Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its second quarter financial results for six and three months ended June 30, 2014.
For the quarter ended June 30, 2014, the Company recorded revenues of $9.0 million, net income of $0.4 million and positive EBITDA of $0.8 million. This is an increase from the same period in 2013 which had revenues of $6.3 million, a net loss of $2.5 million and an EBITDA loss of $2.2 million.
“We are very pleased with our second quarter results during which revenues grew 42.3% compared to the comparable period in 2013” stated John Simmons, CEO. “More importantly, the Company achieved a very significant improvement in profitability in the second quarter during which positive EBITDA of $0.8 million replaced an EBITDA loss of $2.2 million in the comparable period in 2013.”
Mr. Simmons also commented on the balance of fiscal 2014, “We expect two circumstances to affect revenue and profitability in the near term”, said Mr. Simmons. “Our Carmanah order backlog has continued to grow which, when combined with expected revenues from Sol, Inc., will result in substantial revenue growth in the third quarter. At the same time costs relating to the acquisition of Sol will negatively impact profitability during this period. We expect these costs to be temporary and to cease once the transition and integration is complete.”
Highlights for the quarter are provided below:
Q2 2014 vs. Q2 2013
- Revenues: $9.0 million, up $2.7 million from $6.3 million
- Gross margin: 36.3%, up from 24.4%
- Operating costs: $2.8 million, down $0.2 million from $3.0 million
- Net income/(loss): $0.4 million net income, up from a loss of ($2.5) million
- EBITDA (a non-IFRS measure): $0.8 million, up from a loss of ($2.2) million
Financial Condition at June 30, 2014 compared to December 31, 2013
- Cash and cash equivalents of $8.5 million, up from $5.2 million
- Working capital of $12.3 million, up from $8.1 million
- Continued debt-free operations
Business and operational highlights for the first half of 2014
During the second quarter the following events were announced and completed in the quarter or subsequent to quarter end including:
- Two private placements were announced and one private placement was closed in the second quarter. The first private placement provided proceeds of approximately $4.2 million CDN through the issuance of 19,300,000 shares at the price of $0.22 CDN per share and closed on April 3, 2014. A second private placement was announced in the second quarter and closed subsequent to quarter end. This private placement provided proceeds of approximately $3.0 million CDN through the issuance of 12,000,000 shares at the price of $0.25 CDN per share and closed on July 17, 2014. Both private placements were subscribed for predominantly by members of our board and management.
- As previously announced, the Company completed the acquisition of SOL Inc. (“Sol”), a Florida based solar outdoor lighting competitor just subsequent to the end of the second quarter. This acquisition was initially announced on March 21, 2014, an Agreement and Plan of Merger (the “Merger Agreement”) was signed on May 26, 2014, and the transaction was approved by eligible Carmanah shareholders at the Company’s Annual General and Special meeting held on June 23, 2014. The transaction closed on July 2, 2014.
Reporting Currency
Unless otherwise indicated, all financial information presented in this press release is in US dollars.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the second quarter ended June 30, 2014 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: www.carmanah.com/Company/Investors/Financial_Reports.aspx. Both documents are also filed on SEDAR (www.sedar.com).
EBITDA
|
EBITDA reconciliation |
Three months ended June 30 |
Six months ended June 30 |
||
|---|---|---|---|---|
| (US$ in thousands) | 2014 | 2013 | 2014 | 2013 |
|
Net income (loss) |
438 |
(2,477) |
515 |
(3,189) |
|
Add/(deduct): |
|
|
|
|
|
Income tax expense |
– |
– |
(1) |
2 |
|
Amortization |
82 |
240 |
171 |
475 |
|
Merger and acquisition costs |
205 |
– |
480 |
– |
|
Non-cash stock based compensation |
84 |
63 |
101 |
108 |
|
EBITDA* |
809 |
(2,174) |
1,266 |
(2,604) |
* 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 business is operated within two distinct business segments, Signals and Power. The Signals segment includes products offered into the marine, aviation, obstruction and traffic industries. The Power segment offers Solar Engineering, Procurement and Construction services, mobile power solutions and solar outdoor lighting systems. 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 and 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:
Investors:
Investor Relations: Stuart Williams
Toll-Free: 1.877.722.8877
investors@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. Examples of forward-looking information in this news release include, but are not limited to, statements with respect to: 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 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.