COM DEV Announces Second Quarter Fiscal 2012 Results
CAMBRIDGE, ON, June 7, 2012 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced second quarter financial results for the six-month period ended April 30, 2012. All amounts are stated in Canadian dollars unless otherwise noted.
Second Quarter Highlights
- Revenue was $50.1 million in the second quarter of 2012, a 6% decrease from revenue of $53.1 million in the second quarter of 2011.
- Gross margin in the core Space Equipment business was 24%, compared to 22% in Q2 2011.
- Net income attributable to shareholders was $5.2 million, or $0.07 per share, an increase of $4.0 million compared to $1.3 million or $0.02 per share in the second quarter of 2011.
- New orders won in the second quarter totaled $59 million, compared to $28 million a year earlier and $45 million in the first quarter of 2012.
- Backlog at April 30, 2012 was $134 million, plus an additional $19 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded.
"Margins and profitability showed year-over-year improvement once again this quarter," said Michael Pley, CEO of COM DEV. "A healthy level of orders in the quarter, driven by strong activity in the commercial market, positions us well to grow revenue in the coming quarters. We expect revenue in the second half of the year to exceed the $97 million of first half revenues by approximately 10 percent."
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 second quarter are as follows.
Three months ended April 30 (unaudited, in thousands of dollars)
Space Equipment | Data Services | Consolidated * | ||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||
Revenue | 47,580 | 51,025 | 2,530 | 2,076 | 50,110 | 53,101 | ||
Gross margin | 12,065 | 11,543 | 335 | 174 | 12,378 | 11,032 | ||
Gross margin % | 24% | 22% | 13% | 8% | 25% | 21% | ||
Net income | 6,305 | 2,908 | (1,034) | (929) | 5,249 | 1,294 |
* Consolidated figures may not equal the sum of the two segments due to intra-segment adjustments. Please see Note 12 to the Unaudited Interim Consolidated Financial Statements for additional details.
Financial Review
COM DEV's fiscal 2012 second quarter revenues of $50.1 million decreased by $3.0 million or 6% compared to $53.1 million a year earlier. Revenues in the civil and military sectors were relatively stable in comparison to the second quarter of 2011, while revenues in the commercial sector declined by $2.7 million. The decline in commercial revenues is related to a significant inflow of new orders at the end of fiscal 2010, which resulted in a higher-than-normal level of backlog in the commercial portion of the business and a high level of revenue in the early part of 2011. The revenue split between the three market segments in Q2 2012 was 54% commercial, 28% civil and 18% military, compared to a 56/27/17 split in the second quarter of 2011.
COM DEV received new orders totaling $59 million in the second quarter, of which 73% were commercial, 1% was civil, and 26% were military. In last year's second quarter the Company booked $28 million of new orders, with a commercial/civil/military split of 71/22/7.
Order backlog at April 30, 2012 was $134 million, compared to $125 million three months earlier, and $131 million one year earlier. An additional $19 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 55%, 21% and 24% respectively, compared to 48%, 24% and 28% at April 30, 2011. The Company expects to convert approximately 71% of the total backlog into revenue during fiscal 2012.
Consolidated gross margin was $12.4 million in the second quarter, representing 25% of total revenues, compared to $11.0 million or 21% of revenues in Q2 2011. The improvement is attributable to stronger results in the core equipment business, continued progress in the Data Services segment, and a reduced impact from the one remaining program out of the five which had a significant drag on gross margin in the second quarter of last year. Gross margin in the Space Equipment segment was $12.1 million, or 24% of segment revenues.
COM DEV recorded a net research and development expense of $35,000 in the second quarter of 2012, compared to $1.0 million a year earlier. A $1.5 million increase in investment tax credits recoverable more than offset the effect of a reduction in R&D recovery.
Selling expenses were $2.9 million in Q2 2012, unchanged from Q2 2011. Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway. General expenses of $4.9 million increased by $0.6 million from the previous year, as a result of additional expenses under the long term incentive plan and increased costs driven by new Controlled Goods regulations.
Net income attributable to shareholders was $5.2 million in the second quarter of 2012, compared to $1.3 million a year earlier. The increase is due primarily to improved gross margins, a gain on foreign exchange, and a net gain on the sale of underutilized IP assets, partially offset by higher income tax expense. Net income in the Space Equipment segment was $6.3 million, compared to $2.9 million in Q2 2011, while the $1.0 million net loss in the Data Services segment compares to a $0.9 million net loss a year earlier.
COM DEV ended the second quarter with $21.2 million of cash and equivalents, compared to $23.5 million at January 31, 2012. Operating activities generated $2.6 million of cash in the quarter. At April 30, 2012, COM DEV had outstanding debt of $19.2 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 76,285,147 on June 7, 2012.
