Victoria, British Columbia, Canada – Tuesday, August 14, 2007 – Carmanah Technologies Corporation (TSX: CMH) announces its results for the six months ended June 30, 2007.
Highlights for the Quarter
- Q2 2007 revenues of $15,366,000, compared to Q2 2006 at $15,842,000, representing a 3% decline over the period;
- YTD revenues of $30,551,000, compared to $28,432,000, representing a 7.5% increase over the period;
- Q2 2007 gross margin at 20% and YTD gross margin at 27.5%;
- Q2 2007 EBITA of ($4,024,000) and YTD EBITA of ($4,347,000);
- Q2 2007 net earnings of ($3,049,000) and YTD net earnings of ($3,513,000);
- Sales order backlog of $4,460,000 going into Q3 2007.
Summary of Results
“During Q2 2007, Carmanah faced challenges on many fronts,” states Art Aylesworth, Carmanah’s CEO. “The sudden rise of the Canadian dollar resulted in lower sales, lower margins, as well as losses from a working capital revaluation; the combined impact on the quarter is estimated at $1.5 million pre-tax as well as a 5% reduction in gross margin. Carmanah’s operating costs also increased disproportionately, as the Company ramped up in support of anticipated growth. In addition, as part of an ongoing analysis of inventories, Carmanah recorded an additional inventory allowance of $660,000 in June 2007 to allow for slow moving and obsolete inventory.”
“The net result was unsatisfactory performance for Q2 2007 and an unsettling time for Carmanah and its shareholders,” states Aylesworth. “However, we believe that shareholders should not lose sight of the fact Carmanah is uniquely positioned in one of the most significant growth areas in technology. Our differentiated, higher margin offerings in energy-efficient, renewable technologies have a great future. We are making the changes in our executive management depth, operations and execution to ensure that we maintain leadership in this space.”
Revenues for the three months ended June 30, 2007 were $15.4 million compared to $15.8 million in the prior year. Revenues for the six months ended were $30.6 million compared to $28.4 million in the prior year. The reduction in year-over-year Q2 sales is primarily due to the decline of the US dollar.
A summary of revenues from each of Carmanah’s technology groups is as follows:
| Sales by Group ($ thousands) | ||||||
| 3 Months Ended June 30 | 6 Months Ended June 30 | |||||
| 2007 | 2006 | Change | 2007 | 2006 | Change | |
| $15,365 | $15,842 | ($477) | $30,551 | $28,432 | $2,119 | |
| Solar LED Lighting | $5,893 | $5,832 | $61 | $12,918 | $11,221 | $1,697 |
| Solar Power Systems | 8,308 | 8,639 | (331) | 15,519 | 14,939 | 580 |
| LED Sign Group | 1,164 | 1,371 | (207) | 2,114 | 2,272 | (158) |
The Company uses certain non-GAAP measures to assist in assessing its financial performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. One such non-GAAP measure used for assessing financial performance is earnings before interest, taxes and amortization (EBITA).
| EBITA Reconciliation | Three months ended March 31, |
Six months ended June 30, |
||
| 2007 | 2006 | 2007 | 2006 | |
| EBITA | ($4,024,000) | $774,000 | ($4,347,000) | $901,000 |
| Net earnings – as reported | ($3,049,000) | $124,000 | ($3,513,000) | $100,000 |
| Add back (deduct): | ||||
| Interest Income | (23,000) | (39,000) | (62,000) | (119,000) |
| Income taxes | (1,264,000) | 358,000 | (1,342,000) | 407,000 |
| Amortization of equipment and leaseholds |
245,000 | 263,000 | 438,000 | 385,000 |
| Amortization of intangibles |
67,000 | 68,000 | 132,000 | 128,000 |
EBITA for Q2 2007 was ($4,024,000), compared to $774,000 for the same period in 2006. YTD EBITA was ($4,347,000), compared with $901,000 for the same period in 2006.
Loss before tax for Q2 2007 was ($4,313,000), compared to $481,000 for the same period in 2006. YTD loss before tax was ($4,856,000), compared to $507,000 for the same period in 2006.
