COM DEV Announces First Quarter Fiscal 2013 Results

CAMBRIDGE, ON, March 11, 2013 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced first quarter results for the three-month period ended January 31, 2013. All amounts are stated in Canadian dollars unless otherwise noted.

First Quarter Highlights

  • Revenue was $52.3 million, a 10.7 percent increase from $47.2 million in the first quarter of 2012.
  • Net income attributable to shareholders was $4.6 million or $0.06 per share, compared to $3.6 million or $0.05 per share in the first quarter of 2012.
  • The Company booked $61.8 million in new orders, compared to $45.2 million in the first quarter of 2012 and $56.1 million in the fourth quarter of 2012.
  • Increased gross margins in the space equipment business of 28.4 percent compared to 27.8 percent in Q1 2012
  • Increase in exactEarth customer base to 62 from 16 in Q1 2012. There are also 64 trials currently underway.

"We are very pleased with the growth in earnings and gross margins in the first quarter of fiscal 2013, which reflects the results of our focus on profitability and sustainability without any legacy issues," stated Michael Pley, President and CEO. "As well, we have secured new contracts in all of our divisions which will contribute to continued growth."

Financial Review

COM DEV's fiscal 2013 first quarter revenues of $52.3 million increased by $5.1 million or 10.8 percent compared to $47.2 million the previous year. The revenue split between the three market segments was 44 percent commercial, 34 percent civil and 22 percent military, compared to a 58/26/16 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.

COM DEV received new orders totaling $61.8 million during the quarter, of which 58 percent were commercial, 41 percent were civil, and one percent were military. In fiscal Q1 2012 the Company booked $45 million of new orders, with a commercial/civil/military split of 53/36/11. Included in the new orders are orders received under Authorities to Proceed (ATPs) which allows a subcontractor to start work on a project while the full contract negotiations are concluded. An additional $20.7 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. Included in the total orders for Q1 were $1.8 million in orders for exactEarth.

Order backlog at January 31, 2013 was $148 million, compared to $125.3 million at Q1 2012. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 43 percent, 39 percent and 18 percent respectively, compared to 46 percent, 33 percent and 21 percent at January 31, 2012.  The Company expects to convert approximately 79 percent of the total backlog into revenue during fiscal 2013.

Consolidated gross margin was $13.6 million in fiscal Q1 2013, representing 26.1 percent of total revenues, compared to $13.1 million or 27.6 percent of revenues in Q1 2012. The decrease is net of an increase in the space equipment gross margin percentage, offset by a decrease in the data segment gross margin percentage due to higher depreciation from the commissioning of two exactEarthTM satellites and higher related operations costs for down-linking, back-hauling, and processing higher volumes of data.

COM DEV recorded a net research and development expense of $0.5 million in Q1 2013, compared to $1.0 million in Q1 2012.  Gross R&D spending declined to $2.6 million from $3.8 million while R&D funding from external sources decreased to $0.5 million from $1.8 million. The Company also recognized $1.6 million of Investment Tax Credits (ITCs) in Q1 2013, compared to $1.0 million in Q1 2012.

Selling expenses were unchanged from the same quarter in the prior year and general expenses increased by $0.1 million over Q1 2012. Selling expenses fluctuate from quarter to quarter depending on the volume of work and proposals that are underway.

Net income attributable to shareholders was $4.6 million in Q1 2013, compared to $3.6 million in Q1 2012.  The $1.0 million increase was the result of higher gross margin, lower interest and other expenses, as well as lower expenses for taxes net of investment tax credit.

The Company generated $3.9 million of cash from operating activities in Q1 2013, compared with 2012 when $5.6 million was generated. The Company invested $3.1 million in working capital in Q1 2013 which compares to the $0.8 million invested in working capital in Q1 2012. This increase in working capital was mainly due to decreases in accounts payable and deferred revenue, partially offset by a decrease in accounts receivable.

The Company's basic share count stood at 76,293,147 on March 11, 2013.

Conference Call

A conference call will be held Monday, March 11, 2013 at 8:00 am EDT 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.  With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced 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 defense applications. COM DEV's majority-owned subsidiary, exactEarth Ltd., provides satellite data services.

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 Interim Statements of Operations 
 (Canadian dollars in thousands, except for per share figures) 
 Unaudited 
                           
For the three months ended January 31         2013       2012
                   
  Revenue         $ 52,283     $ 47,209
  Cost of revenue           38,658       34,159
  Gross margin           13,625       13,050
  Research and development costs         2,576       3,783
  Research and development recovery         481       1,768
  Investment tax credits recoverable         1,613       1,040
  Net research and development expense         482       975
  Selling expenses           2,573       2,613
  General expenses           4,539       4,398
          6,031       5,064
  Interest expense         118       246
  Foreign exchange gain           (352)       (355)
  Other (income) expense           (162)       211
Income before income taxes         $ 6,427     $ 4,962
  Income tax expense         2,250       1,781
Net income         $ 4,177     $ 3,181
                   
Attributable to:                    
  Shareholders         $ 4,589     $ 3,610
  Non-controlling interest           (412)       (429)
        $ 4,177     $ 3,181
                   
Other comprehensive income:                    
  Foreign currency translation         190       21
Comprehensive income         $ 4,367     $ 3,202
                   
Earnings per share                  
Basic and diluted earnings per share         $0.06       $0.05

 

 COM DEV International Ltd. 
 Consolidated Interim Statements of Financial Position 
 (Canadian dollars in thousands) 
 Unaudited 
                 
