COM DEV Announces Third Quarter Fiscal 2012 Results

CAMBRIDGE, ON, Sept. 6, 2012 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced third quarter financial results for the three- and nine-month periods ended July 31, 2012.  All amounts are stated in Canadian dollars unless otherwise noted.

Third Quarter Highlights

  • Revenue was $54.5 million in the third quarter of 2012, a 7% increase from revenue of $50.9 million in the third quarter of 2011.
  • exactEarth successfully launched its EV-1 satellite, expected to be the highest performance commercial AIS satellite ever launched.
  • COM DEV completed and shipped its largest-ever contract, an instrument designed and built for the James Webb Space Telescope.
  • Gross margin was 25%, compared to 28% in Q3 2011.
  • Net income attributable to shareholders was $4.0 million, or $0.05 per share, an increase of $0.3 million compared to $3.7 million or $0.05 per share in the third quarter of 2011.
  • New orders won in the third quarter totaled $62 million, compared to $47 million a year earlier and $59 million in the second quarter of 2012.
  • Backlog at July 31, 2012 was $140 million, plus an additional $10 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded.

"As anticipated, our momentum continues to build throughout the fiscal year with revenue, orders and backlog all trending positively," said Michael Pley, CEO of COM DEV.  "Demand remains strong in our end markets and we have been very successful in our bidding activity.  On that basis, and despite a slower start to the year, we now expect our fiscal 2012 revenues to slightly exceed those of 2011."

Financial Review

COM DEV's fiscal 2012 third quarter revenues of $54.5 million increased by $3.7 million or 7% compared to $50.9 million a year earlier.  In comparison to the third quarter of 2011, revenue in the civil sector increased by $9.2 million, while commercial revenue declined by $5.5 million.  The increase in civil business is largely due to work on communications satellites that is similar to the Company's core commercial work, but classified as civil because the operators are public sector entities in emerging economies.  The revenue split between the three market segments in Q3 2012 was 45% commercial, 35% civil and 20% military, compared to a 59/19/22 split in the third quarter of 2011.

COM DEV received new orders totaling $62 million in the third quarter, of which 14% were commercial, 47% were civil, and 39% were military. In last year's third quarter the Company booked $47 million of new orders, with a commercial/civil/military split of 73/22/5.

Order backlog at July 31, 2012 was $140 million, compared to $134 million three months earlier, and $126 million one year earlier.  An additional $10 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 29%, 40% and 31% respectively, compared to 53%, 25% and 22% at July 31, 2011.  The Company expects to convert approximately 59% of the total closing backlog into revenue beyond the end of fiscal 2012.

Consolidated gross margin was $13.4 million in the third quarter, representing 25% of total revenues, compared to $14.4 million or 28% of revenues in Q3 2011.  The decline in margins is the result of a shift in the mix of work underway during the quarters.

COM DEV recorded a net research and development recovery of $0.5 million in the third quarter of 2012, compared to a net expense of $0.9 million a year earlier.  A $2.3 million Investment Tax Credit and $0.8 million of external R&D funding exceeded the $2.5 million of gross R&D spending in the quarter.

Selling expenses were $3.0 million in the third quarter of 2012, an increase of 3% from Q3 2011.  Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway.  General expenses of $4.7 million increased by $0.7 million from the previous year, as a result of higher finance costs, increased administrative headcount driven by new expanded Canadian government Controlled Goods security clearance process requirements, and exactEarth™ spending.

Net income attributable to shareholders was $4.0 million in the third quarter of 2012, compared to $3.7 million a year earlier.  The increase is due primarily to lower net R&D expense and reduced Other expense, partially offset by lower gross margin, higher selling and general expenses, and lower foreign exchange gain.  Net income in the Space Equipment segment was $5.2 million, compared to $5.5 million in Q3 2011, while the $1.5 million net loss in the Data Services segment compares to a $2.1 million net loss a year earlier.

COM DEV ended the third quarter with $16.9 million of cash and equivalents, compared to $21.2 million at April 30, 2012.  During the quarter the Company renegotiated its credit agreement, establishing a new term debt facility of up to $40 million and reducing its operating line of credit availability from $32 million to $20 million.  The Company made an initial draw of US$17 million against the term debt facility, and repaid its previous term loan.  At July 31, 2012, COM DEV had outstanding debt of $20.7 million including the current portion, and its operating line of credit was not drawn upon.

The Company's basic share count stood at 76,285,147 on July 31, 2012.

