COM DEV Announces Third Quarter Fiscal 2014 Results
CAMBRIDGE, ON, Sept. 5, 2014 /CNW/ - COM DEV International Ltd. (TSX: CDV) today announced financial results for the three-month period ended July 31, 2014. All amounts are stated in Canadian dollars unless otherwise noted.
Third Quarter Highlights
- Revenue was $50.8 million, a 6.3 percent decline from the $54.2 million realized in the third quarter of 2013, largely as a result of continuing U.S. government budget sequestration.
- Commercial satellite component revenue was $33.5 million, a 13.6 percent increase from $29.5 million achieved in the third quarter of 2013. Civil and military/defence program revenue declined by 13.9 and 52.4 percent respectively.
- Backlog was $115.5 million, an 11.8 percent decline from $131.0 million in Q3 2013, with additional Authority To Proceed (ATP) follow on work of $37.1 million expected at the end of Q3 this year, versus $3.6 million at the end of Q3 2013. When ATP's are taken into consideration, expected backlog at the end of Q3 2014 is $152.6 million versus $134.6 million at the end of Q3 2013.
- COM DEV's exactEarth™ subsidiary had revenue of $3.7 million, up 37.0 percent from $2.7 million in Q3 2013, and EBITDA of $0.6 million in Q3 2014, compared to $0.4 million in Q3 2013.
"In the third quarter we had solid growth in revenue in our commercial satellite components business," said Michael Pley, CEO. "While revenues are still constrained by U.S. budget pressures, demand for commercial communication satellites remains strong with 11 new satellite projects awarded in the third quarter. COM DEV has already won work on five of these satellite projects, and is pursuing work on the remaining six. These will be potential sources of new revenue in future quarters."
"We are also very pleased with the performance of our exactEarth™ subsidiary with its 37 percent increase in revenue and 50 percent growth in EBITDA," Mr. Pley added. "exactEarthTM continues to capture market share through signing new customers, introducing new product lines and expanding relationships with existing customers. They are well on track to achieve expected revenue growth of 20 to 25 percent this year."
Financial Review
COM DEV's third quarter 2014 revenues were $50.8 million, a 6.3 percent decline compared to $54.2 million in the previous year. The revenue split between the three market segments was 66 percent commercial, 24 percent civil and 10 percent military/defence, compared to a 54 percent, 27 percent, 19 percent split respectively in 2013. Revenues in the commercial sector increased13.6 percent in the quarter while the civil and military/defence sectors declined by 13.9 percent and 52.4 percent respectively.
COM DEV received new orders totaling $36.5 million during the quarter, of which 91 percent were commercial, 7 percent were civil, and 2 percent were military/defence. In Q3 2013 the Company booked $36.6 million of new orders, with a commercial/civil/military split of 81 percent, 5 percent, 14 percent respectively.
Included in the $36.5 million of new orders received in the third quarter of 2014 are orders received under Authorities to Proceed (ATPs). As delivery schedules have become more critical, customers are increasingly using ATPs as a way to start a subcontractor working, under contract, on a program while the full contract negotiations are concluded. At the end of Q3 2014, the amount of potential order value in excess of ATP, which management expects to realize, stood at $37.1 million. This compares to $3.6 million at the end of Q3 2013. The expected full contract amounts are based on bid values, with a high percentage of ATPs historically being turned into full contract values.
Order backlog at July 31, 2014 was $115.5 million, compared to $131.0 million for the same period in 2013. Backlog was split between the Company's commercial, civil and military/defence sectors at a ratio of 58 percent, 37 percent and 5 percent respectively, compared to 47 percent, 38 percent and 15 percent respectively at July 31, 2013. The Company expects to convert approximately 40 percent of the total backlog into revenue during fiscal 2014.
Consolidated gross margin was $13.3 million in Q3 2014, representing 26.1 percent of total revenues, a 0.9 percent decrease from Q3 2013 with gross margin of $14.6 million representing 27.0 percent of total revenues. The decrease is the result of a decline in operations in the U.S., as well as reduced data segment gross margin, offset by improvements in the non-U.S. equipment segment of the business and a favourable foreign exchange impact. The decrease in the data services segment gross margin percentage is due to higher depreciation costs as new satellites are brought into service and increased product development and ground segment costs. As it expands its fleet, exactEarthTM is able to deliver improved service levels to its customers, resulting in increased revenues.
