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Press release from CNW Group

COM DEV Announces First Quarter Fiscal 2012 Results

Thursday, April 12, 2012

COM DEV Announces First Quarter Fiscal 2012 Results16:00 EDT Thursday, April 12, 2012CAMBRIDGE, ON, April 12, 2012 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced first quarter financial results for the three-month period ended January 31, 2012.  The first quarter fiscal 2012 results are COM DEV's first set of consolidated financial statements prepared under International Financial Reporting Standards (IFRS).  All amounts are stated in Canadian dollars unless otherwise noted.First Quarter HighlightsRevenue was $47.2 million in the first quarter of 2012, a 6% decrease from revenue of $50.3 million in the first quarter of 2011.Gross margin in the core Space Equipment business was 29%, compared to 20% in Q1 2011.Net income attributable to shareholders was $3.6 million, or $0.05 per share, an increase of $3.5 million compared to $77,000 or $0.00 per share in the first quarter of 2011.New orders won in the first quarter totaled $45 million, compared to $59 million a year earlier and $54 million in the fourth quarter of 2011.Backlog at January 31, 2012 was $125 million, compared to $129 million at October 31, 2011.exactEarth signed six new customers in the quarter, surpassing 30 customers in total."We continue to make progress on our top priority of improving profitability," said Michael Pley, CEO of COM DEV.  "Solid execution throughout the organization led to our highest gross margin percentage in over two years and effective control of operating expenses.  While overall revenue growth has been slow, we expect to build momentum as the fiscal year progresses."Segmented ResultsCOM DEV reports results in two business segments.  The Space Equipment segment represents the Company's traditional manufacturing operations, while the Data Services segment consists primarily of the maritime tracking services offered by exactEarth Ltd.  Selected segmented results for the fiscal first quarter are as follows.Three months ended January 31 (unaudited, in thousands of dollars) Space Equipment Data Services Consolidated * 20122011 20122011 20122011Revenue45,19550,105 2,014159 47,20950,264Gross margin12,94110,258 (74)(1,248) 13,0508,633Gross margin %29%20% -- 28%17%Net income4,5862,220 (1,588)(2,420) 3,181(577)* Consolidated figures may not equal the sum of the two segments due to intra-segment adjustments.  Please see Note 13 to the Consolidated Financial Statements for additional details.Financial ReviewEffective the first quarter of fiscal 2012, COM DEV began reporting its financial results in accordance with IFRS.  All figures in this news release, including prior year comparable results, are presented in accordance with IFRS.  As a result, some prior-year figures may differ from those originally reported under Canadian Generally Accepted Accounting Principles (GAAP).  For more detailed information regarding the Company's transition to IFRS, please refer to the Company's Management Discussion and Analysis, Consolidated Financial Statements, and in particular Note 15 to the financial statements, all filed on SEDAR at www.sedar.com.COM DEV's fiscal 2012 first quarter revenues of $47.2 million decreased by $3.1 million or 6% compared to $50.3 million a year earlier.  Revenues in the civil and military sectors were relatively stable in comparison to the first quarter of 2011, while revenues in the commercial sector declined by $3.5 million.  The decline in commercial revenues is related to a significant inflow of new orders at the end of fiscal 2010, which resulted in a higher-than-normal level of backlog in the commercial portion of the business and a high level of revenue in the early part of 2011.  The revenue split between the three market segments in Q1 2012 was 58% commercial, 26% civil and 16% military, compared to a 61/24/15 split in the first quarter of 2011.COM DEV received new orders totaling $45 million in the first quarter, of which 53% were commercial, 36% were civil, and 11% were military. In last year's first quarter the Company booked $59 million of new orders, with a commercial/civil/military split of 48/11/40.Order backlog at January 31, 2012 was $125 million, compared to $129 million three months earlier, and $159 million one year earlier.  An additional $35 million of follow-on orders are expected to be realized from ATPs already received; COM DEV only includes these ATP amounts in orders and backlog once the final contracts are in place.  Backlog was split between the Company's commercial, civil and military sectors at a ratio of 46%, 33% and 21% respectively, compared to 47%, 25% and 28% at January 31, 2011.  The Company expects to convert approximately 74% of the total backlog into revenue during fiscal 2012.Consolidated gross margin was $13.1 million in the first quarter, representing 28% of total revenues, compared to $8.6 million or 17% of revenues in Q1 2011.  The improvement is attributable to strong results in the core equipment business, continued progress in the data services business, and a reduced impact from the one remaining program out of the five which had a significant drag on the Q1 2011 gross margin.  