Carmanah Technologies Corporation
TSX : CMH

Carmanah Technologies Corporation

November 09, 2016 18:20 ET

Carmanah Reports Third Quarter 2016 Fiscal Results

VICTORIA, BRITISH COLUMBIA--(Marketwired - Nov. 9, 2016) - Carmanah Technologies Corporation (TSX:CMH) ("the Company" or "Carmanah") today reported its third quarter financial results for the period ended September 30, 2016. 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.

Third Quarter Revenues and Profitability

Revenues from continuing operations for the third quarter of 2016 were USD $11.3 million, down approximately 9 per cent from revenues of USD $12.4 million in the third quarter of 2015.

  • Signals segment revenue was USD $10.0 million, down from USD $11.4 million in the third quarter of 2015. This decrease was the result of reduced revenues from the Company's marine businesses, which were down by approximately 32% over prior year. Offsetting this were increases in the Company's other signals businesses, which were up approximately 9% over 2015.
  • Illumination segment revenue was USD $1.3 million, up from USD $1.0 million from the third quarter of 2015.

"While third quarter revenues did not meet expectations," said John Simmons, Chief Executive Officer. "Our focus on improving margins and managing expenses resulted in strong Net Income and Adjusted EBITDA(1)."

Net income in the third quarter of 2016 was USD $1.1 million up from a loss of USD $0.7 million in the third quarter of 2015. Carmanah management relies on Adjusted EBITDA (a non-IFRS measure) to gauge financial performance. In the third quarter of 2016, the Company generated Adjusted EBITDA of USD $1.7 million, or 15% of revenue, up 48% from USD $1.1 million, or 9% of revenue, in the same period in 2015. A table reconciling net income and Adjusted EBITDA is provided in this press release.

(1)NON-GAAP FINANCIAL MEASURES: EBITDA, Adjusted EBITDA and Core Operating expenditures. This news release presents information about EBITDA, Adjusted EBITDA and Core Operating expenditures, all of which are non-IFRS financial measures, to provide supplementary information about 2016 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. Core Operating expenditures exclude anomalies, such as the recognition of previously unrecognized investment tax credits or restructuring charges. Carmanah uses these non-IFRS measures internally to make strategic decisions, forecast future results and evaluate its performance. These measures 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 nine-month period ended September 30th, 2016 for a more detailed discussion of these measures and their calculation.

Highlights for the quarter are provided below:

Three months ended September 30, Nine months ended September 30,
(US$ thousands) 2016 2015 2016 2015
Revenue 11,316 12,416 37,028 27,266
Gross margin % 45.3 % 40.5 % 43.4 % 41.1 %
Core operating expenditures1 (4,336 ) (5,331 ) (12,729 ) (10,229 )
Net income 1,122 (745 ) 2,837 8,406
Adjusted EBITDA1 1,668 1,126 5,709 3,218

Financial Condition at September 30, 2016 compared to December 31, 2015

  • Cash and cash equivalents of USD $20.9 million, up USD $6.0 million from USD $14.9 million
  • Working capital was USD $22.1 million, up USD $9.8 million from USD $12.3 million

Complete set of Financial Statements and Management Discussion & Analysis

A complete set of the third quarter ended September 30, 2016 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 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 unaudited condensed consolidated financial statements for the quarter ended September 30, 2016 and the audited consolidated financials for the year ended December 31, 2015, including the notes thereto.

EBITDA and Adjusted EBITDA1

EBITDA reconciliations Three months ended September 30, Nine months ended September 30,
(US$ in thousands) 2016 2015 2016 2015
Net income 1,122 (745 ) 2,837 8,406
Add/(deduct):
Interest 52 - 227 -
Income taxes 122 (267 ) 809 (6,211 )
Amortization 393 1,213 1,197 1,506
Non-cash stock based compensation 174 323 549 572
EBITDA [1] 1,863 524 5,619 4,273
Merger and acquisition costs 106 443 377 1,215
Investment tax credits - - - (4,320 )
Foreign exchange (gain)/loss (56 ) 181 (89 ) 1,255
Extraordinary legal costs (245 ) 7 (198 ) 32
Restructuring and asset write offs - (29 ) - 763
Adjusted EBITDA 1,668 1,126 5,709 3,218

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 three reportable segments: Signals, Illumination and Power. The Signals segment includes serves the Airfield Ground Lighting, Aviation Obstruction, Offshore Wind, Marine and Traffic markets. The Illumination segment provides solar powered LED outdoor lights for municipal and commercial customers. The Power segment serves both On-Grid and Off-Grid verticals.

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, 2015; 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.

Contact Information

  • Carmanah Technologies Corporation
    Evan Brown
    (250) 380-0052
    Chief Financial Officer/Corporate Secretary
    investors@carmanah.com