COM DEV Announces Solid Second Quarter Fiscal 2013 Results

CAMBRIDGE, ON, June 6, 2013 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced second quarter results for the three-month period ended April 30, 2013. All amounts are stated in Canadian dollars unless otherwise noted.

Second Quarter Highlights

  • Revenue was $55.2 million, up 10.2 percent over second quarter 2012 revenues of $50.1 million.
  • Solid order performance with $57.0 million in new business in the quarter resulted in a book to bill ratio of 1.03 - the fifth consecutive quarter with a ratio greater than 1.0.
  • 28% gross margin in the core space equipment business, up from 25% in Q2 2012, reflected the quality of the Company's underlying backlog, as well as solid engineering, manufacturing, and program management performance.
  • Net income attributable to shareholders was $4.8 million, or $0.06 per share compared to Q2 2012, where the benefit of a one-time gain of $2.2 million from the sale of underutilized assets, boosted net income to $5.5 million, or $0.07.
  • Increase in exactEarth subscription customer base to 70 from 41 in Q2 2012. In addition to subscription customers there are 60 customer trials currently underway, up from 16 in Q2 2012.
  • Backlog grew by 11.8% to $149.1 million at April 30, 2013, up from $133.5 million at the end of Q2 2012.

"The second quarter of 2013 delivered solid results, with continued strong gross margins in our equipment business, and a book-to-bill ratio that stayed above 1.0 for the fifth consecutive quarter," stated Michael Pley, CEO of COM DEV. "Subsequent to our quarter-end we have seen a significant pick-up in announcements for new satellite orders and we maintain our outlook for growth in revenue in fiscal 2013."

Financial Review

COM DEV's fiscal 2013 second quarter revenues of $55.2 million increased by $5.1 million or 10.2 percent compared to $50.1 million the previous year. The revenue split between the three market segments was 47 percent commercial, 34 percent civil and 19 percent military, compared to a 54/28/18 split in 2012. It is important to note that communication satellite programs are increasingly being seen in the civil segment as emerging country national governments use satellites as an efficient means to provide communications infrastructure. These programs draw on the Company's same products as the more traditional commercial market segments. In general, bidding and order activity remains robust.

COM DEV received new orders totaling $57.0 million during the quarter, of which 44 percent were commercial, 41 percent were civil, and 15 percent were military. In the second quarter of 2012 the Company booked $59.3 million of new orders, with a commercial/civil/military split of 73/01/26.

Order backlog at April 30, 2013 was $149.1 million compared to $133.5 million at the end of the second quarter of fiscal 2012. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 54 percent, 29 percent and 17 percent respectively, compared to 55 percent 21 percent and 24 percent at April 30, 2012. The Company expects to convert approximately 61 percent of the total backlog into revenue during the balance of fiscal 2013.

Consolidated gross margin was $14.7 million in fiscal Q2 2013, representing 27 percent of total revenues, compared to $12.4 million or 25 percent of revenues in Q2 2012. The improvement was primarily the result of an increase in the Space Segment gross margin percentage to 28 percent (2012: 25 percent), slightly offset by a decrease in the Data Services Segment gross margin percentage due to higher depreciation from the successful commissioning of two exactEarth satellites and the higher operations costs of the expanded constellation to service exactEarth's growing customer base.

COM DEV recorded a net research and development expense of $0.1 million in Q2 2013, compared to $0.1 million in Q2 2012. Gross R&D spending declined to $2.8 million from $3.9 million while R&D funding from external sources decreased to $0.7 million from $1.0 million. The Company also recognized $2.0 million of Investment Tax Credits (ITCs) in Q2 2013, compared to $2.8 million in Q2 2012, which helped to offset income tax expense.

General expenses in Q2 2013 at $4.9 million were unchanged from the same quarter in the prior year, and selling expenses at $3.0 million were marginally higher than the $2.9 million from Q2 2012. In general, selling expenses fluctuate from quarter to quarter and year to year depending on the volume of bids and proposal work that is underway.

