Norsat Announces Second Quarter Fiscal Year 2016 Financial Results

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

VANCOUVER, Aug. 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 second quarter ended June 30, 2016.

Financial Highlights

For the three months ended June 30, 2016

  • $9.0 million in revenue for the quarter, consistent with the amount for the same period last year.
  • Gross profit margin of 46% for the quarter, an increase of 7% from 39% for the same period last year.
  • Net earnings for the quarter were $0.9 million, or $0.16 per share, basic and diluted, compared to $0.7 million, or $0.12 per share, basic and diluted, for the same period last year.
  • Adjusted EBITDA1 of $1.7 million for the quarter, an increase of 50% from $1.2 million for the same period last year.

For the six months ended June 30, 2016

  • $18.5 million in revenue for the six months ended June 30, 2016, an increase of 7% compared to $17.4 million for the same period last year.
  • Gross profit margin of 45% for the six months ended June 30, 2016, an increase of 6% from 39% for the same period last year.
  • Net earnings for the six months ended June 30, 2016 were $2.1 million, or $0.36 per share, basic and diluted, compared to $1.2 million, or $0.21 per share, basic and diluted, for the same period last year.
  • Adjusted EBITDA1 of $3.4 million for the six months ended June 30, 2016, an increase of 63% from $2.1 million for the same period last year.
  • $9.3 million of cash and cash equivalents at June 30, 2016, an increase of $4.7 million compared to $4.6 million at December 31, 2015.
  • $22.6 million of working capital at June 30, 2016, an increase of $3.2 million compared to $19.4 million at December 31, 2015.

__________________
1Adjusted EBITDA is a measure that 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.


"We are very pleased with the second quarter results. Despite continued softness in the Canadian infrastructure and public safety markets, our total revenue and profitability have remained strong as we continue to manage our cost structure while challenging ourselves to develop and market reliable products to meet customer needs," said Dr. Amiee Chan, President and CEO of Norsat. "To demonstrate our continued commitment to our long-term strategy to expand our market share in remote and challenging applications, we have introduced new products and solutions during the quarter, including the Median 40W Ku-band BUC, along with a range of LNBs to our microwave product line," added Dr. Chan.

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, August 4, 2016 at 8:30 am Pacific Time (11:30 am Eastern Time) to discuss its fiscal year 2016 second quarter results. 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.



Condensed Interim Consolidated Statements of Financial Position


(Expressed in United States dollars)



(Unaudited)









June 30, 2016

December 31, 2015

ASSETS



Current assets



Cash and cash equivalents

$

9,318,248

$

4,585,754

Trade and other receivables

8,753,411

8,987,392

Inventories

11,339,377

10,956,524

Prepaid expenses and other

258,347

394,617


29,669,383

24,924,287

Non-current assets



Property and equipment, net

570,756

558,609

Intangible assets, net

4,434,258

4,724,490

Goodwill

4,097,751

4,097,751

Investment tax credits recoverable

4,694,480

4,985,139

Deferred income tax assets

1,704,126

2,218,848


15,501,371

16,584,837

Total assets

$

45,170,754

$

41,509,124




LIABILITIES 



Current liabilities



Trade and other payables

$

2,545,612

$

1,906,703

Accrued liabilities

2,149,332

2,375,107

Provisions

957,466

947,682

Taxes payable

-

-

Deferred revenue

1,430,914

286,432


7,083,324

5,515,924

Non-current liabilities



Long-term deferred revenue

14,199

45,889

Total liabilities

7,097,523

5,561,813

SHAREHOLDERS' EQUITY



Issued capital

39,995,215

39,850,648

Treasury shares

(431,547)

(320,750)

Contributed surplus

4,148,106

4,318,487

Accumulated other comprehensive loss

(4,508,316)

(4,673,811)

Deficit

(1,130,227)

(3,227,263)

Total shareholders' equity

38,073,231

35,947,311

Total liabilities and shareholders' equity

$

45,170,754

$

41,509,124




 

 

Norsat International Inc.




