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Press release from CNW Group

Avigilon Corporation Announces Second Quarter 2012 Results

Wednesday, August 08, 2012

Avigilon Corporation Announces Second Quarter 2012 Results16:00 EDT Wednesday, August 08, 2012VANCOUVER, Aug. 8, 2012 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in high-definition (HD) surveillance systems, today announced its financial results for the three and six months ended June 30, 2012. All figures are stated in Canadian dollars unless otherwise noted.Second Quarter 2012 HighlightsRevenue was $24.4 million, an increase of 52% over Q2 2011 revenue of $16.0 million.Gross margin was 48%, compared to 42% a year earlier.EBITDA was $2.1 million, compared to Q2 2011 EBITDA of $2.1 million. (See "Non-IFRS Measures" below.)Net income was $1.3 million, an increase of 22% from $1.1 million in Q2 2011.First Half 2012 HighlightsRevenue was $42.1 million in the first six months of 2012, an increase of 61% from $26.0 million in the same period last year.Gross margin was 48%, up from 43% in the prior year.EBITDA was $3.3 million, an increase of 23% over $2.7 million in the first half of 2011. (See "Non-IFRS Measures" below.)Net income was $2.0 million, a 63% increase compared to $1.2 million a year earlier."Effective execution of our growth strategy has led to record revenues in the second quarter," said Alexander Fernandes, president and chief executive officer at Avigilon. "We have been expanding our global sales team, building awareness of our brand, and investing in product innovation.  I expect all these activities to continue to drive strong growth."Financial ReviewAvigilon reported revenue of $24.4 million in the three months ended June 30, 2012, an increase of $8.4 million, or 52%, compared to $16.0 million of revenue in the second quarter of 2011.   Revenue growth was broadly based, with five of the six regions growing by at least 47% year-over-year, and no single sale representing more than 5% of revenue.  In comparison, a one-time enterprise sale of $2.3 million was completed in Q2 2011, representing 14% of revenue.  Factoring out that enterprise sale, revenue in the current quarter grew 80% over the previous year.Gross margin was $11.7 million in the second quarter, an increase of $5.0 million or 74% from $6.7 million the previous year. As a percentage of revenue, gross margin was 48% in Q2 2012 compared to 42% a year earlier.  The increased gross margin percentage has resulted primarily from a shift in sales mix.  In particular, the large enterprise sale in the second quarter of last year, referenced above, had a product mix that resulted in low gross margins.Selling and marketing expenses were $6.6 million in the second quarter of 2012, a $3.7 million increase from $2.9 million a year earlier. The increase was primarily due to a higher number of sales personnel, as we continue to grow our global sales team to support revenue growth, and activities associated with the Company's recently expanded marketing program designed to promote the Avigilon brand.Research and development expenses, net of related income tax credits, were $1.2 million in Q2 2012, a $0.5 million increase compared to $0.7 million in the prior year's second quarter.  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 the second quarter, up $0.9 million from $1.2 million of G&A expense in Q2 2011. 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 $2.1 million in the second quarter, an increase of $19,000 or 1% from a year earlier.  The increases in revenue and gross margin were largely offset by planned spending on further growth, investments that typically drive results in future periods.Net income was $1.3 million in Q2 2012, an increase of $0.2 million or 22% compared to net income of $1.1 million in the second quarter of 2011. Earnings per share were $0.04 (basic and diluted), compared to $0.06 (basic) and $0.04 (diluted) a year earlier.  Avigilon's basic share count at June 30, 2012 was 31,451,287.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 Wednesday, August 8, 2012, beginning at 5:00 p.m. EDT (2:00 p.m. PDT). To access the live 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 13629310.