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9.8.2006: Meldung: Carmanah Technologies Corporation: Financial Results für Q2 2006

CARMANAH ANNOUNCES FINANCIAL RESULTS FOR Q2 2006

 

Victoria, British Columbia, Canada - Tuesday, August 8, 2006 -

Carmanah Technologies Corporation (TSX: CMH) is pleased to announce

its second quarter results for the three and six months ended June

30, 2006 and 2005.

 

HIGHLIGHTS FOR THE QUARTER

 

- Record Q2 2006 revenues of $15,844,155, representing a 142%

increase over Q2 2005 and 25% over Q1 2006 at $12,693,769.

- Record 2006 year-to-date revenues at $28,537,924, representing a

151% increase over the same six-month period in 2005.

- Record Q2 2006 orders booked of $16,152,968.

- Sales order backlog of $6,681,294.

- Gross margin at 34% for Q2 2006 and for the six months ending

June 30, 2006.

- Q2 2006 EBITA in the amount of $773,025, representing an increase

of 503% over Q1 2006 at $128,249.

- Q2 2006 net earnings in the amount of $123,543, compared to Q1

2006 loss of $(23,290).

 

Download financial results:

www.carmanah.com/documents/news_releases/060808_CarmanahRelease.pdf

 

SUMMARY OF RESULTS

 

Q2 2006 is trending as per management"s expectations. During the

quarter, Carmanah achieved record revenues of $15,844,155, which

represents growth of 142% over the same quarter in 2005 at $6,542,507

and 25% over Q1 2006 at $12,693,769. The Company also booked a

record $16,152,968 in sales orders and held a significant sales order

backlog of $6,681,294 going into Q3 2006. In addition, gross margins

were stable at 34% and all operating expenses declined as a

percentage of sales.

 

"The last of the unusual expenses related to our integration of

Soltek Powersource Ltd. and the capital costs associated with

multiple facility moves and improvements were effectively completed

in Q2", states Art Aylesworth, Carmanah"s CEO. "Revenues and profits

are now growing quarter over quarter and we are seeing our operating

expenses decline as a percentage of sales. The past quarter also saw

the Company enjoy several important milestones, including the

successful launch of and orders for our feature-rich A704-5 aviation

light, as well as the follow-on order from London Buses to extend the

system-wide rollout of our solar LED bus stops. In addition, our

solar LED roadway beacons received formal approval from the state of

Florida and our mobile power systems division signed a new channel

partnership agreement with a major US distributor, strengthening our

US routes to market. All of these achievements signal increased

mainstream acceptance of our products, which bodes well for a strong

finish to the year. With the wide range of "unusual" integration and

expansion activities of the past year behind us, management is now

focused on growth, efficiency and profitability initiatives."

 

OVERVIEW OF OPERATIONS

 

The growth in Carmanah"s operations, both organically and through

acquisition, has resulted in a broadening of the Company"s business

activities to include the design, manufacture and/or distribution of

three technology groups: solar powered LED lighting, solar power

systems and LED-illuminated signage.

 

Carmanah"s Solar LED Lighting Group provides a variety of

energy-efficient LED lighting products for marine, aviation, transit,

roadway and industrial worksite applications. The Company"s Solar

Power Systems Group offers a wide range of renewable energy system

solutions for industrial, residential and recreational power

applications. The Company"s LED Sign Group designs and manufactures

energy-efficient LED edge-lit signs for corporate identity,

point-of-purchase and architectural applications.

 

Carmanah"s headquarters and primary manufacturing and distribution

facilities are located in Victoria, British Columbia, Canada. The

Company also operates additional manufacturing and distribution

facilities in Calgary, Alberta, Canada, as well as regional

distribution and sub-assembly facilities in Barrie, ON; Santa Cruz,

CA; and London, England.

 

Carmanah currently has more than 250,000 installations in 110

countries. Carmanah"s customer list includes a wide range of

government, commercial and private users worldwide, who are serviced

directly by the Company or one of its regional authorized

distributors and/or sales agents.

 

RESULTS OF OPERATIONS

 

Sales

 

Carmanah"s total revenues for the three months ended June 30, 2006

were $15,844,155, representing a 142% increase over the same period

in 2005 at $6,542,507. Revenues for the six months ended June 30,

2005 were $28,537,924, representing a 151% increase over the same

period in 2005 at $11,392,049.

