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Press release from CNW Group

COM DEV Announces Second Quarter Fiscal 2012 Results

Thursday, June 07, 2012

COM DEV Announces Second Quarter Fiscal 2012 Results16:24 EDT Thursday, June 07, 2012CAMBRIDGE, ON, June 7, 2012 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced second quarter financial results for the six-month period ended April 30, 2012.  All amounts are stated in Canadian dollars unless otherwise noted.Second Quarter HighlightsRevenue was $50.1 million in the second quarter of 2012, a 6% decrease from revenue of $53.1 million in the second quarter of 2011.Gross margin in the core Space Equipment business was 24%, compared to 22% in Q2 2011.Net income attributable to shareholders was $5.2 million, or $0.07 per share, an increase of $4.0 million compared to $1.3 million or $0.02 per share in the second quarter of 2011.New orders won in the second quarter totaled $59 million, compared to $28 million a year earlier and $45 million in the first quarter of 2012.Backlog at April 30, 2012 was $134 million, plus an additional $19 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded."Margins and profitability showed year-over-year improvement once again this quarter," said Michael Pley, CEO of COM DEV.  "A healthy level of orders in the quarter, driven by strong activity in the commercial market, positions us well to grow revenue in the coming quarters.  We expect revenue in the second half of the year to exceed the $97 million of first half revenues by approximately 10 percent."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 second quarter are as follows.Three months ended April 30 (unaudited, in thousands of dollars) Space Equipment Data Services Consolidated * 20122011 20122011 20122011Revenue47,58051,025 2,5302,076 50,11053,101Gross margin12,06511,543 335174 12,37811,032Gross margin %24%22% 13%8% 25%21%Net income6,3052,908 (1,034)(929) 5,2491,294* Consolidated figures may not equal the sum of the two segments due to intra-segment adjustments.  Please see Note 12 to the Unaudited Interim Consolidated Financial Statements for additional details.Financial ReviewCOM DEV's fiscal 2012 second quarter revenues of $50.1 million decreased by $3.0 million or 6% compared to $53.1 million a year earlier.  Revenues in the civil and military sectors were relatively stable in comparison to the second quarter of 2011, while revenues in the commercial sector declined by $2.7 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 Q2 2012 was 54% commercial, 28% civil and 18% military, compared to a 56/27/17 split in the second quarter of 2011.COM DEV received new orders totaling $59 million in the second quarter, of which 73% were commercial, 1% was civil, and 26% were military. In last year's second quarter the Company booked $28 million of new orders, with a commercial/civil/military split of 71/22/7.Order backlog at April 30, 2012 was $134 million, compared to $125 million three months earlier, and $131 million one year earlier.  An additional $19 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 55%, 21% and 24% respectively, compared to 48%, 24% and 28% at April 30, 2011.  The Company expects to convert approximately 71% of the total backlog into revenue during fiscal 2012.Consolidated gross margin was $12.4 million in the second quarter, representing 25% of total revenues, compared to $11.0 million or 21% of revenues in Q2 2011.  The improvement is attributable to stronger results in the core equipment business, continued progress in the Data Services segment, and a reduced impact from the one remaining program out of the five which had a significant drag on gross margin in the second quarter of last year.  Gross margin in the Space Equipment segment was $12.1 million, or 24% of segment revenues.COM DEV recorded a net research and development expense of $35,000 in the second quarter of 2012, compared to $1.0 million a year earlier.  A $1.5 million increase in investment tax credits recoverable more than offset the effect of a reduction in R&D recovery.Selling expenses were $2.9 million in Q2 2012, unchanged from Q2 2011.  Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway.  General expenses of $4.9 million increased by $0.6 million from the previous year, as a result of additional expenses under the long term incentive plan and increased costs driven by new Controlled Goods regulations.Net income attributable to shareholders was $5.2 million in the second quarter of 2012, compared to $1.3 million a year earlier.  The increase is due primarily to improved gross margins, a gain on foreign exchange, and a net gain on the sale of underutilized IP assets, partially offset by higher income tax expense.  Net income in the Space Equipment segment was $6.3 million, compared to $2.9 million in Q2 2011, while the $1.0 million net loss in the Data Services segment compares to a $0.9 million net loss a year earlier.COM DEV ended the second quarter with $21.2 million of cash and equivalents, compared to $23.5 million at January 31, 2012.  