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Press release from CNW Group

Avigilon Corporation Announces First Quarter 2012 Results

Thursday, May 10, 2012

Avigilon Corporation Announces First Quarter 2012 Results16:00 EDT Thursday, May 10, 2012VANCOUVER, May 10, 2012 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in high-definition (HD) surveillance systems, today announced its financial results for the three months ended March 31, 2012. All figures are stated in Canadian dollars unless otherwise noted.First Quarter 2012 HighlightsRevenue was $17.8 million, an increase of 77% over Q1 2011 revenue of $10.0 million.Gross margin was 48%, compared to 44% a year earlier.EBITDA was $1.2 million, an increase of 100% over Q1 2011 EBITDA of $0.6 million. (See "Non-IFRS Measures" below.)Net income was $0.6 million, compared to $0.1 million in Q1 2011."In the first quarter of 2012, we effectively executed on our top priority of revenue growth," said Alexander Fernandes, president and chief executive office at Avigilon. "Our innovative HD technology is enjoying rapid and widespread global customer adoption while also accelerating the video surveillance market's transition from analog to high-definition."Financial ReviewAvigilon reported revenue of $17.7 million in the three months ended March 31, 2012, an increase of $7.7 million or 77% compared to $10.0 million of revenue in the comparable period of 2011.  The Company generated higher product sales volumes worldwide, as a result of new product offerings, expansion into new markets, and greater penetration in existing markets.  Revenue growth was particularly strong in the North America, EMEA, and Latin America regions.  Avigilon's revenues have historically experienced some seasonality, with the first and third quarters generally being slower than the second and fourth quarters.Gross margin was $8.5 million in the first quarter, an increase of $4.1 million or 93% from $4.4 million the previous year. As a percentage of revenue, gross margins were 48% in Q1 2012 compared to 44% a year earlier, with the increase largely due to a change in sales mix towards higher margin products.Selling and marketing expenses were $4.3 million in Q1 2012, an increase of $2.0 million or 82% over the prior year's first quarter. The increase was primarily due to a higher number of sales personnel to support continuing revenue growth, and the development of a new and expanded marketing program.Research and development expenses, net of related income tax credits, were $1.1 million in the first quarter of 2012, a $0.5 million increase compared to the previous year.  The Company has increased its investment in R&D as it focuses on continuing to expand and enhance its product offering.General and administrative expenses were $2.1 million in 2011, up $1.1 million from $1.0 million of G&A expense in 2010. The increase was primarily due to additional personnel and their related expenses to support Avigilon's growth and its status as a public company.EBITDA was $1.2 million in the first quarter, an increase of $1.2 million or 100% compared to $0.6 million in Q1 2011.  The increase was attributable to the growth in revenue.Net income for the quarter was $647,000, an increase of $526,000 compared to net income of $121,000 in Q1 2011. Earnings per share were $0.02 (basic and diluted), compared to $0.01 a year earlier.  Avigilon's basic share count at March 31, 2012 was 31, 261,287.Financial statements can be downloaded from the Avigilon website at http://ir.avigilon.comor SEDAR at http://www.sedar.com/.Conference CallAvigilon has scheduled a conference call to discuss these results on Thursday, May 10, 2012, beginning at 5:00 p.m. EDT (2:00 p.m. PDT). 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 778-371-8506, 416-849-0833 or 1-855-859-2056, reference number 77105786.Non-IFRS MeasuresThe term "EBITDA" refers to earnings before deducting interest, taxes, depreciation, amortization, foreign exchange gain or loss, and stock-based compensation. Management believes that 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. 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 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 (TSX: AVO) is defining the future of protection through innovative high-definition surveillance solutions. Delivering the world's best image quality, our industry-leading HD network video management software and megapixel cameras are reinventing surveillance. Information about Avigilon can be found at www.avigilon.com.Forward Looking Statements Certain 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, therecan 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 Consolidated Statements of Income and Comprehensive Incomefor the three months ended March 31, 2012 and 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited) Three months ended  March 31, March 31,           2012          2011 $ $   Sales       17,754       10,034Cost of sales       (9,260)      (5,637)          8,494         4,397   Operating expenses     Selling and marketing         4,342         2,381Research and development         1,068            520General and administrative         2,117            992Amortization              68             38          7,595         3,931   Operating income            899            466   Other income (expense)     Accretion expense                -          (137)Interest and other, net              30            (14)Foreign exchange loss          (138)           (94)           (108)         (245)   Income before income taxes            791            221Income tax expense          (144)         (100)Net income and total comprehensive income            647            121   Earnings per share  Basic           0.02           0.01 Diluted           0.02           0.01    Weighted average number of shares outstanding (000s)  Basic       31,051       17,248Diluted       34,832       19,767Avigilon CorporationConsolidated Statements of Financial Positionas at March 31, 2012 and December 31, 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)   March 31, December 31,           2012                2011 $$Assets  Current assets   Cash and cash equivalents         9,498             12,418 Trade and other receivables       13,065             13,291  Inventories       13,390             11,254 Other financial assets              -                     88 Prepaid expenses            588                 605 Research tax credits         1,249                 973        37,790             38,629Non-current assets   Property and equipment         2,587               2,304  Intangible assets              37                   46 Deposits            275                 272 Deferred tax assets         1,558               1,703        42,247             42,954   Liabilities  Current liabilities   Trade and other payables         6,237               7,765 Bank loan              -                      -   Leasehold incentive              59                   59          6,296               7,824Non-current liabilities    Leasehold incentive            264                 279          6,560               8,103   Shareholders' equity  Capital stock       37,336             37,251Equity compensation reserve         4,203               4,099Deficit       (5,852)            (6,499)        35,687             34,851        42,247             42,954   Avigilon CorporationConsolidated Statements of Changes in Equityfor the three months ended March 31, 2012 and 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)     Total Capital stockEquity shareholders' SharesAmountreserveDeficitequityBalance, January 1, 2011  17,248,202        9,559        3,753        (10,328)             2,984Net income and total comprehensive income               -              -               -121               121Stock-based compensation               -               -            18-                 18Balance, March 31, 2011  17,248,202        9,559        3,771        (10,207)             3,123       Balance, January 1, 2012  31,021,287      37,251        4,099          (6,499)            34,851Net income and total comprehensive income-               -               -            647               647Share issue costs-         (20)             -      -                 (20)Stock-based compensation--         104-                 104Issuance of common stock     105,000         105             -  -                 105Balance, March 31, 2012  31,126,287      37,336        4,203          (5,852)            35,687      Avigilon CorporationConsolidated Statements of Cash Flowsfor the three months ended March 31, 2012 and 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited) Three months ended  March 31, March 31,         2012          2011 $ $Cash flows from operating activities   Net income for the period                  647                   121 Adjustments for non-cash items      Amortization                  160                   106    Stock-based compensation                  104                    18    Dividend Expense                      -                   137    Tax expense                  144                   100    Unrealized foreign exchange loss (gain)                   29                      8   Interest expense (income)                  (30)                   14                   1,054                   504 Changes in working capital      Decrease (increase) in trade & other receivables                  296                   235    Decrease (increase) in deposits                    (2)                (443)    Increase in inventories             (2,137)             (2,538)    Decrease (increase) in prepaid expenses and deposits                   17                 (458)    Decrease (increase) in research tax credits                (276)                (136)    Increase (decrease) in trade and other payables             (1,518)                  236 Net changes in working capital             (3,620)             (3,104)  Interest (paid) received                   30                   (14)Net cash used in operating activities             (2,536)             (2,614)Cash flows from investing activities   Purchase of property and equipment                (449)                  (89) Purchase of intangible assets                      -                     (7)Net cash used in investing activities                (449)                  (96)Cash flows from financing activities   Proceeds from (to) bank loan                      -                1,370 Issuance of common stock                  105                       - Share issuance costs                  (20)                      -Net cash provided by financing activities                   85               1,370Effect of foreign exchange rate changes on cash                  (20)                  (40)Increase (decrease) in cash             (2,920)             (1,380)Cash, beginning of period             12,418               2,330Cash, end of period               9,498                   950     For further information: Investor relations: Jeff Codispodi, The Equicom Group T: (416) 815-0700 ext. 261 jcodispodi@equicomgroup.com Media relations: Angela St-Amour, Avigilon Corporation T: (604) 630-3410  angela.stamour@avigilon.com