 

Solar LED Lighting Group

 

Revenues from the Solar LED Lighting Group were $5,770,912 in Q2

2006, representing an increase of 12% over Q2 2005 at $5,142,265.

This is not indicative of sales momentum, however, as total orders

booked by the Solar LED Lighting Group for the quarter was

$6,719,976. The differential between orders booked and invoiced

sales is primarily a result of orders in the system with delivery

dates beyond Q2.

 

Revenues from the Solar LED Lighting Group for the six months ended

June 30, 2006 were $11,097,912, representing an increase of 29% over

the same period in 2005 at $8,585,446. The Solar LED lighting Group

entered Q3 2006 with a sales order backlog of $3,446,525.

 

Solar Power Systems Group

 

Revenues from the Solar Power Systems Group amounted to $8,548,354

for the three months ended June 30, 2006, and $14,775,108 for the six

months ended June 30, 2006. This group was acquired in July 2005 and

therefore has no comparatives for the same periods in 2005. The

Solar Power Systems Group entered Q3 2006 with a sales order backlog

of $2,913,698.

 

LED Sign Group

 

Revenues from the LED Sign Group were $1,356,497 in sales for Q2

2006, compared to $1,400,242 for Q2 2005. Contributions for the six

months ended June 30, 2006 were $2,246,699, compared to $2,806,603

for the same period in 2005. A significant portion of revenues

achieved by this group are through larger orders, and therefore

quarter-over-quarter results may vary significantly. The LED Sign

Group entered Q3 2006 with a sales order backlog of $321,069.

 

A summary of revenues from each of Carmanah"s technology groups is as

follows:

 

Sales Summary

Q1 2006 Q1 2005

 

Solar LED Lighting $5,327,000 $3,443,181

Solar Power Systems $6,226,754 $ -

LED Sign Group $890,202 $1,406,361

Other income $249,813 $ -

TOTAL $12,693,769 $4,849,542

 

Q2 2006 Q2 2005

 

Solar LED Lighting $5,770,912 $5,142,265

Solar Power Systems $8,548,354 $ -

LED Sign Group $1,356,497 $1,400,242

Other income $168,392 $ -

TOTAL $15,844,155 $6,542,507

 

YTD 2006 YTD 2005

 

Solar LED Lighting $11,097,912 $8,585,446

Solar Power Systems $14,775,108 $ -

LED Sign Group $2,246,699 $2,806,603

Other income $418,205 $ -

TOTAL $28,537,924 $11,392,049

 

Cost of Sales and Gross Profit Margin

 

Carmanah"s cost of sales for the Q2 2006 was $10,496,659 (66% of

sales), resulting in a gross profit margin of 34%, compared with

gross profit margin of 35% for Q1 2006. For the six months ended

June 30, 2006, the Company"s gross profit margin was 34%, compared

with 49% for the same period in 2005. The shift in Carmanah"s gross

margin from 2005 to 2006 is primarily due to the contribution by the

Company"s Solar Power Systems Group for the six months ended June 30,

2006 ($14,775,108 at 24% gross margin).

 

Carmanah offers product solutions to a variety of market sectors at

various gross profit margins. The blended gross profit margin is

significantly affected by the ratio of sales contributed by the

various technological groups, by the product mix sold, as well as the

related market sector.

 

Wages and Benefits

 

As a percentage of revenue, wage and benefit expenses continue to

trend downwards from preceeding periods. For the three months ended

June 30, 2006 wage and benefit expenses were 15%, compared to 21% for

Q2 2005 and 19% for Q1 2006. Wage and benefit expenses for the six

months ended June 30, 2006 were 17%, compared to 20% for the same

period in 2005.

 

Wage and benefit expenses for the three months ended June 30, 2006

increased 99% to $2,389,990, compared with $1,202,770 for Q2 2005.

For the six months ended June 30, 2006, wage and benefit expenses

increased 116% to $4,824,958, compared with $2,233,269 for the same

period in 2005. This increase is primarily due to the following:

 

- $1,600K in additional wage expenses resulting from the acquisition

of the Solar Power Systems Group;

- $390K in additional commissions expense resulting from overall

increased sales;

- $274K in additional sales, marketing, finance, purchasing and

administrative staff in support of overall sales growth; and

- $247K in additional stock-based compensation expense.

