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Press release from CNW Group

Avigilon Corporation Announces Third Quarter 2011 Results

Monday, November 14, 2011

Avigilon Corporation Announces Third Quarter 2011 Results16:00 EST Monday, November 14, 2011VANCOUVER, Nov. 14, 2011 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in high-definition (HD) surveillance systems, today announced its financial results for the three and nine months ended September 30, 2011.  All figures are stated in Canadian dollars unless otherwise noted.Third Quarter 2011 HighlightsRevenue was $15.1 million, an increase of 82% over Q3 2010 revenue of $8.3 million.Gross margin was 45.7%, compared to 45.5% in Q3 2010.Adjusted EBITDA was $1.5 million, an increase of 10% from $1.4 million in Q3 2010. (See "Non-IFRS Measures" below.)Net income was $1.0 million, up 34.9% from $0.7 million in Q3 2010.Subsequent to the end of the quarter Avigilon completed a $25 million financing transaction, raising gross proceeds of $20 million in an Initial Public Offering and proceeds of $5 million in a Secondary Offering, and listed its shares on the Toronto Stock Exchange.Year-to-Date 2011 HighlightsRevenue was $41.2 million in the first nine months of 2011, an increase of 86% over $22.1 million in the comparable period of 2010.Gross margin was 43.8%, compared to 44.9% the prior year.Adjusted EBITDA was $4.3 million, up 77% from $2.4 million a year earlier.Net income was $2.2 million, an increase of 111% from $1.0 million in the 2010 period."We are very pleased to report a very strong third quarter, in which we achieved 82% revenue growth while remaining solidly profitable," said Alexander Fernandes, President and Chief Executive Officer, Avigilon. "We believe that there are significant opportunities available to us in the global video surveillance market.  Our recent IPO provides us with the resources to expand our sales and marketing efforts and accelerate our product roadmap so that we are well positioned to capitalize on these opportunities."Financial ReviewAvigilon's revenue was $15.1 million for the three months ended September 30, 2011, an increase of $6.8 million or 82% compared to $8.3 million for the third quarter of 2010.  The increase in revenue was due to higher product sales volumes worldwide, as a result of new product offerings, penetration into new markets, and greater customer acceptance in existing markets.Gross margins were $6.9 million in the third quarter, an increase of $3.1 million or 83% from $3.8 million a year earlier.  As a percentage of revenue, gross margins were 45.7% in Q3 2011 compared to 45.5% in Q3 2010. Selling and marketing expenses were $3.2 million in the third quarter, a $1.9 million increase from $1.4 million the previous year.  The increase was primarily due to increased sales volumes, additional personnel and their related expenses. Research and development expenses were $0.8 million in the third quarter, a $0.3 million or 70% increase from $0.5 million in the prior year's third quarter.General and administrative expenses were $1.5 million in Q3 2011, compared to $0.7 million in Q3 2010. The increase was primarily due to additional personnel and their related expenses to support Avigilon's growth. Adjusted EBITDA was $1.5 million in the third quarter, an increase of $0.1 million or 10% compared to $1.4 million in the prior year's third quarter.Net income was $1.0 million in the third quarter of 2011, an increase of $0.3 million or 34.9% compared to a net income of $0.7 million in Q3 2010.  Earnings per share were $0.06 (basic) or $0.04 (diluted) in Q3 2011, compared to $0.04 (basic) or $0.03 (diluted) a year earlier.Avigilon's weighted average share count in the third quarter of 2011 was 17,248,202 (basic), or 30,165,566 (diluted).  As of November 14, 2011, after giving effect to the issuance of 4,444,446 shares in the Company's IPO and the associated conversion of 9,148,639 preferred shares into common shares, the share count stood at 30,841,287 (basic) or 34,610,012 (diluted). Conference CallAvigilon has scheduled a conference call to discuss these results on Monday, November 14, 2011, beginning at 4:30 p.m. EST (1:30 p.m. PST).  To access the call, dial 647- 427-7450 or 1-888-231-8191, or view the webcast at http://ir.avigilon.com. A replay will be available for one year on the Company's website, and for one week by dialing 416-849-0833 or 1-855-859-2056, reference number 26887022.Non-IFRS MeasuresThe term "adjusted EBITDA" refers to earnings before deducting interest, taxes, depreciation, amortization, foreign exchange gain or loss, and stock-based compensation.  