations |
( |
) | |
|||||
Other income (expense), net: |
||||||||
Total unrealized gains on available-for-sale securities, net |
|
|
||||||
Less: portion of gains recognized in other comprehensive income |
( |
) | ( |
) | ||||
Net credit gains recognized in earnings |
|
|
||||||
Other income (expense), net |
|
|
||||||
Total other income (expense), net |
|
|
||||||
(Loss) income before income taxes |
( |
) | |
|||||
Less: (Benefit) provision for income taxes |
( |
) | |
|||||
Consolidated net (loss) income |
( |
) | |
|||||
Less: Net income attributable to noncontrolling interest |
|
|
||||||
Net (loss) income attributable to Vicor Corporation |
$ | ( |
) | $ | |
|||
Net (loss) income per common share attributable to Vicor Corporation: |
||||||||
Basic |
$ | ( |
) | $ | |
|||
Diluted |
$ | ( |
) | $ | |
|||
Shares used to compute net (loss) income per common share attributable to Vicor Corporation: |
||||||||
Basic |
|
|
||||||
Diluted |
|
|
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Consolidated net (loss) income |
$ |
( |
) | $ | |
|||
Foreign currency translation gains (losses), net of tax (1) |
|
( |
) | |||||
Unrealized gains on available-for-sale securities, net of tax (1) |
|
|
||||||
Other comprehensive income (loss) |
|
( |
) | |||||
Consolidated comprehensive (loss) income |
( |
) | |
|||||
Less: Comprehensive income attributable to noncontrolling interest |
|
|
||||||
Comprehensive (loss) income attributable to Vicor Corporation |
$ | ( |
) | $ | |
|||
(1) | The deferred tax assets associated with cumulative foreign currency translation gains and cumulative unrealized gains on available-for-sale securities are completely offset by a tax valuation allowance as of March 31, 2020 and 2019. Therefore, there is |
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Operating activities: |
||||||||
Consolidated net (loss) income |
$ | ( |
) | $ | |
|||
Adjustments to reconcile consolidated net (loss) income to net cash used by operating activities: |
||||||||
Depreciation and amortization |
|
|
||||||
Stock-based compensation expense, net |
|
|
||||||
Provision (benefit) for doubtful accounts |
|
( |
) | |||||
Increase in long-term income taxes payable |
|
|
||||||
Decrease in long-term deferred revenue |
( |
) | ( |
) | ||||
Gain on disposal of equipment |
— |
( |
) | |||||
Deferred income taxes |
( |
) | ( |
) | ||||
Credit gain on available-for-sale securities |
( |
) | ( |
) | ||||
Change in current assets and liabilities, net |
( |
) | ( |
) | ||||
Net cash used by operating activities |
( |
) | ( |
) | ||||
Investing activities: |
||||||||
Additions to property, plant and equipment |
( |
) | ( |
) | ||||
Proceeds from sale of equipment |
— |
|
||||||
Decrease in other assets |
|
( |
) | |||||
Net cash used for investing activities |
( |
) | ( |
) | ||||
Financing activities: |
||||||||
Proceeds from issuance of Common Stock |
|
|
||||||
Payment of contingent consideration obligations |
( |
) | ( |
) | ||||
Net cash provided by financing activities |
|
|
||||||
Effect of foreign exchange rates on cash |
|
( |
) | |||||
Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents at beginning of period |
|
|
||||||
Cash and cash equivalents at end of period |
$ | |
$ | |
||||
Three months ended March 31, 2020 |
Class B Common Stock |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Vicor Corporation Stockholders’ Equity |
Noncontrolling Interest |
Total Equity |
|||||||||||||||||||||||||||
Balance on December 31, 2019 |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||
Sales of Common Stock |
|
|
|
|
||||||||||||||||||||||||||||||||
Stock-based compensation expense |
|
|
|
|||||||||||||||||||||||||||||||||
Issuances of stock through employee stock purchase plan |
|
|
|
|
||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax: |
||||||||||||||||||||||||||||||||||||
Net income |
( |
