Norsat Announces Third Quarter Fiscal Year 2016 Financial Results

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

VANCOUVER, Nov. 3, 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 third quarter ended September 30, 2016.

Financial Highlights

For the three months ended September 30, 2016

  • $8.9 million in revenue for the quarter, a decrease of 5% compared to $9.3 million for the same period last year.
  • Gross profit margin of 47% for the quarter, an increase of 5% from 42% for the same period last year.
  • Net earnings for the quarter were $1.4 million, or $0.24 and $0.23 per share, basic and diluted, compared to $1.5 million, or $0.26 per share, basic and diluted, for the same period last year.
  • Adjusted EBITDA(1) of $1.9 million for the quarter, an increase of 14% from $1.7 million for the same period last year.

For the nine months ended September 30, 2016

  • $27.4 million in revenue for the nine months ended September 30, 2016, an increase of 3% compared to $26.6 million for the same period last year.
  • Gross profit margin of 46% for the nine months ended September 30, 2016, an increase of 6% from 40% for the same period last year.
  • Net earnings for the nine months ended September 30, 2016 were $3.5 million, or $0.60 and $0.59 per share, basic and diluted, compared to $2.7 million, or $0.47 per share, basic and diluted, for the same period last year.
  • Adjusted EBITDA(1) of $5.4 million for the nine months ended September 30, 2016, an increase of 41% from $3.8 million for the same period last year.
  • $12.1 million of cash and cash equivalents at September 30, 2016, an increase of $7.5 million compared to $4.6 million at December 31, 2015.
  • $24.5 million of working capital at September 30, 2016, an increase of $5.1 million compared to $19.4 million at December 31, 2015.

______________________________

(1) Adjusted 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 third quarter results. 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, which was demonstrated by the significant order received from Harris Corporation during the quarter," 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 a new series of heavy duty vehicle mounted duplexers and an expanded portfolio of covert antennas designed to support law enforcement activities," 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, November 3, 2016 at 8:30 am Pacific Time (11:30 am Eastern Time) to discuss its fiscal year 2016 third quarter results. To access the conference call, please dial toll-free 1-888-886-7786 or 416-764-8658. The conference call title is: 'Investor Call – Q3 2016'. 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)








September 30, 2016

December 31, 2015

ASSETS



Current assets



Cash and cash equivalents

$

12,071,468

$

4,585,754

Trade and other receivables

7,868,594

8,987,392

Inventories

10,937,699

10,956,524

Prepaid expenses and other

499,613

394,617


31,377,374

24,924,287

Non-current assets



Property and equipment, net

591,522

558,609

Intangible assets, net

4,280,760

4,724,490

Goodwill

4,097,751

4,097,751

Investment tax credits recoverable

4,757,334

4,985,139

Deferred income tax assets

1,366,991

2,218,848


15,094,358

16,584,837

Total assets

$

46,471,732

$

41,509,124




LIABILITIES 



Current liabilities



Trade and other payables

$

1,961,204

$

1,906,703

Accrued liabilities

2,388,052

2,375,107

Provisions

907,553

947,682

Taxes payable

-

-

Deferred revenue

1,650,072

286,432


6,906,881

5,515,924

Non-current liabilities



Long-term deferred revenue

4,265

45,889

Total liabilities

6,911,146

5,561,813

SHAREHOLDERS' EQUITY



Issued capital

40,010,378

39,850,648

Treasury shares

(431,436)

(320,750)

Contributed surplus

4,207,094

4,318,487

Accumulated other comprehensive loss

(4,480,669)

(4,673,811)

Retained earnings/(deficit)

255,219

(3,227,263)

Total shareholders' equity

39,560,586

35,947,311

Total liabilities and shareholders' equity

$

46,471,732

$

41,509,124

 

Norsat International Inc.

Condensed Interim Consolidated Statements of Earnings and Comprehensive Income

(Expressed in United States dollars)

(Unaudited)







Three months ended September 30

Nine months ended September 30


2016

2015

2016

2015











Revenue

$

8,855,622

$

9,278,889

$

27,368,985

$

26,639,305

Cost of sales

4,689,736

5,359,040

14,914,133

15,878,587

Gross profit

4,165,886

3,919,849

12,454,852

10,760,718






Expenses:





Selling and distributing 

1,056,730

1,183,898

3,720,466

3,722,686

General and administrative 

1,015,116

983,593

2,718,274

2,742,763

Product development 

728,335

674,879

2,369,112

2,164,587


Less: Government contributions

(377,057)

(322,828)

(1,144,235)

