Avigilon Corporation Announces Record Revenue and Second Quarter 2014 Results
VANCOUVER, Aug. 7, 2014 /CNW/ - Avigilon Corporation ("Avigilon" or the "Company") (TSX: AVO), a leading global provider of end-to-end security solutions, today announced its financial results for the three and six months ended June 30, 2014. All figures are stated in Canadian dollars unless otherwise noted.
Second Quarter 2014 Financial Highlights
- Revenue was $65.2 million, an increase of 66% over Q2 2013 revenue of $39.2 million.
- Gross margin percentage was 55%, up from 53% a year earlier.
- Adjusted EBITDA* was $8.7 million, a 61% increase over Q2 2013 Adjusted EBITDA of $5.4 million.
- Net income was $2.8 million, compared with net income of $3.4 million in Q2 2013.
- Adjusted Earnings* was $5.7 million, a 49% increase over Q2 2013 Adjusted Earnings of $3.8 million.
- Fully Diluted Adjusted Earnings Per Share* of $0.12, compared with $0.10 in Q2 2013.
"It was another quarter of profitable growth for Avigilon, highlighted by record revenue and increased EBITDA, while we made significant investments for future growth," said Alexander Fernandes, founder, president, CEO and chairman of the Board of Avigilon. "At our current annualized run rate, we are more than halfway to our target of $500 million by the end of 2016. To achieve this target, we are continuing our successful strategy of expanding our sales team, enhancing marketing and brand awareness, and increasing research and development activities. With a view to augmenting our organic growth, we continue to evaluate acquisitions of complementary technologies in the security space."
Avigilon reported Q2 2014 record revenue of $65.2 million, an increase of 66%, or $26.0 million, compared to revenue of $39.2 million in Q2 2013. Revenue growth continues to reflect increased product sales worldwide, driven by greater customer adoption in existing markets, further penetration of new target regions and sales of new products. Revenue was strong across all regions, with year-over-year sales growth ranging up to 123% in the Company's six target geographic regions.
Gross margin was $36.0 million in Q2 2014 (55% of revenue), compared with $20.7 million (53% of revenue) in Q2 2013. The year-over-year increase in gross margin percentage mainly reflects the ongoing effects of greater purchasing power, economies of scale, and improved manufacturing efficiencies.
Sales and marketing expenses in Q2 2014 were $18.1 million, an increase of 69% compared to $10.7 million in Q2 2013. The increase reflects planned growth spending to expand the Company's global sales and marketing team, which management believes will drive continued revenue growth. In Q2 2014, sales and marketing expenses represented 28% of revenue, compared with 27% in Q2 2013.
Research and development (R&D) expenses, net of related income tax credits and capitalized development costs, were $4.4 million in Q2 2014, compared to $2.3 million in Q2 2013. Gross R&D spend was $6.4 million in Q2 2014, a $3.6 million increase compared with $2.8 million in Q2 2013. The growth in spending is consistent with the Company's plan to increase its R&D team to further enhance and expand its product offering. Avigilon expects to continue to increase its R&D investment, in dollars and as a percentage of revenue, to support accelerated product development.
General and administrative expenses (G&A) in Q2 2014 were $7.8 million, compared with $3.4 million in Q2 2013. The increase is primarily due to additional personnel and their related expenses, including new headcount in customer support, human resources, finance and legal. G&A expenses in Q2 2014 also include $0.7 million in business acquisition-related costs. The Company expects its administrative expenses to increase in the near term as it continues to expand infrastructure to support planned growth, but believes these expenses will increase at a slower rate than revenue.
Adjusted EBITDA increased 61% year-over-year to $8.7 million in Q2 2014, compared with $5.4 million in Q2 2013. The year-over-year improvement largely reflects the Company's increase in revenue and improved gross margin.
Net income for Q2 2014 was $2.8 million, compared with net income of $3.4 million in Q2 2013. Net income for Q2 2014 was impacted by a foreign exchange loss of $1.9 million, compared with a $0.3 million gain in the same period last year, and $1.5 million in acquisitions related expenses.
Removing the effects of foreign exchange and acquisition related expenses, Adjusted Earnings increased 49% year-over-year to $5.7 million in Q2 2014, compared with $3.8 million in Q2 2013.
