Avigilon Corporation Announces Third Quarter 2011 Results

VANCOUVER, Nov. 14, 2011 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in high-definition (HD) surveillance systems, today announced its financial results for the three and nine months ended September 30, 2011.  All figures are stated in Canadian dollars unless otherwise noted.

Third Quarter 2011 Highlights

  • Revenue was $15.1 million, an increase of 82% over Q3 2010 revenue of $8.3 million.
  • Gross margin was 45.7%, compared to 45.5% in Q3 2010.
  • Adjusted EBITDA was $1.5 million, an increase of 10% from $1.4 million in Q3 2010. (See "Non-IFRS Measures" below.)
  • Net income was $1.0 million, up 34.9% from $0.7 million in Q3 2010.
  • Subsequent to the end of the quarter Avigilon completed a $25 million financing transaction, raising gross proceeds of $20 million in an Initial Public Offering and proceeds of $5 million in a Secondary Offering, and listed its shares on the Toronto Stock Exchange.

Year-to-Date 2011 Highlights

  • Revenue was $41.2 million in the first nine months of 2011, an increase of 86% over $22.1 million in the comparable period of 2010.
  • Gross margin was 43.8%, compared to 44.9% the prior year.
  • Adjusted EBITDA was $4.3 million, up 77% from $2.4 million a year earlier.
  • Net income was $2.2 million, an increase of 111% from $1.0 million in the 2010 period.

"We are very pleased to report a very strong third quarter, in which we achieved 82% revenue growth while remaining solidly profitable," said Alexander Fernandes, President and Chief Executive Officer, Avigilon. "We believe that there are significant opportunities available to us in the global video surveillance market.  Our recent IPO provides us with the resources to expand our sales and marketing efforts and accelerate our product roadmap so that we are well positioned to capitalize on these opportunities."

Financial Review

Avigilon's revenue was $15.1 million for the three months ended September 30, 2011, an increase of $6.8 million or 82% compared to $8.3 million for the third quarter of 2010.  The increase in revenue was due to higher product sales volumes worldwide, as a result of new product offerings, penetration into new markets, and greater customer acceptance in existing markets.

Gross margins were $6.9 million in the third quarter, an increase of $3.1 million or 83% from $3.8 million a year earlier.  As a percentage of revenue, gross margins were 45.7% in Q3 2011 compared to 45.5% in Q3 2010. 

Selling and marketing expenses were $3.2 million in the third quarter, a $1.9 million increase from $1.4 million the previous year.  The increase was primarily due to increased sales volumes, additional personnel and their related expenses. 

Research and development expenses were $0.8 million in the third quarter, a $0.3 million or 70% increase from $0.5 million in the prior year's third quarter.

General and administrative expenses were $1.5 million in Q3 2011, compared to $0.7 million in Q3 2010. The increase was primarily due to additional personnel and their related expenses to support Avigilon's growth. 

Adjusted EBITDA was $1.5 million in the third quarter, an increase of $0.1 million or 10% compared to $1.4 million in the prior year's third quarter.

Net income was $1.0 million in the third quarter of 2011, an increase of $0.3 million or 34.9% compared to a net income of $0.7 million in Q3 2010.  Earnings per share were $0.06 (basic) or $0.04 (diluted) in Q3 2011, compared to $0.04 (basic) or $0.03 (diluted) a year earlier.

Avigilon's weighted average share count in the third quarter of 2011 was 17,248,202 (basic), or 30,165,566 (diluted).  As of November 14, 2011, after giving effect to the issuance of 4,444,446 shares in the Company's IPO and the associated conversion of 9,148,639 preferred shares into common shares, the share count stood at 30,841,287 (basic) or 34,610,012 (diluted). 

Conference Call
Avigilon has scheduled a conference call to discuss these results on Monday, November 14, 2011, beginning at 4:30 p.m. EST (1:30 p.m. PST).  To access the 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 26887022.