Conference Call
A conference call will be held Thursday, June 7, 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 April 30 | 2012 | 2011 | |||||||||||||
Revenue | $ 50,110 | $ 53,101 | |||||||||||||
Cost of revenue | 37,732 | 42,069 | |||||||||||||
Gross margin | 12,378 | 11,032 | |||||||||||||
Research and development costs | 3,853 | 4,199 | |||||||||||||
Research and development recovery | 1,020 | 1,942 | |||||||||||||
Investment tax credits recoverable | 2,798 | 1,300 | |||||||||||||
Net research and development expense | 35 | 957 | |||||||||||||
Selling expenses | 2,946 | 2,909 | |||||||||||||
General expenses | 4,881 | 4,282 | |||||||||||||
Operating income | 4,516 | 2,884 | |||||||||||||
Interest expense | 257 | 204 | |||||||||||||
Foreign exchange (gain) loss | (1,158) | 85 | |||||||||||||
Other (income) expense | (1,975) | 314 | |||||||||||||
Income before income taxes | $ 7,392 | $ 2,281 | |||||||||||||
Income tax expense | 2,527 | 1,300 | |||||||||||||
Net income | $ 4,865 | $ 981 | |||||||||||||
Attributable to: | |||||||||||||||
Shareholders | $ 5,249 | $ 1,294 | |||||||||||||
Non-controlling interest | (384) | (313) | |||||||||||||
$ 4,865 | $ 981 | ||||||||||||||
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) | |||||||||||||||
Unaudited | |||||||||||||||
For the six months ended April 30 | 2012 | 2011 | |||||||||||||
Revenue | $ 97,319 | $ 103,365 | |||||||||||||
Cost of revenue | 71,891 | 83,700 | |||||||||||||
Gross margin | 25,428 | 19,665 | |||||||||||||
Research and development costs | 7,636 | 8,023 | |||||||||||||
Research and development recovery | 2,788 | 3,732 | |||||||||||||
Investment tax credits recoverable | 3,838 | 2,300 | |||||||||||||
Net research and development expense | 1,010 | 1,991 | |||||||||||||
Selling expenses | 5,559 | 5,488 | |||||||||||||
General expenses | 9,279 | 8,688 | |||||||||||||
Operating income |
|
9,580 | 3,498 | ||||||||||||
Interest expense | 503 | 330 | |||||||||||||
Foreign exchange (gain) loss | (1,513) | 269 | |||||||||||||
Other (income) expense | (1,764) | 195 | |||||||||||||
Income before income taxes | $ 12,354 | $ 2,704 | |||||||||||||
Income tax expense | 4,308 | 2,300 | |||||||||||||
Net income | $ 8,046 | $ 404 | |||||||||||||
Attributable to: | |||||||||||||||
Shareholders | $ 8,859 | $ 1,371 | |||||||||||||
Non-controlling interest | (813) | (967) | |||||||||||||
$ 8,046 | $ 404 | ||||||||||||||
Earnings per share | |||||||||||||||
Basic and diluted earnings per share | $0.12 | $0.02 | |||||||||||||
COM DEV International Ltd. | |||||||||||||||
Consolidated Statements of Financial Position | |||||||||||||||
(Canadian dollars in thousands) | |||||||||||||||
Unaudited | |||||||||||||||
As at | As at | ||||||||||||||
April 30, | October 31, | ||||||||||||||
2012 | 2011 | ||||||||||||||
Assets | |||||||||||||||
Current | |||||||||||||||
Cash and cash equivalents | $ 21,157 | $ 27,618 | |||||||||||||
Accounts receivable | 37,588 | 47,563 | |||||||||||||
Inventory | 54,792 | 46,147 | |||||||||||||
Prepaids and other | 3,868 | 1,422 | |||||||||||||
Income taxes recoverable | 4,693 | 4,788 | |||||||||||||
Investment tax credit - current | 4,612 | 4,684 | |||||||||||||
126,710 | 132,222 | ||||||||||||||
Non-current | |||||||||||||||
Property, plant and equipment | 79,701 | 73,973 | |||||||||||||
Intangible assets | 15,234 | 15,576 | |||||||||||||
Goodwill | 2,165 | 2,200 | |||||||||||||
Investment tax credit | 7,239 | 9,493 | |||||||||||||
Deferred income tax assets | 3,562 | 1,088 | |||||||||||||
Total assets | $ 234,611 | $ 234,552 | |||||||||||||
Liabilities | |||||||||||||||
Current | |||||||||||||||
Accounts payable and accrued liabilities | $ 25,600 | $ 25,830 | |||||||||||||
Income taxes payable | 400 | 302 | |||||||||||||
Provisions | 435 | 1,172 | |||||||||||||
Deferred revenue | 8,727 | 9,977 | |||||||||||||
Current portion of loans payable | 7,838 | 8,867 | |||||||||||||
43,000 | 46,148 | ||||||||||||||
