~ Q2 delivers strong revenue growth,
increased earnings, and record cash flow ~
VANCOUVER, CANADA, August 9, 2017 /CNW/ - Avigilon
Corporation ("Avigilon" or the "Company") (TSX: AVO),
provider of trusted security solutions, today reported financial
results for the three and six months ended June 30, 2017. All figures are in United States ("US") dollars unless
otherwise stated.
Second Quarter 2017 Highlights
- Revenue of $99.4 million,
compared with $85.7 million in Q2
2016.
- Revenue growth of 16% outpaced the industry's estimated growth
rate of 6% per annum.
- Gross profit* of $51.1 million,
compared with $43.0 million in Q2
2016.
- Strong gross margin percentage* of 51%.
- Adjusted EBITDA* of $17.8
million, compared with $8.0
million in Q2 2016.
- Adjusted EBITDA Margin* of 18%, compared with 9% in Q2
2016.
- Adjusted Earnings* of $9.3
million, compared with $2.6
million in Q2 2016.
- Diluted Adjusted EPS* of $0.21,
compared with $0.06 in Q2 2016.
- Operating expenses as a percentage of revenue of 42%, compared
with 51% in Q2 2016.
- Record cash flow from operations of $20.2 million, compared with $12.0 million in Q2 2016.
- Introduced several new products including:
-
- Avigilon Presence Detector, a sensor that combines Avigilon
self-learning analytics with impulse radar technology to help
detect people even if they have stopped moving or are hidden.
- H4 Thermal camera line, a new camera line that includes thermal
technology designed to detect people and vehicles in areas with
poor visibility.
- Continued the expansion of the H4 camera line, including the
introduction of the H4 Mini Dome camera line and other models for a
variety of environments.
- Avigilon Access Control Manager with biometric integration
which offers an additional layer of identification to our access
control solutions.
"In Q2, we significantly increased profit, achieved strong
revenue growth, and continued to outpace the industry," said
Alexander Fernandes, Avigilon's
Founder, President, Chief Executive Officer and Chairman of the
Board. "We successfully executed our strategy, led the industry
with innovative new technology and solutions, and gained market
share."
Detailed Financial Review
Avigilon reported Q2 2017 revenue of $99.4 million, an increase of 16% over revenue of
$85.7 million in Q2 2016. On a
constant currency basis, revenue in Q2 2017 grew 17% compared to
the same period in 2016. Revenue growth continued to outpace the
industry's estimated growth rate of 6% per annum. Gross profit
increased $8.1 million from
$43.0 million in Q2 2016 to
$51.1 million in Q2 2017. Revenue and
gross profit growth reflect increased unit volume as a result of
greater customer adoption in existing markets, further penetration
of target regions, the ongoing success of the H4 camera platform
and Avigilon Control Center ("ACC") 6, new product
introductions, and broader adoption of video analytics.
Increased operating leverage, expressed as a percentage of
revenue, include:
- Sales and marketing expenses decreased as a percentage of
revenue from 24% in Q2 2016 to 20% in Q2 2017;
- General and administrative ("G&A") expenses
decreased as a percentage of revenue from 16% in Q2 2016 to 11% in
Q2 2017; and
- Operating expenses decreased as a percentage of revenue from
51% in Q2 2016 to 42% in Q2 2017.
Management expects the Company's operating expenses as a
percentage of revenue to continue to decrease year over year as the
Company focuses on profitability and benefits from efficiencies
arising from previous investments and economies of scale.
Sales and marketing expenses in Q2 2017 were roughly the same as
sales and marketing expenses in Q2 2016. Correspondingly, strong
revenue growth has been achieved without a commensurate increase in
sales and marketing expenses as the Company benefited from new
efficiencies arising from previous investments. Going forward,
management expects sales and marketing expenses to increase year
over year as the Company continues investing in its global sales
and marketing team and initiatives.