Operating activities generated $2.6 million of cash in the quarter.  At April 30, 2012, COM DEV had outstanding debt of $19.2 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 76,285,147 on June 7, 2012.Conference CallA conference call will be held Thursday, June 7, 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 April 30  2012 2011             Revenue     $ 50,110  $ 53,101  Cost of revenue   37,732 42,069  Gross margin   12,378 11,032  Research and development costs  3,853 4,199  Research and development recovery 1,020 1,942  Investment tax credits recoverable  2,798 1,300  Net research and development expense 35 957  Selling expenses   2,946 2,909  General expenses   4,881 4,282  Operating income   4,516 2,884  Interest expense   257 204  Foreign exchange (gain) loss  (1,158) 85  Other (income) expense  (1,975) 314 Income before income taxes   $ 7,392  $ 2,281  Income tax expense    2,527 1,300 Net income     $ 4,865  $ 981            Attributable to:        Shareholders    $ 5,249  $ 1,294  Non-controlling interest   (384) (313)         $ 4,865  $ 981            Earnings per share        Basic and diluted earnings per share  $0.07 $0.02                                   COM DEV International Ltd.   Consolidated Statements of Operations   (Canadian dollars in thousands, except for per share figures)   Unaudited             For the six months ended April 30  2012 2011             Revenue      $ 97,319  $ 103,365  Cost of revenue   71,891 83,700  Gross margin   25,428 19,665  Research and development costs  7,636 8,023  Research and development recovery 2,788 3,732  Investment tax credits recoverable  3,838 2,300  Net research and development expense 1,010 1,991  Selling expenses   5,559 5,488  General expenses   9,279 8,688  Operating income       9,580 3,498  Interest expense  503 330  Foreign exchange (gain) loss  (1,513) 269  Other (income) expense  (1,764) 195 Income before income taxes   $ 12,354  $ 2,704  Income tax expense    4,308 2,300 Net income     $ 8,046  $ 404            Attributable to:        Shareholders    $ 8,859  $ 1,371  Non-controlling interest   (813) (967)         $ 8,046  $ 404            Earnings per share        Basic and diluted earnings per share  $0.12 $0.02                                   COM DEV International Ltd.   Consolidated Statements of Financial Position   (Canadian dollars in thousands)   Unaudited         As at As at        April 30, October 31,        2012 2011  Assets           Current            Cash and cash equivalents    $ 21,157  $ 27,618    Accounts receivable   37,588 47,563    Inventory    54,792 46,147    Prepaids and other    3,868 1,422    Income taxes recoverable  4,693 4,788    Investment tax credit - current  4,612 4,684        126,710 132,222   Non-current            Property, plant and equipment  79,701 73,973    Intangible assets   15,234 15,576    Goodwill     2,165 2,200    Investment tax credit    7,239 9,493    Deferred income tax assets   3,562 1,088  Total assets      $ 234,611  $ 234,552             Liabilities           Current            Accounts payable and accrued liabilities   $ 25,600  $ 25,830    Income taxes payable   400 302    Provisions     435 1,172    Deferred revenue    8,727 9,977    Current portion of loans payable   7,838 8,867        43,000 46,148              Non-current            Loans payable    11,314 14,687    Accounts payable and accrued liabilities  319 930    Employee future benefits   4,318 4,494        15,951 20,111              Total liabilities    58,951 66,259             Shareholders' equity          Share capital   345,862 345,666   Treasury Stock    (355) -   Contributed surplus    9,526 9,570   Deficit     (186,923) (195,782)   Non-controlling interest    8,164 8,977   Accumulated other comprehensive loss  (614) (138)   Total shareholders' equity   175,660 168,293             Total liabilities and shareholders' equity   $ 234,611  $ 234,552                                              COM DEV International Ltd.   Consolidated Statements of Cash Flows   (Canadian dollars in thousands)   Unaudited             For the three months ended April 30  2012 2011            Operating activities        Net income     $ 4,865  $ 981  Amortization   2,040 2,674  Gain on disposal of assets  (2,197) (282)  Defined benefit plan expenses  153 205  Defined benefit plan contributions  (961) (201)  Stock compensation expense   423 288  Employee stock ownership plan awards  52 50  Investment tax credits recoverable  (2,798) (1,300)  Deferred tax expense   2,527 1,300  Unrealized foreign exchange (gain) loss on derivatives  421 77        4,525 3,792  Net change in non-cash working capital items (1,968) 3,915 Operating activities   2,557 7,707            Financing activities        