Vicor Earnings 2019-09-30

VICR 10Q Quarterly Report

Large accelerated filer

Smaller reporting company

Accelerated filer

Emerging growth company

Non-accelerated filer

Balance Sheet	Income Statement	Cash Flow

10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

0-18277

VICOR CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		04-2742817
(State of Incorporation)		(I.R.S. Employer Identification No.)

25 Frontage Road, Andover, Massachusetts 01810

(Address of Principal Executive Office)

(978)

470-2900

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VICR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes

☐

☒

The number of shares outstanding of each of the issuer’s classes of Common Stock as of

October

2019

was:


Common Stock, $.01 par value			28,645,840
Class B Common Stock, $.01 par value			11,758,218

Table of Contents

VICOR CORPORATION

INDEX


	Page
Part I — Financial Information:
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at September 30, 2019 and December 31, 2018		1
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018		2
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018		3
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018		4

Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2019 and 2018		5

Notes to Condensed Consolidated Financial Statements		6
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		33
Item 4 - Controls and Procedures		33
Part II — Other Information:
Item 1 - Legal Proceedings		35
Item 1A - Risk Factors		35
Item 6 - Exhibits		35
Signature(s)		36

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

Table of Contents

VICOR CORPORATION

Part I – Financial Information

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)


	September 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	81,229		$	70,557
Accounts receivable, less allowance of $65 in 2019 and $224 in 2018		39,987			43,673
Inventories, net		49,688			47,370
Other current assets		5,114			3,460

Total current assets		176,018			165,060
Long-term deferred tax assets, net		241			265
Long-term investments, net		2,576			2,526
Property, plant and equipment, net		56,336			50,432
Other assets		2,739			2,785

Total assets	$	237,910		$	221,068

Liabilities and Equity
Current liabilities:
Accounts payable	$	10,329		$	16,149
Accrued compensation and benefits		9,548			10,657
Accrued expenses		2,335			2,631
S hort-term lease liabilities		1,580			—
Sales allowances		1,076			548
Accrued severance and other charges		—			234
Income taxes payable		57			710
Short-term de ferred revenue		5,843			5,069

Total current liabilities		30,768			35,998
Long-term deferred revenue		1,134			232
Contingent consideration obligations		210			408
Long-term income taxes payable		237			238
Long-term lease liabilities		2,845			102

Total liabilities		35,194			36,978
Commitments and contingencies (Note 12)
Equity:
Vicor Corporation stockholders’ equity:
Class B Common Stock		118			118
Common Stock		404			402
Additional paid-in capital		199,166			193,457
Retained earnings		141,786			129,000
Accumulated other comprehensive loss		(278	)		(394	)
Treasury stock, at cost		(138,927	)		(138,927	)

Total Vicor Corporation stockholders’ equity		202,269			183,656
Noncontrolling interest		447			434

Total equity		202,716			184,090

Total liabilities and equity	$	237,910		$	221,068

See accompanying notes.

-1-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net revenues	$	70,772		$	78,035		$	199,852		$	217,500
Cost of revenues		37,770			39,031			106,647			112,402

Gross margin		33,002			39,004			93,205			105,098
Operating expenses:
Selling, general and administrative		15,443			15,280			45,846			46,493
Research and development		11,507			10,691			34,433			33,220
Severance and other charges		—			(10	)		—			340

Total operating expenses		26,950			25,961			80,279			80,053

Income from operations		6,052			13,043			12,926			25,045
Other income (expense), net:
Total unrealized gains on available-for-sale securities, net		11			32			50			88
Less: portion of gains recognized in other comprehensive income		(10	)		(30	)		(47	)		(82	)

Net credit gains recognized in earnings		1			2			3			6
Other income (expense), net		145			230			670			612

Total other income (expense), net		146			232			673			618

Income before income taxes		6,198			13,275			13,599			25,663
Less: Provision for income taxes		266			227			805			724

Consolidated net income		5,932			13,048			12,794			24,939
Less: Net (loss) income attributable to noncontrolling interest		(5	)		36			8			124

Net income attributable to Vicor Corporation	$	5,937		$	13,012		$	12,786		$	24,815

Net income per common share attributable to Vicor Corporation:
Basic	$	0.15		$	0.32		$	0.32		$	0.62
Diluted	$	0.14		$	0.32		$	0.31		$	0.61
Shares used to compute net income per common share attributable to Vicor Corporation:
Basic		40,332			40,120			40,279			39,769
Diluted		42,194			41,124			41,435			40,645

See accompanying notes.

-2-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
Consolidated net income	$	5,932		$	13,048		$	12,794	$	24,939
Foreign currency translation (losses) gains , net of tax (1)		(11	)		(156	)		74		(129	)
Unrealized gains on available-for-sale securities, net of tax (1)		10			30			47		82

Other comprehensive (loss) income		(1	)		(126	)		121		(47	)

Consolidated comprehensive income		5,931			12,922			12,915		24,892
Less: Comprehensive (loss) income attributable to noncontrolling interest		(6	)		25			13		115

Comprehensive income attributable to Vicor Corporation	$	5,937		$	12,897		$	12,902	$	24,777

(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 September 30, 2019 and 2018. Therefore, there is no income tax benefit (provision) recognized for the three and nine months ended September 30, 2019 and 2018.