) | ( |
) | |
( |
) | |||||||||||||||||||||||||||||
Other comprehensive income |
|
|
|
|
||||||||||||||||||||||||||||||||
Total comprehensive income |
( |
) | |
( |
) | |||||||||||||||||||||||||||||||
Balance on March 31, 2020 |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||
Three months ended March 31, 2019 |
Class B Common Stock |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total Vicor Corporation Stockholders’ Equity |
Noncontrolling Interest |
Total Equity |
|||||||||||||||||||||||||||
Balance on December 31, 2018 |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||
Sales of Common Stock |
|
|
|
|||||||||||||||||||||||||||||||||
Stock-based compensation expense |
|
|
|
|||||||||||||||||||||||||||||||||
Issuances of stock through employee stock purchase plan |
|
|
|
|
||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax: |
||||||||||||||||||||||||||||||||||||
Net income |
|
|
|
|
||||||||||||||||||||||||||||||||
Other comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Total comprehensive income |
|
|
|
|||||||||||||||||||||||||||||||||
Balance on March 31, 2019 |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||
March 31, 2020 |
December 31, 2019 |
|||||||
Raw materials |
$ | |
$ | |
||||
Work-in-process |
|
|
||||||
Finished goods |
|
|
||||||
Net balance |
$ | |
$ | |
||||
Gross |
Gross |
Estimated |
||||||||||||||
Unrealized |
Unrealized |
Fair |
||||||||||||||
March 31, 2020 |
Cost |
Gains |
Losses |
Value |
||||||||||||
Failed Auction Security |
$ | |
$ | — |
$ | |
$ | |
||||||||
Gross |
Gross |
Estimated |
||||||||||||||
Unrealized |
Unrealized |
Fair |
||||||||||||||
December 31, 2019 |
Cost |
Gains |
Losses |
Value |
||||||||||||
Failed Auction Security |
$ | |
$ | — |
$ | |
$ | |
||||||||
Estimated |
||||||||
Cost |
Fair Value |
|||||||
Due in twenty to forty years |
$ | |
$ | |
||||
2020 |
2019 |
|||||||
Balance at the beginning of the period |
$ | |
$ | |
||||
Reductions in the amount related to credit gain for which other-than-temporary impairment was not previously recognized |
( |
) | ( |
) | ||||
Balance at the end of the period |
$ | |
$ | |
||||
Using |
||||||||||||||||
Quoted Prices Markets (Level |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Fair Value as of March 31, 2020 |
|||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Long-term investments: |
||||||||||||||||
Failed Auction Security |
— |
— |
|
|
||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration obligations |
— |
— |
( |
) | ( |
) |
Using |
||||||||||||||||
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Fair Value as of December 31, 2019 |
|||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | |
$ | — |
$ | — |
$ | |
||||||||
Long-term investments: |
||||||||||||||||
Failed Auction Security |
— |
— |
|
|
||||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration obligations |
— |
— |
( |
) | ( |
) |
Fair Value |
Valuation Tech nique |
Unobservable Input |
Weighted Average |
|||||||||
Failed Auction Security |
$ | |
|
|
|
% | ||||||
|
|
% | ||||||||||
|
|
% | ||||||||||
|
|
% | ||||||||||
|
|
% |
Balance at the beginning of the period |
$ | |||
Credit gain on available-for-sale security included in Other income (expense), net |
||||
Gain included in Other comprehensive income |
||||
Balance at the end of the period |
$ | |||
Balance at the beginning of the period |
$ |
|||
Payments |
( |
) | ||
Balance at the end of the period |
$ | |||
Three Months Ended March 31, 2020 |
||||||||||||
Brick Products |
Advanced Products |
Total |
||||||||||
United States |
$ | $ | $ | |||||||||
Europe |
||||||||||||
Asia Pacific |
||||||||||||
All other |
||||||||||||
$ | $ | $ | ||||||||||
Three Months Ended March 31, 2019 |
||||||||||||
Brick Products |
Advanced Products |
Total |
||||||||||
United States |
$ | $ | $ | |||||||||
Europe |
||||||||||||
Asia Pacific |
||||||||||||
