Sevcon Announces Fifth Consecutive Quarter Of Sequential Revenue Growth And Third Straight Quarter Of Growth
MAY 20 2014 BY MARK KANE
Sevcon recently reported financial results for the first quarter of 2014. Revenues increased to $9.2 million from $8.0 million in Q1 2013 and the company was able to see some net profits of $162,000.
Sales of motor controllers are growing, which is a good indication on the overall condition of the small electric vehicles market. Growth is still lower than expected though.
“This increase was mainly in our controls business and largely reflected higher sales to customers in our traditional off-road markets of aerial work platform and fork lift truck, as well as higher demand for on-road applications. Sales growth of 12% in both the off-road and four-wheel on-road sectors of our business combined was lower than anticipated although we saw growth in controller shipments in excess of 30% for two-wheel on-road applications such as electric scooters and motorcycles”
Interesting is that electric motorcycles from Brammo and Zero are driving the growth for North America:
“Sales increased 7% from the second quarter last year in North America driven largely by an increase in sales of 160% to two-wheel, on-road OEM’s which more than offset a combined reduction in sales of 32% in the traditional areas of aerial work platform, airport ground support and the mining sector.”
Sevcon is now considering raising equity capital to solve the strategic challenge of scaling the business.
President and CEO Matt Boyle said:
“Sevcon’s revenue growth in the second quarter was driven by higher product shipments across the majority of our markets and in all three of the geographic regions we serve. Sales for the second quarter increased mid single digits year-over-year in both Europe and the United States, reflecting demand growth in our traditional off-road markets, primarily for fork-lift truck and aerial work platform applications. This was a particularly strong quarter for us in Asia, where we posted high double-digit sales growth, year-over-year. This growth continued to be driven primarily by aerial work platform and fork lift truck demand in Japan and China. In addition, we are beginning to benefit from our new business initiatives in the on-road sector in Asia, primarily in China.”
“The past three months marked Sevcon’s fifth consecutive quarter of sequential revenue growth and our third straight quarter of growth, year-over-year. We believe that underlying demand is slowly gathering strength in the majority of our markets worldwide. Our lead times and order visibility are continuing to improve, and our portfolio of customer relationships is expanding. Although we are investing in Sevcon’s future growth, our business continues to benefit from having a low-cost, flexible manufacturing model. As a result, we believe that Sevcon is positioned to deliver significant margin leverage on incremental sales as conditions in our markets improve.”
“We believe the market will begin a meaningful shift towards larger electric and hybrid vehicles, and that inflection point may well be closer than many people think. Our product roadmap has the potential to put us in the sweet spot for this next phase of EV market growth. Our key strategic challenge is scaling the business to capture this opportunity on a timely basis, which we may accomplish organically or through acquisitions of other businesses, or both. Meeting this challenge means that we will need a stronger balance sheet to fuel accelerated growth. We are considering raising equity capital by means of a rights offering or other approach, and we are developing a capital allocation and investment strategy that will help us to achieve our goals.”