Gross margin in the Space Equipment segment was $12.9 million, or 29% of segment revenues.COM DEV recorded a net research and development expense of $1.0 million in the first quarter of 2012, compared to $1.0 million a year earlier.  Gross R&D spending of $3.8 million, R&D recovery of $1.8 million, and a recognized Investment Tax Credit of $1.0 million were all consistent with the Q1 2011 figures.Selling expenses were $2.6 million in Q1 2012, unchanged from Q1 2011.  Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway.  General expenses of $4.4 million were unchanged from the previous year.Net income attributable to shareholders was $3.6 million in the first quarter of 2012, compared to $77,000 a year earlier.  The increase is due primarily to improved gross margins, as well as a gain on foreign exchange, partially offset by higher other expenses and a higher income tax expense.  Net income in the Space Equipment segment was $4.6 million, compared to $2.2 million in Q1 2011, while the $1.6 million net loss in the Data Services segment compares to a $2.4 million net loss a year earlier.COM DEV ended the first quarter with $23.5 million of cash and equivalents, compared to $27.6 million at October 31, 2011.  Operating activities generated $5.4 million of cash in the quarter.  At January 31, 2012, COM DEV had outstanding debt of $21.2 million including the current portion, and the Company's $32 million credit facility was not drawn upon.The Company's basic share count stood at 76,187,035 on April 12, 2012.Conference CallA conference call will be held Thursday, April 12, 2012 at 5:00 pm EDT to discuss this announcement.  To access the call, dial 647-427-7450 or 1-888-231-8191.  To access the live webcast, please visit the Company's website at www.comdevintl.com or www.newswire.ca for directions.  Participants will require Windows Media Player™ to listen to the webcast.About COM DEVCOM DEV International Ltd. (www.comdevintl.com) is a leading global provider of space hardware and services.  With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced subsystems and microsatellites that are sold to major satellite prime contractors, government agencies and satellite operators, for use in communications, space science, remote sensing and defense applications. COM DEV's majority-owned subsidiary, exactEarth Ltd., provides satellite data services.This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding COM DEV's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. COM DEV uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by COM DEV in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors COM DEV believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to COM DEV's expectations and predictions is subject to any number of risks, assumptions and uncertainties.  Many factors could cause COM DEV's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release.  These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of COM DEV's customers; the competition COM DEV faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of COM DEV's products or services.The triangular logo and the word COM DEV are each registered trademarks and the property of COM DEV Ltd. All rights reserved. COM DEV International Ltd.Consolidated Statements of Operations(Canadian dollars in thousands, except for per share figures)Unaudited            For the three months ended January 31  2012  2011             Revenue      $47,209  $50,264 Cost of revenue    34,159  41,631 Gross margin    13,050  8,633 Research and development costs   3,783  3,824 Research and development recovery  1,768  1,790 Investment tax credits recoverable   1,040  1,000 Net research and development expense  975  1,034 Selling expenses    2,613  2,579 General expenses    4,398  4,406 Operating income     5,064  614 Interest expense    246  126 Foreign exchange (gain) loss   (355)  184 Other expense (income)   211  (119)Income before income taxes   $4,962  $423 Income tax expense     1,781  1,000Net income (loss)    $3,181  $(577)            Attributable to:         Shareholders    $3,610  $77 Non-controlling interest    (429)  (654)        $3,181  $(577)            Earnings per share         Basic and diluted earnings per share  $0.05 $0.00See accompanying notes to consolidated financial statements COM DEV International Ltd.Consolidated Statements of Financial Position(Canadian dollars in thousands)Unaudited                          As atJanuary 31,2012   As atOctober 31,2011   As atNovember 1,2010Assets               Current                Cash and cash equivalents    $23,521  $27,618  $17,436   Accounts receivable    38,154  47,563  44,357   Inventory      51,584  46,147  61,359   Prepaids and other     1,943  1,422  3,274   Income taxes recoverable   4,788  4,788  4,615   Investment tax credit - current   4,684  4,684  774        124,674  132,222  131,815  Non-current                Property, plant and equipment   77,670  73,973  73,517   Intangible assets    16,066  15,576  17,962   Goodwill     2,209  