Condensed Interim Consolidated Statements of Earnings and Comprehensive Income


(Expressed in United States dollars, except per share amount)



(Unaudited)











Three months ended June 30

Six months ended June 30


2016

2015

2016

2015






Revenue

$

8,959,936

$

8,950,091

$

18,513,363

$

17,360,416

Cost of sales

4,846,117

5,467,065

10,224,397

10,519,547

Gross profit

4,113,819

3,483,026

8,288,966

6,840,869






Expenses:





Selling and distributing 

1,259,794

1,271,795

2,663,736

2,538,788

General and administrative 

821,057

734,713

1,703,158

1,759,170

Product development 

856,782

730,932

1,640,777

1,489,708


Less: Government contributions

(387,703)

(312,933)

(767,178)

(643,957)

Loss on foreign exchange

131,550

210,792

82,391

388,541

Interest and bank charges

27,583

40,908

54,383

76,306

Total expenses

2,709,063

2,676,207

5,377,267

5,608,556






Earnings before income taxes

1,404,756

806,819

2,911,699

1,232,313






Current income tax expense/(recovery)

3,373

-

3,373

(66,068)

Deferred income tax expense

466,382

132,710

811,290

64,585

Net earnings

$

935,001

$

674,109

$

2,097,036

$

1,233,796






Other comprehensive income (loss)






Exchange differences on translation of operations






in currencies other than United States dollars

148,558

464,402

165,495

(79,377)

Total comprehensive income

$

1,083,559

$

1,138,511

$

2,262,531

$

1,154,419






Net earnings per share






Basic earnings per share

$

0.16

$

0.12

$

0.36

$

0.21


Diluted earnings per share

$

0.16

$

0.12

$

0.36

$

0.21






Weighted average number of shares outstanding






Basic

5,764,892

5,759,439

5,765,922

5,762,789


Diluted

5,815,681

5,783,048

5,800,064

5,785,985






 

 

Norsat International Inc.




Condensed Interim Consolidated Statements of Cash Flows



(Expressed in United States dollars)




(Unaudited)









Three months ended June 30

Six months ended June 30


2016

2015

2016

2015






Cash and cash equivalents provided by/(used in)





Operating activities:





Net earnings for the period

$

935,001

$

674,109

$

2,097,036

$

1,233,796

Income taxes paid 

(3,373)

(43,270)

(3,373)

(43,270)

Adjustments for items not affecting cash:






Depreciation and amortization

201,919

329,742

431,247

657,791


Write-off of property and equipment

-

-

-

31,139


Unrealized foreign exchange loss

119,569

210,793

144,425

388,541


Acquisition loan cost amortization

-

-

-

2,262


Other income

-

(198,997)

-

(198,997)


Current income tax expense/(recovery)

3,373

-

3,373

(66,068)


Deferred income tax expense

466,382

132,710

811,290

64,585


Share-based payments 

84,531

64,410

129,407

118,361


Vesting of RSUs

-

(14,632)

-

(14,632)


Government contributions 

(387,703)

(312,933)

(767,178)

(643,957)

Changes in non-cash working capital 

1,065,497

(1,977,058)

1,298,835

(2,888,486)

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

2,485,196

(1,135,126)

4,145,062

(1,358,935)






Investing activities:





Purchase of intangible assets, property and 






equipment, net of SADI

(111,222)

(43,454)

(134,640)

(99,549)

Net cash flows used in investing activities

(111,222)

(43,454)

(134,640)

(99,549)






Financing activities:





Repayment of acquisition loan

-

(1,306,762)

-

(2,286,762)

Purchase of treasury shares, including purchase costs

(266,018)

(273,298)

(266,018)

(273,298)

Government contributions

46,058

69,727

1,000,518

833,211

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

(219,960)

(1,510,333)

734,500

(1,726,849)






Effect of foreign currency translation on






cash and cash equivalents

(7,514)

(73,410)

(12,428)

266,812






Increase/(decrease) in cash and cash equivalents

2,146,500

(2,762,323)

4,732,494

(2,918,521)

Cash and cash equivalents, beginning of period

7,171,748

5,357,535

4,585,754

5,513,733

Cash and cash equivalents, end of period

$

9,318,248

$

2,595,212

$

9,318,248

$

2,595,212











 

 


Norsat International Inc.




Reconciliation of IFRS to non-IFRS Measures




(Expressed in United States dollars)










Three months ended June 30

Six months ended June 30


2016

2015

2016

2015

Net earnings for the period

$

935,001

$

674,109

$

2,097,036

$

1,233,796

Interest (income)/expense

(2,258)

7,139

(3,816)

21,644

Depreciation and amortization

201,919

329,742

431,247

657,791

Tax expense/(recovery)

469,755

132,710

814,663

(1,483)

EBITDA(2)

$

1,604,417

$

1,143,700

$

3,339,130

$

1,911,748

Loss on foreign exchange 

131,550

210,792

82,391

388,541

Other income

-

(198,997)

-

(198,997)

Adjusted EBITDA(2)

$

1,735,967

$

1,155,495

$

3,421,521

$

2,101,292






(2)

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 Management's Discussion and Analysis for the three and six months ended June 30, 2016 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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