CALGARY, ALBERTA , a precise positioning technology company,
today reported its financial results for the third quarter ended
September 30, 2007.
Revenues in the third quarter 2007 were CDN $23.3 million (US
$22.2 million), compared to CDN $19.0 million (US $16.9 million) in
the similar period a year ago. Net income for the third quarter
2007 was CDN $5.3 million (US $5.1 million) or CDN $0.60 (US $0.57)
per share (diluted), compared to a net income of CDN $5.6 million
(US $5.0 million) or CDN $0.63 (US $0.56) per share (diluted) in
the similar period a year ago.
Revenues in the nine months ended September 30, 2007 were CDN
$65.3 million (US $59.2 million), compared to CDN $58.4 million (US
$51.3 million) in 2006. The Company is reporting net income for the
nine months ended September 30, 2007 of CDN $16.3 million (US $14.8
million) or CDN $1.84 (US $1.67) per share (diluted), compared to
net income of CDN $16.3 million (US $14.3 million) or CDN $1.84 (US
$1.61) per share (diluted), in the 2006 period.
"Revenue for the third quarter of 2007 grew 23% compared to the
similar period last year, and surpasses our previous record
achieved during the second quarter 2007," said Jon Ladd, President
and CEO. "We were able to achieve this despite the continued
weakening of the US dollar relative to the Canadian dollar, which
adversely affected revenue by approximately $1.6 million during the
quarter, relative to the third quarter a year ago."
"Growth was primarily driven by our largest customer category,
Special Applications, with revenue of $15.7 million, an improvement
of 24% over the similar period in 2006," continued Ladd. Revenue
growth in the quarter was the result of increased shipments of
precise positioning components into Asia and strong sales into the
precision agriculture market. Revenue from shipments to Leica
Geosystems AG, despite declining 5% compared to the third quarter
2006, accounted for approximately 18% of total revenue for the
quarter. Sales related to Antcom Corporation, which NovAtel
acquired on September 18, 2007, contributed $0.3 million to
revenue.
Revenue in the Geomatics category increased 42% to $4.7 million
in the third quarter 2007, compared to the third quarter 2006. The
majority of the Geomatics revenue is comprised of the composite
business attributable to Point, Inc., NovAtel's joint venture with
Sokkia Co. Ltd. During the quarter, the Company reverted to its
standard accounting policy of recognizing revenue at the point of
shipment instead of upon collection of payment from Point, which
provided a benefit of approximately $0.6 million to Geomatics
revenue in the current quarter.
Third quarter 2007 revenue of $2.8 million from the Aerospace
and Defence category declined by 7% over the similar period a year
ago, largely due to timing of deliveries under large,
government-funded contracts. The majority of the third quarter 2007
revenue was derived from the achievement of project milestones
associated with Europe's future Galileo system.
"Our third quarter 2007 revenue growth over the comparable
period last year was dampened by approximately 6% due to the effect
of the US dollar, which continued to weaken relative to the
Canadian dollar. Net income for the current quarter declined to
$5.3 million, compared to $5.6 million in the third quarter of last
year, primarily due to legal costs relating to an intellectual
property dispute and the impact of foreign exchange. Gross margins
remained strong at 61.1% of revenue in the current quarter," said
Werner Gartner, Executive Vice President and CFO at NovAtel.
Foreign Exchange
Although approximately 98% of NovAtel's revenues in the first
nine months of 2007 were earned in US dollars, the financial
results are reported in Canadian dollars and in accordance with
Canadian generally accepted accounting principles. The CDN/US
dollar exchange rate has declined from an average rate of
approximately CDN $1.14 per US dollar in all of 2006 to a rate of
approximately CDN $1.00 per US dollar as of September 30, 2007.
The US dollar financial information presented above is
translated from the Canadian dollar financial information at the
average rates in effect during the relevant reporting periods, as
follows:
Three months ended Nine months ended
--------------------------------------------
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2007 2006 2007 2006
--------------------------------------------
Canadian dollar per US dollar 1.051 1.124 1.102 1.140
Due to the pending tender offer by Hexagon for all the
outstanding shares of NovAtel, NovAtel will not host a conference
call to discuss further the third quarter 2007 financial
results.
About NovAtel
NovAtel Inc. (NASDAQ: NGPS) is a leading provider of precision
Global Navigation Satellite System (GNSS) components and subsystems
that afford its customers rapid integration of precise positioning
technology. The Company's mission is to provide exceptional return
on investment and outstanding service to our customers. An ISO 9001
certified company, NovAtel is focused on developing quality OEM
products including receivers, antennas, enclosures and firmware
that are integrated into high precision positioning applications
worldwide. These applications include surveying, Geographical
Information System (GIS) mapping, precision agriculture machine
guidance, port automation, mining, marine and defence industries.