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.Condensed consolidated interim financial statements ofAvigilon CorporationJune 30, 2012(Unaudited)Avigilon Corporation Consolidated Statements of Comprehensive Incomefor the three and six months ended June 30, 2012 and 2011(Expressed in thousands of Canadian dollars, except number of shares and per share amounts)(Unaudited)          Three months endedSix months ended  June 30,June 30,June 30,June 30,  2012201120122011  $$$$      Sales 24,35016,03742,10426,071Cost of sales (12,690)(9,353)(21,951)(14,990)  11,6606,68420,15311,081      Operating expenses           Selling and marketing 6,5502,93810,892 5,318Research and development 1,2016562,2691,176General and administrative 2,1601,2284,3442,258  9,9114,82217,5058,752Operating income 1,7491,8622,6482,329      Other income (expense)           Accretion expense -(137)-(274)Interest and other, net 19(32)50(47)Foreign exchange gain (loss) 94(62)(44)(156)  113(231)6(477)      Income before taxes 1,8621,6312,6541,852Current tax expense (70)-(70)-Deferred tax expense (480)(553)(625)(653)Net income and total comprehensive income 1,3121,0781,9591,199      Earnings per share     Basic 0.040.060.060.07Diluted 0.040.040.060.05      Weighted average number of shares outstanding (000s)     Basic 31,36717,24831,20917,248Diluted 35,04029,75834,79429,758Avigilon CorporationConsolidated Statements of Financial Positionas at June 30, 2012 and December 31, 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)      June 30,December 31,  20122011  $$Assets   Current assets    Cash and cash equivalents 12,40312,418 Trade and other receivables 15,10313,291 Inventories 9,75511,254 Other financial assets -88 Prepaid expenses 1,087605 Research tax credits 973973  39,32138,629Non-current assets    Property and equipment 2,8452,304 Intangible assets 6246 Deposits 285272 Deferred tax assets 1,6571,703Total assets 44,17042,954    Liabilities   Current liabilities    Trade and other payables 6,3107,765 Other financial liabilities 115- Leasehold incentive 5959  6,4847,824Non-current liabilities    Leasehold incentive 249279  6,733 8,103    Shareholders' equity   Capital stock 37,92037,251Equity compensation reserve 4,0574,099Deficit (4,540)(6,499)  37,43734,851Total liabilities and shareholders' equity 44,17042,954    Avigilon CorporationConsolidated Statements of Changes in Equityfor the six months ended June 30, 2012 and 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)     Equity Total Capital stockcompensation shareholders' SharesAmountreserveDeficitequity  $$$$      Balance, January 1, 201117,248,2029,5593,753(10,328)2,984Net income and total comprehensive income---1,1991,199Deferred share issue costs-(296)--(296)Stock-based compensation--96-96Balance, June 30, 201117,248,2029,2633,849(9,129)3,983       Balance, January 1, 201231,021,28737,2514,099(6,499)34,851Net income and total comprehensive income---1,9591,959Share issue costs-(27)--(27)Stock-based compensation--224-224Issuance of common stock (Note 7)430,000430--430Transfer to capital stock on exercise of options-266(266)--Balance, June 30, 201231,451,28737,9204,057(4,540)37,437      Avigilon CorporationConsolidated Statements of Cash Flowsfor the six months ended June 30, 2012 and 2011(Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)        Three months endedSix months ended  June 30,June 30,June 30,June 30,  2012201120122011  $$$$Cash flows from operating activities      Net income for the period 1,3121,0781,9591,199 Adjustments for non-cash items         Amortization 196112356218    Stock-based compensation 1207822496    Deferred tax expense 480553625653    Deferred tax credits (304)-(579)-    Unrealized foreign exchange loss (gain) (91)16(63)24    Interest expense (income) (19)32(50)47     1,6941,8692,4722,237 Changes in working capital         Increase in trade & other receivables (1,795)(5,933)(1,500)(5,698)    Decrease (increase) in deposits (10)2(12)(442)    Decrease (increase) in inventories 3,636(1,210)1,499(3,748)    Decrease (increase) in prepaid expenses and deposits (501)377(484)(82)    Increase in research tax credits -(165)-(301)   Increase (decrease) in trade and other payables 4522,670(1,066)2,907 Net changes in working capital 1,782(4,259)(1,563)(7,364) Interest (paid) received 19(32)50(47) Income taxes paid (396)-(396)-Net cash provided by (used in) operating activities 3,099(2,422)563(5,174)      Cash flows from investing activities      Purchase of property and equipment (458)(126)(907)(222) Disposal of property and equipment -2-2 Purchase of intangible assets (36)(7)(36)(7)Net cash used in investing activities (494)(131)(943)(227)      Cash flows from financing activities      Proceeds from bank loan -1,769-3,139 Issuance of common stock 325-430- Share issuance costs (7)(296)(27)(296) Dividends paid on redeemable preferred shares -137-274Net cash provided by financing activities 3181,6104033,117      Effect of foreign exchange rate changes on cash (18)(7)(38)(46)      Increase (decrease) in cash 2,905(950)(15)(2,330)Cash, beginning of period 9,49895012,4182,330Cash, end of period 12,403-12,403-  SOURCE: Avigilon CorporationFor 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