Victoria, British Columbia, Canada – Wednesday, November 14, 2007 – Carmanah Technologies Corporation (TSX: CMH) announces its results for the nine months ended September 30, 2007.
Highlights for the Quarter
- Cash: $1.4 million and no bank debt
- Revenue: $15.4 million (unchanged from Q2 2007 and compares with $17.5 million achieved in Q3 2006). Year-to-date revenue of $46.0 million (unchanged from the same nine month period in 2006)
- Sales order backlog: $5.9 million going into Q4 2007 (improved from $4.5 million at the end of Q3 2007, and compares with $6.4 million at the end of Q3 2006)
- Gross margin: 30.6% for Q3 2007 and 28.5% for nine months ended September 30, 2007
- EBITDA: ($0.7) million for Q3 2007 and ($5.0) million for nine months ended September 30, 2007
- Net earnings (loss): ($0.8) million for Q3 2007 and ($4.3) million for nine months ended September 30, 2007
Summary of Results
Mr. Ted Lattimore, CEO, said “Since joining Carmanah in mid October, I have been very impressed with the great people, exciting products, and tremendous potential of this company; but I’m also starting to identify some very promising opportunities for change as well. I have confidence in our technology, our customer relationships, and our ability to make a big difference in the solar and LED markets – the challenge ahead is to ensure we focus our resources amidst a range of opportunities. But first things first, in Q3 2007 we strengthened our financial position and made significant progress toward a return to profitability, although despite improved cost and working capital management, the continued strengthening of the Canadian dollar relative to the US dollar has affected sales growth and resulted in continued foreign exchange losses in the quarter. Still, we are improving efficiency, controlling costs and working together to prepare the company for an exciting and profitable future.”
Mr. Roland Sartorius, CFO, commented “This year has been a challenging one for Carmanah — as it has been for many Canadian companies doing a majority of their business in US dollars. The significant appreciation in the Canadian dollar has resulted in lower sales, affected our margins and caused us to incur additional foreign exchange losses. We are reviewing all aspects of our operations, from pricing to supply management, and making adjustments where necessary. We also initiated foreign currency hedging in the quarter, and are continuing to watch the rate changes daily and act on them accordingly. During Q3 2007, reductions in the surplus inventory focus on working capital management and cost-saving initiatives were among the primary factors that resulted in the generation of $5.4 million in non-cash working capital, leaving Carmanah with a positive cash balance of $1.4 million, and no debt. Operating expenses have been stabilized in Q3 2007 ending $1.5 million lower (net of $0.7 million of non-recurring items in Q2 2007) than Q2 2007 and comparable to operating expenses in Q3 2006. The achievements in Q3 2007, have allowed us to put the company back on a solid footing and provide a strong base for focused growth.”
Revenues for the three months ended September 30, 2007 were $15.4 million compared to $17.5 million in the prior year. Revenues for the nine months ended were $46.0 million compared to $46.0 million in the prior year. The reduction in year-over-year Q3 sales is primarily due to the decline of the US dollar.
A summary of revenues from each of Carmanah’s technology groups is as follows:
| Sales by Group ($ thousands) | ||||||
| 3 Months Ended Sep 30 | 9 Months Ended Sep 30 | |||||
| 2007 | 2006 | Change | 2007 | 2006 | Change | |
| $15,445 | $17,529 | ($2,084) | $45,997 | $45,961 | $36 | |
| Solar LED Lighting | $7,792 | $8,853 | ($1,061) | $20,323 | $20,075 | $248 |
| Solar Power Systems | 6,398 | 7,820 | (1,422) | 22,301 | 22,758 | (457) |
| LED Sign Group | 1,255 | 856 | 399 | 3,373 | 3,128 | 245 |
EBITA for Q3 2007 was ($0.7) million, compared to $1.1 million for the same period in 2006. YTD EBITA was ($5.0) million, compared with $2.0 million for the same period in 2006.
