Carmanah Technologies Corporation (TSX: CMH) (Pink Sheets:
CMHXF) (“the Company” or “Carmanah”) today reported its fourth
quarter and fiscal year financial results for the period ended
December 31, 2011.
For the year-end December 31, 2011, the Company recorded a net
loss of $8.6 million on revenues of $35.9 million which is
consistent with the preliminary guidance issued on February 7,
2012. The significant net loss is primarily due to an $8.2 million
one-time non-cash impairment of deferred tax assets. The tax assets
were written off upon management’s review of their recoverability
of the assets based on a number of factors including Carmanah’s
early stage of development, the Company’s current and anticipated
revenue stream and its historical net income results.
“Revenue performance of $35.9 million reflects 5.8% growth year
on year. While positive overall, we remain disappointed in revenue
performance for the year and particularly our lack of headway
within Outdoor Lighting.” stated Bruce Cousins, Chief Executive
Officer. “In terms of adjusted EBITDA (a non-IFRS measure), we have
improved results by $0.8 million year on year. In addition, Cash
Flow from Operations continues positive".
Financial Condition at December 31, 2011 compared to December
31, 2010
- Cash and cash equivalents of $4.9
million, down $0.8 million from $5.7 million
- Working capital of $7.8 million, up
$0.3 million from $7.5 million
- Continued debt-free operations
Fourth quarter 2011 compared to fourth quarter 2010
- Revenues: $7.1 million, down
$2.2 million from $9.3 million
- Gross margin: 27.5%, up from
26.0%
- Operating costs: $2.9 million,
down $0.7 million from $3.6 million
- Net loss: $8.9 million, up $4.8
million from $4.1 million
- Adjusted EBITDA (a non-IFRS
measure): negative $0.4 million, up $0.1 million from negative
$0.3 million
Fiscal 2011 compared to fiscal 2010
- Sales: $35.9 million, up $2.0
million from $33.9 million
- Gross margin: 31.4%, down from
33.3%
- Operating costs: $11.5 million,
down $2.0 million from $13.5 million
- Net loss: $8.6 million, up $3.8
million from $4.8 million
- Adjusted EBITDA (a non-IFRS
measure): $1.3 million, up $0.8 million from $0.5 million
Summary of operations:
- Revenues for the fourth quarter of 2011
were $7.1 million, down $2.2 million from $9.3 million in the
fourth quarter of 2010. By product sector, revenues are as follows:
- Signals, $3.1 million, down from $4.1
million
- Illumination, $1.9 million, up from
$1.2 million
- Grid-tie, $1.0 million, down from $2.9
million
- Mobile, $1.1 million, unchanged from
$1.1 million
- Sales for fiscal 2011 were $35.9
million, up $2.0 million from $33.9 million in fiscal 2010. Broken
down by product sector, sales are as follows:
- Signals, $15.8 million, down from $18.5
million
- Illumination, $5.2 million, up from
$4.7 million
- Grid-tie, $9.7 million, up from $5.6
million
- Mobile, $5.2 million, up from $5.1
million
- Gross margin percentages for fiscal
2011 were 31.4%, down from 33.3% for fiscal 2010. Key drivers in
margin erosion include overall sales mix, with stronger performance
in lower margin segments, and foreign currency exchange rates.
Broken down by product sector, gross margin percentages are as
follows:
- Signals, 41.5% up from 38.1%
- Illumination, 24.8% down from
27.3%
- Grid-tie, 19.3% down from 20.0%
- Mobile, 29.8% down from 36.2%.
Corporate operational highlights during 2011
included:
- Appointment of a new Chief Executive
Officer - In October 2011, we hired Bruce Cousins as our new
Chief Executive Officer (“CEO”). Bruce replaced Ted Lattimore after
he had announced his departure in May 2011. Mr. Cousins has a
successful track record of delivering financial, operational and
organizational performance and company profitability in the global
technology industry. Concurrent to his employment agreement, we
completed a private placement with Mr Cousins which resulted in the
issuance of 250,000 shares for proceeds of $0.1 million. As a part
of Ted Lattimore’s departure, we incurred a $0.3 million charge for
a separation payment in the second quarter of 2011 in our Statement
of Operations under the caption “Other income (expense)”.
- Lightech Electronics Industries Inc.
(“Lightech”) lawsuit settlement - In September 2011, we settled
the ongoing litigation surrounding our attempted 2010 acquisition
of Lightech Electronics Industries Inc. Under the settlement, we
agreed to forgo our $0.3 million investment we had made in
Lightech, but received back approximately $0.3 million in funds
previously held in escrow. The agreement saw both parties release
each other from all current and future claims surrounding this
transaction. For the year-ended December 31, 2011, we recorded a
net recovery of $0.2 million associated with these actions. In
2010, we had recorded a $1.5 million loss, $0.9 million in legal,
due diligence and financing charges and $0.6 million related to
deposits for the acquisition.