See accompanying notes.

-3-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2019			2018
Operating activities:
Consolidated net income	$	12,794		$	24,939
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		7,647			6,870
Stock-based compensation expense, net		2,292			2,604
(Benefit) provision for doubtful accounts		(138	)		91
Decrease in long-term income taxes payable		(1	)		—
Increase in other long-term liabilities		—			7
Increase (decrease) in long-term deferred revenue		902			(54	)
Gain on disposal of equipment		(23	)		(45	)
Deferred income taxes		24			26
Credit gain on available-for-sale securities		(3	)		(6	)
Change in current assets and liabilities, net		(6,955	)		(11,590	)

Net cash provided by operating activities		16,539			22,842
Investing activities:
Additions to property, plant and equipment		(9,122	)		(6,894	)
Proceeds from sale of equipment		23			45
Decrease in other assets		(37	)		(92	)

Net cash used for investing activities		(9,136	)		(6,941	)
Financing activities:
Proceeds from issuance of Common Stock		3,423			8,378
Payment of contingent consideration obligations		(198	)		(208	)

Net cash provided by financing activities		3,225			8,170
Effect of foreign exchange rates on cash		44			(95	)

Net increase in cash and cash equivalents		10,672			23,976
Cash and cash equivalents at beginning of period		70,557			44,230

Cash and cash equivalents at end of period	$	81,229		$	68,206

See accompanying notes.

-4-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)


																Total
										Accumulated						Vicor
	Class B				Additional					Other						Corporation
	Common		Common		Paid-In			Retained		Comprehensive			Treasury			Stockholders’			Noncontrolling			Total
Three months ended September 30, 2019	Stock		Stock		Capital			Earnings		Income (Loss)			Stock			Equity			Interest			Equity
Balance on June 30, 2019	$	118	$	403	$	196,698		$	135,849	$	(278	)	$	(138,927	)	$	193,863		$	453		$	194,316
Sales of Common Stock				1		689											690						690
Stock-based compensation expense						753											753						753
Issuances of stock through employee stock purchase plan						1,026											1,026						1,026
Components of comprehensive income, net of tax:
Net income									5,937								5,937			(5	)		5,932
Other comprehensive income											—						—			(1	)		(1	)

Total comprehensive income																	5,937			(6	)		5,931

Balance on September 30, 2019	$	118	$	404	$	199,166		$	141,786	$	(278	)	$	(138,927	)	$	202,269		$	447		$	202,716

Nine months ended September 30, 2019
Balance on December 31, 2018	$	118	$	402	$	193,457		$	129,000	$	(394	)	$	(138,927	)	$	183,656		$	434		$	184,090
Sales of Common Stock				1		1,117											1,118						1,118
Stock-based compensation expense						2,292											2,292						2,292
Issuances of stock through employee stock purchase plan				1		2,304											2,305						2,305
Other						(4	)										(4	)					(4	)
Components of comprehensive income, net of tax:
Net income									12,786								12,786			8			12,794
Other comprehensive income											116						116			5			121

Total comprehensive income																	12,902			13			12,915

Balance on September 30, 2019	$	118	$	404	$	199,166		$	141,786	$	(278	)	$	(138,927	)	$	202,269		$	447		$	202,716

																Total
										Accumulated						Vicor
	Class B				Additional					Other						Corporation
	Common		Common		Paid-In			Retained		Comprehensive			Treasury			Stockholders’			Noncontrolling			Total
Three months ended September 30, 201 8	Stock		Stock		Capital			Earnings		Income (Loss)			Stock			Equity			Interest			Equity
Balance on June 30, 2018	$	118	$	399	$	188,276		$	109,078	$	(401	)	$	(138,927	)	$	158,543		$	395		$	158,938
Sales of Common Stock				3		2,462											2,465						2,465
Stock-based compensation expense						688											688						688
Issuances of stock through employee stock purchase plan						947

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$29.79	41	$1,222

10-Q	2019-09-30	Quarter: 2019-09-30
10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-25	Earnings, Exhibits
8-K	2019-06-28	Shareholder Vote
8-K	2019-04-23	Earnings, Exhibits
8-K	2019-02-26	Earnings, Exhibits
8-K	2018-10-16	Earnings, Exhibits
8-K	2018-07-24	Earnings, Exhibits
8-K	2018-06-15	Shareholder Vote
8-K	2018-05-30	Sale of Shares, Officers, Exhibits
8-K	2018-04-24	Earnings, Exhibits
8-K	2018-02-22	Earnings, Exhibits

OC	Owens Corning	5,990
MSM	MSC Industrial Direct	3,767
KRNT	Kornit Digital	1,013
RTEC	Rudolph Technologies	679
GPRO	Gopro	546
TAYD	Taylor Devices	38
LBY	Libbey	37
RETO	Reto Eco-Solutions	25
CVV	CVD Equipment	24
SMIT	Schmitt Industries	10

EX-31.1	d811594dex311.htm
EX-31.2	d811594dex312.htm
EX-32.1	d811594dex321.htm
EX-32.2	d811594dex322.htm