COM DEV recorded a net research and development expense of $1.4 million in Q3 2014, compared to a net expense of $0.4 million in Q3 2013. Gross R&D spending declined to $2.5 million from $2.8 million while R&D funding from external sources decreased to $0.2 million from $0.4 million. The Company also recognized $0.9 million of Investment Tax Credits (ITCs) in Q3 2014, to offset Canadian Federal taxes, compared to $2.0 million in Q3 2013. The reduction in R&D spending is a result of the Company's efforts to focus on strategic R&D activities.
Selling expenses of $2.9 million in Q3 2014 declined slightly from $3.0 million spent in Q3 2013. General expenses grew by $0.4 million in Q3 2014 to $5.1 million from $4.7 million in Q3 2013. The increase in general expenses reflects the cost of Corporate Development and Enterprise Risk Management functions, as well as increases in legal and finance organization costs.
The Company recorded a foreign exchange gain of $0.3 million in Q3 2014, compared to a gain of $0.6 million in the same quarter in the previous year. Foreign exchange amounts include realized and unrealized gains and losses that result from balance sheet translation of foreign denominated balances, realized gains and losses from settling USD hedge contracts, and mark to market valuation adjustments on the Company's outstanding USD hedge contracts.
EBITDA attributable to shareholders was $7.2 million in Q3 2014, compared to $9.8 million in Q3 2013. The decrease in EBITDA is the result of lower net income and an increase in amortization offset by lower interest and income tax expenses. The equipment segment EBITDA decreased as compared to the same quarter last year, while the data services segment saw an increase in EBITDA attributable to shareholders over the prior year. The data services segment was EBITDA positive in Q3 2014 at $0.6 million, compared to a Q3 2013 positive EBITDA of $0.4 million. The increase is the result of decreased net loss in exactEarthTM, driven by continued revenue growth as exactEarthTM expands its global customer base.
COM DEV ended Q3 2014 with $36.4 million of cash and equivalents, compared to $34.9 million in Q3 2013. The Company invested $1.0 million of cash in operating activities in Q3 2014, compared with Q3 2013 when $2.0 million was generated. During Q3 2014, $8.0 million of cash was used compared to $1.3 million used in Q3 2013.
The Company's operating credit line of $20 million was not drawn upon at the end of Q3 2014, except for $2.8 million (Q3 2013: $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 76,685,327 on September 4, 2014.
Dividend
For the three months ended July 31, 2014, the Board of Directors has declared a dividend of $0.03 per share to be paid on September 30, 2014, to shareholders of record on September 15, 2014.
Conference Call
A conference call will be held Friday, September 5, 2014 at 7:30 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. The company has a staff of 1,200, annual revenues of $216 million, and facilities in Canada, the United Kingdom, the United States, India, and China. 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 defense 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 Interim Statements of Financial Position |
|||||||||
(Canadian dollars in thousands) |
|||||||||
Unaudited |
|||||||||
As at July 31, |
As at October 31, |
As at November 1, |
|||||||
Assets |
|||||||||
Current assets |
|||||||||
Cash and cash equivalents |
$ |
36,399 |
$ |
34,897 |
$ |
25,794 |
|||
Accounts receivable |
31,120 |
37,460 |
41,722 |
||||||
Inventory |
56,178 |
59,383 |
64,763 |
||||||
Prepaid expenses and other |
1,574 |
2,716 |
3,214 |
||||||
Income taxes recoverable |
3,247 |
2,245 |
2,266 |
||||||
Investment tax credits-current |
2,961 |
2,961 |
