COM DEV Announces First Quarter Fiscal 2010 Results
CAMBRIDGE, ON, March 11 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced first quarter financial results for the three month period ended January 31, 2010. All amounts are stated in Canadian dollars unless otherwise noted.
First Quarter Highlights
- Revenue was $56.7 million, compared to $56.5 million recorded in the first quarter of 2009. - Gross margin was 24%, compared to 26% in Q1 2009. - Net income was $2.2 million, or $0.03 per share, compared to $4.4 million or $0.06 per share for the prior year period. - New orders won in the first quarter totaled $51 million, compared to $88 million a year earlier and $67 million in the fourth quarter of fiscal 2009. - Backlog at January 31, 2010 was $157 million, compared to $163 million at the end of fiscal 2009.
"In the first quarter we maintained revenue levels from last year despite currency headwinds, but a number of additional factors contributed to suppressing our margins and profitability," said John Keating, CEO of COM DEV. "The program performance issues identified at the end of fiscal 2009 had an impact on our margins this quarter, as anticipated, and we also experienced cost increases on a couple of other programs. Our continued investment in growth included over $1 million of operating expenses for our exactEarth subsidiary which did not exist a year ago."
Mr. Keating continued: "We remain optimistic about our prospects for fiscal 2010. We have seen a good start to contract awards already in the second quarter, and our new business pipeline indicates a strong possibility of achieving record orders for the year. exactEarth continues to meet our expectations, having opened its new data centre and won a $1.4 million contract from the Canadian Government. The Government has also announced funding for the RADARSAT Constellation Mission, a program on which we expect to play an important role."
Financial Review
COM DEV's fiscal 2010 first quarter revenues of $56.7 million represented an increase of $0.2 million or 0.3% over the first quarter of 2009. The revenue split between the three market segments was 59% commercial, 30% civil and 11% military, compared to a 59/24/17 split in the first quarter of 2009. Based on current market activity levels, and the Company's historic success rate at winning new business, management continues to expect fiscal 2010 revenue to grow by at least 10% over fiscal 2009.
COM DEV received new orders totaling $51 million during the first quarter, of which 60% were commercial, 21% were civil, and 19% were military. In Q1 2009 the Company booked $88 million of new orders, with a commercial/civil/military split of 51/12/37.
Order backlog at quarter-end was $157 million, compared to backlog of $163 million three months earlier, and $189 million one year ago. These variations in backlog are consistent with historical patterns as the order profiles are typically lumpy in nature. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 46%, 34% and 20% respectively, compared to 44%, 35% and 21% at January 31, 2009.
Gross margin was $13.4 million in the first quarter, representing 24% of revenues, compared to $14.7 million or 26% of revenues in the first quarter of 2009. The decrease in gross margin percentage was mainly the result of a small number of projects with reduced gross margins, as announced in Q4 2009, cost increases on a small number of commercial programs in Q1 2010 and less favourable exchange rates.
Net research and development expense was $2.9 million in the quarter, compared to $2.8 million in the first quarter of 2009. Gross R&D spending decreased by 4% from a year earlier to $3.7 million, but outside funding of R&D decreased by 26% to $0.8 million.
Selling expenses were $2.7 million in the first quarter, compared to $2.0 million in Q1 2009. The increase was due to a higher level of bidding costs in support of increased bidding activity, higher business development and sales and marketing costs in exactEarth and our COM DEV Canada division, and to an increase in commission costs. General and administrative expenses were $6.3 million, compared with $5.4 million in Q1 2009, with the increase due primarily to the startup activities in the exactEarth subsidiary and higher salary and benefit costs.
Net income for the quarter was $2.2 million, compared to $4.4 million in Q1 2009, while earnings per share were $0.03, compared to $0.06 a year earlier.
COM DEV ended the quarter with $18.2 million of cash and equivalents, compared to $21.4 million at October 31, 2009. Operating activities generated $4.4 million of cash in the first quarter. Financing activities used $1.6 million of cash, while investing activities used $5.9 million of cash. At January 31, 2010, COM DEV had outstanding debt of $18.2 million including the current portion, and the Company's $32 million credit facility was not drawn upon.
The Company's basic share count did not change during the first quarter, and stood at 76,100,289 on January 31, 2010 (fully diluted: 77,249,777).
Conference Call
A conference call will be held Thursday, March 11, 2010 at 5:00 pm EST to discuss this announcement. 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 Playe(TM) to listen to the webcast.
About COM DEV
COM DEV International Ltd. (www.comdevintl.com) is a leading global designer and manufacturer of space hardware subsystems. With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced products and subsystems that are sold to major satellite prime contractors for use in communications, space science, remote sensing and military satellites.
