Carmanah Technologies Corp: First Quarter 2012 Results

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Victoria, British Columbia - Carmanah Technologies Corporation (“the Company” or “Carmanah”) today reported its first quarter results for the period ended March 31, 2012.

For the three months ended March 31, 2012, the Company recorded a net loss of $0.9 million on revenues of $5.4 million. Total Q1 2012 revenues were down $4.2 million over the same period in 2011. The net loss is primarily driven by lower Grid-tie revenues in the quarter due to a delay in contract awards caused by uncertainties in Ontario, Canada’s Feed in Tariff ("FIT") program. Q1 2012 lower results also reflect longer than expected timing of closing sales in our Outdoor Lighting and Aviation markets, as well as the first quarter of 2012 not having a number of significant project-based sales compared to the same period in 2011.

“In a word, disappointing sales results,” stated Bruce Cousins, Chief Executive Officer. “We believe that this has been a unique quarter and is not reflective of the balance of the year expectations. We remain committed to revenue growth in 2012. Significant progress was made in the quarter in support of expected improvements in revenue. We announced new products, strengthened our sales channels and enhanced our partnerships.”

Financial Condition at March 31, 2012 compared to December 31, 2011

    Cash and cash equivalents of $4.3 million, down $0.6 million from $4.9 million
    Working capital of $7.1 million, down $0.7 million from $7.8 million
    Continued debt-free operations

First quarter 2012 compared to first quarter 2011

    Revenues: $5.4 million, down $4.2 million from $9.6 million
    Gross margin: 37.2%, up from 32.4%
    Operating costs: $2.9 million, up $0.1 million from $2.8 million
    Net (loss)/income: $(0.9) million net loss, down $1.1 million from net income of  $0.2 million
    Adjusted EBITDA (a non-IFRS measure): negative $0.6 million, down $1.3 million from positive $0.7 million

Summary of operations:

    Revenues for the first quarter of 2012 were $5.4 million, down $4.2 million from $9.6 million in the first quarter of 2011. By product sector, revenues are as follows:
        Signals, $2.9 million, down from $3.9 million
        Outdoor Lighting, $0.8 million, down from $1.5 million
        Grid-tie, $0.1 million, down from $2.5 million
        Mobile, $1.6 million, down from $1.7 million
    Gross margin percentages for quarter 1 2012 were 37.2%, up from 32.4% in quarter 1 2011. The increase was mainly driven by the change in sales mix, with substantially lower sales from lower margin grid-tie revenue. Broken down by product sector, gross margin percentages are as follows:
        Signals, 40.9% down from 44.3%
        Outdoor Lighting, 28.5% down from 31.2%
        Grid-tie, (7.4)% down from 15.5%
        Mobile, 36.1% up from 31.1%.

Corporate operational and business highlights during the first quarter of 2012 included:

    Successfully negotiated and signed two long term exclusive cooperation agreements to enhance our portfolio and strengthen our network of strategic partnerships with the following companies:
        Sabik Oy (“Sabik”), our marine signaling partner based in Finland which we have worked with over the past few years. The five year agreement expands on our previous two year sales and marketing collaborations and to include a deeper integration of joint product development.
        Laser Guidance Inc., a US based pioneer in the aviation precision guidance systems. The agreement provides us with a five year exclusive world-wide marketing license for a portfolio of Laser Guidance aviation navigation aids.
    Embarked on major development efforts for our signaling products which will see a variety of new products launched this year, most significantly a new state of the art Marine signal lantern to replace our 700 series lights and a new Traffic signaling device that improves crosswalk safety.
    Launched a number of new and innovative products in our Aviation, Outdoor lighting and mobile segments. Details of these product releases are outlined in the next section under the relevant segment update.
    Expanded our focus on revenue growth with the hiring of an additional five sales employees to complement our new vertical orientated sales structure. Under this new structure, each market vertical has its own leadership and supporting team and is directly responsible for driving the planning, development and execution within the market.Reporting Currency and Accounting StandardsUnless 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”).

Adjusted EBITDA
      Adjusted EBITDA reconciliation           Three months ended March 31     
    (US$ in thousands)         2012           2011   
    Net Income (loss)            (911)         158     
    Add/(deduct):                     
    Interest                                -            4     
    Income tax expense               -         103     
    Amortization                     277         275     
    EBITDA*                        (634)         540     
    Terminated Lightech agreement costs         
                                             -            96     
    Non-cash stock based compensation         
                                              61         57     
    Adjusted EBITDA*              (573)         693     

* 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, and terminated Lightech agreement costs.

Complete set of Financial Statements and Management Discussion & Analysis

A complete set of the first quarter ended March 31, 2012 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.

Contact:
Carmanah Technologies Corporation
Investors:
Investor Relations: Roland Sartorius, CFO
Toll-Free: 1-877-722-8877
[email protected]
or
Media:
Public Relations: David Davies
Tel: +1-250-382-4332
[email protected]
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