Non-IFRS Measures
The term "adjusted EBITDA" refers to earnings before deducting interest, taxes, depreciation, amortization, foreign exchange gain or loss, and stock-based compensation.  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. Adjusted EBITDA does not have a standardized meaning prescribed by International Financial Reporting Standards (IFRS) and is not necessarily comparable to similar measures provided by other companies.  Accordingly, investors are cautioned that adjusted EBITDA 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.

About Avigilon

Avigilon is a leader in the design, manufacturing and marketing of high definition, network-based video surveillance systems and equipment for the global security market. The Avigilon surveillance system has been designed to provide high quality video capture, transmission, recording and playback. The components of the Avigilon system include cameras, recording hardware and software which may be sold separately or in combination to provide customers with a customizable end-to-end video surveillance solution.

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.  Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made numerous assumptions. Although our management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that any forward-looking statement or information referenced herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Such risks, uncertainties and other factors include, among other things those risks identified in Avigilon's prospectus filed on SEDAR at 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.

Avigilon Corporation   
Condensed consolidated interim statements of comprehensive income   
for the three and nine months ended September 30, 2011 and 2010  
(Expressed in Canadian dollars, except number of shares and per share amounts)
(Unaudited - prepared by management)        Three months ended     Nine months ended 
         September 30,     September 30,     September 30,     September 30, 
        2011   2010   2011   2010
         $    $    $     $ 
                     
                     
Sales       15,108,920   8,281,769   41,179,871   22,126,841
Cost of sales       (8,207,092)   (4,515,584)   (23,130,641)   (12,194,424)
        6,901,828   3,766,185   18,049,230   9,932,417
                     
Operating expenses                    
    Selling       3,223,814   1,369,686   8,289,671   4,398,811
    Research and development       751,367   442,002   1,889,431   1,467,558
    Administrative       1,473,650   648,694   3,916,273   1,740,178
    Amortization       38,569   30,438   114,101   87,334
    Stock-based payments       136,305   48,276   232,380   144,825
        5,623,705   2,539,096   14,441,856   7,838,706
                     
Operating income       1,278,123   1,227,089   3,607,374   2,093,711
                     
Other income (expense)                    
    Preferred share dividend expense       (138,357)   (137,230)   (412,817)   (411,690)
    Interest and other       (54,844)   8,249   (101,382)   38,200
    Foreign exchange gain       478,889   84,437   322,556   50,319
        285,688   (44,544)   (191,643)   (323,171)
                     
Income before income taxes       1,563,811   1,182,545   3,415,731   1,770,540
Dividend tax expense       (8,412)   -   (66,905)   -
Income tax expense       (548,746)   (436,199)   (1,143,646)   (727,859)
Net income and total comprehensive income       1,006,653   746,346   2,205,180   1,042,681
                     
Earnings per share                    
    Basic       0.06   0.04   0.13   0.06
    Diluted       0.04   0.03   0.09   0.05
                     
Weighted average number of shares outstanding                    
    Basic       17,248,202   17,077,872   17,248,202   17,109,008
    Diluted       30,165,566   28,699,561   29,817,191   27,776,588

 
Avigilon Corporation  
Condensed consolidated interim statements of financial position
As at September 30, 2011 and December 31, 2010  
(Expressed in Canadian dollars)  
(Unaudited - prepared by management)  
            September 30,    December 31, 
            2011   2010
            $    $ 
Assets                
Current assets                
    Cash            426,303   2,330,100
    Trade and other receivables           10,069,032   7,652,921
    Inventories           9,998,570   5,306,696
    Prepaid expenses and deposits           434,260   307,768
    Research tax credits           624,517   578,873
            21,552,682   16,176,358
                 
Property and equipment           1,430,648   1,494,939
Intangible assets           25,709   27,262
Deposits           470,361   25,953
Deferred tax assets           922,986   1,999,133
            24,402,386   19,723,645
                 
Liabilities                
Current liabilities                
    Trade and other payables           4,768,014   4,643,226
    Bank loan           3,885,000   1,760,000
            8,653,014   6,403,226
                 
Preferred shares liability           10,749,042   10,336,225
            19,402,056   16,739,451
                 