2,200  2,252   Investment tax credit     10,533  9,493  1,000   Deferred income tax assets    -  1,088  6,301 Total assets      $231,152  $234,552  $  232,847                Liabilities               Current                Accounts payable and accrued liabilities   $25,069  $25,830  $27,625   Income taxes payable    310  302  -   Provisions      927  1,172  897   Deferred revenue     6,002  9,977  26,737   Current portion of loans payable    8,615  8,867  6,401        40,923  46,148  61,660                 Non-current                Loans payable     12,593  14,687  10,115   Accounts payable and accrued liabilities   647  930  968   Employee future benefits    4,554  4,494  5,299   Deferred income tax liabilities    382  -  -        18,176  20,111  16,382                 Total liabilities     59,099  66,259  78,042                               Shareholders' equity              Share capital    345,666  345,666  346,068  Contributed surplus     10,128  9,570  7,435  Deficit      (192,172)  (195,782)  (207,026)  Non-controlling interest   8,548  8,977  8,328  Accumulated other comprehensive loss   (117)  (138)  -  Total shareholders' equity    172,053  168,293  154,805                Total liabilities and shareholders' equity   $231,152  $234,552  $  232,847See accompanying notes to consolidated financial statements COM DEV International Ltd.Consolidated Statements of Cash Flows(Canadian dollars in thousands)Unaudited           For the three months ended January 31 2012 2011            Operating activities         Net income (loss)    $3,181  $(577) Amortization    2,543  2,690 Loss on disposal of assets   30  - Defined benefit plan expenses   159  216 Defined benefit plan contributions   (250)  (207) Stock compensation expense    491  375 Employee stock ownership plan awards  67  63 Investment tax credits recoverable   (1,040)  (1,000) Deferred tax expense     1,781  1,000 Unrealized foreign exchange (gain) loss on derivatives   (422)  37        6,540  2,597 Net change in non-cash working capital items  (1,100)  797Operating activities    5,440  3,394            Financing activities         Shares issued    -  514 Non-controlling interest investment, net  -  4 Repayment of long term debt   (2,439)  (1,504)Financing activities    (2,439)  (986)            Investing activities         Acquisition of property, plant and equipment   (5,200)  (1,836) Proceeds on disposal of property, plant and equipment  4  - Acquisition of intangible assets    (1,502)  (1,173)Investing activities    (6,698)  (3,009)Effect of exchange rate changes on cash  (400)  (113)            Net decrease in cash    (4,097)  (714)Cash and cash equivalents, beginning of period  27,618  17,436Cash and cash equivalents, end of period  $23,521  $16,722            Interest paid     $262  $107Taxes paid     $165  $- See accompanying notes to consolidated financial statementsCOM DEV International Ltd.Consolidated Statements of Comprehensive Income(Canadian dollars in thousands, except for per share figures)Unaudited             For the three months ended January 31 2012 2011            Net Income (loss)    $3,181  $(577)            Other comprehensive income (loss):        Foreign currency translation adjustment (net of taxes of $nil)  21  (374)            Comprehensive income (loss)   $3,202  $(951)  COM DEV International Ltd.Consolidated Statements of Changes in Equity(Canadian dollars in thousands)Unaudited                            For the three months ended January 31, 2012  Total   Deficit  Accumulated OtherComprehensive Loss  ShareCapital  Non-controllinginterest  ContributedSurplus                   Balance, October 31, 2011 $168,293  $(195,782)  $(138)  $345,666  $8,977  $9,570                   Comprehensive income                  Net income (loss) 3,181  3,610  -  -  (429)  - Foreign currency translation adjustments (net of taxes of $nil) 21  -  21  -  -  -   3,202  3,610  21  -  (429)  -Expense recognized for ESOP awards 67  -  -  -  -  67Expense recognized for stock-based compensation and long-term incentive plans 491  -  -  -  -  491Balance, January 31, 2012 $172,053  $(192,172)  $(117)  $345,666  $8,548  $10,128                                      For the three months ended January 31, 2011                                    Balance, October 31, 2010 $154,805  $(207,026)  $-  $346,068  $8,328  $7,435                   Comprehensive income                  Net Income (577)  77  -  -  (654)  - Foreign currency translation adjustments (net of taxes of $nil) (374)  -  (374)  -  -  -   (951)  77  (374)  -  (654)  -Common stock issued 514  -  -  741  -  (227)Expense recognized for ESOP awards 63  -  -  -  -  63Non-controlling interest investment  4  -  -  -  -  4Expense recognized for stock-based compensation and long-term incentive plans 375  -  -  -  -  375Balance, January 31, 2011 $154,810  $(206,949)  $(374)  $346,809  $7,674  $7,650See accompanying notes to consolidated financial statements     For further information: Gary Calhoun Chief Financial Officer Tel:  (519) 622-2300 ext. 2826 gary.calhoun@comdev.ca  Jeff Codispodi The Equicom Group Tel: (416) 815-0700 ext. 261 jcodispodi@equicomgroup.com