Carmanah Technologies: Q2 2010 Results
Carmanah Technologies Corporation announces its second quarter financial results for the three-month period ending June 2010.
Sales for the quarter were $8.0 million, up $0.5 million from the same period last year. Second quarter Systems & Other sales increased by $0.7 million over the second quarter of the prior year, mainly due to a significant increase in mobile systems sales.
Highlights for the Quarter
* Sales: $8.0 million, up from $7.5 million for the same period in 2009
* Gross margin: 33.9%, down from 38.5% in 2009
* Operating costs: $3.4 million, up from $3.2 million in 2009
* Net (loss): $(0.7) million, consistent with 2009
* Adjusted EBITDA: $(0.7) million, consistent with 2009
* Cash balance: $6.7 million as at June 30, 2010, down from $8.7 million at December 31, 2009
* Debt: Continued debt-free operations
Summary of Results
The second quarter of 2010 showed an overall slight decline in sales of our EverGEN™ products over the first quarter of 2010, due to the lumpiness in EverGEN™ lighting sales caused by the project-based nature of this product line. Revenue for the EverGEN™ product declined from $1.6 million in the first quarter of 2010 to $1.2 million in the second quarter of 2010, with trends suggesting an increase in growth again during the second half of 2010. The newest EverGEN™ product, the 1710 series, which was launched recently at Lightfair in Las Vegas, Nevada, has shown a very positive market reception to its performance, high level of industrial design and integration, and its net price per value. Through the second quarter of 2010, in conjunction with the release to market of the 1710 series, a “See the Light” time limited marketing program was launched to provide lighting agents, distributors and customers the opportunity to procure a 1710 at a discounted price in order to seed the market with deployed installations, allowing a demonstration base for the product and its performance.
“On a year over year basis we are pleased with the upward revenue trend as our traditional markets regain some strength and the lighting market adopts our new outdoor illumination products,” said Ted Lattimore, Carmanah CEO. “Within 2010, quarter over quarter revenue was steady as we have yet to feel the positive impact of the Ontario Feed in Tariff program in our Grid-tie business; and with the product mix change from quarter one to quarter two, a 5.4% lower gross margin was realized vs. the uncharacteristically high quarter one gross margin.”
“During the second quarter of 2010, Carmanah continued to maintain its strong working capital position and have zero debt,” said Roland Sartorius, Carmanah CFO. “Throughout the year we are focused on executing several growth strategies for the Company while not jeopardizing our liquidity. As well, our revenues to date, although slightly higher than 2009, are expected to increase during the second half of 2010. ”
Sales for the second quarter of 2010 were $8.0 million, up from $7.5 million in 2009. This increase is due to higher sales in Illumination products, Grid-tie systems and Mobile systems sales during this period. A summary of revenues from each of the Company’s Signals & Illumination and Systems & Other business segments is displayed below:
Sales For the three months ended June 30,
(US$ thousands) 2010 2009 Change
$ Mix $ Mix $ %
Signals & Illumination
Signals 4,526 56.9% 5,155 68.8% (629) (12%)
Illumination 1,204 15.1% 775 10.4% 429 55%
Total Signals & Illumination 5,730 72.0% 5,930 79.2% (200) (3%)
Systems & Other
Solar Power Systems and Grid-tie 2,226 28.0% 1,530 20.4% 696 45%
Other - - 29 0.4% (29) (100%)
Total Systems & Other 2,226 28.0% 1,559 20.8% 667 43%
Total Revenue 7,956 100% 7,489 100% 467 6%
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 Adjusted EBITDA, defined as net income before interest, income taxes, amortization, restructuring charges, goodwill, intangible impairments and discontinued operations.
