Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its first quarter financial results for the period ended March 31, 2018. Currency amounts are in U.S. dollars unless otherwise noted and are for Carmanah’s continuing operations which exclude the operating results from the Company’s Power Division segment which was divested by way of two separate transactions in 2017.
In the first quarter of 2018, Carmanah generated revenues of USD $14.9 million, up USD $3.8 million or 34.3% over the first quarter of 2017 revenues of USD $11.1 million. The increase in revenues was attributed to stronger performance by the Company’s Signals segment, which generated revenues of USD $13.5 million, up USD $4.0 million or 41.2% over the first quarter of 2017 revenues of USD $9.6 million. The Illumination segment generated revenues of USD $1.4 million, down USD $0.1 million or 8.9% over the first quarter of 2017 revenues of USD $1.5 million, as the transition to our next generation EverGen product continued.
Gross margin percentage in the first quarter of 2018 was 42.4%, down 2.5% compared to the same period in 2017. The reduction in gross margins resulted from sales mix in the quarter.
Core operating expenditures in the first quarter of 2018 were USD $5.3 million, up from USD$4.0 million in the first quarter of 2017. The increase was due to the amortization of acquired intangible assets from Vega and EKTA and the overall increase in G&A expenses associated with the acquisition of Vega.
Net income in the first quarter of 2018 was USD $0.6 million which was unchanged from the same period in 2017.
Carmanah management relies on Adjusted EBITDA1 (a non-IFRS measure) to gauge financial performance. In the first quarter of 2018, the Company generated Adjusted EBITDA of USD $1.8 million, up 11.0% from USD $1.6 million in the same period in 2017. A table reconciling net income and Adjusted EBITDA is included in this release.
“Important operational progress was made by our Company in the first quarter”, said John Simmons, CEO. “During the quarter, capping more than a year of development, our Telematics vertical received orders and began shipping its first products. Also in the quarter the Company acquired a patent portfolio which now allow Carmanah’s Traffic vertical to resume the pursuit of sales from its very popular Rectangular Rapid Flashing Beacon without concerns of intellectual property infringement. Finally, continued progress was made during the quarter for our consolidating integration of Vega Industries by Sabik Marine and we are targeting the third quarter 2018 to fully integrate and cease operating in New Zealand.
Highlights for the quarter are provided below:
Financial Condition at March 31, 2018 compared to December 31, 2017
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the first quarter ended March 31, 2018 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: https://carmanah.com/company/financial-reports. Both documents are also filed on SEDAR (www.sedar.com). The financial information included in this release is qualified in its entirety and should be read together with the audited consolidated financial statements for the year ended December 31, 2017, including the notes thereto.
EBITDA and Adjusted EBITDA1
About Carmanah Technologies Corporation
Carmanah designs, develops and distributes a portfolio of products focused on energy optimized LED solutions for infrastructure. Since 1996, we have earned a global reputation for delivering durable, dependable, efficient and cost-effective solutions for industrial applications that perform in some of the world’s harshest environments. We manage our business within two reportable segments: Signals and Illumination. The Signals segment serves the Airfield Ground Lighting, Aviation Obstruction, Offshore Wind, Marine, Traffic and Telematics markets. The Illumination segment provides solar powered LED outdoor lights for municipal and commercial customers.
Carmanah Technologies Corporation:
Evan Brown, (250) 380-0052
Chief Financial Officer/Corporate Secretary
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,” “estimates,” “could,” “will” or variations of such words and phrases. Forward-looking statements or information in this news release relate to, among other things: revenues, and revenue growth, for the fourth quarter and year ended December 31, 2017; order backlogs; gross margins and estimates of EBITDA and Adjusted EBITDA. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Carmanah or Sabik to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to: our ability to become a worldwide leader in the marine aids to navigation industry, the potential growth of the off-shore wind safety market or our ability to participate in any growth and other general uncertainties that may impact actual outcomes. These forward-looking statements are based on management’s current expectations and beliefs but given the uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward-looking statements or information. Carmanah disclaims any obligation to update, or to publicly announce, any such statements, events or developments except as required by law.
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.
1 NON-GAAP FINANCIAL MEASURES: EBITDA and Adjusted EBITDA. This news release presents information about EBITDA and Adjusted EBITDA, both of which are non-IFRS financial measures, to provide supplementary information about 2017 operating performance. Carmanah defines EBITDA as net income or loss before interest, income taxes, amortization, and non-cash stock based compensation. Adjusted EBITDA removes unusual or non-operating items from EBITDA, such merger and acquisition costs, restructuring charges, asset write offs, and foreign exchange gains and losses. Carmanah uses these non-IFRS measures internally to make strategic decisions, forecast future results and evaluate its performance. EBITDA and Adjusted EBITDA are not intended as a substitute for IFRS measures. A limitation of utilizing these non-IFRS measures 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. Readers should refer to the “Definitions and Reconciliations” section of the Company’s most recently filed MD&A for the three and twelve months ended December 31, 2017 for a more detailed discussion of these measures and their calculation.