NovAtel's reference receivers are also at the core of national
aviation ground networks in the USA, Japan, Europe, China and
India. The Company is committed to providing its customers with
advanced positioning technology through significant R&D
investment focusing on the modernized Global Positioning System
(GPS), the revitalized Russian GLONASS and the emerging European
Galileo satellite systems, as well as the integration of additional
complementary technologies such as Inertial Measurement Units
(IMUs). For more information, visit www.novatel.com.
Certain statements in this press release are forward-looking
statements. These forward-looking statements are not based on
historical facts but rather on management's current expectations
regarding NovAtel's future growth, results of operations,
performance, future capital and other expenditures, competitive
advantages, business prospects and opportunities. Wherever
possible, words such as "anticipate", "believe", "expect", "may",
"could", "potential", "intend", "estimate", "should", "plan",
"predict", "forecast" or the negative or other variations of these
words, or similar words or phrases, have been used to identify
these forward-looking statements. Forward-looking statements
involve significant known and unknown risks, uncertainties and
assumptions. Many factors could cause actual results, performance
or achievements to differ materially from the results discussed or
implied in the forward-looking statements, including operating
results of the Company's joint venture Point, Inc. ("Point"), U.S.
dollar to Canadian dollar exchange rate fluctuations, establishing
and maintaining effective distribution channels, certification and
market acceptance of NovAtel's new products, the impact and timing
of large orders, dependence on key customers, credit risks of
customers and the Company's joint venture Point, pricing pressures
in the market and other competitive factors, maintaining
technological leadership, timing of revenue recognition in
connection with certain contracts, the ability to maintain supply
of products from subcontract manufacturers, the procurement of
components to build products, product defects, the impact of
industry consolidations, including the proposed acquisition of
NovAtel Inc. by Hexagon AB and proposed merger between Sokkia Co.
Ltd. and Topcon Corp., vulnerability to general economic, market
and business conditions, competition, environmental and other
actions by governmental authorities, reliance on key personnel and
other factors described in the Company's Form 20-F for the year
ended December 31, 2006 and other SEC filings, many of which are
beyond the control of NovAtel. These factors should be considered
carefully and undue reliance should not be placed on the
forward-looking statements. These forward-looking statements are
made as of the date of this news release, and NovAtel assumes no
obligation to update or revise them to reflect new events or
circumstances.
NOVATEL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, Canadian dollars)
(Unaudited)
Sep. 30, Dec. 31,
2007 2006
-----------------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,418 $ 3,853
Short-term investments 42,760 45,454
Accounts receivable 17,975 13,697
Related party receivables 788 920
Related party notes receivable 324 378
Inventories 10,721 8,075
Prepaid expenses and deposits 1,983 578
Future income tax asset 4,137 3,356
-----------------------
Total current assets 88,106 76,311
Capital assets 7,536 6,079
Intangible assets and goodwill 12,980 8,213
Other assets 1,041 816
Deferred development costs 1,044 1,253
Future income tax asset 4,740 4,296
-----------------------
Total assets $115,447 $ 96,968
-----------------------
-----------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 12,089 $ 12,336
Income tax payable 139 -
Related party payables 30 72
Notes payable 463 541
Deferred revenue and customer deposits 905 692
Provision for future warranty costs 887 816
Future income tax liabilities 142 -
-----------------------
Total current liabilities 14,655 14,457
Future income tax liabilities 859 -
Licence fee payable 155 691
Deferred gain on sale/leaseback of capital assets 147 231
-----------------------
Total liabilities 15,816 15,379
-----------------------
Shareholders' equity:
Capital stock 41,904 40,953
(Common shares issued and outstanding: 8,633 at
September 30, 2007 and 8,529 at Dec. 31, 2006)
Contributed surplus 2,460 1,647
Retained earnings 55,267 38,989
Accumulated other comprehensive income (loss) - -
-----------------------
Total shareholders' equity 99,631 81,589
-----------------------
Total liabilities and shareholders' equity $115,447 $ 96,968
-----------------------
-----------------------
NOVATEL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in Canadian $ thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
--------------------------------------------
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2007 2006 2007 2006
--------------------------------------------
Revenues:
Product sales $ 21,673 $ 18,230 $ 62,271 $ 54,910
NRE fees 1,665 793 3,027 3,528
