Norsat Announces Fourth Quarter and Fiscal Year 2015 Financial Results

- Management to Host Conference Call at 8:30 am Pacific Time (11:30 am Eastern Time) -

VANCOUVER, March 4, 2016 /CNW/ - Norsat International Inc. ("Norsat" or the "Company") (TSX: NII and NYSE MKT: NSAT), a provider of unique and customized communication solutions for remote and challenging applications, today reported financial results for the fourth quarter and full year ended December 31, 2015.

Financial Highlights

For the three months ended December 31, 2015

  • $9.5 million in revenue for the quarter, compared to $9.4 million for the same period last year.
  • Gross profit margin of 41% for the quarter, an increase of 6% from 35% for the same period last year.
  • Net earnings for the quarter were $5.9 million, including the deferred income tax recovery of $3.8 million, or $1.03 per share, basic and diluted, an increase of $5.8 million from $51,000, or $0.01 per share, basic and diluted, for the same period last year.
  • Adjusted EBITDA is a measure the Company uses to reflect the results of its core earnings. Adjusted EBITDA is defined as earnings before income tax expense, financing costs, depreciation and amortization, foreign exchange gain or loss, corporate development costs, write-down of inventory, impairment charges or recoveries, discontinued operations and other non-cash charges.
    • Adjusted EBITDA of $1.5 million for the quarter, an increase of 97% from $0.7 million for the same period last year.
  • Deferred income tax recovery for the quarter was $3.8 million, compared to $70,000 for the same period last year. The recovery was based on an assessment of the Company's history of profitability and its ability to realize deferred income tax assets.

For the year ended December 31, 2015

  • $36.1 million in revenue for the year, consistent with revenue of $36.2 million in 2014.
  • Gross profit margin of 41% for the year, compared to 40% for 2014.
  • Net earnings were $8.7 million, for the year including the deferred income tax recovery of $3.8 million, or $1.50 per share, basic and diluted, an increase of $4.5 million from $4.2 million, or $0.73 per share, basic and diluted, for 2014.
  • $4.6 million of cash and cash equivalents at December 31, 2015, compared to $5.5 million at December 31, 2014.
  • No bank debt outstanding as the Company repaid the remaining balance during the second quarter in 2015. Bank debt at December 31, 2014 was $2.4 million.
  • $19.4 million of working capital at December 31, 2015, compared to $13.8 million at December 31, 2014.
  • Adjusted EBITDA of $5.3 million for the year, an increase of 12% from $4.7 million for 2014.
  • Deferred income tax recovery for the year was $3.8 million, compared to $0.3 million for 2014. The recovery was based on an assessment of the Company's history of profitability and its ability to realize deferred income tax assets.

"Fiscal 2015 demonstrated continued solid operating results as we continued to work through the sizable backlog of orders booked earlier in the year." said Dr. Amiee Chan, President and CEO of Norsat.  "We have been experiencing increased demand for components including our successful and expanding ATOM product line and solutions supplied to militaries around the globe which is driving improvements in our Satellite Communications segment. Offsetting the improved results within the Satellite Communications segment was a continuation of headwinds within our Land Mobile Radio (LMR) segment both in the U.S. and particularly in the Canadian public safety markets.  Partially offsetting the softness in LMR was an increase in sales of our positive train control (PTC) products as railroads worked toward the December 31, 2015 deadline.  In late December 2015, the deadline for certain railroads to install PTC technologies was extended to December 31, 2018 with a possibility of further extending the deadline to the 2020 year if railroads meet certain conditions.  Therefore, we believe the program's scope will continue over the coming years as thousands of locomotives and miles of track still need equipment to enable PTC to be fully operational, providing Norsat with a strong backlog of order flow for years to come."

A full set of financial statements and Management's Discussion and Analysis for Norsat is available at www.norsat.com and will be available at www.sedar.com.

Conference Call Details
Norsat will host a conference call today, March 4, 2016 at 8:30 am Pacific Time (11:30 am Eastern Time) to discuss its financial results for the fourth quarter and full year ended December 31, 2015. To access the conference call, please dial toll-free 1-888-886-7786 or 416-764-8658. The conference call title is: 'Norsat Investor Call'. Please connect approximately 10 – 15 minutes prior to the beginning of the call to ensure participation. A digital recording and transcript of the call will be available after the live call at: http://www.norsat.com/investors/financial-information/conference-call-recordings/

Norsat International Inc.



