Carmanah Reports First Quarter 2014 Results

May 8, 2014
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Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its first quarter financial results for three months ended March 31, 2014. 

For the quarter ended March 31, 2014, the Company recorded revenues of $9.1 million, net income of $0.1 million and positive EBITDA of $0.5 million.  This is an increase from the same period in 2013 which had revenues of $7.0 million, a net loss of $0.7 million, and an EBITDA loss of $0.4 million. 

“The Carmanah team did an excellent job in the first quarter by increasing revenues and improving margins while lowering operating costs” stated John Simmons, CEO “This performance is a significant improvement over both the comparable quarter in 2013 and the last quarter of 2013.”

Revenue growth in the first quarter was evident in virtually every division of the Company.  This led to a profitable result which would have been greater if not for extraordinary or unusual expenses.  Mr. Simmons added, “We incurred unusually high legal expenses in the first quarter. Some of these legal expenses were attributable to an ongoing patent infringement lawsuit which we are defending and some related to our expected acquisition of SOL, Inc.  If not for these costs, that should reduce or be eliminated imminently, our reported net profit would have been considerably higher.”

Mr. Simmons also commented on the balance of fiscal 2014, “While we are encouraged by current business prospects we continue to have limited visibility with respect to future revenues”, said Mr. Simmons.  “While we are applying effort to achieve profitable growth, we are not able to predict that the growth achieved over the past two quarters will continue.” 

Highlights for the quarter are provided below: 

Q1 2014 vs. Q1 2013

  • Revenues: $9.1 million, up $2.1 million from $7.0 million
  • Gross margin: 32.7%, up from 30.3%
  • Operating costs: $2.5 million, down $0.3 million from $2.8 million
  • Net income/(loss): $0.1 million net income, up from a loss of ($0.7) million
  • EBITDA (a non-IFRS measure): $0.5 million, up from a loss of ($0.4) million

Financial Condition at March 31, 2014 compared to December 31, 2013

  • Cash and cash equivalents of $5.1 million, down from $5.2 million
  • Working capital of $8.1 million,  unchanged
  • Continued debt-free operations

Business and operational highlights for the first quarter 2014

SOL, Inc. Acquisition

On March 21, 2014, the Company announced that it has entered into a binding letter of intent (“LOI”) to acquire SOL Inc. (“Sol”), a Florida based outdoor lighting business vertical.  Under the terms of the LOI, Carmanah will acquire all of the shares of Sol for the following consideration: 

  • 38,163,176 of our common shares which will be issued from treasury; and
  • A royalty or earn-out payable to electing former shareholders of Sol equal to 3% of total revenues Carmanah receives in respects of certain specified prospective sales by Sol provided each identified project results in revenues of at least $5.0 million and are subject to other conditions.   

Michael Sonnenfeldt, Carmanah’s Chairman of the Board, currently owns 84.5% of the outstanding shares of Sol as well as 23.4% of Carmanah’s outstanding common shares.  As a result, the Acquisition will be considered a “related party transaction” for purposes of applicable Canadian securities laws. As part of the deal, Mr. Sonnenfeldt will waive receipt of the royalty or earn-out payment which will be then provided on a proportional basis to the other Sol Shareholders. 

The acquisition is subject to the successful sign off on a definitive purchase agreement and a variety of approvals, including a vote by shareholders and various regulatory approvals.  The Company’s shareholders will be voting on the proposed acquisition at the next Annual General Meeting, which is currently scheduled for June 23, 2014.  As a result of Mr. Sonnenfeldt’s conflict of interest, he is not eligible to vote on the transaction. 

This acquisition will be a business combination.  The values associated with preliminary purchase price allocation will depend upon the Company’s share price upon closing. 