- New head office facility - In
September 2011, we moved into our new 13,000 square foot head
office facility in Victoria B.C. The new head office has a 5 year
lease term and a 5 year renewal option and is located on 250 Bay
Street, Victoria, B.C., Canada. During the second and third
quarters of 2011, we invested approximately $0.6 million in
leasehold improvements.
- Organizational realignment within
our Lighting group – In the fall of 2011, we implemented a new
team based approach within the Lighting group to help focus sales
and planning activities. Under the new structure, each segment has
its own leadership and supporting team and is directly responsible
for the development and results of their business. This new
structure should help to maintain a constant focus on each of our
markets to meet their unique objectives.
Reporting Currency and Change in Accounting Standards
Unless otherwise indicated, all financial information presented
in this press release is in US dollars and has been prepared in
accordance with International Financial Reporting Standards
(“IFRS”). The conversion to IFRS from Canadian Generally Accepted
Accounting Principles became effective January 1, 2011. Please
refer to the Company’s most recently issued consolidated financial
statements for further discussion.
Adjusted EBITDA
Three months ended December 31 Year ended December 31
(US$ in thousands)
2011 2010 2011
2010 Net loss (8,888) (4,103) (8,553) (4,771)
Add/(deduct): Interest - (3) 4 11 Income tax expense/(recovery)
3,987 (1,206) 4,212 (1,482) Amortization 280 300 1,102 1,243
EBITDA* (4,621) (5,012) (3,235) (4,999) Restructuring - 491 - 807
Terminated Lightech agreement costs/(recovery) - 1,228 (176) 1,470
Impairment of Investment tax credits 4,051 - 4,051 - Retirement
provision - - 261 - Non-cash stock based compensation 147 62 428
294 Intangible asset impairment - 2,969 - 2,969 Adjusted EBITDA*
(423) (262) 1,329 541
* A Non-IFRS measure
Management believes that the non-IFRS measures presented provide
useful information by excluding certain items that may not be
indicative of Carmanah’s core operating results and that this
non-IFRS measure will allow for a better evaluation of the
operating performance of the Company’s business and facilitate
meaningful comparison of results in the current period to those in
prior periods as well as future periods. Reference to this non-IFRS
measure should not be considered as a substitute for results that
are presented in a manner consistent with IFRS. This non-IFRS
measure is provided to enhance investors’ overall understanding of
Carmanah’s current financial performance.
A limitation of utilizing this non-IFRS measure is that the IFRS
accounting effects of the non-recurring items do in fact reflect
the underlying financial results of Carmanah’s business and these
effects should not be ignored in evaluating and analyzing
Carmanah’s financial results. Therefore, management believes that
Carmanah’s IFRS measures of net loss and the same respective
non-IFRS measure should be considered together.
Non-IFRS measures do not have any standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other companies. One such non-IFRS
measure used for assessing financial performance is Adjusted
EBITDA, defined as net income before interest, income taxes,
amortization, non-cash stock-based compensation, restructuring
charges, retirement provision, and terminated Lightech agreement
costs.
Complete set of Financial Statements and Management
Discussion & Analysis
A complete set of the annual 2011 Financial Statements and
Management’s Discussion & Analysis are available on Carmanah's
corporate website. To view these documents, visit:
www.carmanah.com/Company/Investors/Financial_Reports.aspx. Both
documents for the year ended December 31, 2011 will also be filed
on SEDAR (www.sedar.com).
About Carmanah Technologies Corporation
As one of the most trusted names in solar technology, Carmanah
has earned a reputation for delivering strong and effective
products for industrial applications worldwide. Industry proven to
perform reliably in some of the world's harshest environments,
Carmanah solar LED lights and solar power systems provide a
durable, dependable and cost effective energy
alternative. Carmanah is a publicly traded company, with
common shares listed on the Toronto Stock Exchange under the symbol
"CMH”. For more information, visit www.carmanah.com.
This release may contain forward-looking statements. Often, but
not always, forward-looking statements can be identified by the use
of words such as “expects,” “plans,” “estimates,” “intends,”
“believes,” “could,” “might,” “will” or variations of such words
and phrases. Forward-looking statements involve known and unknown
risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of Carmanah to be materially
different from any future results, performance, or achievements
expressed or implied by the forward-looking statements. These
statements are based on management’s current expectations and
beliefs and are subject to a number of risks and uncertainties. For
additional information on these risks and uncertainties, see
Carmanah’s most recently filed Annual Information Form (AIF) and
Annual MD&A, which are available on SEDAR at www.sedar.com and
on the Company’s website at www.carmanah.com. The risk factors
identified in Carmanah’s AIF and MD&A are not intended to
represent a complete list of factors that could affect Carmanah.
Accordingly, readers should not place undue reliance on
forward-looking statements. Carmanah does not assume any obligation
to update the forward-looking information contained in this press
release.