Net income attributable to shareholders was $4.8 million in Q2 2013, compared to $5.5 million in 2012.  While that net income figure is lower year over year by $0.7 million, current quarter gross margin percentage strength generated $2.3 million more in gross margin versus Q2 2012.  The comparative prior year's net income contained a $2.2 million one-time gain from the sale of underutilized Intellectual Property, as well as a $1.0 million higher valuation gain on the Company's foreign exchange hedge portfolio due to the strengthening of the Canadian dollar in Q2 of 2012.

The Company generated $11.9 million of cash from operating activities in Q2 2013, compared with 2012 when $1.8 million was generated. The Company generated $6.1 million in working capital in Q2 2013, which compares to $0.7 million generated in working capital in Q2 2012. This increase in working capital was mainly due to a decrease in accounts receivable, inventory and contracts in progress, offset by an increase in prepaid and decreases in accounts payable and billings in excess of costs and earnings on contracts in progress.

During the quarter the Company received a settlement proposal from the Canada Revenue Agency related to a dispute over Corporate Minimum Tax, and Capital Tax reassessments.  The terms of that proposal have been reflected in the Q2 financial statements, including comparative figures.

The Company's basic share count stood at 76,397,656 on June 6, 2013.

Conference Call

A conference call will be held Thursday, June 6, 2013 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 Interim Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited
                             
For the three months ended April 30             2013     2012
                             
                             
  Revenue           $   55,229     $   50,110
  Cost of revenue               40,492         37,732
  Gross margin               14,737         12,378
  Research and development costs               2,777         3,853
  Research and development recovery               658         1,020
  Investment tax credits recoverable               2,011         2,798
  Net research and development expense (recovery)               108         35
  Selling expenses               2,977         2,946
  General expenses               4,948         4,881
                  6,704         4,516
  Interest expense               169         257
  Foreign exchange gain               (111)         (1,158)
  Other expense (income)               267         (1,975)
Income before income taxes           $   6,379     $   7,392
  Income tax expense               1,932         2,247
Net income           $   4,447     $   5,145
                             
Attributable to:                          
  Shareholders           $   4,780     $   5,529
  Non-controlling interest               (333)         (384)
              $   4,447     $   5,145
                             
Other comprehensive income:                          
  Foreign currency translation               262         (497)
Comprehensive income           $   4,709     $   4,648
                             
Earnings per share                          
Basic and diluted earnings per share               $0.06         $0.07
                             
See accompanying notes to consolidated financial statements
 

COM DEV International Ltd.
Consolidated Interim Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited
                             
For the six months ended April 30             2013     2012
                             
                             
  Revenue           $   107,512     $   97,319
  Cost of revenue               79,150         71,891
  Gross margin               28,362         25,428
  Research and development costs               5,353         7,636
  Research and development recovery               1,139         2,788
  Investment tax credits recoverable               3,624         3,838
  Net research and development expense               590         1,010
  Selling expenses               5,550         5,559
  General expenses               9,487         9,279
                  12,735         9,580
  Interest expense               287         503
  Foreign exchange gain               (463)         (1,513)
  Other expense (income)               105         (1,764)
Income before income taxes           $   12,806     $   12,354
  Income tax expense               4,182         3,743
Net income           $   8,624     $   8,611
                             
Attributable to:                          
  Shareholders           $   9,369     $   9,424
  Non-controlling interest               (745)         (813)
              $   8,624     $   8,611
                             
Other comprehensive income:                          
  Foreign currency translation               452         (476)
Comprehensive income           $   9,076     $   8,135
                             
Earnings per share                          
Basic and diluted earnings per share               $0.12     $   0.12
                             
See accompanying notes to consolidated financial statements
 
 

COM DEV International Ltd.
Consolidated Interim Statements of Financial Position
(Canadian dollars in thousands)
Unaudited
              As at     As at     As at
              April 30,     October 31,     November 1,
              2013     2012     2011
                                 