Conference Call

A conference call will be held Thursday, September 6, 2012 at 5:00 pm 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 Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited  
         
For the three months ended July 31   2012   2011
         
  Revenue   $ 54,543   $ 50,870
  Cost of revenue   41,113   36,502
  Gross margin   13,430   14,368
  Research and development costs   2,519   4,595
  Research and development recovery   758   1,960
  Investment tax credits recoverable   2,293   1,700
  Net research and development (recovery) expense   (532)   935
  Selling expenses   3,014   2,898
  General expenses   4,733   4,036
  Operating income   6,215   6,499
  Interest expense   246   275
  Foreign exchange gain   (175)   (1,214)
  Other expense   735   2,558
Income before income taxes   $ 5,409   $ 4,880
  Income tax expense   1,813   1,700
Net income   $ 3,596   $ 3,180
         
Attributable to:          
  Shareholders   $ 4,013   $ 3,722
  Non-controlling interest   (417)   (542)
    $ 3,596   $ 3,180
         
Earnings per share        
Basic and diluted earnings per share   $0.05   $0.05

 

COM DEV International Ltd.
Consolidated Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited  
         
For the nine months ended July 31   2012   2011
         
  Revenue   $ 151,862   $ 154,235
  Cost of revenue   113,004   120,202
  Gross margin   38,858   34,033
  Research and development costs   10,155   12,618
  Research and development recovery   3,546   5,692
  Investment tax credits recoverable   6,131   4,000
  Net research and development expense   478   2,926
  Selling expenses   8,573   8,386
  General expenses   14,012   12,724
  Operating income   15,795   9,997
  Interest expense   749   605
  Foreign exchange gain   (1,688)   (945)
  Other (income) expense   (1,029)   2,753
Income before income taxes   $ 17,763   $ 7,584
  Income tax expense   6,121   4,000
Net income   $ 11,642   $ 3,584
         
Attributable to:        
  Shareholders   $ 12,872   $ 5,093
  Non-controlling interest   (1,230)   (1,509)
    $ 11,642   $ 3,584
         
Earnings per share        
Basic and diluted earnings per share   $0.17   $0.07

 

COM DEV International Ltd.
Consolidated Statements of Financial Position
(Canadian dollars in thousands)
Unaudited  
    As at   As at
    July 31,   October 31,
    2012   2011
Assets        
  Current          
    Cash and cash equivalents     $ 16,930   $ 27,618
    Accounts receivable   48,662   47,563
    Inventory   56,188   46,147
    Prepaids and other   2,970   1,422
    Income taxes recoverable   4,673   4,788
    Investment tax credit - current   4,034   4,684
        133,457   132,222
  Non-current          
    Property, plant and equipment   83,872   73,973
    Intangible assets   15,150   15,576
    Goodwill   2,217   2,200
    Investment tax credit   9,782   9,493
    Deferred income tax assets   2,372   1,088
Total assets       $ 246,850   $ 234,552
             
Liabilities            
  Current          
    Accounts payable and accrued liabilities   $ 26,187   $ 25,830
    Income taxes payable   605   302
    Provisions   396   1,172
    Deferred revenue   14,396   9,977
    Current portion of loans payable   3,339   8,867
    44,923   46,148
         
  Non-current          
    Loans payable   17,347   14,687
    Accounts payable and accrued liabilities   314   930
    Employee future benefits   4,270   4,494
    21,931   20,111
         
  Total liabilities     66,854   66,259
         
Shareholders' equity            
  Share capital     345,862   345,666
  Treasury Stock     (11)  
  Contributed surplus     9,409   9,570
  Deficit     (182,910)   (195,782)
  Non-controlling interest     7,747   8,977
  Accumulated other comprehensive loss     (101)   (138)
  Total shareholders' equity     179,996   168,293
         
Total liabilities and shareholders' equity       $ 246,850   $ 234,552

 COM DEV International Ltd.
Consolidated Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited
           
For the three months ended July 31     2012   2011
           
Operating activities          
  Net income   $ 3,596   $ 3,180
  Amortization   2,249   3,211
  (Gain) loss on disposal of assets   (106)   12
  Defined benefit plan expenses   157   (169)
  Defined benefit plan contributions   (301)   (286)
  Stock compensation expense   398   439
  Employee stock ownership plan awards   45   47
  Investment tax credits recoverable   (2,293)   (1,700)
  Deferred tax expense   1,553   1,700
  Unrealized foreign exchange loss on derivatives   795   145
      6,093   6,579
  Net change in non-cash working capital items   (5,347)   (6,282)
Operating activities     746   297
           
Financing activities          
  Shares repurchased and cancelled     (114)
  Non-controlling interest investment, net     (2)
  Cash settlement of restricted stock units   (216)  
  Advance of long term debt   17,308  
  Repayment of long term debt   (15,710)   (2,280)
Financing activities     1,382   (2,396)
           
Investing activities          
  Acquisition of property, plant and equipment   (5,371)   (3,008)
  Proceeds on disposal of property, plant and equipment   105   94
  Acquisition of intangible assets   (485)   (140)
Investing activities   (5,751)   (3,054)
Effect of exchange rate changes on cash   (604)   174
         
