COM DEV Announces Fourth Quarter and Year-End Fiscal 2013 Results

CAMBRIDGE, ON, Jan. 9, 2014 /CNW/ - COM DEV International Ltd. (TSX: CDV) today announced fourth quarter and year-end financial results for the three- and twelve-month periods ended October 31, 2013.  All amounts are stated in Canadian dollars unless otherwise noted.

Fiscal Year 2013 Highlights

  • New order intake for the year was $243.3 million, growing by 9.3% over 2012 order levels.
  • Backlog at October 31, 2013 was $164.7 million, which is the highest backlog since early 2009, and is the highest year-end backlog for the Company since it began tracking it in 2006. An additional $35.3 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded, increases the backlog ultimately expected to be realized to $200.0 million, compared to an expected total backlog of $177.9 million a year earlier.
  • Revenue increased year over year by 3.3%, to $215.5 million, up from $208.6 million in fiscal year 2012.
  • Gross margins averaged 26.8% for the year, compared to 25.8% in fiscal 2012, reflecting effective program execution during the year, and year over year growth in revenues from the Company's exactEarth™ subsidiary. 
  • Majority-owned subsidiary exactEarth achieved positive EBITDA of $0.4 million compared to negative EBITDA of $2.7 million in fiscal 2012, and had revenue of $11.4 million, compared to $9.3 million in 2012, a 22.6% increase year over year.
  • Net income attributable to shareholders was $18.6 million or $0.24 per share, an increase of $2.2 million compared to $16.4 million or $0.22 per share

Fourth Quarter Highlights

  • The Company booked $87.9 million in new orders, including the largest commercial order ever received by the Company, compared to $56.1 million in the fourth quarter of 2012 and $36.6 million in the third quarter of 2013.
  • Included in the total new orders for the quarter was $4.2 million in new orders for the Company's exactEarth™ subsidiary, a 44.8% increase over 2012 Q4 when $2.9 million in new orders were won.
  • Revenue was $53.8 million, a 5% decline from $56.7 million in the fourth quarter of 2012, due to continuing federal government budget pressures in the United States and the impact of sequestration on the Company's U.S. operation.  
  • Gross margins averaged 27.3%, compared to 27.1% in fiscal Q4 2012.
  • The Company recorded a non-cash impairment loss on its U.S. operation in the amount of $3.5 million, resulting from the impact of government budget sequestration in the United States.
  • Net income attributable to shareholders was $4.1 million or $0.05 per share, compared to $3.0 million or $0.04 per share in the fourth quarter of 2012.

"At the beginning of fiscal 2013 we stated that our objective was to continue our disciplined approach with a focus on profitability and lean operations." stated Michael Pley, President and CEO. "We are very pleased that, despite the significant impact of U.S. sequestration, we achieved a 13% increase in net income and an almost 60% increase in cash from operations. Going forward into fiscal 2014 we will look at opportunities to deploy these resources to grow the Company and to deliver value to our shareholders."

Financial Review

COM DEV saw a 9% increase in new orders, totaling $243.3 million during the year, of which 68% were commercial, 26% were civil, and 6% were military. In fiscal 2012 the Company booked $222.7 million of new orders, with a commercial/civil/military split of 48/28/24. The growth in orders in 2013 is an indication of the strength of the commercial market, and came in the face of headwinds in the U.S. government market.

COM DEV's fiscal 2013 revenues of $215.5 million increased by $6.7 million or 3.3% compared to $208.6 million the previous year. The revenue split between the three market segments was 48% commercial, 35% civil and 17% military, compared to a 48/32/20 split in 2012. It is important to note that communication satellite programs are increasingly being seen in the civil segment as emerging country national governments use satellites as an efficient means to provide communications infrastructure. These programs draw on the Company's same core equipment as the more traditional commercial market segments. In general, bidding and order activity remains robust.