Loss before tax for Q3 2007 was ($1.1) million, compared to $0.8 million for the same period in 2006. YTD loss before tax was ($5.9) million, compared to $1.3 million for the same period in 2006.
Net earnings/loss for Q3 2007 ($0.8) million, compared to a $0.3 million for same period in the prior year. Net earnings/loss for the nine months ended September 30, 2007 was ($4.3) million compared to $0.4 million for the same period in the prior year.
Non-GAAP Measures
The Company uses certain non-GAAP measures to assist in assessing its financial performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. One such non-GAAP measure used for assessing financial performance is earnings before interest, taxes and amortization (EBITA).
| EBITA Reconciliation | Three months ended Sep 30, |
Nine months ended Sep 30, |
||
| ($ thousands) | 2007 | 2006 | 2007 | 2006 |
| EBITA | ($749) | $1,062 | ($4,951) | $1,963 |
| Net earnings – as reported | ($765) | $337 | ($4,279) | $437 |
| Add back (deduct): | ||||
| Interest Expense | 50 | 0 | 197 | 0 |
| Interest Income | (18) | (42) | (80) | (61) |
| Income taxes | (311) | 490 | (1,653) | 897 |
| Amortization | 295 | 277 | 864 | 790 |
Progress During the Quarter
With improved working capital management, Carmanah’s liquidity position improved over Q2 2007 to end with a cash balance of $1.4 million and no bank debt at the end Q3. Other highlights included:
- August 9, 2007: Carmanah appointed Roland Sartorius as Chief Financial Officer
- September 24, 2007: Carmanah Introduced its newest innovation, the EverGEN™ line of solar engines, at the Solar Power 2007 conference in Long Beach, California. Available in five models ranging from 10 to 80 watts in power, the EverGEN solar engine is a self-contained, solar-powered energy source that provides dependable, high-quality electricity for lights, sensors, cameras and more – anywhere there’s access to the sun
- October 16, 2007: Carmanah appointed Ted Lattimore as Chief Executive Officer. This completed Carmanah’s new executive suite. Mr. Ted Lattimore subsequently purchased 385,000 shares through a private placement
- On November 9, 2007: Art Aylesworth was elected Chairman of Carmanah’s Board, and David Green moved to the Chair of the Governance Committee
The Company believes that its cash and cash equivalents, short-term investments, bank credit facilities and cash from improved operations going forward will be sufficient to satisfy its operating cash requirements.
Complete set of Financial Statements and Management Discussion & Analysis
Conference Call Details
To discuss the Q3 2007 results, Carmanah has scheduled a conference call for Wednesday, November 14, 2007 at 2:00 pm Pacific time (5:00 pm Eastern time). To access this conference call by telephone, dial 1-888-882-9090 (Canada and US) or 1-403-770-0861 (international) approximately five to ten minutes before start time. When prompted for the conference ID, enter 5388629.
A recording of the conference will also be available on Carmanah’s corporate website (www.carmanah.com) within three business days.
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 a technology leader in solar-LED lighting, solar power systems and LED-illuminated signage. From its headquarters in Victoria, British Columbia, Canada, Carmanah oversees a network of branch offices and sales representatives across Canada, the United States and the United Kingdom. Carmanah is a publicly traded company, with common shares listed on the Toronto Stock Exchange under the symbol TSX:CMH. For more information, visit www.carmanah.com.
Cautionary Note on Forward-looking Information
This release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “expects,” “plans,” “estimates,” “intends,” “believes,” “could,” “might,” “will” or variations of such words and phrases. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Carmanah to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties which 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 on SEDAR at www.sedar.com. The risk factors identified in Carmanah’s Annual Report are not intended to represent a complete list of factors that could affect Carmanah. Accordingly, readers should not place undue reliance on forward-looking statements. Carmanah does not assume any obligation to update the forward-looking information contained in this press release.
For further information, please contact:
Investors:
Investor Relations
Tel: (403) 470-8384
Toll-Free: 1-877-255-8483
Media:
David Davies
Public Relations
Tel: (250) 382-4332