 

Office and Administration

 

As a percentage of revenue, office and administration expenses for Q2

2006 were 6%, compared to 7% for Q2 2005 and 6% for Q1 2006. Office

and administration expenses for the six months ended June 30, 2006

were also 6%, compared to 8% for the same period in 2005.

 

Office and administration expenses in Q2 2006 were $992,470,

representing a 119% increase over Q2 2005 of $453,658. Office and

administration expenses for the six months ended June 30, 2006 were

$1,801,989, representing an increase of 99% over the same period in

2005 at $904,548. This increase is primarily due to:

 

- The acquisition of the Solar Power Systems Group in July 2005,

which has no comparatives for the same periods in 2005,

contributed to this increase with the additional costs of its

four sub-assembly and warehouse operations (Victoria, BC, Calgary,

AB, Barrie, ON, and Santa Cruz, CA);

 

- The expansion into Carmanah"s new 28,000 square foot warehouse

facility, as well as the associated increase in overall office,

administration and information technology expenses; and

 

- Increased public company-related costs, including a one-time

expense in Q1 2006 in the amount of $117,000 to transfer its

listing from the TSX Venture Exchange to the TSX Toronto Stock

Exchange, as well as an overall increase in regulatory fees and

expenses paid under the new listing.

 

Sales and Marketing

 

As a percentage of revenue, sales and marketing expenses for Q2 2006

were 4%, compared to 6% for Q2 2005 and 4% for Q1 2006. Sales and

marketing expenses for the six months ended June 30, 2006 were 4%,

compared to 7% for the same period 2005.

 

Sales and marketing expenses for Q2 2006 were $632,523, representing

a 51% increase over Q2 2005 of $418,478. Sales and marketing

expenses for the six months ended June 30, 2006 were $1,157,818,

representing a 49% increase over $776,103 for the same period in

2005. The Company continued to increase sales and marketing

activities for new and existing product lines throughout its

worldwide marketplace and is expanding its sales and marketing

efforts to include the Power Systems Group"s customers and verticals.

 

For the first six months of 2006, the Company attended 56 tradeshows

and industry conferences, compared with 43 similar events during the

same period in 2005.

 

Research and Development

 

As a percentage of revenue, research and development expenses for Q2

2006 were 3%, compared to 7% for Q2 2005, and 3% for Q1 2006.

Research and development expenses for the six months ended June 30,

2006 were 3%, compared to 7% for the same period 2005.

 

During Q2 2006, gross research and development expenses increased 69%

to $820,062, compared with $486,787 for Q2 2005. For the six months

ended June 30, 2006, gross research and development expenses

increased 68% to $1,432,329, compared with $850,012 for the same

period in 2005. The increase in gross research and development

expenses is primarily due to continued investment in new product

development, cost reduction initiatives and existing product

enhancements across all of the Company"s technology groups.

 

During Q2 2006, a SR&ED investment tax credit in the amount of

$326,361 was booked against total research and development expenses,

resulting in net research and development expenses of $493,701. For

the six months ended June 30, 2006, a SR&ED investment tax credit in

the amount of $526,509 was booked against year-to-date research and

development expenses, resulting in net research and development

expenses of $905,820. There are no comparative SR&ED investment tax

credits for 2005.

 

Income Tax

 

Income tax expense for Q2 2006 totaled $357,826. This amount is

comprised of current tax expense of $282,199 and future income tax

expense of $75,627. The current tax expense relates to taxable

income generated by Carmanah in the normal course of operations.

Current tax expense as a percentage of pre-tax earnings is high, as

Carmanah chose to postpone certain tax deductions to use investment

tax credits that offset taxes otherwise payable.

 

Earnings

 

Earnings before interest, taxes and amortization (EBITA) for Q2 2006

were $773,025, compared to $447,471 for Q2 2005. For the six months

ended June 30, 2006, EBITA were $901,274, compared to $754,043 for

the same period in 2005.