 Assets                             
   Current                             
     Cash and cash equivalents          $ 33,101     $ 25,794     $ 27,618
     Accounts receivable           37,703       41,722       47,563
     Inventory           56,826       64,763       46,147
     Prepaid and other              3,612       3,214       1,421
     Income taxes recoverable             2,384       2,266       2,159
     Investment tax credits - current             2,422       2,162       4,684
                  136,048       139,921       129,592
   Non-current                               
     Property, plant and equipment             87,774       86,000       73,973
     Intangible assets             14,424       14,600       15,576
     Goodwill             2,245       2,205       2,200
     Investment tax credits             4,185       2,124       9,493
     Deferred income tax assets             12,520       14,728       1,779
 Total assets          $ 257,196     $ 259,578     $ 232,613
                                 
 Liabilities                             
   Current                             
     Accounts payable and accrued liabilities          $ 22,968     $ 30,622     $ 25,830
     Income taxes payable              1,279       851       302
     Provisions             833       430       1,172
     Billings in excess of costs and earnings on contracts in progress           18,307       22,448       9,977
     Current portion of loans payable             4,481       3,978       8,867
                  47,868       58,329       46,148
                                   
   Non-current                               
     Loans payable              15,764       16,358       14,687
     Accounts payable and accrued liabilities              398       525       930
     Employee future benefits             3,823       3,719       4,494
                  19,985       20,602       20,111
                                   
   Total liabilities              67,853       78,931       66,259
                                   
                                   
 Shareholders' equity                               
   Share capital             346,262       345,876       345,666
   Treasury stock             (1,516)       (432)       -
   Contributed surplus             9,616       9,298       9,570
   Deficit             (171,955)       (181,324)       (197,720)
   Non-controlling interest              6,572       7,317       8,976
   Accumulated other comprehensive loss              364       (88)       (138)
   Total shareholders' equity              189,343       180,647       166,354
                                   
 Total liabilities and shareholders' equity          $ 257,196     $ 259,578     $ 232,613
                       
See accompanying notes to consolidated financial statements
 
 

COM DEV International Ltd.
Consolidated Interim Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited
                         
For the three months ended April 30       2013     2012
                         
Operating activities                      
  Net income       $   4,447     $   5,145
  Amortization           2,800         2,040
  Gain on disposal of assets           -         (2,197)
  Defined benefit plan expenses           138         153
  Defined benefit plan contributions           (231)         (961)
  Stock based compensation expense           204         423
  Employee stock ownership plan awards           48         52
  Amorization of issue costs, effective interest, and unrealized foreign exchange on loans           284         159
  Investment tax credits recoverable           (2,011)         (2,798)
  Deferred income tax expense           16         1,760
  Payment of withholding tax on behalf of employees upon settlement of restricted stock units           -         (881)
  Unrealized foreign exchange loss (gain) on derivatives           159         (1,746)
              5,854         1,149
  Net change in non-cash working capital items           6,085         686
Operating activities           11,939         1,835
                         
Financing activities                      
  Purchase of treasury stock           (625)         (355)
  Advance of long-term debt           540         -
  Repayment of long-term debt           (865)         (2,215)
Financing activities           (950)         (2,570)
                         
Investing activities                      
  Acquisition of property, plant and equipment           (3,787)         (3,725)
  Proceeds on disposal of property, plant and equipment           -         2,197
  Acquisition of intangible assets           (480)         96
Investing activities           (4,267)         (1,432)
Effect of exchange rate changes on cash           (7)         (197)
                         
Net increase (decrease) in cash           6,715         (2,364)
Cash and cash equivalents, beginning of the period           26,386         23,521
Cash and cash equivalents, end of the period       $   33,101     $   21,157
                         
Interest paid       $   128     $   271
Taxes paid       $   -     $   4
                   
See accompanying notes to consolidated financial statements
 
 

COM DEV International Ltd.
Consolidated Interim Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited
                         