--------------------------------------------
Total revenues 23,338 19,023 65,298 58,438
--------------------------------------------
Cost of sales:
Cost of product sales 7,929 6,296 23,371 20,684
Cost of NRE fees 1,148 609 2,051 2,170
--------------------------------------------
Total cost of sales 9,077 6,905 25,422 22,854
--------------------------------------------
Gross profit 14,261 12,118 39,876 35,584
--------------------------------------------
Operating expenses:
Research and development 4,238 3,480 12,525 10,003
Selling and marketing 2,126 1,984 5,863 5,632
General and administration 2,819 2,031 7,221 5,617
Foreign exchange (gain) loss 517 (69) 423 79
--------------------------------------------
Total operating expenses 9,700 7,426 26,032 21,331
--------------------------------------------
Operating income 4,561 4,692 13,844 14,253
Interest income, net 586 468 1,600 1,135
Other expense (9) (56) (130) (139)
--------------------------------------------
Income from operations before
income taxes 5,138 5,104 15,314 15,249
Income taxes
Current provision 120 96 261 276
Future income tax
expense (benefit) (327) (600) (1,225) (1,373)
--------------------------------------------
Net income $ 5,345 $ 5,608 $ 16,278 $ 16,346
--------------------------------------------
--------------------------------------------
Net income per share (basic) $ 0.62 $ 0.66 $ 1.90 $ 1.94
--------------------------------------------
--------------------------------------------
Weighted average shares
outstanding (basic) 8,622 8,475 8,583 8,429
--------------------------------------------
--------------------------------------------
Net income per share (diluted) $ 0.60 $ 0.63 $ 1.84 $ 1.84
--------------------------------------------
--------------------------------------------
Weighted average shares
outstanding (diluted) 8,852 8,917 8,832 8,860
--------------------------------------------
--------------------------------------------
NOVATEL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Canadian $ thousands)
(Unaudited)
Three months ended Nine months ended
--------------------------------------------
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
2007 2006 2007 2006
--------------------------------------------
Operating activities:
Net income $ 5,345 $ 5,608 $ 16,278 $ 16,346
Charges and credits to
operations not involving an
outlay of cash:
Amortization 936 851 2,767 2,522
Loss (gain) on disposal of
capital assets - 15 9 (13)
Current income tax provision
and future income tax benefit (249) (514) (1,307) (1,380)
Stock-based compensation expense 438 872 1,020 1,693
Amortization of deferred
gain on sale/leaseback of
capital assets (28) (28) (84) (83)
Accretion on royalty payable 55 - 167 -
Net change in non-cash working
capital related to operations:
(Increase) decrease
in accounts receivable and
related party receivables (1,790) 379 (3,326) (2,736)
Increase in inventories (1,038) (1,001) (1,344) (2,891)
(Increase) decrease in prepaid
expenses and deposits (1,229) 148 (1,334) (332)
Increase (decrease) in accounts
payable, accrued liabilities
and related party payables 1,194 603 (1,640) 918
Increase in deferred revenue
and customer deposits 167 153 213 506
Increase in provision for
future warranty costs 24 49 71 209
Decrease (increase) in
other assets (389) - (225) -
--------------------------------------------
Cash provided by operating
activities 3,436 7,135 11,265 14,759
--------------------------------------------
Financing activities:
Issuance of shares 130 373 744 846
Related party notes receivable 83 12 - (351)
Notes payable (82) (14) - 510
Effect of exchange rate changes
on financing activities (10) 2 (24) (2)
--------------------------------------------
Cash provided by financing
activities 121 373 720 1,003
--------------------------------------------
Investing activities:
Purchase of capital and
intangible assets (1,895) (2,465) (4,402) (4,548)
Proceeds from disposal
of capital assets - - - 35
Purchase of short-term
investments (3,344) (10,843) (38,032) (36,993)
Proceeds from short-term
investments 12,544 9,358 40,726 30,681
Acquisition of Antcom, Inc.,
net of cash acquired (4,712) - (4,712) -
--------------------------------------------
Cash provided by (used in)
investing activities 2,593 (3,950) (6,420) (10,825)
--------------------------------------------
Increase in cash and cash
equivalents 6,150 3,558 5,565 4,937
Cash and cash equivalents,
beginning of period 3,268 4,100 3,853 2,721
--------------------------------------------
Cash and cash equivalents,
end of period $ 9,418 $ 7,658 $ 9,418 $ 7,658
--------------------------------------------
--------------------------------------------
Interest paid related to bank
advances and capital lease
obligations $ - $ - $ - $ -
--------------------------------------------
--------------------------------------------
Income taxes paid $ 42 $ 10 $ 343 $ 283
--------------------------------------------
--------------------------------------------
Contacts: NovAtel Inc. Sonia Ross (403) 295-4532 Website:
www.novatel.com
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