COM DEV Announces Fourth Quarter and Year End Fiscal 2011 Results

CAMBRIDGE, ON, Jan. 12, 2012 /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, 2011.  All amounts are stated in Canadian dollars unless otherwise noted.

Fiscal Year 2011 Highlights

  • Revenue was $203.2 million, an 8% decrease from revenue of $220.9 million in fiscal 2010.
  • Gross margin in the core Space Equipment business showed continuous improvement over the year, and for the full year was 24%, compared to 22% in 2010.
  • Net income attributable to shareholders was $13.6 million, or $0.18 per share, an increase of $10.9 million compared to $2.7 million or $0.04 per share in 2010.
  • New orders totaled $188 million in fiscal 2011, compared to $210 million the previous year.
  • Backlog at October 31, 2011 was $126 million, plus an additional $20 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded, for an expected backlog of $146 million, compared to an expected total backlog of $158 million a year earlier.
  • Majority-owned subsidiary exactEarth booked nearly $10 million of customer orders during the year, while continuing to expand its constellation of satellites.

Fourth Quarter Highlights

  • Revenue was $49.9 million in the fourth quarter of fiscal 2011, a 3% decrease from revenue of $51.5 million in the fourth quarter of 2010.
  • Gross margin in the core Space Equipment business was 26%, compared to 25% in Q4 2010.
  • Net income attributable to shareholders was $5.1 million, or $0.07 per share, an increase of $7.0 million compared to a net loss of $1.9 million or $(0.02) per share in the fourth quarter of 2010.
  • New orders won in the fourth quarter totaled $54 million, compared to $79 million a year earlier and $47 million in the third quarter of 2011.

"We said our top priority for 2011 was to improve our bottom line performance. I am pleased with the progress we made during the year, but we still have work to do to reach the level of sustainable profitability this organization is capable of delivering," said Michael Pley, CEO of COM DEV.  "We controlled expenses, completed four of the five programs that had been suppressing our results, and executed effectively on our other programs. A slowdown in orders in the civil space sector contributed to reduced revenues, but we have taken steps to properly size the business and focus our efforts on available opportunities."

Mr. Pley continued:  "Our priorities for fiscal 2012 are unchanged.  We will continue to focus on capitalizing on a very exciting opportunity for exactEarth, driving results in our core commercial business, expanding the market presence of our U.S. division, and completing the last of the challenging programs. In 2012 we expect our core equipment market to be relatively flat."

Segmented Results

COM DEV reports results in two business segments. The Space Equipment segment represents the Company's traditional manufacturing operations, while the Data Services segment consists primarily of the maritime tracking services offered by exactEarth Ltd.  Selected segmented results for the fiscal third quarter are as follows.

Year ended October 31 (unaudited, in thousands of dollars)

  Space Equipment   Data Services   Consolidated *
  2011 2010   2011 2010   2011 2010
Revenue 198,435 219,036   4,760 1,885   203,195 220,921
Gross margin 50,267 49,891   (2,274) (1,497)   46,581 45,119
Gross margin % 24% 22%   - -   23% 20%
Net income 20,558 11,794   (5,540) (5,825)   13,606 2,694

* Consolidated figures may not equal the sum of the two segments due to intra-segment adjustments. Please see Note 15 to the Consolidated Financial Statements for additional details.

Financial Review

COM DEV's fiscal 2011 revenues of $203.2 million decreased by $17.7 million or 8% compared to $220.9 million the previous year. The revenue split between the three market segments was 61% commercial, 20% civil and 18% military, compared to a 65/23/12 split in 2010. Revenue growth of 37% in the military sector was offset by declines of 13% in the commercial sector and 18% in the civil sector. The decline in commercial revenues was due in part to a decision to exit certain unprofitable activities. Civil space revenues fell behind the Company's expectations in 2011 due to a slowdown in ordering activity attributable to the current government fiscal climate.

COM DEV received new orders totaling $188 million during the year, of which 56% were commercial, 23% were civil, and 21% were military. In fiscal 2010 the Company booked $210 million of new orders, with a commercial/civil/military split of 79/10/11.