Non-current | |||||||||||||||
Loans payable | 11,314 | 14,687 | |||||||||||||
Accounts payable and accrued liabilities | 319 | 930 | |||||||||||||
Employee future benefits | 4,318 | 4,494 | |||||||||||||
15,951 | 20,111 | ||||||||||||||
Total liabilities | 58,951 | 66,259 | |||||||||||||
Shareholders' equity | |||||||||||||||
Share capital | 345,862 | 345,666 | |||||||||||||
Treasury Stock | (355) | - | |||||||||||||
Contributed surplus | 9,526 | 9,570 | |||||||||||||
Deficit | (186,923) | (195,782) | |||||||||||||
Non-controlling interest | 8,164 | 8,977 | |||||||||||||
Accumulated other comprehensive loss | (614) | (138) | |||||||||||||
Total shareholders' equity | 175,660 | 168,293 | |||||||||||||
Total liabilities and shareholders' equity | $ 234,611 | $ 234,552 | |||||||||||||
COM DEV International Ltd. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(Canadian dollars in thousands) | |||||||||||||||
Unaudited | |||||||||||||||
For the three months ended April 30 | 2012 | 2011 | |||||||||||||
Operating activities | |||||||||||||||
Net income | $ 4,865 | $ 981 | |||||||||||||
Amortization | 2,040 | 2,674 | |||||||||||||
Gain on disposal of assets | (2,197) | (282) | |||||||||||||
Defined benefit plan expenses | 153 | 205 | |||||||||||||
Defined benefit plan contributions | (961) | (201) | |||||||||||||
Stock compensation expense | 423 | 288 | |||||||||||||
Employee stock ownership plan awards | 52 | 50 | |||||||||||||
Investment tax credits recoverable | (2,798) | (1,300) | |||||||||||||
Deferred tax expense | 2,527 | 1,300 | |||||||||||||
Unrealized foreign exchange (gain) loss on derivatives | 421 | 77 | |||||||||||||
4,525 | 3,792 | ||||||||||||||
Net change in non-cash working capital items | (1,968) | 3,915 | |||||||||||||
Operating activities | 2,557 | 7,707 | |||||||||||||
Financing activities | |||||||||||||||
Non-controlling interest investment, net | - | 2,616 | |||||||||||||
Cash settlement of restricted stock units | (881) | - | |||||||||||||
Purchase of treasury stock | (355) | - | |||||||||||||
Advance of long term debt | - | 15,000 | |||||||||||||
Repayment of long term debt | (2,185) | (1,827) | |||||||||||||
Financing activities | (3,421) | 15,789 | |||||||||||||
Investing activities | |||||||||||||||
Acquisition of property, plant and equipment | (3,725) | (1,190) | |||||||||||||
Proceeds on disposal of property, plant and equipment | 2,197 | 1,466 | |||||||||||||
Acquisition of intangible assets | 96 | 70 | |||||||||||||
Investing activities | (1,432) | 346 | |||||||||||||
Effect of exchange rate changes on cash | (68) | (770) | |||||||||||||
Net (decrease) increase in cash | (2,364) | 23,072 | |||||||||||||
Cash and cash equivalents, beginning of period | 23,521 | 16,722 | |||||||||||||
Cash and cash equivalents, end of period | $ 21,157 | $ 39,794 | |||||||||||||
Interest paid | $ 271 | $ 162 | |||||||||||||
Taxes paid | $ 4 | $ - | |||||||||||||
COM DEV International Ltd. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(Canadian dollars in thousands) | |||||||||||||||
Unaudited | |||||||||||||||
For the six months ended April 30 | 2012 | 2011 | |||||||||||||
Operating activities | |||||||||||||||
Net income | $ 8,046 | $ 404 | |||||||||||||
Amortization | 4,583 | 5,364 | |||||||||||||
Gain on disposal of assets | (2,167) | (282) | |||||||||||||
Defined benefit plan expenses | 312 | 421 | |||||||||||||
Defined benefit plan contributions | (1,211) | (408) | |||||||||||||
Stock compensation expense | 914 | 663 | |||||||||||||
Employee stock ownership plan awards | 119 | 113 | |||||||||||||
Investment tax credits recoverable | (3,838) | (2,300) | |||||||||||||
Deferred tax expense | 4,308 | 2,300 | |||||||||||||
Unrealized foreign exchange (gain) loss on derivatives | - | 114 | |||||||||||||
11,066 | 6,389 | ||||||||||||||
Net change in non-cash working capital items | (3,068) | 4,712 | |||||||||||||