2,162 |
||||||
Total current assets |
131,479 |
139,662 |
139,921 |
||||||
Non-current assets |
|||||||||
Property, plant and equipment |
93,929 |
92,340 |
86,000 |
||||||
Intangible assets |
18,541 |
16,416 |
14,600 |
||||||
Goodwill |
- |
- |
2,205 |
||||||
Investment tax credits |
11,668 |
9,933 |
2,124 |
||||||
Deferred income tax assets |
7,889 |
9,552 |
14,728 |
||||||
Total non-current assets |
132,027 |
128,241 |
119,657 |
||||||
Total assets |
$ |
263,506 |
$ |
267,903 |
$ |
259,578 |
|||
Liabilities |
|||||||||
Current liabilities |
|||||||||
Accounts payable and accrued liabilities |
$ |
19,435 |
$ |
26,334 |
$ |
30,622 |
|||
Income taxes payable |
349 |
4 |
851 |
||||||
Provisions |
765 |
1,215 |
430 |
||||||
Billings in excess of costs and earnings |
9,834 |
17,047 |
22,448 |
||||||
Current portion of loans payable |
7,273 |
5,787 |
3,978 |
||||||
Total current liabilities |
37,656 |
50,387 |
58,329 |
||||||
Non-current liabilites |
|||||||||
Accounts payable and accrued liabilities |
319 |
33 |
525 |
||||||
Loans payable |
12,506 |
14,890 |
16,358 |
||||||
Employee future benefits |
3,959 |
3,803 |
5,514 |
||||||
Total non-current liabilities |
16,784 |
18,726 |
22,397 |
||||||
Total liabilities |
$ |
54,440 |
$ |
69,113 |
$ |
80,726 |
|||
Shareholders' equity |
|||||||||
Share capital |
177,560 |
346,572 |
345,876 |
||||||
Treasury stock |
(138) |
(1,051) |
(432) |
||||||
Contributed surplus |
177,320 |
8,326 |
9,298 |
||||||
Accumulated other comprehensive income (loss) |
3,777 |
1,981 |
(1,698) |
||||||
Non-controlling interest |
5,449 |
6,221 |
7,317 |
||||||
Deficit |
(154,902) |
(163,259) |
(181,509) |
||||||
Total shareholders' equity |
209,066 |
198,790 |
178,852 |
||||||
Total liabilities and shareholders' equity |
$ |
263,506 |
$ |
267,903 |
$ |
259,578 |
COM DEV International Ltd. |
||||||||||||||
Consolidated Interim Statements of Changes in Equity |
||||||||||||||
(Canadian dollars in thousands) |
||||||||||||||
Unaudited |
||||||||||||||
For the nine months ended July 31, 2014 |
Total |
Deficit |
Accumulated Other |
Share |
Treasury |
Non-Controlling |
Contributed |
|||||||
Balance, October 31, 2013 |
$ |
198,790 |
$ |
(163,259) |
$ |
1,981 |
$ |
346,572 |
$ |
(1,051) |
$ |
6,221 |
$ |
8,326 |
Comprehensive income |
11,674 |
10,650 |
1,796 |
- |
- |
(772) |
- |
|||||||
Common stock issued |
687 |
- |
- |
1,261 |
- |
- |
(574) |
|||||||
Common stock repurchased |
(344) |
- |
- |
(273) |
- |
- |
(71) |
|||||||
Expense recognized for ESOP |
155 |
- |
- |
- |
- |
- |
155 |
|||||||
Treasury stock |
(675) |
- |
- |
- |
(675) |
- |
- |
|||||||
Reduction in stated capital |
- |
- |
- |
(170,000) |
- |
- |
170,000 |
|||||||
Dividends paid |
(2,293) |
(2,293) |
- |
- |
- |
- |
- |
|||||||
Settlement of long-term incentive |
(240) |
- |
- |
- |
1,588 |
- |
(1,828) |
|||||||
Expense recognized for long-term |
1,010 |
- |
- |
- |
- |
- |
1,010 |
|||||||
Expense recognized for stock-based |
302 |
- |
- |
- |
- |
- |
302 |
|||||||
Balance, July 31, 2014 |
$ |
209,066 |
$ |
(154,902) |
$ |
3,777 |
$ |
177,560 |
$ |
(138) |
$ |
5,449 |
$ |
177,320 |
For the nine months ended July 31, 2013 |
||||||||||||||
Balance, October 31, 2013 |
$ |
178,852 |
$ |
(181,509) |
$ |
(1,698) |
$ |
345,876 |
$ |
(432) |
$ |
7,317 |
$ |
9,298 |
Comprehensive income |
15,521 |
14,228 |
2,343 |
- |
- |
(1,050) |
- |
|||||||
Common stock issued |
66 |
- |
- |
473 |
- |
- |
(407) |
|||||||
Expense recognized for ESOP awards |
152 |
- |
- |
- |
- |
- |
152 |
|||||||
Treasury stock |
(1,594) |
- |
- |
- |
(1,594) |
- |
- |
|||||||
Dividends paid |
- |
- |
- |
- |
- |
- |
- |
|||||||
Settlement of long-term incentive plans, |
(894) |
- |
- |
- |
1,251 |
- |
(2,145) |
|||||||
Expense recognized and deferred tax |
765 |
- |
- |
- |
- |
- |
765 |
|||||||
