Carmanah Reports Second Quarter 2015 Results

August 10, 2015
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Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its second quarter financial results for the period ended June 30, 2015.  Currency amounts are in U.S. dollars unless otherwise noted.

For the quarter ended June 30, 2015, the Company recorded revenues of $15.7 million, and net income of $10.3 million. This compares to revenues of $9.0 million and net income of $0.4 million in the second quarter of 2014. The substantial swing in net income is attributable to the recognition of $9.9 million in tax assets which were previously written off at the end of 2011 due to the uncertainty of their usage. The Company decided to reinstate these assets based on our financial performance over the past 6 quarters and management’s outlook for future periods which makes it probable these assets will be utilized. These assets included both investment tax credits and deferred income taxes, both of which will allow the Company to reduce taxes on current and future earnings realized within Canada.

The Company saw strong revenue growth across all of its segments, with the Power, Signals, and Illuminations segments up $3.9 million, $1.6 million, and $1.2 million, respectively. The Power segment benefited from the carryover of a large backlog of projects within its Solar EPC vertical and the GoPower! vertical continued to see strong growth driven by its efforts to expand its distribution and the introduction of new products. Revenue increases in the Company’s Signals segment were largely driven by new product introductions, expanded distribution, and some larger projects. The increase in the Illumination segment is primarily due to the acquisition of Sol Inc on July 2, 2014.

Carmanah management relies on adjusted EBITDA (a non-IFRS measure) to gauge financial performance. In the second quarter of 2015 the Company’s generated $2.5 million of adjusted EBITDA, up from $0.8 million in the same period of 2014.  A table reconciling net profit and adjusted EBITDA is included in this release.

“Carmanah’s second quarter was very eventful”, said John Simmons chief executive officer. “During the quarter our sales teams generated record levels of new orders which led to record high revenues and a substantial book of open orders to be completed during the balance of the year. In addition, and just subsequent to quarter end, we closed our acquisition of the Sabik Group which solidifies our market lead in the marine aids-to-navigation industry and launches us as a safety and markings provider in the fast growing offshore wind energy industry.”

Highlights for the quarter and the year are provided below:

  Three months ended June 30 Six months ended June 30
(US$ thousands) 2015 2014 2015 2014
Revenue  15,715 8,994 27,029 18,113
Gross margin % 34% 36% 35% 35%
Operating (expenditures)/recovery 932 -2,724 -3,804 -5,188
Net income/(loss) 10,332 438 10,362 515
Adjusted EBITDA * 2,499 843 3,980 1,616

*Adjusted EBITDA is a Non-IFRS measure. Foreign exchange gain/ loss is no longer included in the adjusted EBITDA calculation, as such historical amounts have been updated.


Financial Condition at June 30, 2015 compared to December 31, 2014

  • Cash and cash equivalents of $38.9 million, up $30.1 million from $8.8 million
  • Working capital of $41.6 million, up $33.5 million from $16.1 million