Management believes that adjusted EBITDA is a useful measure as it provides an indication of the operational results of the business prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset amortization. Adjusted EBITDA does not have a standardized meaning prescribed by International Financial Reporting Standards (IFRS) and is not necessarily comparable to similar measures provided by other companies.  Accordingly, investors are cautioned that adjusted EBITDA should not be construed as an alternative to operating income or net income determined in accordance with IFRS as an indicator of the Company's financial performance or as a measure of its liquidity and cash flows.About AvigilonAvigilon is a leader in the design, manufacturing and marketing of high definition, network-based video surveillance systems and equipment for the global security market. The Avigilon surveillance system has been designed to provide high quality video capture, transmission, recording and playback. The components of the Avigilon system include cameras, recording hardware and software which may be sold separately or in combination to provide customers with a customizable end-to-end video surveillance solution.Forward Looking StatementsCertain statements contained in this news release, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws.  Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made numerous assumptions. Although our management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that any forward-looking statement or information referenced herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Such risks, uncertainties and other factors include, among other things those risks identified in Avigilon's prospectus filed on SEDAR at www.sedar.com.Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Avigilon. Accordingly, readers should not place undue reliance on forward-looking statements or information. Avigilon undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement.Avigilon Corporation   Condensed consolidated interim statements of comprehensive income   for the three and nine months ended September 30, 2011 and 2010  (Expressed in Canadian dollars, except number of shares and per share amounts)(Unaudited - prepared by management)    Three months ended   Nine months ended      September 30,   September 30,   September 30,   September 30,     2011  2010 2011  2010     $  $  $   $                       Sales   15,108,920  8,281,769 41,179,871  22,126,841Cost of sales   (8,207,092) (4,515,584) (23,130,641) (12,194,424)    6,901,828  3,766,185 18,049,230 9,932,417           Operating expenses              Selling   3,223,814  1,369,686 8,289,671  4,398,811    Research and development   751,367  442,002 1,889,431  1,467,558    Administrative   1,473,650  648,694 3,916,273  1,740,178    Amortization   38,569  30,438 114,101  87,334    Stock-based payments   136,305  48,276 232,380  144,825    5,623,705  2,539,096 14,441,856  7,838,706           Operating income   1,278,123  1,227,089 3,607,374  2,093,711           Other income (expense)              Preferred share dividend expense   (138,357) (137,230) (412,817) (411,690)    Interest and other   (54,844) 8,249 (101,382) 38,200    Foreign exchange gain   478,889  84,437 322,556 50,319    285,688  (44,544) (191,643) (323,171)           Income before income taxes   1,563,811  1,182,545 3,415,731  1,770,540Dividend tax expense   (8,412) - (66,905) -Income tax expense   (548,746) (436,199) (1,143,646) (727,859)Net income and total comprehensive income   1,006,653  746,346 2,205,180  1,042,681           Earnings per share              Basic   0.06  0.04 0.13  0.06    Diluted   0.04  0.03 0.09  0.05           Weighted average number of shares outstanding              Basic   17,248,202  17,077,872 17,248,202  17,109,008    Diluted   30,165,566  28,699,561 29,817,191  27,776,588 Avigilon Corporation  Condensed consolidated interim statements of financial positionAs at September 30, 2011 and December 31, 2010  (Expressed in Canadian dollars)  (Unaudited - prepared by management)        September 30,  December 31,       2011  2010      $  $ Assets        Current assets            Cash      426,303  2,330,100    Trade and other receivables     10,069,032  