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 January 31 2010 2009 ------------------------------------------------------------------------- Revenue $ 56,687 $ 56,511 Cost of revenue 43,262 41,833 --------- --------- Gross margin 13,425 14,678 --------- --------- Research and development costs 3,685 3,846 Research and development recovery 768 1,044 --------- --------- Net research and development 2,917 2,802 Selling expenses 2,653 2,036 General expenses 6,299 5,357 --------- --------- Operating income 1,556 4,483 Interest expense 147 423 Foreign exchange gain (964) (402) Other expense 146 108 --------- --------- Income before non-controlling interest 2,227 4,354 Non-controlling interest (18) - --------- --------- Net income $ 2,245 $ 4,354 --------- --------- --------- --------- Earnings per share Basic and diluted earnings per share $ 0.03 $ 0.06 COM DEV International Ltd. Consolidated Balance Sheets (Canadian dollars in thousands) Unaudited As at As at January 31, October 31, 2010 2009 ------------------------------------------------------------------------- Assets Current Cash and cash equivalents $ 18,228 $ 21,404 Accounts receivable 38,453 53,674 Inventory 55,662 51,114 Prepaids and other 3,612 3,112 Income taxes recoverable 4,615 4,615 Future income tax assets - current 6,192 6,192 ----------- ----------- 126,762 140,111 Property, plant and equipment 70,113 69,537 Intangible assets 23,502 21,459 Goodwill 2,360 2,388 Future income tax assets - long term 1,881 1,723 ----------- ----------- Total assets $ 224,618 $ 235,218 ----------- ----------- ----------- ----------- Liabilities Current Accounts payable and accrued liabilities $ 24,582 $ 32,939 Deferred revenue 19,836 22,510 Current portion of loans payable 6,562 6,587 ----------- ----------- 50,980 62,036 ----------- ----------- Long term Loans payable 11,606 13,401 Employee future benefits 1,888 1,872 ----------- ----------- 13,494 15,273 ----------- ----------- Total liabilities 64,474 77,309 ----------- ----------- Non-controlling interest 468 486 ----------- ----------- Shareholders' equity Share capital 345,885 345,885 Contributed surplus 3,138 2,804 Deficit (186,514) (188,759) Accumulated other comprehensive income (2,833) (2,507) ----------- ----------- Total shareholders' equity 159,676 157,423 ----------- ----------- Total liabilities and shareholders' equity $ 224,618 $ 235,218 ----------- ----------- ----------- ----------- COM DEV International Ltd. Consolidated Statements of Cash Flows (Canadian dollars in thousands) Unaudited For the three months ended January 31 2010 2009 ------------------------------------------------------------------------- Operating activities Net income $ 2,245 $ 4,354 Amortization 2,617 2,849 Loss on disposal of assets 53 - Defined benefit plan expenses 170 118 Stock compensation expense 277 176 Employee stock option plan awards 57 54 Unrealized foreign exchange gain on derivatives (947) (209) Non-controlling interest (18) - --------- --------- 4,454 7,342 Net change in non-cash working capital items (70) (10,985) --------- --------- Operating activities 4,384 (3,643) --------- --------- Financing activities Shares issued - 258 Repayment of long term debt (1,584) (1,570) --------- --------- Financing activities (1,584) (1,312) --------- --------- Investing activities Acquisition of property, plant and equipment (2,700) (449) Proceeds on disposal of property, plant and equipment 1 - Acquisition of intangible assets (2,970) (943) Employee future benefits contributions (197) (153) --------- --------- Investing activities (5,866) (1,545) --------- --------- Effect of exchange rate changes on cash (110) (359) --------- --------- Net decrease in cash (3,176) (6,859) Cash and cash equivalents, beginning of period 21,404 16,102 --------- --------- Cash and cash equivalents, end of period $ 18,228 $ 9,243 --------- --------- --------- --------- Interest paid $ 161 $ 322 --------- --------- --------- --------- Taxes paid $ 158 $ - --------- --------- --------- --------- COM DEV International Ltd. Consolidated Statements of Changes in Equity (Canadian dollars in thousands) Unaudited Accumulated For the three Other months ended Comprehensive Share Contributed January 31, 2010 Total Deficit Income Capital Surplus ------------------------------------------------------------------------- Balance, October 31, 2009 $ 157,423 $(188,759) $ (2,507) $ 345,885 $ 2,804 Comprehensive income Net Income 2,245 2,245 - - - Foreign currency translation adjustments (net of taxes of $nil) (326) - (326) - - ---------- ---------- ---------- ---------- ---------- 1,919 2,245 (326) - - Common stock issued - - - - - Value of ESOP awards 57 - - - 57 Expense recognized for stock-based compensation 277 - - - 277 ---------- ---------- ---------- ---------- ---------- Balance, January 31, 2010 $ 159,676 $(186,514) $ (2,833) $ 345,885 $ 3,138 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------------------------------------------------- For the three months ended January 31, 2009 Balance, October 31, 2008 $ 121,060 $(204,065) $ (729) $ 323,975 $ 1,879 Comprehensive income Net Income 4,354 4,354 - - - Foreign currency translation adjustments (net of taxes of $nil) (434) - (434) - - ----------- ---------- ---------- ---------- ---------- 3,920 4,354 (434) - - Common stock issued 257 - - 286 (29) Value of ESOP awards 54 - - - 54 Expense recognized for stock-based compensation 176 - - - 176 ---------- ---------- ---------- ---------- ---------- Balance, January 31, 2009 $ 125,467 $(199,711) $(1,163) $ 324,261 $ 2,080 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
%SEDAR: 00003673E
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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