Operating activities | 7,998 | 11,101 | |||||||||||||
Financing activities | |||||||||||||||
Shares issued | - | 514 | |||||||||||||
Non-controlling interest investment, net | - | 2,620 | |||||||||||||
Cash settlement of restricted stock units | (881) | - | |||||||||||||
Purchase of treasury stock | (355) | - | |||||||||||||
Advance of long term debt | - | 15,000 | |||||||||||||
Repayment of long term debt | (4,624) | (3,331) | |||||||||||||
Financing activities | (5,860) | 14,803 | |||||||||||||
Investing activities | |||||||||||||||
Acquisition of property, plant and equipment | (8,925) | (3,026) | |||||||||||||
Proceeds on disposal of property, plant and equipment | 2,201 | 1,466 | |||||||||||||
Acquisition of intangible assets | (1,406) | (1,103) | |||||||||||||
Investing activities | (8,130) | (2,663) | |||||||||||||
Effect of exchange rate changes on cash | (469) | (883) | |||||||||||||
Net increase (decrease) in cash | (6,461) | 22,358 | |||||||||||||
Cash and cash equivalents, beginning of period | 27,618 | 17,436 | |||||||||||||
Cash and cash equivalents, end of period | $ 21,157 | $ 39,794 | |||||||||||||
Interest paid | $ 533 | $ 269 | |||||||||||||
Taxes paid | $ 169 | $ - | |||||||||||||
COM DEV International Ltd. | |||||||||||||||
Consolidated Statements of Comprehensive Income | |||||||||||||||
(Canadian dollars in thousands, except for per share figures) | |||||||||||||||
Unaudited | |||||||||||||||
For the three months ended April 30 | 2012 | 2011 | |||||||||||||
Net Income | $ 4,865 | $ 981 | |||||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment (net of taxes of $nil) | (497) | (848) | |||||||||||||
Comprehensive income | $ 4,368 | $ 133 | |||||||||||||
COM DEV International Ltd. | |||||||||||||||
Consolidated Statements of Comprehensive Income | |||||||||||||||
(Canadian dollars in thousands, except for per share figures) | |||||||||||||||
Unaudited | |||||||||||||||
For the six months ended April 30 | 2012 | 2011 | |||||||||||||
Net Income | $ 8,046 | $ 404 | |||||||||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment (net of taxes of $nil) | (476) | (1,222) | |||||||||||||
Comprehensive income (loss) | $ 7,570 | $ (818) |
COM DEV International Ltd. | ||||||||||||||
Consolidated Statements of Changes in Equity | ||||||||||||||
(Canadian dollars in thousands) | ||||||||||||||
Unaudited | ||||||||||||||
For the six months ended April 30, 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 | 7,570 | 8,859 | (476) | - | - | (813) | - | |||||||
Common stock issued | - | - | - | 196 | - | (196) | ||||||||
Expense recognized for ESOP awards | 119 | - | - | - | - | 119 | ||||||||
Treasury stock | (355) | - | - | - | (355) | - | - | |||||||
Expense recognized for stock-based compensation and long-term incentive plans | 914 | - | - | - | - | 914 | ||||||||
Settlement of long-term incentive plans | (881) | - | - | - | - | (881) | ||||||||
Balance, April 30, 2012 | $ 175,660 | $ (186,923) | $ (614) | $ 345,862 | $ (355) | $ 8,164 | $ 9,526 | |||||||
For the six months ended April 30, 2011 | ||||||||||||||
Balance, October 31, 2010 | $ 154,805 | $ (207,026) | $ - | $ 346,068 | $ - | $ 8,328 | $ 7,435 | |||||||
Comprehensive income | (818) | 1,371 | (1,222) | - | - | (967) | - | |||||||
Common stock issued | 514 | - | - | 871 | - | - | (357) | |||||||
Expense recognized for ESOP awards | 113 | - | - | - | - | - | 113 | |||||||
Non-controlling interest investment | 2,620 | - | - | - | - | 2,700 | (80) | |||||||
Expense recognized for stock-based compensation and long-term incentive plans | 664 | - | - | - | - | - | 664 | |||||||
Balance, April 30, 2011 | $ 157,898 | $ (205,655) | $ (1,222) | $ 346,939 | $ - | $ 10,061 | $ 7,775 |
For further information:
Gary Calhoun
Chief Financial Officer
Tel: (519) 622-2300 ext. 2826
[email protected]
Jeff Codispodi
The Equicom Group
Tel: (416) 815-0700 ext. 261
[email protected]
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