Order backlog at October 31, 2011 was $126 million, compared to $123 million three months earlier, and $149 million at the end of fiscal 2010.  An additional $20 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 50%, 29% and 21% respectively, compared to 65%, 19% and 17% at October 31, 2010.  The Company expects to convert approximately 72% of the total backlog into revenue during fiscal 2012.

Consolidated gross margin was $46.6 million in fiscal 2011, representing 23% of total revenues, compared to $45.1 million or 20% of revenues in 2010. The improvement was primarily the result of reduced impact from five programs which negatively affected gross margin by $15 million in 2010.  In 2011, the negative impact from these programs was reduced to $8 million with all but one being completed during the year.  Gross margin in the core Space Equipment segment was $50.3 million, or 24% of segment revenues in 2011, compared to $49.9 million or 22% in 2010.

COM DEV recorded a net research and development recovery of $7.0 million in 2011, compared to a net expense of $6.6 million in 2010.  Gross R&D spending grew to $13.3 million from $12.4 million, but R&D funding from external sources increased to $7.0 million from $3.6 million. The Company also recognized $13.3 million of Investment Tax Credits (ITCs) in 2011, compared to $2.1 million in 2010.

Selling expenses were $11.4 million in 2011, compared to $11.8 million in 2010. Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway. General expenses were $17.6 million, down from $20.7 million a year earlier, as a result of a continued focus on rationalization of spending throughout the organization.

Net income attributable to shareholders was $13.6 million in 2011, compared to $2.7 million in 2010.  The $10.9 million increase was the result of improved gross margins, reduced operating expenses, and the increase in ITCs recognized, offset by a foreign exchange loss of $0.9 million compared to a $2.6 million gain in 2010.  Net income in the Space Equipment segment was $20.6 million, compared to $11.8 million in 2010, while the $5.5 million net loss in the Data Services segment compares to a $5.8 million net loss in the prior year.

COM DEV ended the year with $27.6 million of cash and equivalents, compared to $17.4 million at October 31, 2010. Operating activities generated $14.7 million of cash for the year, compared to $13.6 million in fiscal 2010. Financing activities generated $10.0 million in 2011, primarily due to a $15.0 million increase in the term loan. The Company used $13.9 million of cash for investing activities.  At October 31, 2011, COM DEV had outstanding debt of $23.6 million including the current portion, and the Company's $32 million credit facility was not drawn upon.

The Company's basic share count stood at 76,394,409 on January 12, 2012. The Company repurchased and cancelled 280,500 common shares during fiscal 2011.

Conference Call

A conference call will be held Thursday, January 12, 2012 at 5:00 pm EST to discuss this announcement. 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 Statements of Operations 
 (Canadian dollars in thousands, except for per share figures) 
                   
For the three months ended October 31   2011   2010
                   
  Revenue          $ 49,889    $ 51,486
  Cost of revenue       38,026   41,224
  Gross margin       11,863   10,262
  Research and development costs     3,420   3,142
  Research and development recovery   1,269   1,426
  Investment tax credits recoverable     8,117   1,300
  Net research and development (recovery) expense   (5,966)   416
  Selling expenses       3,018   2,957
  General expenses       4,914   4,646
  Operating income       9,897   2,243
  Interest expense       283   137
  Foreign exchange loss (gain)     1,859   (219)
  Other expense       256   3,213
Income before income taxes      $ 7,499    $ (888)
  Income tax expense       2,970   1,300
Net income (loss)        $ 4,529    $ (2,188)
                   
Attributable to:            
  Shareholders        $ 5,071    $ (1,941)
  Non-controlling interest       (542)   (247)
               $ 4,529    $ (2,188)
                   
Earnings per share            
Basic and diluted earnings per share     $0.07   ($0.02)
                   
 COM DEV International Ltd. 
 Consolidated Statements of Operations 
 (Canadian dollars in thousands, except for per share figures) 
                   
For the year ended October 31     2011   2010
                   
  Revenue          $ 203,195    $ 220,921
  Cost of revenue       156,614   175,802
  Gross margin       46,581   45,119
  Research and development costs     13,318   12,366
  Research and development recovery   6,961   3,629
  Investment tax credits recoverable     13,317   2,100
  Net research and development (recovery) expense   (6,960)   6,637
  Selling expenses       11,367   11,845
  General expenses       17,638   20,689
  Operating income  
 
     
 