Net decrease in cash   (4,227)   (4,979)
Cash and cash equivalents, beginning of period   21,157   39,794
Cash and cash equivalents, end of period   $ 16,930   $ 34,815
         
Interest paid   $ 240   $ 349
Taxes paid   $ 91   $ -

COM DEV International Ltd.
Consolidated Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited    
         
For the nine months ended July 31   2012   2011
         
Operating activities        
  Net income   $ 11,642   $ 3,584
  Amortization   6,832   8,575
  Gain on disposal of assets   (2,273)   (270)
  Defined benefit plan expenses   469   252
  Defined benefit plan contributions   (1,512)   (694)
  Stock compensation expense   1,312   1,102
  Employee stock ownership plan awards   164   160
  Investment tax credits recoverable   (6,131)   (4,000)
  Deferred tax expense   5,861   4,000
  Unrealized foreign exchange (gain) loss on derivatives   (1,372)   259
    14,992   12,968
  Net change in non-cash working capital items   (6,248)   (1,570)
Operating activities   8,744   11,398
         
Financing activities        
  Shares issued     514
  Shares repurchased and cancelled     (114)
  Non-controlling interest investment, net     2,618
  Cash settlement of restricted stock units   (1,097)  
  Purchase of treasury stock   (355)  
  Advance of long term debt   17,308   15,000
  Repayment of long term debt   (20,334)   (5,611)
Financing activities   (4,478)   12,407
           
Investing activities        
  Acquisition of property, plant and equipment   (14,296)   (6,034)
  Proceeds on disposal of property, plant and equipment   2,306   1,560
  Acquisition of intangible assets   (1,891)   (1,243)
Investing activities   (13,881)   (5,717)
Effect of exchange rate changes on cash   (1,073)   (709)
         
Net (decrease) increase in cash   (10,688)   17,379
Cash and cash equivalents, beginning of period   27,618   17,436
Cash and cash equivalents, end of period   $ 16,930   $ 34,815
         
Interest paid   $ 773   $ 618
Taxes paid   $ 260   $ -

 

COM DEV International Ltd.
Consolidated Statements of Comprehensive Income
(Canadian dollars in thousands)
Unaudited
         
For the three months ended July 31   2012   2011
         
Net Income   $ 3,596   $ 3,180
         
Other comprehensive income:        
  Foreign currency translation adjustment (net of taxes of $nil)   513   85
         
Comprehensive income   $ 4,109   $ 3,265
         
         
For the nine months ended July 31   2012   2011
         
Net Income   $ 11,642   $ 3,584
         
Other comprehensive income (loss):        
  Foreign currency translation adjustment (net of taxes of $nil)   37   (1,137)
         
Comprehensive income   $ 11,679   $ 2,447

 

COM DEV International Ltd.
Consolidated Statements of Changes in Equity
(Canadian dollars in thousands)
Unaudited
                             
For the nine months ended July 31, 2012   Total   Deficit   Accumulated
Other Comprehensive
Loss
  Share Capital   Treasury Stock   Non-
controlling Interest
  Contributed Surplus
                             
Balance, October 31, 2011   $168,293   $(195,782)   $ (138)   $ 345,666   $ -    $ 8,977   $ 9,570
                             
Comprehensive income   11,679   12,872   37       (1,230)  
                             
Common stock issued         196         (196)
Expense recognized for ESOP awards   164               164
Treasury stock   (11)         (11)    
Expense recognized for stock-based compensation and long-term incentive plans   1,312               1,312
Settlement of long-term incentive plans   (1,441)               (1,441)
Balance, July 31, 2012   $179,996   $(182,910)   $ (101)   $ 345,862   $ (11)   $ 7,747   $ 9,409
                             
                             
For the nine months ended July 31, 2011                            
                             
Balance, October 31, 2010   $ 154,805   $ (207,026)   $ -    $ 346,068   $ -    $ 8,328   $ 7,435
                             
Comprehensive income   2,447   5,093   (1,137)       (1,509)  
                             
Common stock issued   514       871       (357)
Common stock repurchased and cancelled   (114)       (231)       117
Expense recognized for ESOP awards   160             160
Non-controlling interest investment   2,618           2,700   (82)
Expense recognized for stock-based compensation and long-term incentive plans   1,102             1,102
Balance, July 31, 2011   $161,532   $(201,933)   $ (1,137)   $346,708   $ -    $ 9,519   $ 8,375

 

 

SOURCE: Com Dev International Ltd.

For further information:

Gary Calhoun
Chief Financial Officer
Tel:  (519) 622-2300 ext. 2826
gary.calhoun@comdev.ca

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

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