VICTORIA, BRITISH COLUMBIA–(Marketwired – Aug. 9, 2017) – Carmanah Technologies Corporation (TSX:CMH) (“the Company” or “Carmanah”) today reported its second quarter financial results for the period ended June 30, 2017. Currency amounts are in U.S. dollars unless otherwise noted.
All figures below, unless otherwise stated, are for Carmanah’s continuing operations and exclude the operating results from the Company’s Power business segment. The planned disposal was announced in a press release dated October 11, 2016.
In the second quarter of 2017, the Company generated revenues of USD $12.1 million down approximately 12% from Q2 2016 which had revenues of USD $13.9 million. The decline in revenues was attributable to overall minor revenue reductions in most the Signals segment except for the Offshore Wind and Traffic verticals which increased year-over-year. Our Illumination segment revenues also had a decrease over the same period in 2016. The Signals segment declines and increases were mostly the result of project timing differences in the current and comparable quarter. Illumination segment revenue reductions resulted from a transition to the Company’s new EverGen product offering.
Net income in the second quarter of 2017 was USD $0.5 million down from net income of USD $0.9 million in the second quarter of 2016.
Carmanah management relies on Adjusted EBITDA(1) (a non-IFRS measure) to gauge financial performance. In the second quarter of 2017, the Company generated Adjusted EBITDA of USD $1.8 million, down 18% from USD $2.2 million in the same period in 2016. The variance is largely a result of lower revenues. A table reconciling net income and Adjusted EBITDA is included in this release.
“Several initiatives for Carmanah came to fruition in the second quarter. After more than a year of product development, we completed the first shipments of our new EverGen outdoor lighting products,” said John Simmons, CEO. “And just after quarter end, we made significant progress in our overall business strategy with the sale of our Off-Grid Power business (Go Power!) and the acquisition of Vega Industries in New Zealand.”
(1) NON-GAAP FINANCIAL MEASURES: EBITDA and Adjusted EBITDA. This news release presents information about EBITDA and Adjusted EBITDA, both of which are non-IFRS financial measures, to provide supplementary information about 2017 operating performance. Carmanah defines EBITDA as net income or loss before interest, income taxes, amortization, and non-cash stock based compensation. Adjusted EBITDA removes unusual or non-operating items from EBITDA, such merger and acquisition costs, restructuring charges, asset write offs, and foreign exchange gains and losses. Carmanah uses these non-IFRS measures internally to make strategic decisions, forecast future results and evaluate its performance. EBITDA and Adjusted EBITDA are not intended as a substitute for IFRS measures. A limitation of utilizing these non-IFRS measures 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. Readers should refer to the “Definitions and Reconciliations” section of the Company’s most recently filed MD&A for the three and twelve months period ended June 30, 2017 for a more detailed discussion of these measures and their calculation.
Highlights for the quarter are provided below:
| Three months ended June 30, | Six months ended June 30, | |||
| (US$ thousands) | 2017 | 2016 | 2017 | 2016 |
| Revenue | 12,201 | 13,852 | 23,328 | 25,712 |
| Gross margin % | 42.7% | 41.1% | 43.8% | 42.6% |
| Core operating expenditures1 | (4,249) | (4,295) | (8,318) | (8,394) |
| Net income | 509 | 934 | 1,118 | 1,715 |
| Adjusted EBITDA1 | 1,777 | 2,167 | 3,422 | 4,037 |
Financial Condition at June 30, 2017 compared to December 31, 2016
- Cash and cash equivalents of USD $23.0 million, up USD $1.1 million from USD $21.9 million
- Working capital of USD $26.4 million, up USD $4.8 million from USD $21.6 million
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the fourth quarter ended December 31, 2016 Financial Statements and Management’s Discussion & Analysis are available on Carmanah’s corporate website. To view these documents, visit: https://carmanah.com/company/financial-reports. Both documents are also filed on SEDAR (www.sedar.com). The financial information included in this release is qualified in its entirety and should be read together with the audited consolidated financial statements for the year ended December 31, 2016, including the notes thereto.
EBITDA and Adjusted EBITDA[1]
| EBITDA reconciliations | Three months ended June 30, | Six months ended June 30, | |||
| (US$ in thousands) | 2017 | 2016 | 2017 | 2016 | |
| Net income | 509 | 934 | 1,118 | 1,715 | |
| Add/(deduct): | |||||
| Interest | 34 | 63 | 81 | 175 | |
| Income taxes | 129 | 458 | 400 | 687 | |
| Amortization | 405 | 427 | 792 | 804 | |
| Non-cash stock based compensation | 162 | 106 | 339 | 375 | |
| EBITDA [1] | 1,239 | 1,988 | 2,730 | 3,756 | |
| Merger and acquisition costs | 70 | 131 | 123 | 266 | |
| Extraordinary legal costs | 6 | 42 | 17 | 47 | |
| Other non-recurring expenses | 399 | – | 490 | – | |
| Foreign exchange (gain)/loss | 63 | 5 | 62 | (33) | |
| Adjusted EBITDA | 1,777 | 2,166 | 3,422 | 4,036 | |
About Carmanah Technologies Corporation
Carmanah designs, develops and distributes a portfolio of products focused on energy optimized LED solutions for infrastructure. Since 1996, we have earned a global reputation for delivering durable, dependable, efficient and cost-effective solutions for industrial applications that perform in some of the world’s harshest environments. We manage our business within two reportable segments: Signals and Illumination. The Signals segment includes serves the Airfield Ground Lighting, Aviation Obstruction, Offshore Wind, Marine, Traffic and Telematics markets. The Illumination segment provides solar powered LED outdoor lights for municipal and commercial customers.
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,” “estimates,” “could,” “will” or variations of such words and phrases. Forward-looking statements or information in this news release relate to, among other things: revenues, and revenue growth, for the fourth quarter and year ended December 31, 2016; order backlogs; gross margins and estimates of EBITDA and Adjusted EBITDA. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Carmanah or Sabik to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to: our ability to become a worldwide leader in the marine aids to navigation industry, the potential growth of the off-shore wind safety market or our ability to participate in any growth and other general uncertainties that may impact actual outcomes. These forward-looking statements are based on management’s current expectations and beliefs but given the uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward-looking statements or information. Carmanah disclaims any obligation to update, or to publicly announce, any such statements, events or developments except as required by law.
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.
Evan Brown
Chief Financial Officer/Corporate Secretary
(250) 380-0052
[email protected]