 

Non-GAAP measures - the Company uses certain non-GAAP measures to

assist in assessing its financial performance. Non-GAAP measures do

not have any standardized meaning prescribed by GAAP and are

therefore unlikely to be comparable to similar measures presented by

other companies. One such non-GAAP measure used for assessing

financial performance is EBITA. EBITA is calculated as net earnings

before interest income, taxes and amortization. A reconciliation of

EBITA to net earnings is as follows:

 

Three months ended June 30,

2006 2005

 

Net earnings - as reported $123,543 $387,217

Add back (deduct):

Interest Income (39,413) (43,499)

Income taxes 357,826 -

Amortization of equipment and

leaseholds 262,986 92,501

Amortization of intangibles 68,083 11,252

------

EBITA $773,025 $447,471

 

Six months ended June 30,

2006 2005

 

Net earnings - as reported $100,253 $650,639

Add back (deduct):

Interest Income (118,889) (85,909)

Income taxes 406,777 -

Amortization of equipment and

leaseholds 385,191 167,192

Amortization of intangibles 127,942 22,121

------

EBITA $901,274 $754,043

 

Net earnings for Q2 2006 were $123,543, compared with $387,217 for Q2

2005. For the six months ended June 30, 2006, net earnings were

$100,253 compared with $650,639 for the same period in 2005.

 

Carmanah is continuing to focus on maintaining or increasing the

gross margins across all of its technology groups, and continuing to

reduce overall operating expenses as a percentage of sales.

 

Balance Sheet Highlights

 

Carmanah"s cash, cash equivalents, and short-term investments at June

30, 2006 were $4,444,241, compared to $11,662,214 at December 31,

2005.

 

Net cash usage from operations for the six months ended June 30, 2006

was $6,574,852. This is due primarily to:

 

- $3,840,003 in increased inventory levels in support of increased

sales forecasts, particularly in areas of solar panel supply;

 

- $882,255 in prepayments to suppliers to secure solar panel product;

 

- $2,885,056 in increased accounts receivables due to a combination

of sales generated through the Mobile markets booking program

which has extended payment terms and to increased sales growth,

particularly through the latter part of second quarter.

 

During the six months ended June 30, 2006, Carmanah also invested

$1,387,838 in leasehold improvements and equipment related to setup

and completion of the Company"s new production and warehousing

facility, as well as to improvements to its head office facility in

anticipation of physically integrating Soltek and Carmanah sales and

administration staff. These projects were effectively completed by

the end of Q2 2006. These improvements have prepared Carmanah"s

facilities for the anticipated growth over the next two years. The

Company anticipates no further significant facilities-related

investments in the foreseeable future.

 

As per the December 2005 financing, management advised that funds

raised would be primarily used for significant infrastructure

improvements, as well as pro-active inventory investment related to

potential supply-side challenges in the photovoltaics market. With

availability of dollars to invest in inventory, management was able

to negotiate supply contracts through to the end of 2007. As a

result, current inventory levels will now be monitored and reduced

where appropriate.

 

Net working capital as at June 30, 2006 was $26,743,748 with a

current ratio of 5.2:1 and $7,609 of non-current lease obligations.

 

ABOUT CARMANAH TECHNOLOGIES CORPORATION

 

Carmanah is an award-winning manufacturer specializing in renewable

and energy-efficient technology solutions. The Company is currently

focused on three technology groups: solar power systems & equipment,

solar-powered LED lighting and LED illuminated signage.

 

Carmanah is headquartered in Victoria, British Columbia, Canada and

has branch offices and/or sales representation in 11 cities across

Canada, the United States and the United Kingdom. With more than

250,000 installations worldwide, Carmanah is one of the world"s

premier suppliers of energy-efficient products.

 

The shares of Carmanah Technologies Corporation are publicly traded

on the Toronto Stock Exchange under the symbol "CMH" and on the

Berlin and Frankfurt Stock Exchanges under the symbol "QCX". For

more information, please visit www.carmanah.com.

 

On Behalf of the Board of Directors

Carmanah Technologies Corporation

 

"Praveen Varshney"

Praveen Varshney, Director

 

For further information, please contact:

 

Investor Relations:

Mr. Mark Komonoski, Director

Tel: (403) 470-8384

Toll-Free: 1-877-255-8483

mkomonoski@carmanah.com

 

Media:

Mr. David Davies

Tel: (250) 382-4332

ddavies@carmanah.com

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