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Press release from CNW Group

Avigilon Corporation Announces Third Quarter 2012 Results

Wednesday, November 07, 2012

Avigilon Corporation Announces Third Quarter 2012 Results16:00 EST Wednesday, November 07, 2012VANCOUVER, Nov. 7, 2012 /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, 2012.  All figures are stated in Canadian dollars unless otherwise noted.Third Quarter 2012 HighlightsRevenue was $25.5 million, an increase of 69% over Q3 2011 revenue of $15.1 million.Gross margin was 51%, compared with 45% a year earlier.EBITDA rose to $4.1 million, compared with Q3 2011 EBITDA of $1.5 million. (See "Non-IFRS Measures" below.)Net income was $2.2 million, compared with net income of $1.0 million in Q3 2011.Year-to-Date 2012 HighlightsRevenue was $67.6 million in the first nine months of 2012, an increase of 64% from $41.2 million in the same period last year.Gross margin was 49%, up from 44% in the prior year.EBITDA was $7.4 million, an increase of 77% over $4.2 million in the first nine months of 2011. (See "Non-IFRS Measures" below.)Net income was $4.1 million, an 87% increase compared to $2.2 million a year earlier."It was another strong quarter for Avigilon as we delivered record revenues and earnings in a traditionally slower third-quarter sales season," said Alexander Fernandes, president and chief executive officer at Avigilon. "The third quarter was also highlighted by a $26 million financing, which further strengthens our balance sheet to pursue the significant growth opportunities in global surveillance markets.  To capitalize on these opportunities, we are highly focused on adding new talent to our sales team, continuing our track record of product innovation, and investing in marketing to make Avigilon a household name in our industry."Financial ReviewAvigilon reported revenue of $25.5 million in the three months ended September 30, 2012, an increase of 69% compared with revenue of $15.1 in the third quarter of 2011. Revenue growth continues to be driven by a strong rise in product sales volumes worldwide, reflecting sales of new product offerings, entry into new global markets, and greater customer adoption in existing markets.  Avigilon experienced strong year-over-year sales growth in most regions, particularly in areas where the Company expanded sales staff over the past year.Gross margin was $13.0 million in the third quarter (51% of revenue), compared with $6.9 million (45% of revenue) the previous year.  The increased gross margin year over year reflects the sales mix as well as the impact of higher purchasing power and improved manufacturing efficiencies.  Given the Company's near-term objective of rapid growth in revenue and market share, management is actively targeting a gross margin between 45% and 50%.Selling and marketing expenses were $5.6 million in the third quarter of 2012, a $2.2 million, or 64% increase from a year earlier. The increase reflects planned growth spending to significantly expand the global sales team and marketing efforts, which the Company expects will drive future revenue growth.Research and development (R&D) expenses, net of related income tax credits, were $1.2 million in the third quarter of 2012, a $0.4 million increase compared to $0.8 million in the prior year's third quarter. Gross R&D spend was $1.7 million in the third quarter of 2012, compared to $1.1 million in the prior year.  The increase in spending is due to additional new hires, in line with the Company's plan to increase the product development team to enhance its product offering.General and administrative expenses were $2.7 million in the third quarter, an increase of $1.3 million from a year earlier. 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 $4.1 million in the third quarter, an increase of 173% over the prior year, reflecting increased revenue and lower cost of sales. Net income in Q3 2012 was $2.2 million, compared with net income of $1.0 million in the same period last year. Earnings per share were $0.07 (basic) and $0.06 (diluted) for the third quarter of 2012, compared to $0.06 (basic) and $0.04 (diluted) a year earlier. At September 30, 2012, Avigilon had 36,174,099 basic and 41,863,699 diluted shares outstanding.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, November 7, 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 45260871.