Adjusted EBITDA reconciliation For the three months ended
(US$ thousands) June 30, 2010 June 30, 2009
Net loss $ (736) $ (736)
* Income taxes
* Discontinued operations
* Restructuring charge
Adjusted EBITDA $ (739) $ (671)
Highlights during the Quarter
Throughout the second quarter, we continued to focus on supporting the success and growth of our key partnerships, which include Sabik Oy (“Sabik”) for marine globally, ADB Airfield Solutions, LLC (“ADB”) for aviation globally, and Semex S.A. (“Semex”) for traffic products in Mexico. Under the Sabik partnership agreement, we are expanding our marine product families to include Sabik’s marine lighting solutions, and we will continue to leverage our sales and distribution channels to deliver a complete range of marine lights to our global customer base. Sabik product sales have commenced in the third quarter of 2010, and we anticipate further sales growth in this area for the fourth quarter of 2010 as we continue to strategically target to increase our collective marine market penetration. With ADB, we continue to focus on the launch and release of ADB branded and co-branded solar power aviation lighting solutions to grow our collective aviation market share. With Semex, we continue to focus on both local Mexican lighting and traffic signaling opportunities to penetrate into this region.
Other highlights during this quarter (including subsequent events) included:
* Carmanah Launches New Online Application for Solar LED Lighting. The Company launched the Carmanah EverGEN Selector Tool, a new online application to aid in the selection of solar LED lighting for outdoor, off-grid lighting applications. The tool will allow users to explore different solutions and produce full technical specifications for the Carmanah EverGEN solar LED lighting systems that fit their specific lighting applications. (July 12, 2010)
* Carmanah Awarded $1.5 Million Solar PV Contract by Town of Markham. Carmanah was awarded a $1.5 million (CAD) contract by the Town of Markham, Ontario to supply, install, and commission a 250 kW solar photovoltaic grid-tie system. The system will be installed on the Town’s newly re-located Emergency Operation Centre. (July 7, 2010)
* Carmanah Supplies Carmanah/Sabik Marine Lanterns to Support Oil Spill Containment Efforts. Through its marine partnership with Sabik Oy, Carmanah provided Carmanah/Sabik solar LED marine lanterns for marking oil spill containment booms in the Gulf of Mexico. The lanterns helped to keep marine traffic safe while containment and cleanup work continued in the area. (June 15, 2010)
* Carmanah Awarded Multiple Standing Offers Totaling $1.2 Million (CAD) from Canadian Coast Guard. Through its marine signaling partnership, Carmanah/Sabik, has received four Standing Offers from the Canadian Coast Guard (CCG) to supply a range of solar-powered LED marine lanterns for aids-to-navigation (AtoN) lighting on Canadian waterways. The offers are for a one-year period with an optional one-year extension. Revenue in the first year from the four Standing Offers is anticipated to be in excess of $1.2 million (CAD). (June 2, 2010)
* Carmanah Launches Revolutionary Solar Lighting Technology at LIGHTFAIR ® 2010. Carmanah will be introducing two industry-first advancements in off-grid solar LED lighting technology at booth #932 at LIGHTFAIR 2010 (May 12 to 14). Carmanah is launching leading-edge adaptive lighting technology in the form of patent pending advanced occupancy sensing capabilities and is introducing the Company’s highest output self-contained light to-date, the EverGEN 1720. (May 11, 2010)
* Carmanah Delivers $1 Million (USD) in Solar-Powered Perimeter Fence Lighting. A power generating facility in the United States is illuminating its perimeter fencing with $1 million (USD) of solar-powered LED streetlights provided by Carmanah Technologies. The Southwestern power generating facility, which serves the electrical power needs of approximately four million people in several states, made the decision to incorporate the Carmanah EverGEN™ 1530 solar LED lighting systems as a security improvement to facility grounds. The new solar lights were selected to help underscore the power company’s commitment to renewable energies and sustainable business practices while presenting an economical alternative to traditional grid-powered lighting systems. Including time and installation costs, the utility company anticipates saving an estimated $2 million (USD). (May 4, 2010)
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the second quarter of 2010 Financial Statements and Management’s Discussion & Analysis are available on Carmanah's corporate website. To view full financials, visit: www.carmanah.com/Company/Investors/Financial_Reports.aspx.
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 carmanah.com.
Carmanah Technologies Corporation
Roland Sartorius, Chief Financial Officer
Roland Sartorius, CFO, Toll-Free: 1 877-722-8877