Expense recognized for stock-based |
288 |
- |
- |
- |
- |
- |
288 |
|||||||
Balance, July 31 2013 |
$ |
193,156 |
$ |
(167,281) |
$ |
645 |
$ |
346,349 |
$ |
(775) |
$ |
6,267 |
$ |
7,951 |
COM DEV International Ltd. |
|||||
Consolidated Interim Statements of Comprehensive Income |
|||||
(Canadian dollars in thousands, except for per share figures) |
|||||
Unaudited |
|||||
For the three months ended July 31 |
2014 |
2013 |
|||
Revenue |
$ |
50,814 |
$ |
54,157 |
|
Cost of revenue |
37,555 |
39,554 |
|||
Gross margin |
13,259 |
14,603 |
|||
Research and development costs |
2,501 |
2,755 |
|||
Research and development recovery |
(210) |
(441) |
|||
Investment tax credits recoverable |
(910) |
(1,957) |
|||
Net research and development expense |
1,381 |
357 |
|||
Selling expenses |
2,913 |
2,953 |
|||
General expenses |
5,140 |
4,724 |
|||
Operating income |
3,825 |
6,569 |
|||
Interest expense |
130 |
153 |
|||
Foreign exchange gain |
(326) |
(601) |
|||
Other expense |
110 |
368 |
|||
Income before income taxes |
3,911 |
6,649 |
|||
Income tax expense |
745 |
1,939 |
|||
Net income |
$ |
3,166 |
$ |
4,710 |
|
Attributable to: |
|||||
Shareholders |
3,547 |
5,015 |
|||
Non-controlling interest |
(381) |
(305) |
|||
$ |
3,166 |
$ |
4,710 |
||
Other comprehensive income: |
|||||
Foreign currency translation |
(171) |
343 |
|||
Actuarial gain |
- |
551 |
|||
Comprehensive income |
$ |
2,995 |
$ |
5,604 |
|
Atributable to: |
|||||
Shareholders |
2,968 |
5,606 |
|||
Non-controlling interest |
27 |
(2) |
|||
$ |
2,995 |
$ |
5,604 |
||
Earnings per share |
|||||
Basic and diluted earnings per share |
$ |
0.05 |
$ |
0.07 |
COM DEV International Ltd. |
||||
Consolidated Interim Statements of Cash Flows |
||||
(Canadian dollars in thousands) |
||||
Unaudited |
||||
For the three months ended July 31 |
2014 |
2013 |
||
Operating activities |
||||
Net income |
$ |
3,166 |
$ |
4,710 |
Amortization |
2,907 |
2,694 |
||
Loss (gain) on disposal of assets |
27 |
- |
||
Defined benefit plan expenses |
168 |
212 |
||
Defined benefit plan contributions |
(245) |
(238) |
||
Stock-based compensation expense |
428 |
380 |
||
Employee stock ownership plan awards |
45 |
42 |
||
Non-cash loan adjustments |
1 |
254 |
||
Investment tax credits recoverable |
(910) |
(1,957) |
||
Deferred income tax expense |
512 |
884 |
||
Unrealized foreign exchange gain on derivatives |
(576) |
(398) |
||
Withholding tax remittance on stock units settlement |
(645) |
(834) |
||
4,878 |
5,749 |
|||
Net change in non-cash working capital balances |
(5,893) |
(3,754) |
||
Operating activities |
(1,015) |
1,995 |
||
Financing activities |
||||
Shares issued |
348 |
60 |
||
Purchase of treasury stock |
(187) |
(458) |
||
Proceeds from advance of long-term debt |
- |
1,445 |
||
Repayment of long-term debt |
(1,129) |
(781) |
||
Dividends paid |
(2,293) |
- |
||
Financial activities |
(3,261) |
266 |
||
Investing activities |
||||
Acquisition of property, plant and equipment |
(2,254) |
(3,257) |
||
Proceeds on disposal of property, plant and equipment |
23 |
17 |
||
Acquisition of intangible assets |
(1,423) |
(345) |
||
Investing activities |
(3,654) |
(3,585) |
||
Effect of exchange rate changes on cash |
(90) |
64 |
||
Net increase in cash |
(8,020) |
(1,260) |
||
Cash and cash equivalents, beginning of the period |
$ |
44,419 |
$ |
33,101 |
Cash and cash equivalents, end of the period |
$ |
36,399 |
$ |
31,841 |
Supplemental cashflow information |
||||
Interest paid |
$ |
162 |
$ |
124 |
Taxes paid |
$ |
1,307 |
$ |
809 |
SOURCE: Com Dev International Ltd.
Gary Calhoun, Chief Financial Officer, Tel: (519) 622-2300 ext. 2826, [email protected]; Craig MacPhail, TMX Equicom, Tel: (416) 815-0700 ext. 290, [email protected]
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