Sales and marketing expenses as a percentage of revenue may
fluctuate from quarter to quarter due to the timing of new hires,
trade shows, and other marketing initiatives.
Research and development ("R&D") expenses, net of
related income tax credits and capitalized development costs, were
$4.4 million in Q2 2017, compared
with $4.6 million in Q2 2016. Gross
R&D expenditures were $8.1
million in Q2 2017 (8% of revenue), compared with
$8.4 million in Q2 2016 (10% of
revenue). The investment in gross R&D expenditures is
consistent with the Company's ongoing strategy to lead the industry
with superior product offerings.
Gross R&D expenditures as a percentage of revenue may
fluctuate from quarter to quarter depending on the timing of the
Company's product development projects.
G&A expenses in Q2 2017 were $11.0
million compared with $13.3
million in Q2 2016. The decrease in G&A expenses for Q2
2017 was primarily due to the Company's focus on creating
operational efficiencies and benefits realized from previous
investments.
Amortization and depreciation in Q2 2017 were $6.0 million, compared with $5.2 million in Q2 2016. The increase in
amortization and depreciation was primarily due to previous
investments in, among other things, R&D, and our patent
portfolio.
Operating expenses for Q2 2017 were $41.7
million, a decrease of 5% compared with $43.7 million in Q2 2016, primarily due to the
respective items noted above.
IFRS net income for Q2 2017 was $6.7
million, compared with net loss of $2.0 million in Q2 2016. IFRS earnings per share
in Q2 2017 were $0.15 (basic and
diluted), compared with loss per share of $0.05 (basic and diluted) in Q2 2016.
Adjusted Earnings and diluted Adjusted EPS for Q2 2017 were
$9.3 million and $0.21, respectively, compared with $2.6 million and $0.06, respectively, in Q2 2016.
Adjusted EBITDA was $17.8 million
in Q2 2017 compared with $8.0 million
in Q2 2016. Adjusted EBITDA Margin was 18% in Q2 2017 compared with
9% in Q2 2016.
Net income, earnings per share, Adjusted Earnings, diluted
Adjusted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin for Q2
2017 all increased over the same period in 2016, primarily due to
the combination of increased operating leverage and gains in
revenue and gross profit. In particular, the Company focused on
creating operational efficiencies and benefited from previous
investments, while growing revenues and gross profits through
increased unit volume as a result of greater customer adoption in
existing and target regions, the ongoing success of the H4 camera
platform and ACC 6, and broader adoption of video analytics.
As at June 30, 2017, Avigilon had
net working capital of $113.6
million, including cash and cash equivalents of $31.7 million. Net cash from operating activities
for Q2 2017 was $20.2 million,
compared with $12.0 million in Q2
2016.
As at June 30, 2017, the Company
had 43,782,749 common shares issued and outstanding. The weighted
average number of common shares issued and outstanding for Q2 2017
was approximately 43.8 million basic and approximately 45.1 million
diluted. The Company's primary uses of cash-on-hand in Q2 2017
included, but were not limited to, upgrades to the Company's
downtown Vancouver office tower,
additions to sales and demonstration equipment, and additions to
capitalized development costs.
Conference Call
Avigilon has scheduled a conference call to discuss these
results on Wednesday, August 9, 2017,
beginning at 5:00 p.m. ET
(2:00 p.m. PT). To access the live
call, dial 1-888-231-8191 or +1 647-427-7450, or listen to the
webcast at http://ir.avigilon.com or http://bit.ly/2tYkK2H. A
replay will be available for 90 days on the Company's website, and
for one week by dialing 1-855-859-2056 or +1 416-849-0833,
reference number 51897296.
This news release is qualified in its entirety by the Company's
consolidated financial statements for the three and six months
ended June 30, 2017 and 2016 and the
associated Management's Discussion & Analysis respecting the
same period, which can be downloaded from the Avigilon website at
http://ir.avigilon.com or from the Company's profile on SEDAR at
http://www.sedar.com.
