Carmanah Technologies: Q2 Results
Carmanah Technologies Corporation reported its second quarter financial results for the period ended June 30, 2011.
Sales for the three months ended June 30, 2011 were $10.7 million, up 34% from $8.0 million for the same quarter in 2010. Net loss for the quarter was $0.2 million compared to a loss of $0.7 million in the same period of the prior year.
“Revenue performance for the second quarter continued to ramp up from the positive trend set in Q4 2010 and Q1 this year,” stated Ted Lattimore, Chief Executive Officer. “The improvement is largely due to the success of our Grid-tie installations and impressive sales of Aviation signaling products. Our ability to garner Grid-tie success within the competitive Ontario Feed-In-Tariff program and to penetrate new Aviation markets through our strategic partnerships in Aviation is very satisfying as these achievements are the culmination of a lengthy period of committed strategic and operational effort. We recognize that Grid-tie revenues are seasonal in nature due to the fact that installations cannot be completed in the winter months.”
“Moreover, the improvement in year over year revenues is underlined by a significant improvement in the Operating Income,” Lattimore continued. “When a company is penetrating new markets with new products as deeply as Carmanah is, it is always a challenge to achieve profits before recurring revenue streams are achieved. However, our previous investment in process improvements, expanding our product lines from the previously established R&D building blocks, and executing on a highly scalable model are now making an operating profit possible. It should be noted that the lower gross margin compared to a year ago is due to the difference in product mix, as the Grid-tie revenue of $3.7 million is a lower margin business, and Grid-tie revenue in Q2 2010 was only $0.6 million.”
With regards to the lawsuits involving Lightech, “Management is continuing to aggressively defend its rights and take all measures to bring the matter to an end,” Lattimore stated. For a more detailed discussion on the terminated Lightech agreement, refer to the Company’s Second Quarter 2011 Management’s Discussion & Analysis filed on SEDAR (www.sedar.com) and the Company’s website at www.carmanah.com/Company/Investors/Financial_Reports.aspx
Financial Condition at June 30, 2011 compared to December 31, 2010
Cash and cash equivalents of $4.5 million, down $1.2 million from $5.7 million
Working capital of $8.0 million, up $0.5 million from $7.5 million
Continued debt-free operations
Second quarter 2011 compared to second quarter 2010
Sales: $10.7 million, up $2.7 million or 33.8% from $8.0 million
Gross margin: 30.6%, down from 33.9%
Operating costs: $3.1 million, down $0.3 million from $3.4 million
Net loss: $0.2 million net loss, down $0.5 million from a net loss of $0.7 million
Adjusted EBITDA (a non-IFRS measure): $0.6 million, up $1.2 million from ($0.6) million
Summary of operations:
Sales for the second quarter of 2011 were $10.7 million, up 33.8% from $8.0 million in the second quarter of 2010. Broken down by product sector, sales are as follows:
Signals, $4.5 million, unchanged from $4.5 million
Illumination, $1.2 million, unchanged from $1.2 million
Grid-tie, $3.7 million, up 428.6% from $0.7 million
Mobile, $1.3 million, down 18.8% from $1.6 million
Gross margin percentage for the second quarter of 2011 was 30.6%, down from 33.9% for the second quarter of 2010. Broken down by product sector, gross margin percentages are as follows:
Signals, 39.5%, up from 36.6%
Illumination, 27.2% down from 28.0%
Grid-tie, 20.9%, down from 26.3%
Mobile, 30.9%, down from 33.6%
Product development initiatives during the second quarter of 2011 included:
On April 12, 2011, Carmanah in partnership with ADB Airfield Solutions announced the completion of the wireless solar engine power supply (“SEPS”) for ADB airfield lights and visual navigation aid products. Carmanah, internationally recognized for reliable solar-powered products and ADB Airfield Solutions, the first name in aviation lighting and safety, combined forces through the development of SEPS to improve safety of flight in some of the most demanding environments on earth. Designed by Carmanah to support ADB airfield equipment in environments where the electrical grid is difficult or impossible to access, SEPS wirelessly powers those AC- and solar-powered visual navigation aids required to improve airfield and helipad safety.
On April 12, 2011, Carmanah in partnership with ADB Airfield Solutions announced the release of the solar-powered Helipad Kit; the first comprehensive and stand-alone wireless helipad light and navigational aid system. The Helipad Kit features ADB wireless solar engine power systems, visual navigation aids and Carmanah wireless solar-powered airfield lighting technology. Wireless, completely stand-alone and self-contained, as well as configurable, the Helipad Kit is the ideal total helipad safety improvement system for remote locations where grid power is difficult or impossible to access. The Helipad Kit is available as a complete system of lighting and navigation aid products or configurable to a helipad’s unique mission requirements.