Consolidated Statements of Financial Position



(Expressed in United States dollars, except when otherwise indicated)








December 31, 2015

December 31, 2014

ASSETS



Current assets



Cash and cash equivalents

$                 4,585,754

$              5,513,733

Trade and other receivables

8,987,392

7,570,110

Inventories

10,956,524

10,120,374

Prepaid expenses and other

394,617

435,433


24,924,287

23,639,650

Non-current assets



Property and equipment, net

558,609

855,978

Intangible assets, net

4,724,490

6,360,336

Goodwill

4,097,751

4,736,470

Investment tax credits recoverable

4,985,139

1,910,040

Deferred income tax assets

2,218,848

1,360,959


16,584,837

15,223,783

Total assets

$              41,509,124

$           38,863,433




LIABILITIES 



Current liabilities



Trade and other payables

$                1,906,703

$              2,831,911

Accrued liabilities

2,375,107

2,601,163

Provisions

947,682

766,371

Taxes payable

-

120,038

Deferred revenue

286,432

1,169,816

Current liabilities before acquisition loan

5,515,924

7,489,299

Acquisition loan

-

2,371,266


5,515,924

9,860,565

Non-current liabilities



Long-term deferred revenue

45,889

18,426

Total liabilities

5,561,813

9,878,991




SHAREHOLDERS' EQUITY



Issued capital

39,850,648

39,850,648

Treasury shares

(320,750)

(326,527)

Contributed surplus

4,318,487

4,371,778

Accumulated other comprehensive loss

(4,673,811)

(3,033,963)

Deficit

(3,227,263)

(11,877,494)

Total shareholders' equity

35,947,311

28,984,442

Total liabilities and shareholders' equity

$              41,509,124

$           38,863,433




 

Norsat International Inc.





Consolidated Statements of Earnings and Comprehensive Income





(Expressed in United States dollars, except when otherwise indicated)









Three months ended December 31

Year ended December 31


2015

2014

2015

2014






Revenue

$            9,460,306

$            9,370,908

$            36,099,611

$          36,179,180

Cost of sales

5,574,566

6,109,777

21,453,153

21,800,384

Gross profit

3,885,740

3,261,131

14,646,458

14,378,796






Expenses:





Selling and distributing 

1,153,893

1,526,622

4,876,579

5,413,026

General and administrative 

1,347,995

918,238

4,090,758

4,028,640

Product development 

708,467

749,120

2,873,054

2,845,898


Less: Government contributions

(342,886)

(374,947)

(1,309,671)

(1,266,824)

(Gain)/loss on foreign exchange

(1,141,356)

362,405

(793,154)

(586,020)

Interest and bank charges

30,272

95,783

140,215

242,844

Total expenses

1,756,385

3,277,221

9,877,781

10,677,564






Earnings/(loss) before income taxes

2,129,355

(16,090)

4,768,677

3,701,232






Current income tax expense/(recovery)

-

3,178

(66,068)

(214,355)

Deferred income tax recovery

(3,812,780)

(69,792)

(3,815,486)

(279,168)

Net earnings

$          5,942,135

$               50,524

$           8,650,231

$          4,194,755






Other comprehensive income 





Exchange differences on translation of operations






in currencies other than United States dollars

(1,059,257)

48,816

(1,639,848)

(1,718,485)

Total comprehensive income

$          4,882,878

$               99,340

$           7,010,383

$          2,476,270






Net earnings per share






Basic earnings per share

$                     1.03

$                     0.01

$                       1.50

$                     0.73


Diluted earnings per share

$                     1.03

$                     0.01

$                       1.50

$                     0.73






Weighted average number of shares outstanding






Basic

5,759,400

5,763,897

5,758,179

5,757,518


Diluted

5,775,035

5,770,099

5,777,619

5,761,472







  

Norsat International Inc.





Consolidated Statements of Cash Flows





(Expressed in United States dollars, except when otherwise indicated)











Three months ended December 31

Year ended December 31


2015

2014

2015

2014






Cash and cash equivalents (used in)/provided by





Operating activities:





Net earnings for the period

$ 5,942,135

$ 50,524

$ 8,650,231

$ 4,194,755

Income taxes (paid)/recovered

-

-

(43,270)

57,549

Adjustments for items not affecting cash:






Depreciation and amortization

317,127

375,027

1,295,634

1,274,536


Write-off of property and equipment

-

46,708

31,139

46,708


Unrealized foreign exchange (gain)/loss

(910,533)

362,405

(562,331)

(586,020)


Acquisition loan cost amortization

-

6,786

2,262

27,146


Other expenses/(income)

161,292

-

(37,705)