*Non-IFRS and Additional IFRS Financial Measures
In addition to results reported in accordance with International
Financial Reporting Standards ("IFRS"), Management uses
certain non-IFRS and additional IFRS financial measures as
supplemental indicators of its financial and operating performance.
Non-IFRS financial measures include "Adjusted EBITDA", "Adjusted
EBITDA Margin", "Adjusted Earnings", and "Adjusted Earnings per
Share" ("Adjusted EPS"). Additional IFRS financial measures
include "gross profit" and "gross margin percentage". Management
believes that these supplementary financial measures reflect the
Company's ongoing business in a manner that allows for meaningful
period-to-period comparisons and analysis of business trends.
The Company defines Adjusted EBITDA and Adjusted EBITDA Margin
as earnings and earnings as a percentage of revenue, respectively,
before deducting share-based payments, foreign exchange gain or
loss, business acquisition-related costs, restructuring costs,
non-recurring legal costs, non-recurring lease termination costs,
amortization, depreciation, revaluation gain on contingent
consideration receivable, interest, and taxes. Management believes
that Adjusted EBITDA and Adjusted EBITDA Margin to be useful
measures, as they provide an indication of the operational results
of our business.
The Company defines Adjusted Earnings as earnings before
share-based payments, foreign exchange gain or loss, business
acquisition-related costs, financing costs, restructuring costs,
non-recurring legal costs, non-recurring lease termination costs,
amortization of acquired intangibles, revaluation gain on
contingent consideration receivable, and related tax effects.
Adjusted EPS is calculated as Adjusted Earnings divided by the
basic or diluted weighted average common shares issued and
outstanding and does not represent actual earnings per share
attributable to shareholders. Management believes that the
disclosure of Adjusted Earnings and Adjusted EPS allows investors
to evaluate the operational and financial performance of the
Company's ongoing business using the same evaluation measures that
management uses, and is therefore a useful indicator of the
Company's performance or expected performance of recurring
operations. Please refer to the Company's consolidated financial
statements for the three and six months ended June 30, 2017 and 2016 and the reconciliation
table within the associated Management's Discussion & Analysis
respecting the same period.
The Company defines gross profit as revenue less cost of sales,
and gross margin percentage as gross profit divided by revenue.
Management considers gross profit and gross margin percentage to be
key measures as they demonstrate the Company's profitability and
its ability to cover its operating expenses from normal
operations.
Non-IFRS and additional IFRS financial measures do not have
standardized meanings prescribed by IFRS, and other companies may
calculate these measures differently. The presentation of non-IFRS
and additional IFRS financial measures is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS.
About Avigilon
Avigilon Corporation provides trusted security solutions to the
global market. Avigilon designs, develops, and manufactures video
analytics, network video management software and hardware,
surveillance cameras, and access control solutions. To learn more
about Avigilon, visit avigilon.com.
© 2017, Avigilon Corporation. All rights reserved. AVIGILON, the
AVIGILON logo, AVIGILON CONTROL CENTER, ACC, ACCESS CONTROL
MANAGER, AVIGILON PRESENCE DETECTOR, and TRUSTED SECURITY SOLUTIONS
are trademarks of Avigilon Corporation.
For further information:
Avigilon Investor Relations
T: (604) 629-5182
investors@avigilon.com
The industry's growth rate content in this news release
includes information based on IHS Markit, Technology Group, Video
Surveillance Intelligence Database, June
2017 and Access Control Intelligence Service, June
2017. Information is not an endorsement of Avigilon. Any
reliance on these results is at the third party's own risk.
Visit https://technology.ihs.com for more
details.