  24,536   5,948
  Interest expense     888   553
  Foreign exchange loss (gain)     914   (2,578)
  Other expense       3,009   3,432
Income before income taxes      $ 19,725    $ 4,541
  Income tax expense       8,170   2,115
Net income          $ 11,555    $ 2,426
                   
Attributable to:            
  Shareholders        $ 13,606    $ 2,694
  Non-controlling interest       (2,051)   (268)
               $ 11,555    $ 2,426
                   
Earnings per share            
Basic and diluted earnings per share     $0.18   $0.04
Basic weighted average number of shares   76,394,409   76,137,922
Diluted weighted average number of shares   76,460,835   76,282,809
                   
                   
 COM DEV International Ltd. 
 Consolidated Balance Sheets 
 (Canadian dollars in thousands) 
              As at   As at
              October 31,   October 31,
              2011   2010
 Assets               
   Current               
     Cash and cash equivalents       $ 27,618    $ 17,436
     Accounts receivable       47,563   44,357
     Inventory          47,763   58,827
     Prepaids and other        1,422   3,274
     Income taxes recoverable     4,788   4,615
     Future income tax assets - current    3,477   4,175
              132,631   132,684
   Property, plant and equipment      76,201   75,770
   Intangible assets        29,178   27,862
   Goodwill          2,200   2,252
   Future income tax assets - long term    9,732   3,898
 Total assets           $ 249,942    $ 242,466
                   
 Liabilities               
   Current               
     Accounts payable and accrued liabilities     $ 26,373    $ 27,928
     Income taxes payable      302   -
     Deferred revenue        9,653   23,170
     Current portion of loans payable      8,867   6,401
              45,195   57,499
                   
   Long term               
     Loans payable        14,687   10,115
     Accounts payable and accrued liabilities    930   968
     Employee future benefits      1,582   1,910
              17,199   12,993
                   
   Total liabilities        62,394   70,492
                   
                   
 Shareholders' equity             
   Share capital        345,666   346,068
   Contributed surplus        9,407   7,314
   Deficit          (172,459)   (186,065)
   Non-controlling interest     8,977   8,328
   Accumulated other comprehensive loss    (4,043)   (3,671)
   Total shareholders' equity      187,548   171,974
                   
 Total liabilities and shareholders' equity     $ 249,942    $ 242,466
                   
 COM DEV International Ltd. 
 Consolidated Statements of Cash Flows 
 (Canadian dollars in thousands) 
                   
For the three months ended October 31   2011   2010
                   
Operating activities            
  Net income (loss)        $ 4,529    $ (2,188)
  Amortization       2,844   2,985
  Loss on disposal of assets     17   102
  Defined benefit plan expenses     61   248
  Defined benefit plan contributions     (163)   (194)
  Stock compensation expense     490   456
  Employee stock ownership plan awards   62   52
  Fair value adjustment for SODP loan   (78)   (855)
  Investment tax credits recoverable     (7,926)   (2,100)
  Future tax expense       2,805   1,942
  Unrealized foreign exchange loss (gain) on derivatives   2,661   559
              5,302   1,007
  Net change in non-cash working capital items   (4,697)   760
Operating activities       605   1,767
                   
Financing activities            
  Shares issued       -   -
  Shares repurchased and cancelled   (400)   -
  Non-controlling interest investment, net   (6)   11,952
  Advance of long term debt     522   4,147
  Repayment of long term debt     (2,482)   (1,351)
Financing activities       (2,366)   14,748
                   
Investing activities            
  Acquisition of property, plant and equipment   (3,432)   (4,202)
  Proceeds on disposal of property, plant, and equipment   8   -
  Acquisition of intangible assets     (1,993)   (3,139)
Investing activities       (5,417)   (7,341)
Effect of exchange rate changes on cash   (19)   (637)
                   
Net (decrease) increase in cash     (7,197)   8,537
Cash and cash equivalents, beginning of period    34,815   8,899
Cash and cash equivalents, end of period    $ 27,618    $ 17,436
                   
Interest paid          $ 332    $ 118
Taxes paid          $ -    $ -
                   
 COM DEV International Ltd. 
 Consolidated Statements of Cash Flows 
 (Canadian dollars in thousands) 
                   