On April 14, 2011, Carmanah announced its participation as a founding member to form the Consortium for Solar Lighting (“CSL”). The CSL’s other founding members are Sharp Electronics Corporation, Inovus Solar, Inc., and SolarOne Solutions, Inc. The mission of this group is to accelerate the adoption of reliable solar lighting technology through the development of universal specifications intended to support customers’ fair and comprehensive evaluation of commercial-scale lighting systems. In the process, the group expects that these specifications will foster awareness of solar powered lighting and the applications where it is a viable alternative to conventional grid-connected lighting technology.
Significant sales that were announced during the second quarter of 2011:
On May 3, 2011, Carmanah announced the sale of solar powered aviation lights for deployment at an airport in the Republic of Angola. The value of the contract is approximately $0.2 million and is being coordinated by authorized Carmanah distributor Infocontrol LDA out of Portugal.
On May 17, 2011, Carmanah announced the sale of solar powered Helipad Kits including solar powered A705-4 helipad and approach lights and wind cones for helipad lighting to a dominant oil and gas producer in South America in a deal worth approximately $0.2 million.
On May 25, 2011, Carmanah announced that a large international airport in Latin America has chosen Carmanah A704-5 solar powered aviation runway and A650 taxiway lanterns as their lantern of choice for emergency back-up airfield lighting for both of the runways on the airfield. The value of the purchase was almost $0.8 million.
On June 9, 2011, Carmanah announced that ADB Airfield Solutions and Carmanah had been awarded a contract to supply a rapidly deployable solar hybrid airfield lighting system to the United States Marine Corps. The solar hybrid lighting system was to be shipped to Afghanistan and installed by the Marine Wing Support Squadron in support of NATO’s International Security Assistance Force (“ISAF”). The total value of the award was over $1 million. The solar hybrid lighting system of Medium-Intensity Runway Lights (“MIRL”) have photometrics compliant to FAA AC 150/5345-46D, and can be operated wirelessly using a handheld controller or a ruggedized tablet PC. Powered using either the light’s integral photovoltaic panels, or cables connected to an on-base power network, the solar airfield LED lights reduce or eliminate energy consumption and dependence on fossil fuels. This hybrid lighting approach provides security in the event of grid failure and supports the US Marine Corps’ Expeditionary Energy Strategy objectives.
On April 27, 2011, Carmanah announced the sale of EverGEN 1520 solar powered lights to a city in the State of Nevada to light a dog park area in a newly developed public park in a deal worth $0.1 million.
On April 28, 2011, Carmanah announced the sale of EverGEN 1710 solar powered lights for federal government agency parking lot facility in a deal worth almost $0.2 million.
On June 1, 2011, Carmanah announced the sale of its EverGEN 1710 solar powered lights to a US federal government parking lot facility located in the Midwest, in a project worth almost $0.4 million. The installation took advantage of the Advanced Occupancy Sensing (“AOS”) feature of the EverGEN 1710 which maximizes lumen output potential for this geographic area.
On April 26, 2011, Carmanah announced that it had been awarded a second contract by the Greater Essex County District School Board (“GECDSB”) of Windsor, Ontario, Canada to provide a solar photovoltaic (“PV”) system on the new Tecumseh School. The Carmanah solar rooftop ballasted PV system, valued at approximately $0.6 million, will install on the Tecumseh Vista Academy, the School Board’s first K-12 School
On May 10, 2011, Carmanah announced that it had been awarded a contract valued at approximately $1.8 million to provide solar grid-tied PV systems for two elementary schools in Southern Ontario. Architects and planners for both schools considered the integration of a solar PV system early in the building’s design process. This, in combination with the School District’s continued support of sustainable energy and available funding through the Renewable Energy Funding for schools program, contributed to the District’s decision to adopt the two solar PV systems.
On May 19, 2011, Carmanah announced that it had received an initial stocking order from Keystone Automotive Operations, a leading distributor and marketer of specialty automotive equipment and accessories in North America, for its proprietary Go Power! mobile power product line. This major US automotive equipment distributor decided to initiate stocking Go Power! products in preparation for the 2011 Recreational Vehicle (“RV”) season.
Subsequent to June 30, 2011:
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.
On July 13, 2011, Carmanah announced that 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. Representing the first technical paper by the newly formed Consortium, the introductory document defines the process of selecting and configuring a solar lighting system to ensure that the system will operate reliably 365 days a year. The purpose of the recommended practices document is to sift through and pull together information on best practices from the array of existing standards. Where existing standards are silent on important topics, the CSL will continue to add new information and recommendations. The preliminary document presents solar lighting terminology and diagrams in a user-friendly form with the expectation that the practices can be readily adopted by municipal, government and commercial customers and specifiers. The paper is now available to the public at no cost.
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 Internal 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.
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, termination provision, restructuring charges, goodwill, intangible impairments, discontinued operations and acquisition costs.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the second quarter ended June 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
Roland Sartorius, CFO