Vicor Earnings 2019-06-30

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 June 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

July

23, 2019

was:


Common Stock, $.01 par value			28,519,626
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 June 30, 2019 and December 31, 2018		1
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018		2
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018		3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018		4
Condensed Consolidated Statements of Equity for the three and six months ended June 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		21
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		34
Item 4 - Controls and Procedures		34
Part II — Other Information:
Item 1 - Legal Proceedings		36
Item 1A - Risk Factors		36
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 6 - Exhibits		36
Signature(s)		37
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)


	June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	71,482		$	70,557
Accounts receivable, less allowance of $102 in 2019 and $224 in 2018		38,537			43,673
Inventories, net		54,572			47,370
Other current assets		5,054			3,460

Total current assets		169,645			165,060
Long-term deferred tax assets, net		241			265
Long-term investments, net		2,565			2,526
Property, plant and equipment, net		55,285			50,432
Other assets		2,867			2,785

Total assets	$	230,603		$	221,068

Liabilities and Equity
Current liabilities:
Accounts payable	$	10,819		$	16,149
Accrued compensation and benefits		11,144			10,657
Accrued expenses		2,228			2,631
Operating lease liabilities		1,660			—
Sales allowances		640			548
Accrued severance and other charges		—			234
Income taxes payable		85			710
Deferred revenue		6,581			5,069

Total current liabilities		33,157			35,998
Long-term deferred revenue		196			232
Contingent consideration obligations		306			408
Long-term income taxes payable		236			238
Long-term operating lease liabilities		2,392			102

Total liabilities		36,287			36,978
Commitments and contingencies (Note 12)
Equity:
Vicor Corporation stockholders’ equity:
Class B Common Stock		118			118
Common Stock		403			402
Additional paid-in capital		196,698			193,457
Retained earnings		135,849			129,000
Accumulated other comprehensive loss		(278	)		(394	)
Treasury stock, at cost		(138,927	)		(138,927	)

Total Vicor Corporation stockholders’ equity		193,863			183,656
Noncontrolling interest		453			434

Total equity		194,316			184,090

Total liabilities and equity	$	230,603		$	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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net revenues	$	63,355		$	74,196		$	129,080		$	139,465
Cost of revenues		34,238			38,313			68,877			73,371

Gross margin		29,117			35,883			60,203			66,094
Operating expenses:
Selling, general and administrative		15,030			15,814			30,403			31,213
Research and development		11,706			11,403			22,926			22,529
Severance and other charges		—			350			—			350

Total operating expenses		26,736			27,567			53,329			54,092

Income from operations		2,381			8,316			6,874			12,002
Other income (expense), net:
Total unrealized gains on available-for-sale securities, net		19			33			39			56
Less: portion of gains recognized in other comprehensive income		(18	)		(31	)		(37	)		(52	)

Net credit gains recognized in earnings		1			2			2			4
Other income (expense), net		287			(46	)		525			382

Total other income (expense), net		288			(44	)		527			386

Income before income taxes		2,669			8,272			7,401			12,388
Less: Provision for income taxes		113			363			539			497

Consolidated net income		2,556			7,909			6,862			11,891
Less: Net (loss) income attributable to noncontrolling interest		(7	)		49			13			88

Net income attributable to Vicor Corporation	$	2,563		$	7,860		$	6,849		$	11,803

Net income per common share attributable to Vicor Corporation:
Basic	$	0.06		$	0.20		$	0.17		$	0.30
Diluted	$	0.06		$	0.19		$	0.17		$	0.29
Shares used to compute net income per common share attributable to Vicor Corporation:
Basic		40,275			39,709			40,252			39,594
Diluted		41,081			40,646			41,055			40,406

See accompanying notes.

-2-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Consolidated net income	$	2,556	$	7,909		$	6,862	$	11,891
Foreign currency translation gains (losses) , net of tax (1)		151		(215	)		85		27
Unrealized gains on available-for-sale securities, net of tax (1)		18		31			37		52

Other comprehensive income (loss)		169		(184	)		122		79

Consolidated comprehensive income		2,725		7,725			6,984		11,970
Less: Comprehensive income attributable to noncontrolling interest		4		32			19		90

Comprehensive income attributable to Vicor Corporation	$	2,721	$	7,693		$	6,965	$	11,880

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

See accompanying notes.

