Carmanah Technologies Corp: Financial Results of Q3
Victoria, British Columbia - Carmanah Technologies Corporation (“the Company” or “Carmanah”) today reported its third quarter financial results for the period ended September 30, 2011.
Revenues for the three months ended September 30, 2011 were $8.5 million, down $0.1 million from $8.6 million for the same quarter in 2010. Net Income for the quarter was $0.4 million compared to $0.1 million in the same period of the prior year.
“Revenue performance of $8.5 million in the quarter was essentially flat year on year, and reflects 17% growth on a year to date basis. Net income of $0.4 million for the three months ended September 30, 2011 is mainly based on one-time gains from the legal settlement with Lightech in the quarter.” stated Bruce Cousins, Chief Executive Officer. “I am delighted to have recently joined Carmanah and am optimistic of the growth opportunity for the company.” Cousins continued. “With dramatic decreases in solar panel pricing, continuing breakthrough’s in LED technology and anticipated breakthrough’s in battery technology, Carmanah is well positioned to capitalize on the integration of this technology as “we put solar to work."
Financial Condition at September 30, 2011 compared to December 31, 2010
* Cash and cash equivalents of $3.8 million, down $1.9 million from $5.7 million
* Working capital of $8.3 million, up $0.8 million from $7.5 million
* Continued debt-free operations
Third quarter 2011 compared to third quarter 2010
* Revenues: $8.5 million, down $0.1 million from $8.6 million
* Gross margin: 34.4%, down from 35.1%
* Operating costs: $2.6 million, down $0.3 million from $2.9 million
* Net Income: $0.4 million, up $0.3 million from $0.1 million
* Adjusted EBITDA (a non-IFRS measure): $0.4 million, down $0.6 million from $1.0 million
Summary of operations:
* Revenues for the third quarter of 2011 were $8.5 million, down $0.1 million from $8.6 million in the third quarter of 2010. Broken down by product sector, revenues are as follows:
o Signals, $4.3 million, down from $5.1 million
o Illumination, $0.7 million, unchanged from $0.7 million
o Grid-tie, $2.4 million, up from $1.7 million
o Mobile, $1.1 million, unchanged from $1.1 million
* Gross margin percentage for the third quarter of 2011 was 34.4%, down from 35.1% for the third quarter of 2010. Key drivers in margin erosion 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:
o Signals, 43.1%, up from 41.5%
o Illumination, 13.1% down from 25.1%
o Grid-tie, 25.0%, up from 15.7%
o Mobile, 33.7%, down from 42.1%
Corporate highlights during the third quarter of 2011 included:
* On July 13, 2011, the Consortium for Solar Lighting ("CSL"), of which Carmanah is a founding member, released the Solar Lighting Recommended Practices: Introduction, a preliminary guide to the effective sizing of solar lighting systems. We believe standards development to be an important aspect in the maturation of the solar market and Carmanah is well positioned, together with other industry leading companies, to facilitate this.
* On July 20, 2011, the first Master Distributor Agreement with a large marine supply company was signed with First Choice Marine Supply, a large marine supply firm servicing commercial, industrial and ship chandlery markets headquartered in Tampa, Florida. The original agreement covered the Caribbean territory only but has since been expanded to include the United States.
* On September 15, 2011 we reached a settlement agreement with Lightech Electronics Ltd. (“Lightech”) to end the $6.0 million Lightech lawsuit relating to the 2010 terminated merger agreement between Lightech and Carmanah. As part of the settlement agreement, Carmanah agreed to drop its $0.6 million counter lawsuit against Lightech. This settlement reflects a $0.3 million one-time gain in the quarter.
* On August 9, 2011, it was announced that the Northern Canadian Tsay Keh Dene First Nation is outfitting a remote airfield with its solar LED lighting systems. The new airfield lights will help supply and medevac aircraft navigate their way to and from the remote village located on the northern end of the Williston Reservoir, British Columbia. The solar-powered airfield project was one of two projects funded by the Canadian Government’s Innovative Clean Energy Fund. The new completely solar-powered airfield is the first of its kind in British Columbia.
* On September 9, 2011, Carmanah announced an order valued at $0.1 million, with the US Army. The 101st Airborne Division, known for being called into action when the need is immediate and extreme, had selected the Carmanah A704 solar powered aviation lantern as the perfect tool to aid with rapidly deployed precision drop zone and helipad marking requirements in the Middle East, as well as continental US.
* On July 6, 2011, Carmanah announced two sales orders with a combined value of approximately $0.2 million for Go Power! Pure Sine Wave Inverters, a proprietary mobile power product within the Carmanah portfolio. The inverters are to be deployed in over 600 fleet vehicles operated by a major US utility provider undergoing a fleet revitalization project.
Reporting Currency and Change in Accounting Standards
Unless otherwise indicated, all financial information presented in this press release is in US dollars and has been prepared in accordance with International Financial Reporting Standards (“IFRS”). The conversion to IFRS from Canadian Generally Accepted Accounting Principles became effective January 1, 2011. Please refer to the Company’s most recently issued financial statements for further discussion.
Adjusted EBITDA reconciliation
Net income/(loss) $ 351 $ 54 $ 335 $ (668)
Interest - (1) 4 14
Income taxes expense/(recovery) 68 42 225 (276)
Amortization 288 348 822 943
Non-cash stock-based compensation 108 9 281 232
Restructuring charges - 316 - 316
Termination provision (29) - 261 -
Terminated Lightech agreement costs (360) 242 (176) 242
Adjusted EBITDA* 426 1,010 1,752 803
* 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 these non-IFRS measures 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 these non-IFRS measures should not be considered as a substitute for results that are presented in a manner consistent with IFRS. These non-IFRS measures are provided to enhance investors’ overall understanding of Carmanah’s current financial performance.
A limitation of utilizing these non-IFRS measures 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 on 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, restructuring charges, termination provision, and terminated Lightech agreement costs.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the third quarter ended September 30, 2011 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 will also be 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 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.
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.
Carmanah Technologies Corporation
Investor Relations: Roland Sartorius, CFO
Public Relations: David Davies