7,652,921    Inventories     9,998,570  5,306,696    Prepaid expenses and deposits     434,260  307,768    Research tax credits     624,517  578,873      21,552,682  16,176,358         Property and equipment     1,430,648  1,494,939Intangible assets     25,709  27,262Deposits     470,361  25,953Deferred tax assets     922,986  1,999,133      24,402,386  19,723,645         Liabilities        Current liabilities            Trade and other payables     4,768,014  4,643,226    Bank loan     3,885,000  1,760,000      8,653,014  6,403,226         Preferred shares liability     10,749,042  10,336,225      19,402,056  16,739,451         Shareholders' equity        Capital stock     9,475,603  9,475,603Equity compensation reserve     3,647,571  3,836,615Deficit     (8,122,844) (10,328,024)      5,000,330  2,984,194      24,402,386  19,723,645                   Avigilon Corporation         Condensed consolidated interim statements of changes in equity    For the nine months ended September 30, 2011 and 2010      (Expressed in Canadian dollars, except number of shares)        (Unaudited - prepared by management)                   Total                   Capital stock   Equity     shareholders'   Shares   Amount   reserve   Deficit   equity     $   $   $   $                     Balance, January 1, 201016,998,202 8,975,603 3,559,820 (11,291,954) 1,243,469Net income and comprehensive income- - - 1,042,681 1,042,681Share issue costs- - (64,539) - (64,539)Share-based payments- - 144,825 - 144,825Issuance of common stock250,000 500,000 - - 500,000Deferred income tax effect on share        -  issuance cost adjustments- - 62,778 - 62,778Balance, September 30, 201017,248,202 9,475,603 3,702,884 (10,249,273) 2,929,214          Balance, December 31, 201017,248,202 9,475,603 3,836,615 (10,328,024) 2,984,194Net income and comprehensive income- - - 2,205,180 2,205,180Share issue costs- - (421,424) - (421,424)Share-based payments- - 232,380 - 232,380Balance, September 30, 2011 17,248,202 9,475,603 3,647,571 (8,122,844) 5,000,330 Avigilon Corporation  Condensed consolidated interim statements of cash flows  For the three and nine months ended September 30, 2011 and 2010(Expressed in Canadian dollars)  (Unaudited - prepared by management)      Nine months ended        September 30,   September 30,       2011 2010       $   $          Cash flows from operating activities            Net income for the period     2,205,180  1,042,681    Adjustments for non-cash items                Amortization     283,248  162,805        Stock-based payments     232,380  144,825        Dividend expense     412,817  411,690        Income tax expense     1,076,146  710,180        Unrealized foreign exchange loss (gain)     (387,605) (129,358)        Interest expense (income)     101,382  (38,200)      3,923,548  2,304,623             Changes in non-cash working capital items                Increase in trade & other receivables     (1,963,142) (1,142,194)        Increase (decrease) in deposits     (444,408) 3,127        Increase in inventories     (4,691,874) (2,497,886)        Increase in prepaid expenses and deposits     (126,698) (61,847)        Decrease (increase) in research tax credits      (45,644) 569,232         Increase in trade and other payables     62,696  401,219    Net changes in non-cash working capital     (7,209,070) (2,728,349)    Interest (paid) received     (101,382) 38,200Net cash used in operating activities     (3,386,904) (385,526)         Cash flows from financing activities            Proceeds from bank loan     2,125,000  965,000    Issuance of common stock     -  500,000    Share issuance costs     (421,424) (64,539)Net cash provided by financing activities     1,703,576  1,400,461         Cash flows from investing activities            Purchase of property and equipment     (289,411) (914,557)    Disposal of property and equipment     79,042  -    Purchase of intangible assets     (7,035) (47,876)Net cash used in investing activities     (217,404) (962,433)         Effect of foreign exchange rate changes on cash     (3,065) 57,925         Increase (decrease) in cash      (1,903,797) 110,427Cash, beginning of period     2,330,100 2,241,474Cash, end of period     426,303  2,351,901 For further information: Investor relations: Jeff Codispodi The Equicom Group  T: (416) 815-0700 ext. 261 jcodispodi@equicomgroup.com     Media relations: Sunny McKechnie Edelman  T: (604) 623-3007, ext. 247 sunny.mckechnie@edelman.com