Forward-Looking Statements
Certain information and
statements in this news release contain and constitute
forward-looking information or forward-looking statements as
defined under applicable securities laws (collectively,
"forward-looking statements"). Forward-looking statements normally
contain words like 'believe', 'expect', 'anticipate', 'plan',
'intend', 'continue', 'estimate', 'may', 'will', 'should',
'ongoing' and similar expressions, and within this news release
include, without limitation, and any statements
(express or implied) respecting: Avigilon's future
plans, strategies, and objectives; projected growth,
revenues, gross margin percentage, profitability,
expenses, capital expenditures, and earnings; anticipated
enhancement and expansion of product offerings, intellectual
property portfolio, and associated R&D plans; and expected
investment and expansion of infrastructure. Forward-looking
statements are provided for the purpose of presenting
information about management's current expectations and plans
relating to the future and allowing investors and others to get a
better understanding of our anticipated financial position, results
of operations and operating environment. Readers are cautioned that
such information may not be appropriate for other purposes.
Forward-looking statements are not guarantees of future
performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances. The material expectations, assumptions and other
factors used in developing the forward-looking statements set out
herein include or relate to the following, without limitation:
Avigilon will be able to successfully execute its plans, strategies
and objectives; the business and economic conditions
affecting Avigilon's operations will continue substantially in
their current state, including with respect to industry conditions,
general levels of economic activity, regulations, taxes, interest
rates, and foreign exchange rates; there will be no adverse
material changes to Avigilon's key personnel, facilities,
production capabilities, supply chain, sales channels, reseller
network, or contractual arrangements; Avigilon will be able to
leverage its past investments to support growth and focus on
increasing profitability; Avigilon will be able to successfully
manage cash flow, operating expenses, interest expenses, capital
expenditures, working capital, and credit, liquidity, and market
risks; future financing will be available to Avigilon on favorable
terms when and if required; Avigilon will keep pace with or outpace
the growth, direction, and technological advancement in its
industry; industry data and projections obtained from external
sources are accurate and reliable; Avigilon will be able to design,
develop, and manufacture new products and enhance its existing
product lines; Avigilon will be able to enhance and expand its
intellectual property portfolio; Avigilon will continue to generate
revenues from patent licensing; Avigilon will be able to
successfully integrate businesses, intellectual property, products,
and technologies that it may acquire, if any; Avigilon will not
face any material unexpected costs related to product liability or
warranties; Avigilon's protection of its intellectual property
against third party infringement or misappropriation is sufficient
and its products and technology do not materially infringe third
party intellectual property rights; Avigilon will be able to obtain
necessary third party licenses on favorable terms; Avigilon will
not become involved in unexpected material litigation or otherwise
subject to materially adverse claims; Avigilon's plans
respecting the pricing of its products and services will proceed in
substantially their present form; and Avigilon will be able to
achieve greater economies of scale and cost savings from previous
investments in infrastructure and in its global sales and marketing
teams.
Although management believes that the forward-looking
statements are reasonable, actual results could be substantially
different due to the risks and uncertainties associated with and
inherent to Avigilon's business, as more particularly described in
the "Risk Factors" section of Avigilon's Annual Information Form
dated February 28, 2017,
which is available under Avigilon's profile on SEDAR at
www.sedar.com. Additional material risks and uncertainties
applicable to the forward-looking statements set out herein
include, but are not limited to: unexpected changes to accounting
policies, accounting standards or internal controls and procedures
over financial reporting; and unforeseen events, developments or
factors causing any of the aforesaid expectations, assumptions and
other factors to be inaccurate or irrelevant. Although Avigilon has
attempted to identify important factors that could cause actual
actions, events, or results to differ materially from those
contained in any forward-looking statement, there may be other
factors that cause actions, events or results not to be as
anticipated, predicted, estimated, or intended. Many of these
factors are beyond the control of Avigilon. Accordingly, readers
should not place undue reliance on forward-looking
statements.
Avigilon undertakes no obligation to reissue or update any
forward-looking statements as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements contained in this news release are
qualified by this cautionary statement.
SOURCE Avigilon Corporation