Non-controlling interest investment, net - 2,616  Cash settlement of restricted stock units  (881) -  Purchase of treasury stock   (355) -  Advance of long term debt  - 15,000  Repayment of long term debt  (2,185) (1,827) Financing activities   (3,421) 15,789            Investing activities        Acquisition of property, plant and equipment  (3,725) (1,190)  Proceeds on disposal of property, plant and equipment 2,197 1,466  Acquisition of intangible assets   96 70 Investing activities   (1,432) 346 Effect of exchange rate changes on cash (68) (770)            Net (decrease) increase in cash  (2,364) 23,072 Cash and cash equivalents, beginning of period  23,521 16,722 Cash and cash equivalents, end of period  $ 21,157  $ 39,794            Interest paid     $ 271  $ 162 Taxes paid     $ 4  $ -                                   COM DEV International Ltd.   Consolidated Statements of Cash Flows   (Canadian dollars in thousands)   Unaudited             For the six months ended April 30  2012 2011            Operating activities        Net income     $ 8,046  $ 404  Amortization   4,583 5,364  Gain on disposal of assets  (2,167) (282)  Defined benefit plan expenses  312 421  Defined benefit plan contributions  (1,211) (408)  Stock compensation expense   914 663  Employee stock ownership plan awards  119 113  Investment tax credits recoverable  (3,838) (2,300)  Deferred tax expense   4,308 2,300  Unrealized foreign exchange (gain) loss on derivatives  - 114        11,066 6,389  Net change in non-cash working capital items (3,068) 4,712 Operating activities   7,998 11,101            Financing activities        Shares issued   - 514  Non-controlling interest investment, net - 2,620  Cash settlement of restricted stock units  (881) -  Purchase of treasury stock   (355) -  Advance of long term debt  - 15,000  Repayment of long term debt  (4,624) (3,331) Financing activities   (5,860) 14,803            Investing activities        Acquisition of property, plant and equipment  (8,925) (3,026)  Proceeds on disposal of property, plant and equipment 2,201 1,466  Acquisition of intangible assets   (1,406) (1,103) Investing activities   (8,130) (2,663) Effect of exchange rate changes on cash (469) (883)            Net increase (decrease) in cash  (6,461) 22,358 Cash and cash equivalents, beginning of period 27,618 17,436 Cash and cash equivalents, end of period  $ 21,157  $ 39,794            Interest paid     $ 533  $ 269 Taxes paid     $ 169  $ -                                   COM DEV International Ltd.   Consolidated Statements of Comprehensive Income   (Canadian dollars in thousands, except for per share figures)   Unaudited             For the three months ended April 30  2012 2011            Net Income     $ 4,865  $ 981            Other comprehensive income (loss):       Foreign currency translation adjustment (net of taxes of $nil) (497) (848)            Comprehensive income    $ 4,368  $ 133                                  COM DEV International Ltd.  Consolidated Statements of Comprehensive Income   (Canadian dollars in thousands, except for per share figures)   Unaudited             For the six months ended April 30  2012 2011            Net Income     $ 8,046  $ 404            Other comprehensive income (loss):       Foreign currency translation adjustment (net of taxes of $nil) (476) (1,222)            Comprehensive income (loss)   $ 7,570  $ (818)   COM DEV International Ltd.  Consolidated Statements of Changes in Equity  (Canadian dollars in thousands)  Unaudited                               For the six months ended April 30, 2012Total Deficit Accumulated Other Comprehensive Loss Share Capital Treasury Stock Non-controlling Interest Contributed Surplus               Balance, October 31, 2011 $ 168,293  $ (195,782)  $ (138)  $ 345,666  $ -  $ 8,977  $ 9,570               Comprehensive income7,570 8,859 (476) - - (813) -               Common stock issued- - - 196   - (196)Expense recognized for ESOP awards119 - - -   - 119Treasury stock(355) - - - (355) - -Expense recognized for stock-based compensation and long-term incentive plans914 - - -   - 914Settlement of long-term incentive plans(881) - - -   - (881)Balance, April 30, 2012 $ 175,660  $ (186,923)  $ (614)  $ 345,862  $ (355)  $ 8,164  $ 9,526                              For the six months ended April 30, 2011                            Balance, October 31, 2010 $ 154,805  $ (207,026)  $ -  $ 346,068  $ -  $ 8,328  $ 7,435               Comprehensive income(818) 1,371 (1,222) - - (967) -               Common stock issued514 - - 871 - - (357)Expense recognized for ESOP awards113 - - - - - 113Non-controlling interest investment 2,620 - - - - 2,700 (80)Expense recognized for stock-based compensation and long-term incentive plans664 - - - - - 664Balance, April 30, 2011 $ 157,898  $ (205,655)  $ (1,222)  $ 346,939  $ -  $ 10,061  $ 7,775 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