Order backlog at October 31, 2013 was $164.7 million, compared to $131 million three months earlier, and $139 million at the end of fiscal 2012.  An additional $35.3 million of follow-on orders are expected to be realized from ATPs already received; COM DEV only includes these ATP amounts in orders and backlog once the final contracts are in place. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 58%, 33% and 9% respectively, compared to 36% 36% and 28% at October 31, 2012.  The Company expects to convert approximately 76% of the total backlog into revenue during fiscal 2013.

Consolidated gross margin was $54.3 million in fiscal 2013, representing 25.2% of total revenues, compared to $53.7 million or 25.8% of revenues in 2012.

COM DEV recorded a net recovery of research and development of $3.9 million in 2013, compared to an expense of $2.6 million in 2012.  Gross R&D spending declined to $9.9 million from $12.9 million while R&D funding from external sources decreased to $2.1 million from $4.3 million. The Company also recognized $11.7 million of Investment Tax Credits (ITCs) in 2013, compared to $6.0 million in 2012.

Selling expenses were $11.9 million in 2013, compared to $11.6 million in 2012. Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway. General expenses are managed against the budgets set for the general and administrative functions, with a view to minimizing these costs, while not hindering the achievement of the Company's business objectives.

Net income attributable to shareholders was $18.6 million in 2013, an increase of $2.2 million from  $16.4 million in 2012.  The increase in net income is the result of higher gross margin, net research and development recovery compared to a prior year expense, improved performance in exactEarth™, and lower interest and other expense, offset by the previously noted impairment charge, higher selling and general expenses and a lower foreign exchange gain.

COM DEV ended the year with $34.9 million of cash and equivalents, compared to $25.8 million at October 31, 2013. Operating activities generated $31.9 million of cash for the year, compared to $20.7 million in fiscal 2012. For 2013, $9.1 million of cash was generated compared to $1.8 million invested in 2012. The Company generated $3.9 million of cash from working capital in 2013 which compares to the $19.4 million generated from working capital in 2012. This decrease in working capital was mainly due to decreases in accounts receivable and inventory plus an increase in current portion of loans payable offset by decreases in accounts payable and accrued liabilities and billings in excess of costs and earnings on contracts in progress.

The Company's operating credit line of $20 million was not drawn upon at the end of 2013, except for $2.8 million (2012: $2.8 million) in the form of guarantee letters issued to customers in the normal course of operations by the bank on behalf of the Company and to government agencies while certain tax objections are resolved.

The Company's basic share count stood at 76,486,125 on January 9, 2014.

Conference Call

A conference call will be held Thursday, January 9, 2014 at 5:00 pm EST to discuss this announcement.  To access the call, dial 647-427-7450 or 1-888-231-8191.  To access the live webcast, please visit the Company's website at www.comdevintl.com or www.newswire.ca for directions.  Participants will require Windows Media Player™ to listen to the webcast. 

About COM DEV

COM DEV International Ltd. (www.comdevintl.com) is a leading global provider of space hardware and services. The company has a staff of 1,300, annual revenues of $215 million, and facilities in Canada, the United Kingdom and the United States. COM DEV designs, manufactures and integrates advanced products, subsystems and microsatellites that are sold to major satellite prime contractors, government agencies and satellite operators, for use in communications, space science, remote sensing and defence applications. The company has won contracts to supply its equipment on over 900 spacecraft. COM DEV's majority-owned subsidiary, exactEarth Ltd., provides satellite data services for global maritime surveillance.

This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding COM DEV's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. COM DEV uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by COM DEV in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors COM DEV believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to COM DEV's expectations and predictions is subject to any number of risks, assumptions and uncertainties.  Many factors could cause COM DEV's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release.  These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of COM DEV's customers; the competition COM DEV faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of COM DEV's products or services.

The triangular logo and the word COM DEV are each registered trademarks and the property of COM DEV Ltd. All rights reserved.