-


Current income tax expense/(recovery)

-

3,178

(66,068)

(214,356)


Deferred income tax recovery

(3,812,780)

(69,792)

(3,815,486)

(279,168)


Share-based payments

67,616

105,076

247,876

272,064


Vesting of RSUs

-

(10,895)

-

(69,495)


Government contributions

(342,886)

(374,947)

(1,309,671)

(1,266,824)


Changes in non-cash working capital

(1,802,646)

1,095,383

(3,704,611)

463,711

Net cash flows (used in)/provided by operating activities

(380,675)

1,589,453

688,000

3,920,606






Investing activities:





Purchase of intangible assets, property and equipment

(35,700)

(216,788)

(193,286)

(623,286)

Government contributions for






acquisition of property and equipment

-

22,492

-

49,043

Net cash flows used in investing activities

(35,700)

(194,296)

(193,286)

(574,243)






Financing activities:





Repayment of acquisition loan

-

(480,000)

(2,286,762)

(1,920,000)

Purchase of treasury shares, including purchase costs

(7,460)

(6,121)

(295,390)

(117,906)

Government contributions

438,437

-

1,271,648

997,783

Net cash flows provided by/(used in) financing activities

430,977

(486,121)

(1,310,504)

(1,040,123)






Effect of foreign currency translation on






cash and cash equivalents

(365,834)

207,052

(112,189)

(65,102)






(Decrease)/increase in cash and cash equivalents

(351,232)

1,116,088

(927,979)

2,241,138

Cash and cash equivalents, beginning of period

4,936,986

4,397,645

5,513,733

3,272,595

Cash and cash equivalents, end of period

$ 4,585,754

$ 5,513,733

$ 4,585,754

$ 5,513,733






 


Norsat International Inc.





Reconciliation of IFRS to non-IFRS Measures





(Expressed in United States dollars, except when otherwise indicated)











Three months ended December 31

Year ended December 31


2015

2014

2015

2014

Net earnings for the period

$              5,942,135

$               50,524

$            8,650,231

$             4,194,755

Interest (income)/expense

(728)

20,798

20,572

114,602

Depreciation and amortization

317,127

375,027

1,295,634

1,274,536

Tax recovery

(3,812,780)

(66,614)

(3,881,554)

(493,523)

EBITDA(1)

$              2,445,754

$             379,735

$            6,084,883

$             5,090,370

(Gain)/loss on foreign exchange 

(1,141,356)

362,405

(793,154)

(586,020)

Other expenses/(income)

161,292

-

(37,705)

-

Acquisition costs

-

-

-

180,000

Adjusted EBITDA(1)

$              1,465,690

$             742,140

$            5,254,024

$             4,684,350






(1)

We disclose non-IFRS measures as we believe they provide useful information on actual operating results and assist in comparisons from one period to another. Readers are cautioned that non-IFRS measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.  For a more detailed description of non-IFRS measures, please refer to 2015 Annual Management's Discussion and Analysis posted on Norsat's website and SEDAR.                

 

About Norsat International Inc.

Founded in 1977, Norsat International Inc. is a provider of unique and customized communication solutions for remote and challenging applications. Norsat's products and services include leading-edge product design and development, production, distribution and infield support and service of fly-away satellite terminals, microwave components, antennas, Radio Frequency (RF) conditioning products, maritime based satellite terminals and remote network connectivity solutions. More information is available at www.norsat.com, via email at investor@norsat.com or by phone at 1-604-821-2800.

Forward Looking Statements

The discussion and analysis of this news release contains forward-looking statements concerning anticipated developments in Norsat's operations in future periods, the adequacy of its financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as "expects," "anticipates," "believes," "intends," "estimates,", "predicts," "potential," "targeted," "plans," "possible" and similar expressions, or statements that events, conditions or results "will," "may," "could" or "should" occur or be achieved. These forward-looking statements include, without limitation, statements about Norsat's market opportunities, strategies, competition, expected activities and expenditures as it pursues its business plan, the adequacy of available cash resources and other statements about future events or results. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, such as business and economic risks and uncertainties. The forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward-looking statements made in this news release are qualified by this cautionary statement and there can be no assurance that actual results or anticipated developments will be realized. For the reasons set forth above, investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date of this news release and Norsat assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law.

SOURCE Norsat International Inc.

For further information: Dr. Amiee Chan, President & CEO, Tel: 604-821-2800, Email: achan@norsat.com; Mr. Arthur Chin, Chief Financial Officer, Tel: 604-821-2800, Email: achin@norsat.com

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