For the six months ended April 30       2013     2012
                         
Operating activities                      
  Net income       $   8,624     $   8,611
  Amortization           5,401         4,583
  Gain on disposal of assets           (5)         (2,167)
  Defined benefit plan expenses           273         312
  Defined benefit plan contributions           (231)         (1,211)
  Stock based compensation expense           673         914
  Employee stock ownership plan awards           110         119
  Amorization of issue costs, effective interest, and unrealized foreign exchange on loans           527         285
  Investment tax credits recoverable           (3,624)         (3,838)
  Deferred income tax expense           2,208         2,945
  Payment of withholding tax on behalf of employees upon settlement of restricted stock units           (33)         (881)
  Unrealized foreign exchange loss (gain) on derivatives           286         (2,167)
              14,209         7,505
  Net change in non-cash working capital items           2,946         (103)
Operating activities           17,155         7,402
                         
Financing activities                      
  Shares issued           6          
  Purchase of treasury stock           (1,136)         (355)
  Advance of long-term debt           540         -
  Repayment of long-term debt           (1,158)         (4,687)
Financing activities           (1,748)         (5,042)
                         
Investing activities                      
  Acquisition of property, plant and equipment           (5,526)         (8,925)
  Proceeds on disposal of property, plant and equipment           43         2,201
  Acquisition of intangible assets           (1,207)         (1,406)
Investing activities           (6,690)         (8,130)
Effect of exchange rate changes on cash           (1,410)         (691)
                         
Net increase (decrease) in cash           7,307         (6,461)
Cash and cash equivalents, beginning of the period           25,794         27,618
Cash and cash equivalents, end of the period       $   33,101     $   21,157
                         
Interest paid       $   276     $   533
Taxes paid       $   222     $   169
                         
See accompanying notes to consolidated financial statements        
         
         
     
COM DEV International Ltd.
Consolidated Interim Statements of Changes in Equity
(Canadian dollars in thousands)
Unaudited
                                           
For the six months ended April 30, 2013       Total     Deficit     Accumulated
Other
Comprehensive
Loss
    Share Capital     Treasury
Stock
    Non-controlling
Interest
    Contributed
Surplus
                                             
Balance, October 31, 2012   $   180,647   $ (181,324)   $ (88)   $ 345,876   $ (432)   $ 7,317   $ 9,298
                                             
Comprehensive income       9,076     9,369     452     -     -     (745)     -
                                             
Common stock issued       6     -     -     386     -     -     (380)
Expense recognized for ESOP awards       110     -     -     -     -     -     110
Treasury stock       (1,136)     -     -     -     (1,136)     -     -
Settlement of long-term incentive plans       (33)     -     -     -     52     -     (85)
Expense recognized for long-term incentive plans       517     -     -     -     -     -     517
Expense recognized for stock-based compensation       156     -     -     -     -     -     156
Balance, April 30, 2013   $   189,343   $ (171,955)   $ 364   $ 346,262   $ (1,516)   $ 6,572   $ 9,616
                                             
                                             
For the six months ended April 30, 2012                                            
                                             
Balance, October 31, 2011   $   166,355   $ (197,720)   $ (138)   $ 345,666   $ -   $ 8,977   $ 9,570
                                             
Comprehensive income       8,135     9,424     (476)     -     -     (813)     -
                                             
Common stock issued       -     -     -     196     -     -     (196)
Expense recognized for ESOP awards       119     -     -     -     -     -     119
Treasury stock       (355)     -     -     -     (355)     -     -
Settlement of long-term incentive plans       (881)     -     -     -     -     -     (881)
Expense recognized for long-term incentive plans       750     -     -     -     -     -     750
Expense recognized for stock-based compensation       164     -     -     -     -     -     164
Balance, April 30, 2012   $   174,287   $ (188,296)   $ (614)   $ 345,862   $ (355)   $ 8,164   $ 9,526
                                             
See accompanying notes to consolidated financial statements

SOURCE: Com Dev International Ltd.

For further information:

Gary Calhoun
Chief Financial Officer
Tel:  (519) 622-2300 ext. 2826
gary.calhoun@comdev.ca

Craig MacPhail
TMX Equicom
Tel: (416) 815-0700 ext. 290
cmacphail@tmxequicom.com

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Com Dev International Ltd.

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