Carmanah Reports Second Quarter 2013 Results
VICTORIA, British Columbia--(BUSINESS WIRE)-- Carmanah Technologies Corporation (TSX: CMH) ("the Company" or "Carmanah") today reported its second quarter financial results for the period ended June 30, 2013.
For the second quarter of 2013, the Company recorded a net loss of $2.5 million on revenues of $6.3 million. The significant net loss is primarily due to a $1.0 million one-time non-cash impairment of certain assets. These assets were written off following management's review of their recoverability based on a number of factors.
"The financial results of recent years are not only disappointing but unacceptable" stated John Simmons, our CEO, "The new Board of Directors is now aligned with the shareholders and has provided me with a mandate to make our Company profitable and in doing so increase shareholder value. This will take a little time and I anticipate will involve both performance improvements and changes in strategic direction."
Financial Condition at June 30, 2013 compared to December 31, 2012
Cash and cash equivalents of $2.1 million, down $0.6 million from $2.7 million
Working capital of $4.5 million, down $1.8 million from $6.3 million
Continued debt-free operations
Second quarter 2013 compared to second quarter 2012
Revenues: $6.3 million, up $0.2 million from $6.1 million
Gross margin: 24.4%, down from 29.1%
Operating costs: $3.0 million, down $0.2 million from $3.2 million
Net loss: $2.5 million loss, up $1.0 million from a loss of $1.5 million
Adjusted EBITDA (a non-IFRS measure): negative $1.2 million, up from negative $1.1 million
Summary of operations:
Revenues for the second quarter of 2013 were $6.3 million, up $0.2 million from $6.1 million in the second quarter of 2012. By product sector, revenues are as follows:
Traffic, $1.1 million, up from $0.7 million
Marine, $0.8 million, down from $1.4 million
Aviation/Obstruction, $1.1 million, up from $0.8 million
Outdoor Lighting, $0.5 million, down from $0.9 million
Go Power!, $2.2 million, up from $1.7 million
Solar EPC Services, $0.6 million, comparable to the second quarter of 2012
Gross margin percentages for second quarter of 2013 were 24.4%, down from 29.1% for second quarter 2012. Key drivers in margin variation include overall sales mix, with stronger performance in lower margin segments, and foreign currency exchange rates. Broken down by product sector, gross margin percentages are as follows:
Traffic, 36.7%, down from 39.6%
Marine, 28.1%, down from 30.7%
Aviation/Obstruction, 15.4%, down from 43.3%
Outdoor Lighting, 15.9% down from 18.0%
Go Power!, 26.8%, down from 29.3%
Solar EPC Services, 11.4% down from 11.5%
2013 year to date corporate operational highlights included:
Corporate: At this year's annual general meeting on April 30, 2013, a group of shareholders dissatisfied with results voted for change. As a result Rob Cruickshank and Daniel Nocente resigned from the board on June 19, 2013. Thereafter, Bruce Cousins also resigned from the board on June 26, 2013 and on the same day, Michael Sonnenfeldt and John Simmons were appointed to the board. Michael Sonnenfeldt was elected as Chairman on July 15, 2013. As well, Bruce Cousins resigned as CEO, and John Simmons was appointed CEO effective August 1, 2013. Our Board of Directors would like to express their appreciation to Mssrs. Cruickshank, Nocente and Cousins for their contributions to the Company.
Traffic: Closed the transaction to acquire certain assets of Spot Devices, Inc. ("Spot"), a Nevada, USA-based manufacturer of traffic, pedestrian and school zone safety systems on January 4, 2013. Terms of the transaction included the issuance of 2.2 million of our shares to Spot (valued approximately $0.6 million on close) plus conditional cash payments pursuant to a two-year cash earn-out where Spot would be paid 12.5% of the portion of cumulative 2013 and 2014 Gross Traffic revenues exceeding $17.5 million. Following the transaction closing, focused on spending a significant amount of time and effort to build our technical knowledge of Spot's products and service, build relationships with Spot's customers and hired two additional US sales managers to support this effort. The transaction also provided a royalty free right to license proprietary Systems Infrastructure Management Application ("SIMA") software from an associated company of Spot, Cirrus Systems, LLC ("Cirrus"). The license agreement for SIMA was not signed on January 4, 2013 as certain terms had not been finalized. In early July 2013, the Company concluded that it would not be able to sign an agreement as it was unable to secure economically viable license terms for a service that underpinned a number of Spot's acquired traffic products. Due to a variety of events that have occurred subsequent to the acquisition, management concluded the underlying intangibles acquired were impaired. Consequently, management has booked an intangible impairment of approximately $0.6 million in the second quarter of 2013.
Marine: Progressed significantly towards near term completion on development work that will result in the release of nine different products across two product families by mid-2013. During the second quarter of 2013, launched the new Marine flagship M800 series product as well as the new M550 product with improved performance to replace the foundational M502 signal product. Built a stronger and more efficient sales and support team.
Aviation & Obstruction: Completed several sales of deployable, solar-powered airfield and helipad lighting systems through the ADB-Carmanah partnership. Also focused on the Obstruction market with the introduction of Obstruction specific lanterns and fundamental changes to the sales distribution network.
Outdoor Lighting: Launched the "powered by Carmanah" standalone solar engine product line, to pursue an OEM sales strategy for the supply of Carmanah's commercial-grade solar outdoor light engines for integration with virtually any luminaire manufacturer's product. Signed supply agreements with Acuity Brands, Inc. and Lighting Science Group Corp., leading providers of LED lighting and lighting controls.
Solar EPC Services: Focused on the construction and completion of three 300 kilowatt ("kW") projects. During the second quarter of 2013, designed and were engaged in completing regulatory requirements relating to a newly awarded 300kW project.
GoPower!: Revenues increased by about 32% over the same period in the prior year primarily from the recreational vehicle market annual Canadian booking program which resulted in a 23% performance increase over the same period in 2012. Introduced the Portable Solar Kit series and the largest single panel solar kit. Announced a large sale with a national American US Utility to outfit an additional 1500 service vehicles with power inverters.
Adjusted EBITDA reconciliation
Three months ended June 30
Six months ended June 30
(US$ in thousands)
Income tax expense
Intangible asset impairment
Non-cash stock based compensation
* 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 Adjusted EBITDA, defined as net income before interest, income taxes, amortization, non-cash stock-based compensation, impairment adjustments, restructuring/retirement provision, and acquisition related costs.
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, 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).
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, visitwww.carmanah.com.
Carmanah Technologies Corporation
Roland Sartorius, Chief Financial Officer
For further information:
Investor Relations: Roland Sartorius
Public Relations: Natasha Bartlett
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.
KEYWORDS: North America Canada
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