 

 COM DEV International Ltd.
 Consolidated Statements of Financial Position
 (Canadian dollars in thousands)
                     
        As at October 31,
2013
  As at October 31,
2012
  As at November 1,
2011
            (note 20)   (note 20)
Assets                
  Current assets                
    Cash and cash equivalents     $ 34,897 $ 25,794 $ 27,618
    Accounts receivable       37,460   41,722   47,563
    Inventory        59,383   64,763   46,147
    Prepaid expenses and other       2,716   3,214   1,421
    Income taxes recoverable        2,245   2,266   2,159
    Investment tax credits        2,961   2,162   4,684
  Total current assets        139,662   139,921   129,592
                   
  Non-current assets                
    Property, plant and equipment       92,340   86,000   73,973
    Intangible assets       16,416   14,600   15,576
    Goodwill       -   2,205   2,200
    Investment tax credits        9,933   2,124   9,493
  Deferred income tax assets        9,552   14,728   1,779
  Total non-current assets        128,241   119,657   103,021
Total Assets      $ 267,903  $ 259,578  $ 232,613
               
Liabilities                
  Current liabilities                
    Accounts payable and accrued liabilities     $ 26,334 $ 30,622 $ 25,830
    Income taxes payable       4   851   302
    Provisions        1,215   430   1,172
    Billings in excess of costs and earnings on contracts in progress        17,047   22,448   9,977
    Current portion of loans payable        5,787   3,978   8,867
  Total current liabilities        50,387   58,329   46,148
               
  Non-current liabilites                
    Accounts payable and accrued liabilities       33   525   930
    Loans payable        14,890   16,358   14,687
    Employee future benefits        3,719   3,719   4,494
  Total non-current liabilities        18,642   20,602   20,111
Total liabilities        69,029   78,931   66,259
                 
Shareholders' equity                
    Share capital       346,572   345,876   345,666
    Treasury stock        (1,051)   (432)   -
    Contributed surplus       8,326   9,298   9,570
    Accumulated other comprehensive income (loss)       1,559   (88)   (138)
    Non-controlling interest       6,221   7,317   8,976
    Deficit        (162,753)   (181,324)   (197,720)
  Total shareholders' equity        198,874   180,647   166,354
Total Liabilities and Shareholders' Equity      $ 267,903 $ 259,578 $ 232,613
                 
                 
                 
On behalf of the Board:                
                 
___________________________________     ___________________________________  
Terry Reidel     Kym Anthony        
Chairman of the Board     Chairman of the Audit Committee  

 

COM DEV International Ltd.
Consolidated Statements of Changes in Equity
(Canadian dollars in thousands)
                                 
For the year ended ended October 31, 2013       Total   Deficit   Accumulated
Other
Comprehensive
Income (Loss)
  Share Capital   Treasury Stock   Non-Controlling
Interest
  Contributed
Surplus
                                 
Balance, October 31, 2012 (note 20)      $ 180,647  $ (181,324)   $ (88)  $ 345,876  $ (432)  $ 7,317  $ 9,298
Comprehensive income       19,122   18,571   1,647           (1,096)    
Common stock issued       222           696           (474)
Expense recognized for ESOP awards        203                       203
Treasury stock        (1,870)               (1,870)        
Settlement of long-term incentive plans       (867)               1,251       (2,118)
Expense recognized for long-term incentive plans        1,030                       1,030
Expense recognized for stock-based compensation       387                       387
Balance, October 31, 2013      $ 198,874  $ (162,753)  $ 1,559  $ 346,572  $ (1,051)  $ 6,221  $ 8,326
                                 
                                   
For the year ended ended October 31, 2012                                
                                 
Balance, October 31, 2011 (note 20)      $ 166,354  $ (197,720)  $ (138)  $ 345,666  $ -  $ 8,976  $ 9,570
Comprehensive income           14,787   16,396   50           (1,659)    
Common stock issued        10           210           (200)
Expense recognized for ESOP awards        217                       217
Treasury stock        (787)               (787)        
Settlement of long-term incentive plans        (1,123)               355       (1,478)
Transfer of long-term incentive plans to equity        (259)                       (259)
Expense recognized for long-term incentive plans        1,087                       1,087
Expense recognized for stock-based compensation        361                       361
Balance, October 31 2012      $ 180,647  $ (181,324)  $ (88)  $ 345,876  $ (432)  $ 7,317  $ 9,298
                                 

