VICTORIA, BC, CANADA (November 15, 2012) Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its third quarter results for the period ended September 30, 2012.
For the three months ended September 30, 2012, the Company recorded a net loss of $0.8 million on revenues of $6.7 million. Total third quarter 2012 revenues were down $1.8 million over the same period in 2011. The net loss is primarily driven by lower revenues recognized in the current quarter.
“While the quarter demonstrated improvement versus prior quarter we remain disappointed with results to-date” stated Bruce Cousins, Chief Executive Officer. “The addition of sales resources and focus in each of our signaling markets has yielded significant improvement in pipeline however success in closing on this remains limited. We believe general economic conditions present significant headwind in our efforts with consistent delays in finalizing large project opportunities.”
Financial Condition at September 30, 2012 compared to December 31, 2011
- Cash and cash equivalents of $3.0 million, down $1.9 million from $4.9 million
- Working capital of $6.8 million, down $1.0 million from $7.8 million
- Continued debt-free operations
Third quarter 2012 compared to third quarter 2011
- Revenues: $6.7 million, down $1.8 million from $8.5 million
- Gross margin: 31.1%, down from 34.4%
- Operating costs: $3.0 million, up from $2.7 million
- Net loss: $(0.8) million net loss, down $1.1 million from net income of $0.3 million
- Adjusted EBITDA (a non-IFRS measure): negative $0.5 million, down $0.9 million from positive $0.4 million
Summary of operations:
- Revenues for the third quarter of 2012 were $6.7 million, down $1.8 million from $8.5 million in the third quarter of 2011. By product sector, revenues are as follows:
o Signals, $2.8 million, down from $4.4 million
o Outdoor Lighting, $0.7 million, up from $0.6 million
o Solar EPC Services, $1.6 million, down from $2.4 million
o GoPower!, $1.6 million, up from $1.1 million
- Gross margin percentage for the third quarter of 2012 was 31.1%, down from 34.4% in quarter 3 2011. The decrease was primarily driven by price adjustments in our both the Marine and the Aviation/Obstruction sectors in response to competitive activities. Broken down by product sector, gross margin percentages are as follows:
o Signals, 33.0% down from 43.1%
o Outdoor Lighting, 25.4% up from 13.1%
o Solar EPC Services, 26.8% up from 25.0%
o GoPower!, 34.2% up from 33.7%.
The year-to-date operational and business highlights in 2012 include the following items:
- Negotiated and signed two long term exclusive co-operation agreements to enhance the business portfolio and strengthen the network of strategic partnerships with the following companies:
o Sabik Oy (“Sabik”), a marine signalling partner based in Finland. The five year agreement expands on the previous two year sales and marketing collaborations to include reciprocal technology access as well as joint product development.
o Laser Guidance Inc., a US-based pioneer in aviation precision guidance systems. The agreement provides the Company with a five year exclusive world-wide marketing license for a portfolio of Laser Guidance aviation navigation aids.
- Strengthened the Company’s distribution channel through the addition of new partners in key markets including Best Light in Mexico and Al-Babtain in Saudi Arabia for the Outdoor Lighting market.
- Embarked on major development efforts for the Company’s signalling products, which will see a variety of new products launched this year, most significantly a new state of the art Marine signal lantern to replace the Company’s 700 series lights and a new Traffic signalling device, the rectangular rapid flashing beacon (“RRFB”) that improves crosswalk safety.
- Negotiated a number of major sales contracts, including 5 Solar EPC Services projects worth over $3.3 million.
- Signed a $10 million non-binding letter of agreement with one of the Company’s South American distributors to procure, commission and install various aids to navigation on a major South American waterway. Conditionality by the end customer has been resolved, and progress has been made to move forward into the finalization of technical specifications on the product. It is anticipated that this will be completed in late 2012 with commencement of delivery of the product throughout 2013.
- Expanded the Company’s focus on revenue growth with the hiring of an additional five sales employees to complement the new vertical orientated sales structure. Under this new structure, each market vertical has its own leadership and supporting team and is directly responsible for driving the planning, development and execution within the market.
- Closed a non-brokered private placement of 3,981,722 common shares for net proceeds of $1.8 million.
Reporting Currency and Accounting Standards
Unless otherwise indicated, all financial information presented in this press release is in US dollars and has been prepared in accordance with International Financial Reporting Standards (“IFRS”).
Adjusted EBITDA
| Adjusted EBITDA reconciliation |
Three months ended September 30 |
Nine months ended September 30 |
||
| (US$ in thousands) |
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
|
| Net loss |
(838) |
351 |
(3,200) |
335 |
| Add/(deduct): |
|
|
|
|
| Interest |
– |
– |
– |
4 |
| Income tax expense/(recovery) |
– |
68 |
– |
225 |
| Amortization |
288 |
288 |
853 |
822 |
| EBITDA* |
(550) |
707 |
(2,347) |
1,386 |
| Terminated Lightech agreement recovery |
– |
(360) |
– |
(176) |
| Retirement provision |
– |
(29) |
– |
261 |
| Non-cash stock based compensation |
61 |
108 |
212 |
281 |
| Adjusted EBITDA* |
(489) |
426 |
(2,135) |
1,752 |
* 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 by management for assessing financial performance is Adjusted EBITDA, defined as net income before interest, income taxes, amortization, non-cash stock-based compensation, and terminated Lightech agreement costs.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the third quarter ended September 30, 2012 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: www.carmanah.com/Company/Investors/Financial_Reports.aspx. Both documents will also be filed on SEDAR (www.sedar.com).
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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 www.carmanah.com.
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. 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 www.sedar.com and on the Company’s website at www.carmanah.com. 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.