For the year ended October 31     2011   2010
                   
Operating activities            
  Net income          $ 11,555    $ 2,426
  Amortization       11,670   11,261
  (Gain) loss on disposal of assets     (253)   175
  Defined benefit plan expenses     563   944
  Defined benefit plan contributions     (857)   (779)
  Stock compensation expense     1,557   1,293
  Employee stock ownership plan awards   222   198
  Fair value adjustment for SODP loan   (78)   (855)
  Investment tax credits recoverable     (13,126)   (2,100)
  Future tax expense       8,005   1,942
  Unrealized foreign exchange loss (gain) on derivatives   2,920   (1,144)
              22,178   13,361
  Net change in non-cash working capital items   (7,455)   251
Operating activities       14,723   13,612
                   
Financing activities            
  Shares issued       514   -
  Shares repurchased and cancelled   (514)   -
  Non-controlling interest investment, net   2,612   11,952
  Advance of long term debt     15,522   4,696
  Repayment of long term debt     (8,093)   (6,331)
Financing activities       10,041   10,317
                   
Investing activities            
  Acquisition of property, plant and equipment   (9,466)   (13,849)
  Proceeds on disposal of property, plant and equipment   1,568   -
  Acquisition of intangible assets     (5,956)   (10,926)
  Business acquisitions       -   (2,127)
Investing activities       (13,854)   (26,902)
Effect of exchange rate changes on cash   (728)   (995)
                   
Net increase (decrease) in cash     10,182   (3,968)
Cash and cash equivalents, beginning of year   17,436   21,404
Cash and cash equivalents, end of year    $ 27,618    $ 17,436
                   
Interest paid          $ 950    $ 560
Taxes paid          $ -    $ 173

 

 COM DEV International Ltd. 
 Consolidated Statements of Changes in Equity 
 (Canadian dollars in thousands) 
                         
                         
            Accumulated Other   Share   Non-controlling   Contributed
For the year ended October 31, 2011 Total   Deficit   Comprehensive Loss   Capital   interest   Surplus
                         
Balance, October 31, 2010  $ 171,974    $ (186,065)    $ (3,671)    $ 346,068    $ 8,328    $ 7,314
                         
Comprehensive income                      
  Net income (loss) 11,555   13,606   -   -   (2,051)   -
  Foreign currency translation adjustments (net of taxes of $nil) (372)   -   (372)   -   -   -
    11,183   13,606   (372)   -   (2,051)   -
Common stock issued 514   -   -   871   -   (357)
Common stock repurchased and cancelled (note 12(a)) (514)           (1,273)       759
Expense recognized for ESOP awards 222   -   -   -   -   222
Non-controlling interest investment (note 6) 2,612   -   -   -   2,700   (88)
Expense recognized for stock-based compensation and long-term incentive plans 1,557   -   -   -   -   1,557
Balance, October 31, 2011  $ 187,548    $ (172,459)    $ (4,043)    $ 345,666    $ 8,977    $ 9,407
                         
                         
For the year ended October 31, 2010                      
                         
Balance, October 31, 2009  $ 157,909    $ (188,759)    $ (2,507)    $ 345,885    $ 486    $ 2,804
                         
Comprehensive income                      
  Net income (loss) 2,426   2,694   -   -   (268)   -
  Foreign currency translation adjustments (net of taxes of $nil) (1,164)   -   (1,164)   -   -   -
    1,262   2,694   (1,164)   -   (268)   -
Common stock issued -   -   -   183   -   (183)
Expense recognized for ESOP awards 198   -   -   -   -   198
Non-controlling interest purchase adjustment (note 5(b)) (640)   -   -   -   (465)   (175)
Non-controlling interest investment (note 6) 11,952   -   -   -   8,575   3,377
Expense recognized for stock-based compensation 1,293   -   -   -   -   1,293
Balance, October 31, 2010  $ 171,974    $ (186,065)    $ (3,671)    $ 346,068    $ 8,328    $ 7,314

 

 

SOURCE Com Dev International Ltd.

For further information:

Gary Calhoun Jeff Codispodi
Chief Financial Officer The Equicom Group
Tel:  (519) 622-2300 ext. 2826 Tel: (416) 815-0700 ext. 261
gary.calhoun@comdev.ca jcodispodi@equicomgroup.com

 

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