COM DEV International Ltd.
Consolidated Statements of Comprehensive Income
(Canadian dollars in thousands, except for per share figures)
                         
For the years ended ended October 31             2013         2012
                        (note 20)
                         
  Revenue         $     215,449      $   208,553
  Cost of revenue             157,708         154,816
  Gross margin             57,741         53,737
                         
  Research and development costs             9,939         12,839
  Research and development recovery             (2,098)         (4,281)
  Investment tax credits recoverable              (11,722)         (5,968)
  Net research and development (recovery) expense             (3,881)         2,590
                         
  Selling expenses             11,870         11,617
  General expenses             20,061         19,081
  Impairment losses             3,486         -
  Operating income             26,205         20,449
                         
  Interest expense             528         1,418
  Foreign exchange gain             (926)         (2,313)
  Other expense (income)             223         2,572
Income before income taxes             26,380         18,772
                         
  Income tax expense             8,905         4,035
Net income        $     17,475      $   14,737
                         
Attributable to:                        
  Shareholders             18,571         16,396
  Non-controlling interest             (1,096)         (1,659)
         $     17,475      $   14,737
Other comprehensive income:                        
  Foreign currency translation              1,647         50
Comprehensive income        $     19,122      $   14,787
                         
Attributable to:                        
  Shareholders             19,125         14,785
  Non-controlling interest             (3)         2
         $     19,122      $   14,787
                         
Earnings per share                        
Basic and diluted earnings per share        $     0.24      $   0.22
                         

 

 COM DEV International Ltd. 
 Consolidated Statements of Cash Flows 
 (Canadian dollars in thousands) 
                     
For the years ended October 31         2013         2012
                    (note 20)
Operating activities                    
    Net income      $   17,475      $   14,737
    Amortization          10,659         9,643
    Impairment of assets         3,486         -
    Loss (gain) on disposal of assets         588         (2,312)
    Defined benefit plan expenses          536         614
    Defined benefit plan contributions          (704)         (1,512)
    Stock-based compensation expense          1,417         1,448
    Employee stock ownership plan awards          203         217
    Non-cash loan adjustments         758         491
    Investment tax credits recoverable          (11,722)         (5,968)
    Deferred income tax expense (recovery)          5,176         (13,043)
    Unrealized foreign exchange loss (gain) on derivatives         868         ( 1,928)
    Cash settlement of restricted stock units          (867)         ( 1,123)
    Discounting of investment tax credits         398         -
          28,271         1,264
    Net change in non-cash working capital balances         4,318         19,364
  Operating activities         32,589         20,628
                     
Financing activities                    
    Shares issued          222         10
    Purchase of treasury stock         (1,870)         (787)
    Proceeds from advance of long-term debt         2,959         18,388
    Repayment of long-term debt          ( 3,238)         (22,063)
  Financing activities         ( 1,927)         (4,452)
                     
Investing activities                    
    Acquisition of property, plant and equipment          (14,100)         (18,100)
    Proceeds on disposal of property, plant and equipment         143         3,618
    Acquisition of intangible assets          (5,797)         (2,553)
  Investing activities         (19,754)         (17,035)
                     
Effect of exchange rate changes on cash         (1,805)         (965)
                     
Net increase (decrease) in cash         9,103         (1,824)
Cash and cash equivalents, beginning of the year         25,794         27,618
Cash and cash equivalents, end of the year      $   34,897      $   25,794
                     
Supplemental cashflow information                    
Interest paid      $   527      $   934
Taxes paid      $   1,607      $   260

SOURCE COM DEV International Ltd.

For further information:

Gary Calhoun
Chief Financial Officer
Tel:  (519) 622-2300 ext. 2826
gary.calhoun@comdev.ca

Craig MacPhail
TMX Equicom
Tel: (416) 815-0700 ext. 290
cmacphail@tmxequicom.com