-3-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2019			2018
Operating activities:
Consolidated net income	$	6,862		$	11,891
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		4,998			4,539
Stock-based compensation expense, net		1,539			1,916
(Benefit) provision for doubtful accounts		(117	)		65
Decrease in long-term income taxes payable		(2	)		—
Increase in other long-term liabilities		—			5
Decrease in long-term deferred revenue		(36	)		(36	)
Gain on disposal of equipment		(22	)		(16	)
Deferred income taxes		24			25
Credit gain on available-for-sale securities		(2	)		(4	)
Change in current assets and liabilities, net		(8,005	)		(9,857	)

Net cash provided by operating activities		5,239			8,528
Investing activities:
Additions to property, plant and equipment		(5,864	)		(3,558	)
Proceeds from sale of equipment		22			16
Decrease in other assets		(137	)		(67	)

Net cash used for investing activities		(5,979	)		(3,609	)
Financing activities:
Proceeds from issuance of Common Stock		1,707			4,966
Payment of contingent consideration obligations		(102	)		(172	)

Net cash provided by financing activities		1,605			4,794
Effect of foreign exchange rates on cash		60			(23	)

Net increase in cash and cash equivalents		925			9,690
Cash and cash equivalents at beginning of period		70,557			44,230

Cash and cash equivalents at end of period	$	71,482		$	53,920

See accompanying notes.

-4-

Table of Contents

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)


	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 March 31, 2019		118	$	403		$	195,799		$	133,286	$	(436	)	$	(138,927	)	$	190,243		$	449		$	190,692
Sales of Common Stock							137											137						137
Stock-based compensation expense							766											766						766
Other							(4	)										(4	)					(4	)
Components of comprehensive income, net of tax:
Net income										2,563								2,563			(7	)		2,556
Other comprehensive income												158						158			11			169

Total comprehensive income																		2,721			4			2,725

Balance on June 30, 2019		118	$	403		$	196,698		$	135,849	$	(278	)	$	(138,927	)	$	193,863		$	453		$	194,316

Balance on December 31, 2018		118	$	402		$	193,457		$	129,000	$	(394	)	$	(138,927	)	$	183,656		$	434		$	184,090
Sales of Common Stock							428											428						428
Stock-based compensation expense							1,539											1,539						1,539
Issuances of stock through employee stock purchase plan				1			1,278											1,279						1,279
Other							(4	)										(4	)					(4	)
Components of comprehensive income, net of tax:
Net income										6,849								6,849			13			6,862
Other comprehensive income												116						116			6			122

Total comprehensive income																		6,965			19			6,984

Balance on June 30, 2019		118	$	403		$	196,698		$	135,849	$	(278	)	$	(138,927	)	$	193,863		$	453		$	194,316


	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 March 31, 2018		118	$	402		$	183,415		$	101,218	$	(234	)	$	(138,927	)	$	145,992		$	363		$	146,355
Sales of Common Stock				3			3,678											3,681						3,681
Stock-based compensation expense							1,180											1,180						1,180
Other				(6	)		3											(3	)					(3	)
Components of comprehensive income, net of tax:
Net income										7,860								7,860			49			7,909
Other comprehensive loss												(167	)					(167	)		(17	)		(184	)

Total comprehensive income																		7,693			32			7,725

Balance on June 30, 2018		118	$	399		$	188,276		$	109,078	$	(401	)	$	(138,927	)	$	158,543		$	395		$	158,938

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$35.41	40	$1,430

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	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

IRM	Iron Mountain	8,880
CBPO	China Biologic Products Holdings	3,650
EVRI	Everi Holdings	730
FTSV	Forty Seven	585
CINAV	Cole Real Estate Income Strategy	0
BRFH	Barfresh	0
MFST	Medifirst Solutions	0
ORIG	Ocean Rig Udw	0
GPT	Gramercy Property Trust	0
ACLZ	Accelerize	0

EX-31.1	d739191dex311.htm
EX-31.2	d739191dex312.htm
EX-32.1	d739191dex321.htm
EX-32.2	d739191dex322.htm