            As at
January 31,
2013
  As at
October 31,
2012
Assets                   
  Current                   
    Cash and cash equivalents           $ 26,386    $ 25,794
    Accounts receivable           39,943     41,722
    Inventory            62,425     64,763
    Prepaid and other            3,437     3,214
    Income taxes recoverable          4,846     4,801
    Investment tax credits - current          2,220     2,162
                139,257     142,456
  Non-current                   
    Property, plant and equipment          85,925     86,000
    Intangible assets            14,623     14,600
    Goodwill            2,222     2,205
    Investment tax credits          2,891     2,124
    Deferred income tax assets         12,536     13,629
Total assets             $ 257,454    $ 261,014
                     
Liabilities                   
  Current                   
    Accounts payable and accrued liabilities         $ 25,421    $ 31,175
    Income taxes payable          977     851
    Provisions          483     430
    Billings in excess of costs and earnings on contracts in progress          20,265     22,448
    Current portion of loans payable         3,992     3,978
              51,138     58,882
                     
  Non-current                 
    Loans payable          16,294     16,358
    Accounts payable and accrued liabilities          733     834
    Employee future benefits          3,880     3,719
              20,907     20,911
                     
  Total liabilities          72,045     79,793
                     
                     
Shareholders' equity                 
  Share capital          345,884     345,876
  Treasury stock          (891)     (432)
  Contributed surplus          8,967     8,695
  Deficit          (175,558)     (180,147)
  Non-controlling interest          6,905     7,317
  Accumulated other comprehensive loss          102     (88)
  Total shareholders' equity          185,409     181,221
                     
Total liabilities and shareholders' equity         $ 257,454    $ 261,014

 

 COM DEV International Ltd. 
 Consolidated Interim Statements of Cash Flows 
 (Canadian dollars in thousands) 
 Unaudited 
                   
For the three months ended January 31       2013   2012
                   
Operating activities              
  Net income          $ 4,177    $ 3,181
  Amortization           2,601     2,543
  (Gain) loss on disposal of assets         (5)     30
  Defined benefit plan expenses         135     159
  Defined benefit plan contributions         -     (250)
  Stock based compensation expense       469     491
  Employee stock ownership plan awards       62     67
  Amortization of issue costs, effective interest, and unrealized foreign exchange on loans       243     126
  Investment tax credits recoverable       (1,613)     (1,040)
  Deferred income tax expense           1,093     1,470
  Payment of withholding tax on behalf of employees upon settlement of restricted stock units       (33)     -
  Unrealized foreign exchange loss (gain) on derivatives       127     (422)
                7,256     6,355
  Net change in non-cash working capital items       (3,139)     (789)
Operating activities         4,117     5,566
                     
Financing activities              
  Shares issued           6     -
  Purchase of treasury stock         (511)     -
  Repayment of long-term debt         (293)     (2,472)
Financing activities         (798)     (2,472)
                   
Investing activities                
  Acquisition of property, plant and equipment       (1,739)     (5,200)
  Proceeds on disposal of property, plant and equipment       43     4
  Acquisition of intangible assets       (727)     (1,502)
  Business acquisitions           -     -
Investing activities           (2,423)     (6,698)
Effect of exchange rate changes on cash         (304)     (493)
                     
Net (decrease) increase in cash           592     (4,097)
Cash and cash equivalents, beginning of the period         25,794     27,618
Cash and cash equivalents, end of the period        $ 26,386    $ 23,521
                   
Interest paid          $ 148    $ 262
Taxes paid          $ 222    $ 165

 

 COM DEV International Ltd. 
 Consolidated Interim Statements of Changes in Equity 
 (Canadian dollars in thousands) 
 Unaudited 
                                         
For the three months ended January 31, 2013 Total   Deficit   Accumulated
Other
Comprehensive
Loss
  Share
Capital
  Treasury
Stock
  Non-
controlling
Interest
  Contributed
Surplus
                                         
Balance, October 31, 2012  $ 181,221    $ (180,147)    $ (88)    $ 345,876    $ (432)    $ 7,317    $ 8,695
                                         
Comprehensive income   4,367     4,589     190     -     -     (412)     -
                                         
Common stock issued   6     -     -     8     -     -     (2)
Expense recognized for ESOP awards   62     -     -     -     -     -     62
Treasury stock   (511)     -     -     -     (511)     -     -
Settlement of long-term incentive plans   -     -     -     -     52     -     (52)
Transfer of long-term incentive plans to liabilities for future cash settlements   (205)     -     -     -     -     -     (205)
Expense recognized for long-term incentive plans   367     -     -     -     -     -     367
Expense recognized for stock-based compensation   102     -     -     -     -     -     102
Balance, January 31, 2013  $ 185,409    $ (175,558)    $ 102    $ 345,884    $ (891)    $ 6,905    $ 8,967
                                         
                                         
For the three months ended January 31, 2012                                        
                                         
Balance, October 31, 2011  $ 168,293    $ (195,782)    $ (138)    $ 345,666    $ -    $ 8,977    $ 9,570
                                         
Comprehensive income   3,202     3,610     21     -     -     (429)     -
                                         
Expense recognized for ESOP awards   67     -     -     -     -     -     67
Expense recognized for long-term incentive plans   408     -     -     -     -     -     408
Expense recognized for stock-based compensation   83     -     -     -     -     -     83
Balance, January 31, 2012  $ 172,053    $ (192,172)    $ (117)    $ 345,666    $ -    $ 8,548    $ 10,128

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

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Com Dev International Ltd.

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