Private placement

On March 31, 2014, the Company announced plans for a non-brokered private placement (“Placement”) to raise approximately $4.2 million CDN.  This Placement closed April 4, 2014 and resulted in the issuance of 19,300,000 shares at a price of $0.22 a share.  10,000,000 of these shares were purchased by insiders of the Company.  The following insiders with holdings of approximately 10% or more participated in the Private Placement: 

  • Michael Sonnenfeldt, Carmanah’s Chairman of the Board and largest shareholder, subscribed for 3,500,000 Shares under the Private Placement.  Subsequent to the Placement, Mr. Sonnenfeldt holds 28,037,778 common shares, representing approximately 23.4% of our issued and outstanding common shares.
  • Jim Meekison subscribed for 3,000,000 Shares under the Private Placement.  Mr. Meekison sits on the Company’s Board and subsequent to the Placement holds 13,178,000 common shares, representing approximately 11.0% of our issued and outstanding common shares.  

Subsequent to the acquisition, insiders held approximately 44% of our issued and outstanding common shares of the Company.  The proceeds from this Placement are to be used for general corporate purposes, specifically working capital. 

Corporate Initiatives

During the first quarter of 2014 the Company continued its effort to streamline and simplify its operations.   This included the continued execution of the restructuring initiative announced in late 2013 and the launch of a project to replace the Company’s ERP and CRM systems with a more efficient and cost effective solution.  Detailed planning activities for the ERP/CRM replacement project began in early January 2014 and we expect to implement the new system in July 2014.  The Company currently estimates direct cost savings (licensing, hosting expenses, and support costs) of between $0.2 million and $0.3 million annually as a result of this conversion.  The total expected investment on this project is between $0.4 million and $0.5 million.     

Reporting Currency

Unless otherwise indicated, all financial information presented in this press release is in US dollars.

Complete set of Financial Statements and Management Discussion & Analysis

A complete set of the first quarter ended March 31, 2014 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: Both documents are also filed on SEDAR ( 


EBITDA reconciliation Three months ended March 31,
(US$ in thousands)     2014 2013
Net profit (loss)     77 (712)
Income tax expense     (1) 2
Amortization     89 235
Merger and acquisition costs     275
Non-cash stock based compensation     17 45
EBITDA*     457 (430)
* A Non-IFRS measure        

Management believes that the non-IFRS measures presented provide useful information by excluding certain items that may not be indicative of Carmanah’s core operating results and that this non-IFRS measure will allow for a better evaluation of the operating performance of the Company’s business and facilitate meaningful comparison of results in the current period to those in prior periods as well as future periods. Reference to this non-IFRS measure should not be considered as a substitute for results that are presented in a manner consistent with IFRS. This non-IFRS measure is provided to enhance investors’ overall understanding of Carmanah’s current financial performance.

A limitation of utilizing this non-IFRS measure is that the IFRS accounting effects of the non-recurring items do in fact reflect the underlying financial results of Carmanah’s business and these effects should not be ignored in evaluating and analyzing Carmanah’s financial results. Therefore, management believes that Carmanah’s IFRS measures of net loss and the same respective non-IFRS measure should be considered together.  

Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. One such non-IFRS measure used for assessing financial performance is EBITDA, defined as net income before interest, income taxes, amortization, merger and acquisition costs and non-cash stock based compensation.


About Carmanah Technologies Corporation.

As one of the most trusted names in solar technology, Carmanah has earned a reputation for delivering strong and effective products for industrial applications worldwide. Industry proven to perform reliably in some of the world’s harshest environments, Carmanah solar LED lights and solar power systems provide a durable, dependable and cost effective energy alternative. Carmanah pursues its business strategy within six distinctive product offerings: outdoor lighting, marine signal, aviation signals, traffic signals, Solar EPC Services and GoPower!. Carmanah is actively seeking additional product sales opportunities to add to its top line revenue, as well as extending existing product lines through internal development efforts, strategic business relationships as well as focused acquisitions. Carmanah is a publicly traded company, with common shares listed on the Toronto Stock Exchange under the symbol “CMH”. For more information, visit

Carmanah Technologies Corporation

“Stuart Williams”
Stuart Williams, Chief Financial Officer


For further information:

Investor Relations: Stuart Williams
Toll-Free:  1.877.722.8877


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. Examples of forward-looking information in this news release include, but are not limited to, statements with respect to: the future revenue growth.  For additional information on these risks and uncertainties, see Carmanah’ s most recently filed Annual Information Form (AIF) and Annual MD&A, which are available on SEDAR at and on the Company’s website at The risk factors identified in Carmanah’ s AIF and MD&A 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.