(966,785)

Loss/(gain) on foreign exchange

48,283

(40,339)

130,674

348,202

Interest and bank charges

27,014

33,637

81,397

109,943

Total expenses

2,498,421

2,512,840

7,875,688

8,121,396






Earnings before income taxes

1,667,465

1,407,009

4,579,164

2,639,322






Current income tax expense/(recovery)

7,737

-

11,110

(66,068)

Deferred income tax expense/(recovery)

274,282

(67,291)

1,085,572

(2,706)

Net earnings

$

1,385,446

$

1,474,300

$

3,482,482

$

2,708,096






Other comprehensive income/(loss)





Items that may subsequently be reclassified to income:






Gain/(loss) on translation of foreign subsidiaries

27,647

(501,214)

193,142

(580,591)

Total comprehensive income

$

1,413,093

$

973,086

$

3,675,624

$

2,127,505






Net earnings per share






Basic earnings per share

$

0.24

$

0.26

$

0.60

$

0.47


Diluted earnings per share

$

0.23

$

0.26

$

0.59

$

0.47






Weighted average number of shares outstanding






Basic

5,766,571

5,747,653

5,767,734

5,757,688


Diluted

5,909,745

5,769,721

5,876,595

5,778,383

 

Norsat International Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in United States dollars)

(Unaudited)







Three months ended September 30

Nine months ended September 30


2016

2015

2016

2015






Cash and cash equivalents provided by/(used in)





Operating activities:





Net earnings for the period

$

1,385,446

$

1,474,300

$

3,482,482

$

2,708,096

Income taxes paid 

(7,737)

-

(11,110)

(43,270)

Adjustments for items not affecting cash:






Depreciation and amortization

201,479

320,716

632,726

978,507


Write-off of intangible assets and property and equipment

30,873

-

30,873

31,139


Unrealized foreign exchange loss/(gain)

37,388

(40,339)

181,813

348,202


Acquisition loan cost amortization

-

-

-

2,262


Other income

-

-

-

(198,997)


Current income tax expense/(recovery)

7,737

-

11,110

(66,068)


Deferred income tax expense/(recovery)

274,282

(67,291)

1,085,572

(2,706)


Share-based payments 

65,002

61,899

194,409

180,260


Vesting of RSUs

-

-

-

(14,632)


Government contributions 

(377,057)

(322,828)

(1,144,235)

(966,785)

Changes in non-cash working capital 

831,909

986,521

2,119,722

(1,901,965)

Net cash flows provided by operating activities

2,449,322

2,412,978

6,583,362

1,054,043






Investing activities:





Purchase of intangible assets, property and 






equipment, net of SADI

(152,460)

(58,037)

(287,100)

(157,586)

Net cash flows used in investing activities

(152,460)

(58,037)

(287,100)

(157,586)






Financing activities:





Repayment of acquisition loan

-

-

-

(2,286,762)

Proceeds from exercise of share purchase options

9,149

-

9,149

-

Purchase of treasury shares, including purchase costs

-

-

(265,907)

(273,298)

Government contributions

448,807

-

1,460,236

833,211

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

457,956

-

1,203,478

(1,726,849)






Effect of foreign currency translation on






cash and cash equivalents

(1,598)

(13,167)

(14,026)

253,645






Increase/(decrease) in cash and cash equivalents

2,753,220

2,341,774

7,485,714

(576,747)

Cash and cash equivalents, beginning of period

9,318,248

2,595,212

4,585,754

5,513,733

Cash and cash equivalents, end of period

$

12,071,468

$

4,936,986

$

12,071,468

$

4,936,986

 

Norsat International Inc.





Reconciliation of IFRS to non-IFRS Measures




(Expressed in United States dollars)











Three months ended September 30

Nine months ended September 30


2016

2015

2016

2015

Net earnings for the period

$

1,385,446

$

1,474,300

$

3,482,482

$

2,708,096

Interest income

(4,967)

(344)

(8,783)

21,300

Depreciation and amortization

201,479

320,716

632,726

978,507

Tax expense/(recovery)

282,019

(67,291)

1,096,682

(68,774)

EBITDA(2)

$

1,863,977

$

1,727,381

$

5,203,107

$

3,639,129

Loss/(gain) on foreign exchange  

48,283

(40,339)

130,674

348,202

Other income

-

-

-

(198,997)

Corporate development costs

19,160

-

19,160

-

Adjusted EBITDA(2)

$

1,931,420

$

1,687,042

$

5,352,941

$

3,788,334



(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 nine months ended September 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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