Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its fourth quarter financial results for the period ended December 31, 2013.
For the fourth quarter of 2013, the Company recorded a net loss of $0.9 million (inclusive of a restructuring charge of $0.6 million and asset impairment charges of $0.5 million) on revenues of $7.8 million. This compares to a loss of $0.7 million on revenues of $8.4 million in the fourth quarter of 2012.
“We first announced that we intended to restructure the Company on September 17, 2013 and then confirmed our plan in a release on November 14, 2013” said John Simmons. “In Q4 2014 our plan was mostly completed which contributed to a considerable rebound in revenues from a $4.9 million in Q3 2013 to $7.8 million in Q4 2013 – a 59% increase.”
Carmanah’s restructuring plan focused on streamlining operations in a manner that would reduce operating costs while coincidentally increasing revenue producing capacity. As a result of the plan a total of 23 full time positions were eliminated and 13 new full time positions were added. In addition to staff related costs the restructuring plan included the closure of the Company’s Burnaby office and charges relating to the planned decommissioning and replacement of the Company’s ERP system. The total restructuring charge was $0.6 million, of which $0.3 million was liquidated in Q4 2013.
“Our initial outlook for 2014 indicates that our restructuring has been successful” said John Simmons. “Our Q1 2014 revenues continue to show improvement over Q4 2013, margins are stable and operating costs are lower than comparable periods. As a result we expect positive operating income for the first time in a number of years. But while we are pleased with the progress to date, we have limited visibility beyond Q1 2014 and cannot rule out revenue variability during the balance of the year.”
Highlights for the quarter and the year are provided below:
Fourth quarter 2013 highlights
· Revenues: $7.8 million, down $0.6 million from $8.4 million
· Gross margin: 33.3%, up from 28.8%
· Operating costs: $2.4 million, down $0.6 million from $3.0 million
· Net loss: $0.9 million loss, up $0.2 million from a loss of $0.7 million
· EBITDA (a non-IFRS measure): ($0.7) million, down from ($0.5) million
Fiscal year 2013 highlights
· Revenues: $25.9 million, down $0.5 million from $26.4 million
· Gross margin: 28.5%, down from 31.2%
· Operating costs: $10.8 million, down $1.3 million from $12.1 million
· Net loss: $5.6 million loss, up $1.6 million from a loss of $3.9 million
· EBITDA (a non-IFRS measure): ($4.6) million, down from ($2.8) million
Financial Condition at December 31, 2013 compared to December 31, 2012
· Cash and cash equivalents of $5.2 million, up $2.5 million from $2.7 million
· Working capital of $8.1 million, up $1.8 million from $6.3 million
· Continued debt-free operations
Fiscal year 2013 corporate highlights
· Refinancing: During the third quarter we announced a refinancing of the company by way of a rights offering (“Offering”). Under the Offering, each shareholder was given one right for each share held on the applicable record date. Each right was exercisable for one common share at a subscription price of $0.12 (CAD). In connection with the Offering, the Company entered into a binding standby purchase agreement with a group of investors, who had committed, subject to certain conditions, to purchase up to $5.5 million of the rights shares not otherwise subscribed for by other holders. The Company raised gross proceeds of $6.0 million (CAD) less issuance costs of $0.5 million (CAD). A total of 50,294,200 shares were issued under the Offering.
· Board of directors and executive changes: As a result of shareholder voting from our AGM held on April 30, 2013, significant changes have occurred both at the board and executive level. The significant changes were as follows:
o Rob Cruickshank and Daniel Nocente resigned from the board on June 19, 2013.
o Michael Sonnenfeldt and John Simmons were appointed to the board on June 26, 2013.
o Michael Sonnenfeldt was elected as Chairman on July 15, 2013.
o Bob Wiens resigned from the board, effective October 1, 2013.
o Jim Meekison and Terry Holland were appointed to the board on December 2, 2013.
o The resignation of Bruce Cousins as CEO, announced on June 19, 2013 but effective August 1, 2013
o The appointment of John Simmons as CEO effective August 1, 2013.
Reporting Currency
Unless otherwise indicated, all financial information presented in this press release is in US dollars.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the fourth quarter ended December 31, 2013 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: www.carmanah.com/Company/Investors/Financial_Reports.aspx. Both documents are also filed on SEDAR (www.sedar.com). The financial information included in this release is qualified in its entirety and should be read together with the audited consolidated financials for the year ended December 31, 2013, including the notes thereto.
EBITDA
|
EBITDA reconciliation |
Three months ended December 31 |
Year ended December 31 |
||
|
(US$ in thousands) |
2013 |
2012 |
2013 |
2012 |
|---|---|---|---|---|
|
Net loss |
(933) |
(721) |
(5,564) |
(3,921) |
|
Add/(deduct): |
|
|
|
|
|
Income tax expense |
– |
2 |
5 |
2 |
|
Amortization |
244 |
246 |
936 |
1,099 |
|
EBITDA* |
(689) |
(473) |
(4,623) |
(2,820) |
|
* 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.
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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.
Carmanah Technologies Corporation
“Stuart Williams”
Stuart Williams, Chief Financial Officer
For further information:
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Investors: Investor Relations: Stuart Williams Toll-Free: 1.877.722.8877 |
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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 success of our recent restructuring initiative and our ability to produce positive operating income. 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.