Second quarter 2015 corporate highlights

  • Sabik Acquisition – on July 2, 2015, the Company completed the acquisition of the Sabik Group of Companies (“Sabik” or the “Group”).  The acquired Group consists of the following companies: Sabik Oy, based in Finland, Sabik GmbH, based in Germany, Sabik PTE Ltd based in Singapore, and Sabik Ltd and Sabik Offshore Ltd, both of which are based in the United Kingdom. Sabik is a leading manufacturer in the worldwide marine aids to navigation market, with whom we have a collaborative sales, marketing and development partnership with since 2010. Sabik also provides sophisticated lighting and monitoring solutions to the offshore wind industry. The offshore wind industry will be a new business endeavor for the Company, a market management believes has strong growth potential around the world. The acquisition was announced on June 10, 2015 with the signing of a Share Purchase Agreement (the “Agreement”).  Under the Agreement, the Company has acquired 100% of the shares of each of the companies within the group, with the exception of Sabik Ltd and Sabik Offshore Ltd, which we only acquired 81% and 80% respectively. Of the entities acquired, approximately 90% of the revenues are generated by Sabik Oy and Sabik GmbH. The purchase price consisted of €17.2 million in cash and the issuance of 1,180,414 shares of our Common share, for a total purchase price of €21.5 million.       This acquisition will be considered a business combination for accounting purposes. The acquisition of Sabik is on strategy and in keeping with management’s belief that the signals industry is ready for consolidation. Sabik’s management team has a deep industry experience, market knowledge and technical competence. Therefore Sabik management will lead the combined Carmanah and Sabik Marine businesses. Over the next several years management will explore synergy opportunities that may exist in overlapping product lines, commercial efficiencies, R&D projects and potentially manufacturing competencies. Many efficiencies have already been identified and realized because of the long-standing Carmanah / Sabik partnership. Sabik’s offshore wind business represents a new market for Carmanah, one in which the Company intends to invest in and expand as opportunities present themselves.
  • Share Offering – on April 28, 2015, the Company completed a “bought deal” financing (the “Financing”) which raised gross proceeds of $32 million CAD. The financing was backed by a syndicate of underwriters led by Cormark Securities Inc. and including Canaccord Genuity Corp., GMP Securities LP and Salman Partners Inc. (collectively, the Underwriters”) who agreed to to buy and sell to the public 5,650,000 of the Company’s common shares (“Common Shares”) at a price of $5.00 (CAD) per Common Share. The Underwriters also had an option, exercisable in whole or in part at any time up to 15 days after the closing of the Offering, to purchase up to an additional 750,000 of our Common Shares at the same price.  The main part of the Offering closed on April 28, 2015 with 5,650,000 shares issued from treasury. On May 1, 2015, the Underwriters exercised their option to acquire the additional 750,000 shares.  The majority of the proceeds from this offering were to be used for future mergers and acquisitions, and a substantial portion of these funds were used for that purpose when the Company completed the Sabik acquisition on July 2, 2015.  As a part of the Offering, the Company  also issued a total of 332,750 broker warrants (the “Warrants”) which allow the holder to acquire one additional Common Share at a price of $5.00 (CAD) per share. These Warrants expire after one year from issuance.  13,310 of these warrants were exercised during the second quarter.
  • Recognition of tax asset – during the second quarter of 2015, the Company made the decision to recognize its substantial tax assets which were previously written off at the end of 2011. These assets were originally written off due to the uncertainty of their usage at that time. The decision to reinstate these assets based on the Company’s financial performance over the past 6 quarters and management’s outlook for future periods which makes it probable these assets will be utilized. These assets included both investment tax credits and deferred income taxes, both of which will allow the Company to reduce taxes on current and future earnings realized within Canada.
  • Joint development project for the US Navy – on May 19, 2015, the Company announced that it was a part of a winning bid for a US Naval Air Warfare Center Aircraft Division award that is worth up to $24.5 million. The underlying contract was awarded to Tactical Lighting Systems Inc. (“TLS”) for the design, development, integration, test, and qualification of a Sustainment Lighting System (“SLS”) that will support launch and recovery operations at expeditionary airfields and includes both a vertical takeoff and landing module and a runway module. The contract is on a cost-plus-incentive-fee basis. The Company participated in the bidding process with TLS pursuant to a teaming agreement that included the Company as a key development sub-contractor. The first phase of the contract, a development phase is being initiated immediately under a notice to proceed issued by TLS. The Company is working with TLS to sign a comprehensive agreement to cover the future work under this contract. The Company’s work under the development phase is expected to be completed over the forthcoming 3-years and will generate revenue of approximately USD $4.0 million. The project is subject to cancellation by the Naval Air Warfare Center, Aircraft Division at any time during the contract term.


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 June 30, 2015 Interim 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 (



  Three months ended June 30 Six months ended June 30
  2015 2014 2015 2014
Net income 10,332 438 10,362 515
   Income taxes (5,505) (5,505) (1)
   Amortization 153 82 301 171
   Non-cash stock based compensation 155 84 291 101
EBITDA* 5,135 604 5,449 786
   Merger and acquisition costs 710 327 772 602
   Extraordinary legal costs 24 262 25 408
   Investment tax credits (4,320) (4,320)
   Restructuring and asset write offs (122) 404 (122)
   Other inventory write downs 132 389
   Foreign exchange loss/(gain) 818 (228) 1,261 (58)
Adjusted EBITDA* 2,499 843 3,980 1,616

*Adjusted EBITDA is a Non-IFRS measure. Foreign exchange gain/ loss is no longer included in the adjusted EBITDA calculation, as such historical amounts have been updated.

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, and non-cash stock based compensation. The other non-IFRS measure used is Adjusted EBITDA, which adjusts EBITDA for unusual or non-operating items such as merger and acquisition costs, restructuring charges, asset write offs, and foreign exchange gains and losses.


About Carmanah Technologies Corporation

Since its founding in 1996, Carmanah has become one of the most trusted names in solar technology, delivering reliable and cost-effective solar powered products and systems for industrial applications worldwide. To date, Carmanah’s solutions for marine navigation, airfield ground lighting, aviation obstruction, roadway illumination, parking lot lighting, as well as on and off-grid power generation, have been successfully deployed in over 400,000 installations in 110 countries with proven performance in conditions ranging from desert heat to arctic cold.

Carmanah is publicly traded with common shares listed on the Toronto Stock Exchange under the symbol “CMH”. For more information, visit

Carmanah Technologies Corporation

“Evan Brown”
Evan Brown, Chief Financial Officer

For further information

Investor Relations: Evan Brown
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. 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.