Net earnings/loss for Q2 2007 was ($3,049,000), compared to a $124,000 for same period in the prior year. Net earnings/loss for the six months ended June 30, 2007 was ($3,513,000) compared to $100,000 for the same period in the prior year.
Progress During the Quarter
- In May 2007, Carmanah welcomed Philippe Favreau as Chief Operating Officer. His arrival marked a significant increase in experience and capabilities for the organization.
- In May 2007, Carmanah unveiled the i-PANEL™ solar illuminated advertising panel to the North American outdoor advertising industry. This technology significantly changes the value proposition for illuminated bus shelter advertising and other outdoor media.
- In June 2007, Carmanah unveiled the first of its family of general illumination products targeting the largest addressable market in the Company’s history. This release was done in parallel with the launch of the a series of solar engines -self-contained solar power systems designed to operate lighting and non-lighting applications.
- In June 2007, Carmanah announced a leadership succession plan whereby current CEO Art Aylesworth will move to Chairman of the Board. A search is underway for a new CEO with global experience and a track record of building companies from our current size to the targets outlined in our 5 year plan.
- With improved working capital management, Carmanah’s liquidity position improved over Q2 2007 to ($0.1) million at the end Q2, compared to ($2.0) million in the prior quarter.
Supplemental Information
Conference Call Details
A conference call will be held today at 5:00PM Eastern (2:00PM Pacific) to discuss the Q2 2007 results. To participate on the conference call, please call toll-free 1-800-525-6384 (domestic) or +1-780-409-1668 (international) approximately five to ten minutes prior to the start time. When prompted for the Conference ID, please enter 13359171.
A replay of this conference call is available approximately two hours following the call’s completion. To access this recording, call toll-free 1-888-214-7699 (domestic) or +1-402-220-1554 (international). When prompted for the passcode, please enter 13359171. In addition, a recording of the conference will accessible via Carmanah’s corporate website at www.carmanah.com within three business days.
Change in U.S. Reporting Status
Based on a review of the costs of compliance with U.S. reporting requirements, Carmanah’s Board of Directors has elected to suspend the Company’s 20-F registration by filing a notice on Form 15 with the U.S. Securities and Exchange Commission (SEC). The filing will suspend Carmanah’s U.S. filing requirements for a period of 90 days, and will take final effect thereafter subject to any comments from the SEC.
Carmanah will continue to file continuous disclosure reports in accordance with Canadian reporting requirements. The Company’s filings can be viewed on SEDAR, the Canadian electronic filing service, at www.sedar.com. Information on the trading of Carmanah’s shares by U.S. dealers will continue to be available on the U.S. Pink Sheets under the symbol CMHXF. U.S. investors should contact their investment broker for information on how to buy and sell Carmanah’s common shares.
About Carmanah Technologies Corporation
With more than 250,000 installations worldwide, Carmanah is one of the world’s premier suppliers of renewable and energy-efficient technologies, including solar-powered LED lighting, solar power systems & equipment and LED illuminated signage.
Carmanah is headquartered in Victoria, British Columbia, Canada and has branch offices and/or sales representation in 11 cities across Canada, the United States and the United Kingdom. The Company is publicly traded with common shares listed on the Toronto Stock Exchange under the symbol “CMH” and on the Berlin and Frankfurt Stock Exchanges under the symbol “QCX”. For more information, please visit www.carmanah.com.
On Behalf of the Board of Directors
Carmanah Technologies Corporation
“Praveen Varshney”
Praveen Varshney, Director
For further information, please contact:
Investor Relations:
Mark Komonoski
Director of Investor Relations
Carmanah Technologies Corporation
Tel: (403) 470-8384
Toll-Free: 1-877-255-8483
Media:
David Davies
Public Relations
Tel: (250) 382-4332
This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties are described under the caption “Note Regarding Forward-looking Statements” and “Key Information – Risk Factors” and elsewhere in Carmanah’s Annual Report for the fiscal year ended December 31, 2006, as filed with the U.S. Securities and Exchange Commission and which are incorporated herein by reference. Carmanah does not assume any obligation to update the forward-looking information contained in this press release.