Q4-2012 revenue of $8.4 million underpins positive adjusted EBITDA
Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its fourth quarter and fiscal year financial results for the period ended December 31, 2012.
For the quarter-end December 31, 2012, the Company recorded revenue of $8.4 million and a net loss of $0.7 million, including approximately $0.4 million of one-time charges related to acquisition and restructuring activities. Adjusted EBITDA for the quarter was slightly positive at $8 thousand. Q4 2012 reflects the strongest revenue quarter in 2012, reflecting a 17% increase versus prior year quarter and marks the significant recovery of our Solar EPC Services segment.
For the year end December 31, 2012 the Company recorded revenue of $26.4 million and a net loss of $3.9 million. Revenue results for the year reflect a decline of $9.5 million year on year. The significant decline in revenue relates to soft first half year performance, heavily impacted by uncertainties in the Ontario FIT program negatively impacting our Solar EPC Services segment. These uncertainties were resolved mid-2012, with second half 2012 sales up 31% versus the first half of the year. Net loss improved $4.6 million year on year. Improvement in net loss relates to non-recurring charges in 2011 related to the write-down of tax assets.
“Revenue performance in the quarter reflects our strongest quarter in 2012, and adjusting for one-time charges delivers positive EBITDA in the business. One-time charges relate to restructuring and acquisitions undertaken late in the year to further strengthen execution and protect positive cash flow in the business. Unfortunately, revenue shortfall experienced in the first half 2012 was not recovered in the second half, with overall year on year results disappointing” stated Bruce Cousins, Chief Executive Officer, adding “A tough year for CMH and disappointing overall financial results. However, a strong fourth quarter and significant foundational progress made in the year. Momentum is building and I believe we are poised for a much stronger 2013.”
Financial Condition at December 31, 2012 compared to December 31, 2011
- Cash and cash equivalents of $2.7 million, down $2.2 million from $4.9 million
- Working capital of $6.3 million, down $1.5 million from $7.8 million
- Continued debt-free operations
Fourth quarter 2012 compared to fourth quarter 2011
- Revenues: $8.4 million, up $1.3 million from $7.1 million
- Gross margin: 28.8%, up from 27.5%
- Operating costs: $3.0 million, up $0.1 million from $2.9 million
- Net loss: $0.7 million, down $8.2 million from $8.9 million
- Adjusted EBITDA (a non-IFRS measure): slightly positive at $8 thousand, comparable to negative $0.4 million
Fiscal 2012 compared to fiscal 2011
- Sales: $26.4 million, down $9.5 million from $35.9 million
- Gross margin: 31.2%, down from 31.4%
- Operating costs: $12.1 million, up $0.6 million from $11.5 million
- Net loss: $3.9 million, down $4.6 million from $8.5 million
- Adjusted EBITDA (a non-IFRS measure): negative $2.1 million, down $3.4 million from $1.3 million
Summary of operations:
Revenues for the fourth quarter of 2012 were $8.4 million, up $1.3 million from $7.1 million in the fourth quarter of 2011. By product sector, revenues are as follows:
- Signals, $3.0 million, down from $3.1 million
- Outdoor Lighting, $1.3 million, down from $1.9 million
- Solar EPC Services, $2.5 million, up from $1.0 million
- Go Power!, $1.6 million, up from $1.1 million
Sales for fiscal 2012 were $26.4 million, down $9.5 million from $35.9 million in fiscal 2011. Broken down by product sector, sales are as follows:
- Signals, $11.5 million, down from $15.9 million
- Outdoor Lighting, $3.7 million, down from $5.2 million
- Solar EPC Services, $4.7 million, down from $9.6 million
- Go Power!, $6.5 million, up from $5.2 million
Gross margin percentages for fiscal 2012 were 31.2%, down from 31.4% for fiscal 2011. Key drivers in margin variation 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:
- Signals, 36.0% down from 41.5%
- Outdoor Lighting, 26.6% up from 24.8%
- Solar EPC Services, 24.6% up from 19.3%
- Go Power!, 29.8%, unchanged
Corporate operational highlights during 2012 included:
Negotiated and signed two long term exclusive co-operation agreements to enhance the business portfolio and strengthen the network of strategic partnerships with the following companies:
- Sabik Oy (“Sabik”), a marine signalling partner based in Finland. The five year agreement expands on the previous two year sales and marketing collaborations to include reciprocal technology access as well as joint product development.
- Laser Guidance Inc., a US-based pioneer in aviation precision guidance systems. The agreement provides the Company with a five year exclusive world-wide marketing license for a portfolio of Laser Guidance aviation navigation aids.
Strengthened the Company’s distribution channel through the addition of new partners in key markets including Best Light in Mexico and Al-Babtain in Saudi Arabia for the Outdoor Lighting market.
Embarked on major development efforts for the Company’s signalling products, which will see a variety of new products launched, most significantly a new state of the art Marine signal lantern that replaced the Company’s 700 series lights and a new Traffic signalling device, the rectangular rapid flashing beacon (“RRFB”) that improved crosswalk safety.
Agreed to (a) acquire the business assets of Spot Devices, Inc., a market leader in the traffic signaling industry and (b) an exclusive license for the use in roadway applications of System Infrastructure Management Application (“SIMA”) technology developed by with Cirrus Systems, LLC, a related company of Spot Devices Inc., The acquisition of Spot Devices Inc.’s business complements and expands the Company’s RRFB portfolio. The SIMA technology will expand Carmanah’s offerings by providing remote cloud based network management capability which enables customers to monitor and control traffic systems from a central location. The transaction closed on January 4, 2013.
Signed a supply agreement with Acuity Brands, Inc, a leading provider of LED lighting and lighting controls in early 2013. The agreement provides for the supply of our solar outdoor light engines for integration into certain luminaires provided by Acuity.
Negotiated a number of major sales contracts, including 8 Solar EPC Services projects worth over $5.1 million.
Signed a $10 million non-binding letter of agreement with one of the Company’s South American distributors to procure, commission and install various aids to navigation on a major South American waterway. Conditionality by the end customer has been resolved, and progress has been made to move forward into the finalization of technical specifications on the product. It is anticipated that specifications will be completed in early 2013 with commencement of delivery of the product throughout 2013 and early 2014.
Expanded the Company’s focus on revenue growth with the hiring of additional sales employees to complement the new vertical oriented 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.
Closed a non-brokered private placement of 3,981,722 common shares for net proceeds of $1.8 million.
Reporting Currency and Change in Accounting Standards
Unless otherwise indicated, all financial information presented in this press release is in US dollars and has been prepared in accordance with International Financial Reporting Standards (“IFRS”). The conversion to IFRS from Canadian Generally Accepted Accounting Principles became effective January 1, 2011. Please refer to the Company’s most recently issued consolidated financial statements for further discussion.
|Three months ended December 31||Year ended December 31|
|(US$ in thousands)||2012||2011||2012||2011|
|Income tax expense||2||3,987||2||4,212|
|Terminated Lightech agreement costs/(recovery)||-||-||-||(176)|
|Impairment of Investment tax credits||-||4,051||-||4,051|
|Non-cash stock based compensation||45||147||257||428|
* 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, restructuring/retirement provision, and acquisition related costs.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the annual 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 for the year ended December 31, 2012 will also be filed on SEDAR (www.sedar.com).
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 pursues its business strategy within six distinctive product offerings: outdoor lighting, marine signal, aviation signals, traffic signals, Solar EPC Services and GoPower!. Carmanah is actively seeking additional product sales opportunities to add to its top line revenue, as well as extending existing product lines through internal development efforts, strategic business relationships as well as focused acquisitions. 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.
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