Earnings Per Share were $0.06 (basic and diluted) for Q2 2014, compared to $0.09 (basic) and $0.08 (diluted) a year earlier. Fully Diluted Adjusted Earnings Per Share were $0.12 in Q2 2014, compared with $0.10 in Q2 2013.
In 2014, Avigilon plans to continue to invest significantly to expand sales reach, accelerate innovation and build brand awareness, which management believes will contribute to further revenue growth. In the short term, however, as the necessary investments are incurred in advance of associated revenue, these initiatives are expected to put pressure on the Company's Adjusted EBITDA and net income.
As at June 30, 2014, Avigilon had working capital of $208.8 million, including cash and cash equivalents of $156.7 million. The weighted average number of common shares outstanding for the quarter was 46.2 million basic and 47.0 million diluted. On April 8, 2014, the Company completed a bought deal financing, issuing 3,448,280 common shares at a price of $29.00 per share for gross proceeds of $100.0 million.
This news release is qualified in its entirety by the Company's financial statements and MD&A, which can be downloaded from the Avigilon website at http://ir.avigilon.com or from the Company's profile on SEDAR at http://www.sedar.com/.
Avigilon has scheduled a conference call to discuss these results on Thursday, August 7, 2014, beginning at 5:00 p.m. EDT (2:00 p.m. PDT). To access the live call, dial 647-427-7450 or 1-888-231-8191, or view the webcast at http://ir.avigilon.com. A replay will be available for one year on the Company's website, and for one week by dialing 416-849-0833 or 1-855-859-2056, reference number 63067573.
Management uses certain non-IFRS measures that it believes are useful to investors in evaluating the performance and results of the Company. The term "Adjusted EBITDA" refers to earnings before deducting interest expense, taxes, depreciation, amortization, foreign exchange gain or loss, and share-based payments. Management believes that Adjusted EBITDA is a useful measure as it provides an indication of the operational results of the business prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset amortization.
Management also believes that analyzing operating results exclusive of significant non-cash items provides a useful measure of the Company's performance. The term "Adjusted Earnings" and "Adjusted Earnings Per Share" refers to net earnings and earnings per share, respectively, before share-based payments, foreign exchange gain or loss, business acquisition-related costs and related tax effects. Please refer to the reconciliation table that accompanies the financial statements in this press release and which is included in the Company's Management's Discussion & Analysis for Q2 2014. Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings Per Share do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS") and are not necessarily comparable to similar measures provided by other companies.
Accordingly, investors are cautioned that Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings Per Share should not be construed as an alternative to operating income or net income determined in accordance with IFRS as an indicator of the Company's financial performance or as a measure of its liquidity and cash flows.
Avigilon Corporation is defining the future of protection through innovative end-to-end security solutions. Avigilon's industry-leading HD network video management software, megapixel cameras, access control and video analytics products are reinventing the security market. Information about Avigilon can be found at avigilon.com.
Forward Looking Statements
Certain statements contained in this news release, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward-looking statements normally contain words like believe, expect, anticipate, plan, intend, continue, estimate, may, will, should and similar expressions. Such statements are not guarantees of future performance. They are based on management's expectations and assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Management has based these statements on estimates and assumptions that they believed were reasonable when the statements were prepared. Actual results could be substantially different because of the risks and uncertainties associated with the Company's business. Important risks that could cause such differences include, but are not limited to, the length of sales cycles, rapid technological advancement, competition, the availability of critical inputs, foreign exchange rate occurrences and doing business in foreign countries. Additionally, differences could arise because of events that are announced or completed after the date of this news release, including mergers, acquisitions, other business combinations and divestitures. More information about the risks and uncertainties affecting the Company's business can be found in the "Risk Factors" section of our final short form prospectus dated March 31, 2014 and of our Annual Information Form dated March 28, 2014 each of which is available under the Company's profile at SEDAR (www.sedar.com). Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Avigilon. Accordingly, readers should not place undue reliance on forward-looking statements or information. Avigilon undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement.
SOURCE Avigilon CorporationFor further information:
T: (416) 815-0700 ext. 278
Stephanie Von Zuben
T: (604) 629-5182