All other |
||||||||||||
$ | $ | $ | ||||||||||
Three Months Ended March 31, 2020 |
||||||||||||
Brick Products |
Advanced Products |
Total |
||||||||||
Direct customers, contract manufacturers and non-stocking distributors |
$ | |
$ | |
$ | |
||||||
Stocking distributors, net of sales allowances |
|
|
|
|||||||||
Non-recurring engineering |
|
|
|
|||||||||
Other |
— |
|
|
|||||||||
$ | |
$ | |
$ | |
|||||||
Three Months Ended March 31, 2019 |
||||||||||||
Brick Products |
Advanced Products |
Total |
||||||||||
Direct customers, contract manufacturers and non-stocking distributors |
$ | |
$ | |
$ | |
||||||
Stocking distributors, net of sales allowances |
|
|
|
|||||||||
Non-recurring engineering |
|
|
|
|||||||||
Royalties |
|
|
|
|||||||||
Other |
— |
|
|
|||||||||
$ | |
$ | |
$ | |
|||||||
March 31, 2020 |
December 31, 2019 |
Change |
||||||||||
Accounts receivable |
$ | |
$ | |
$ | |
||||||
Short-term deferred revenue and customer prepayments |
( |
) | ( |
) | ( |
) | ||||||
Long-term deferred revenue |
( |
) | ( |
) | |
|||||||
Deferred expenses |
|
|
|
|||||||||
Sales allowances |
( |
) | ( |
) | ( |
) |
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
Cost of revenues |
$ | |
$ | |
||||
Selling, general and administrative |
|
|
||||||
Research and development |
|
|
||||||
Total stock-based compensation |
$ | |
$ | |
||||
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
Stock options |
$ | |
$ | |
||||
ESPP |
|
|
||||||
Total stock-based compensation |
$ | |
$ | |
||||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
(Benefit) provision for income taxes |
$ | ( |
) | $ | ||||
Effective income tax rate |
( |
)% | % |
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Numerator: |
||||||||
Net (loss) income attributable to Vicor Corporation |
$ | ( |
) | $ | ||||
Denominator: |
||||||||
Denominator for basic net (loss) income per share-weighted average shares (1) |
||||||||
Effect of dilutive securities: |
||||||||
Employee stock options (2) |
— |
|||||||
Denominator for diluted net (loss) income per share – adjusted weighted-average shares and assumed conversions |
||||||||
Basic net (loss) income per share |
$ | ( |
) | $ | ||||
Diluted net (loss) income per share |
$ | ( |
) | $ | ||||
(1) | Denominator represents weighted average number of shares of Common Stock and Class B Common Stock outstanding. |
(2) | Options to purchase |
• | Net revenues decreased 3.5% to $63,401,000 for the first quarter of 2020, from $65,725,000 for the first quarter of 2019, despite a 5.2% increase in bookings in the first three months of 2020 compared to the first three months of 2019.Advanced Products revenues decreased 6.4% and Brick Products revenues decreased 2.4% in each case compared to the first quarter of 2019. |
• | Export sales, as a percentage of total revenues, represented approximately 47.1% in the first quarter of 2020 and 55.5% in the first quarter of 2019. |
• | Gross margin decreased to $27,331,000 for the first quarter of 2020 from $31,086,000 for the first quarter of 2019, and gross margin, as a percentage of net revenues, decreased to 43.1% for the first quarter of 2020 from 47.3% for the first quarter of 2019. |
• | Backlog, representing the total of orders for products received for which shipment is scheduled within the next 12 months, was approximately $110,832,000 at the end of the first quarter of 2020, as compared to $103,832,000 at the end of the first quarter of 2019 and $104,164,000 at the end of the fourth quarter of 2019. |
• | Operating expenses for the first quarter of 2020 increased $3,111,000, or 11.7%, to $29,704,000 from $26,593,000 for the first quarter of 2019, due to an increase in research and development expense of $2,115,000 and an increase in selling, general, and administrative expenses of $996,000. |