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 CorporationConsolidated Statements of Comprehensive Income  for the three and nine months ended September 30, 2012 and 2011(Expressed in thousands of Canadian dollars, except number of shares and per share amounts)(Unaudited)  Three months ended          September 30,Nine months ended  September 30,  2012201120122011  $$$$      Sales 25,50815,10967,61241,180Cost of sales (12,542)(8,252)(34,493)(23,242)  12,9666,85733,11917,938      Operating expenses     Selling and marketing 5,5963,40616,4888,724Research and development 1,2478053,5161,981General and administrative 2,6491,3686,9933,626  9,4925,57926,99714,331Operating income 3,4741,2786,1223,607      Other income (expense)     Accretion expense -(138)-(413)Interest and other, net 16(55)65(101)Foreign exchange gain (loss) (498)479(542)323  (482)286(477)(191)      Income before taxes 2,9921,5645,6453,416Current tax expense (60)(76)(130)(135)Deferred tax expense (768)(481)(1,392)(1,076)Net income and total comprehensive income 2,1641,0074,1232,205      Earnings per share     Basic 0.070.060.130.13Diluted 0.060.040.120.09      Weighted average number of shares outstanding (000s)     Basic 32,71017,24831,71317,248Diluted 36,43630,16634,75429,817Avigilon Corporation   Consolidated Statements of Financial Positionas at September 30, 2012 and December 31, 2011 (Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)     September 30,December 31,  20122011  $$Assets   Current assets    Cash and cash equivalents 45,55212,418 Trade and other receivables 14,55213,291 Inventories 9,51511,254 Other financial assets -88 Prepaid expenses 1,056605 Research tax credits -973  70,67538,629Non-current assets    Property and equipment 3,4532,304 Intangible assets 5246 Deposits 409272 Deferred tax assets 1,7491,703Total assets 76,33842,954    Liabilities   Current liabilities    Trade and other payables 10,3387,765 Other financial liabilities 3- Leasehold incentive 5959  10,4007,824Non-current liabilities    Leasehold incentive 235279  10,635 8,103    Shareholders' equity   Capital stock 64,06437,251Equity compensation reserve 4,0154,099Deficit (2,376)(6,499)  65,70334,851Total liabilities and shareholders' equity 76,33842,954    Avigilon CorporationConsolidated Statements of Changes in Equityfor the nine months ended September 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  $$$$      Balance, January 1, 201117,248,2029,5593,753(10,328)2,984Net income and total comprehensive income---2,2052,205Share issue costs-(421)--(421)Stock-based compensation--232-232Balance, September 30, 201117,248,2029,1383,985(8,123)5,000       Balance, January 1, 201231,021,28737,2514,099(6,499)34,851Net income and total comprehensive income---4,1234,123Share issue costs-(1,732)--(1,732)Stock-based compensation--557-557Issuance of common stock (Note 8)5,152,81227,471--27,471Transfer to capital stock on exercise of options-641(641)--Deferred income tax effect on share issue costs-433--433Balance, September 30, 201236,174,09964,0644,015(2,376)65,703       Avigilon Corporation    Consolidated Statements of Cash Flows    for the three and nine months ended September 30, 2012 and 2011 (Expressed in thousands of Canadian dollars except number of shares and per share data)(Unaudited)      Three months endedNine months ended  September 30,September 30,  2012201120122011  $$$$Cash flows from operating activities      Net income for the period 2,1641,0074,1232,205 Adjustments for non-cash items       Amortization 21966577283  Write off of property and equipment 20772079  Stock-based compensation 333136557232  Accretion expense -138-413  Deferred tax expense 7684811,3921,076  Deferred tax credits (426)-(1,006)-  Unrealized foreign exchange loss (gain) 240(411)237(388)  Interest expense (income) (16)55(65)101      3,3021,5495,8354,001 Changes in working capital       Decrease (increase) in trade & other receivables 3273,735(1,243)(1,963)  Decrease (increase) in deposits (124)(3)(136)(444)  Decrease (increase) in inventories 238(944)1,739(4,692)  Decrease (increase) in prepaid expenses and deposits 28(45)(456)(127)  Decrease (increase) in research tax credits 973255973(46)  Increase (decrease) in trade and other payables 4,173(2,902)3,09663 Net changes in working capital 5,615963,973(7,209) Interest (paid) received 16(55)65(101) Income taxes paid (130)-(526)-Net cash provided by (used in) operating activities 8,8031,5909,347(3,309)      Cash flows from investing activities      Purchase of property and equipment (851)(68)(1,758)(289) Purchase of intangible assets (1)-(37)(7)Net cash used in investing activities (852)(68)(1,795)(296)      Cash flows from financing activities      Proceeds from bank loan -(1,014)-2,125 Issuance of common stock 27,041-27,471-   Share issuance costs (1,704)(125)(1,732)(421)Net cash provided by financing activities 25,337(1,139)25,7391,704      Effect of foreign exchange rate changes on cash and cash equivalents (139)43(157)(3)      Increase (decrease) in cash and cash equivalents 33,14942633,134(1,904)Cash, beginning of period 12,403-12,4182,330Cash, end of period 45,55242645,552426      SOURCE: Avigilon CorporationFor further information: Investor relations:     Craig Armitage, TMX Equicom     T: (416) 815-0700 ext. 278     carmitage@tmxequicom.com     Media relations: Angela St-Amour, Avigilon Corporation T: (604) 630-3410 angela.stamour@avigilon.com