Shareholders' equity                
Capital stock           9,475,603   9,475,603
Equity compensation reserve           3,647,571   3,836,615
Deficit           (8,122,844)   (10,328,024)
            5,000,330   2,984,194
            24,402,386   19,723,645
                 
                 

 

Avigilon Corporation                  
Condensed consolidated interim statements of changes in equity        
For the nine months ended September 30, 2011 and 2010            
(Expressed in Canadian dollars, except number of shares)                
(Unaudited - prepared by management)                  
                   Total 
                   Capital stock     Equity         shareholders' 
   Shares     Amount     reserve     Deficit     equity 
       $     $     $     $ 
                   
                   
Balance, January 1, 2010 16,998,202   8,975,603   3,559,820   (11,291,954)   1,243,469
Net income and comprehensive income -   -   -   1,042,681   1,042,681
Share issue costs -   -   (64,539)   -   (64,539)
Share-based payments -   -   144,825   -   144,825
Issuance of common stock 250,000   500,000   -   -   500,000
Deferred income tax effect on share                 -
  issuance cost adjustments -   -   62,778   -   62,778
Balance, September 30, 2010 17,248,202   9,475,603   3,702,884   (10,249,273)   2,929,214
                   
Balance, December 31, 2010 17,248,202   9,475,603   3,836,615   (10,328,024)   2,984,194
Net income and comprehensive income -   -   -   2,205,180   2,205,180
Share issue costs -   -   (421,424)   -   (421,424)
Share-based payments -   -   232,380   -   232,380
Balance, September 30, 2011  17,248,202   9,475,603   3,647,571   (8,122,844)   5,000,330

 

Avigilon Corporation  
Condensed consolidated interim statements of cash flows  
For the three and nine months ended September 30, 2011 and 2010
(Expressed in Canadian dollars)  
(Unaudited - prepared by management)            Nine months ended 
             September 30,     September 30, 
            2011   2010
             $     $ 
                 
Cash flows from operating activities                
    Net income for the period           2,205,180   1,042,681
    Adjustments for non-cash items                
        Amortization           283,248   162,805
        Stock-based payments           232,380   144,825
        Dividend expense           412,817   411,690
        Income tax expense           1,076,146   710,180
        Unrealized foreign exchange loss (gain)           (387,605)   (129,358)
        Interest expense (income)           101,382   (38,200)
            3,923,548   2,304,623
                 
    Changes in non-cash working capital items                
        Increase in trade & other receivables           (1,963,142)   (1,142,194)
        Increase (decrease) in deposits           (444,408)   3,127
        Increase in inventories           (4,691,874)   (2,497,886)
        Increase in prepaid expenses and deposits           (126,698)   (61,847)
        Decrease (increase) in research tax credits            (45,644)   569,232
         Increase in trade and other payables           62,696   401,219
    Net changes in non-cash working capital           (7,209,070)   (2,728,349)
    Interest (paid) received           (101,382)   38,200
Net cash used in operating activities           (3,386,904)   (385,526)
                 
Cash flows from financing activities                
    Proceeds from bank loan           2,125,000   965,000
    Issuance of common stock           -   500,000
    Share issuance costs           (421,424)   (64,539)
Net cash provided by financing activities           1,703,576   1,400,461
                 
Cash flows from investing activities                
    Purchase of property and equipment           (289,411)   (914,557)
    Disposal of property and equipment           79,042   -
    Purchase of intangible assets           (7,035)   (47,876)
Net cash used in investing activities           (217,404)   (962,433)
                 
Effect of foreign exchange rate changes on cash           (3,065)   57,925
                 
Increase (decrease) in cash            (1,903,797)   110,427
Cash, beginning of period           2,330,100   2,241,474
Cash, end of period           426,303   2,351,901

 

SOURCE Avigilon Corporation

For further information:

Investor relations:
Jeff Codispodi
The Equicom Group 
T: (416) 815-0700 ext. 261
jcodispodi@equicomgroup.com
 

 

Media relations:
Sunny McKechnie
Edelman 
T: (604) 623-3007, ext. 247
sunny.mckechnie@edelman.com

 


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