• | We reported a net loss for the first quarter of 2020 of $(1,735,000), or $(0.04) per share, compared to net income of $4,286,000, or $0.10 per diluted share, for the first quarter of 2019. |
• | For the three months ended March 31, 2020, depreciation and amortization totaled $2,711,000, and capital additions totaled $2,999,000, compared to $2,445,000 and $3,322,000, respectively, for the three months ended March 31, 2019. |
• | Inventories increased by approximately $4,165,000, or 8.5%, to $53,352,000 at March 31, 2020, compared to $49,187,000 at December 31, 2019. |
Decrease |
||||||||||||||||
2020 |
2019 |
$ |
% |
|||||||||||||
Brick Products |
$ | 45,517 |
$ | 46,625 |
$ | (1,108 |
) | (2.4 |
)% | |||||||
Advanced Products |
17,884 |
19,100 |
(1,216 |
) | (6.4 |
)% | ||||||||||
Total |
$ | 63,401 |
$ | 65,725 |
$ | (2,324 |
) | (3.5 |
)% | |||||||
Increase (decrease) |
||||||||
Legal fees |
$ | 564 |
161.6 |
%(1) | ||||
Compensation |
456 |
4.6 |
%(2) | |||||
Bad debt expense |
131 |
148.9 |
% | |||||
Depreciation and amortization |
118 |
18.4 |
% | |||||
Outside services |
101 |
23.8 |
% | |||||
Travel expense |
(145 |
) | (21.9 |
)%(3) | ||||
Business taxes and bank fees |
(164 |
) | (58.6 |
)%(4) | ||||
Other, net |
(65 |
) | (2.0 |
)% | ||||
$ | 996 |
6.5 |
% | |||||
(1) | Increase primarily attributable to an increase in outside legal services associated with the December 2019 ransomware incident. |
(2) | Increase primarily attributable to annual compensation adjustments in May 2019 and an increase in headcount. |
(3) | Decrease primarily attributable to decreased travel by our sales and marketing personnel, notably due to the COVID-19 pandemic. |
(4) | Decrease primarily attributable to a decrease in certain business taxes. |
Increase (decrease) |
||||||||
Project and pre-production materials |
$ | 970 |
61.6 |
%(1) | ||||
Compensation |
575 |
6.9 |
%(2) | |||||
Deferred costs |
364 |
74.9 |
%(3) | |||||
Overhead absorption |
89 |
29.3 |
% | |||||
Supplies expense |
87 |
40.8 |
% | |||||
Other, net |
30 |
1.5 |
% | |||||
$ | 2,115 |
18.9 |
% | |||||
(1) | Increase primarily attributable to increased prototype development costs for Advanced Products. |
(2) | Increase primarily attributable to annual compensation adjustments in May 2019 and an increase in headcount. |
(3) | Increase primarily attributable to a decrease in deferred costs capitalized for certain non-recurring engineering projects for which the related revenues have been deferred. |
2020 |
2019 |
Increase (decrease) |
||||||||||
Rental income |
$ | 198 |
$ | 198 |
$ | — |
||||||
Interest income |
53 |
83 |
(30 |
) | ||||||||
Gain on disposals of equipment |
— |
9 |
(9 |
) | ||||||||
Foreign currency losses, net |
(121 |
) | (58 |
) | (63 |
) | ||||||
Other, net |
18 |
7 |
11 |
|||||||||
$ | 148 |
$ | 239 |
$ | (91 |
) | ||||||
2020 |
2019 |
|||||||
(Benefit) provision for income taxes |
$ | (494 |
) | $ | 426 |
|||
Effective income tax rate |
(22.2 |
)% | 9.0 |
% |
Increase (decrease) |
||||
Cash and cash equivalents |
$ | (1,917 |
) | |
Accounts receivable |
3,164 |
|||
Inventories, net |
4,165 |
|||
Other current assets |
712 |
|||
Accounts payable |
(4,435 |
) | ||
Accrued compensation and benefits |
329 |
|||
Accrued expenses |
(71 |
) | ||
Short-term lease liabilities |
150 |
|||
Sales allowances |
(40 |
) | ||
Income taxes payable |
23 |
|||
Short-term deferred revenue |
(1,246 |
) | ||
$ | 834 |
|||
Exhibit Number |
Description | |||
31.1 |
||||
31.2 |
||||
32.1 |
||||
32.2 |
||||
101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
VICOR CORPORATION | ||||||
Date: May 4, 2020 |
By: |
/s/ Patrizio Vinciarelli | ||||
Patrizio Vinciarelli | ||||||
Chairman of the Board, President and | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: May 4, 2020 |
By: |
/s/ James A. Simms | ||||
James A. Simms | ||||||
Vice President, Chief Financial Officer | ||||||
(Principal Financial Officer) |