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Press release from CNW Group

COM DEV Announces Third Quarter Fiscal 2012 Results

Thursday, September 06, 2012

COM DEV Announces Third Quarter Fiscal 2012 Results16:00 EDT Thursday, September 06, 2012CAMBRIDGE, ON, Sept. 6, 2012 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced third quarter financial results for the three- and nine-month periods ended July 31, 2012.  All amounts are stated in Canadian dollars unless otherwise noted.Third Quarter HighlightsRevenue was $54.5 million in the third quarter of 2012, a 7% increase from revenue of $50.9 million in the third quarter of 2011.exactEarth successfully launched its EV-1 satellite, expected to be the highest performance commercial AIS satellite ever launched.COM DEV completed and shipped its largest-ever contract, an instrument designed and built for the James Webb Space Telescope.Gross margin was 25%, compared to 28% in Q3 2011.Net income attributable to shareholders was $4.0 million, or $0.05 per share, an increase of $0.3 million compared to $3.7 million or $0.05 per share in the third quarter of 2011.New orders won in the third quarter totaled $62 million, compared to $47 million a year earlier and $59 million in the second quarter of 2012.Backlog at July 31, 2012 was $140 million, plus an additional $10 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded."As anticipated, our momentum continues to build throughout the fiscal year with revenue, orders and backlog all trending positively," said Michael Pley, CEO of COM DEV.  "Demand remains strong in our end markets and we have been very successful in our bidding activity.  On that basis, and despite a slower start to the year, we now expect our fiscal 2012 revenues to slightly exceed those of 2011."Financial ReviewCOM DEV's fiscal 2012 third quarter revenues of $54.5 million increased by $3.7 million or 7% compared to $50.9 million a year earlier.  In comparison to the third quarter of 2011, revenue in the civil sector increased by $9.2 million, while commercial revenue declined by $5.5 million.  The increase in civil business is largely due to work on communications satellites that is similar to the Company's core commercial work, but classified as civil because the operators are public sector entities in emerging economies.  The revenue split between the three market segments in Q3 2012 was 45% commercial, 35% civil and 20% military, compared to a 59/19/22 split in the third quarter of 2011.COM DEV received new orders totaling $62 million in the third quarter, of which 14% were commercial, 47% were civil, and 39% were military. In last year's third quarter the Company booked $47 million of new orders, with a commercial/civil/military split of 73/22/5.Order backlog at July 31, 2012 was $140 million, compared to $134 million three months earlier, and $126 million one year earlier.  An additional $10 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 29%, 40% and 31% respectively, compared to 53%, 25% and 22% at July 31, 2011.  The Company expects to convert approximately 59% of the total closing backlog into revenue beyond the end of fiscal 2012.Consolidated gross margin was $13.4 million in the third quarter, representing 25% of total revenues, compared to $14.4 million or 28% of revenues in Q3 2011.  The decline in margins is the result of a shift in the mix of work underway during the quarters.COM DEV recorded a net research and development recovery of $0.5 million in the third quarter of 2012, compared to a net expense of $0.9 million a year earlier.  A $2.3 million Investment Tax Credit and $0.8 million of external R&D funding exceeded the $2.5 million of gross R&D spending in the quarter.Selling expenses were $3.0 million in the third quarter of 2012, an increase of 3% from Q3 2011.  Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway.  General expenses of $4.7 million increased by $0.7 million from the previous year, as a result of higher finance costs, increased administrative headcount driven by new expanded Canadian government Controlled Goods security clearance process requirements, and exactEarth™ spending.Net income attributable to shareholders was $4.0 million in the third quarter of 2012, compared to $3.7 million a year earlier.  The increase is due primarily to lower net R&D expense and reduced Other expense, partially offset by lower gross margin, higher selling and general expenses, and lower foreign exchange gain.  Net income in the Space Equipment segment was $5.2 million, compared to $5.5 million in Q3 2011, while the $1.5 million net loss in the Data Services segment compares to a $2.1 million net loss a year earlier.COM DEV ended the third quarter with $16.9 million of cash and equivalents, compared to $21.2 million at April 30, 2012.  During the quarter the Company renegotiated its credit agreement, establishing a new term debt facility of up to $40 million and reducing its operating line of credit availability from $32 million to $20 million.  The Company made an initial draw of US$17 million against the term debt facility, and repaid its previous term loan.  At July 31, 2012, COM DEV had outstanding debt of $20.7 million including the current portion, and its operating line of credit was not drawn upon.The Company's basic share count stood at 76,285,147 on July 31, 2012.Conference CallA conference call will be held Thursday, September 6, 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 July 31 2012 2011      Revenue $ 54,543 $ 50,870 Cost of revenue 41,113 36,502 Gross margin 13,430 14,368 Research and development costs 2,519 4,595 Research and development recovery 758 1,960 Investment tax credits recoverable 2,293 1,700 Net research and development (recovery) expense (532) 935 Selling expenses 3,014 2,898 General expenses 4,733 4,036 Operating income 6,215 6,499 Interest expense 246 275 Foreign exchange gain (175) (1,214) Other expense 735 2,558Income before income taxes $ 5,409 $ 4,880 Income tax expense 1,813 1,700Net income $ 3,596 $ 3,180     Attributable to:       Shareholders $ 4,013 $ 3,722 Non-controlling interest (417) (542)  $ 3,596 $ 3,180     Earnings per share    Basic and diluted earnings per share $0.05 $0.05 COM DEV International Ltd.Consolidated Statements of Operations(Canadian dollars in thousands, except for per share figures)Unaudited       For the nine months ended July 31 2012 2011      Revenue $ 151,862 $ 154,235 Cost of revenue 113,004 120,202 Gross margin 38,858 34,033 Research and development costs 10,155 12,618 Research and development recovery 3,546 5,692 Investment tax credits recoverable 6,131 4,000 Net research and development expense 478 2,926 Selling expenses 8,573 8,386 General expenses 14,012 12,724 Operating income 15,795 9,997 Interest expense 749 605 Foreign exchange gain (1,688) (945) Other (income) expense (1,029) 2,753Income before income taxes $ 17,763 $ 7,584 Income tax expense 6,121 4,000Net income $ 11,642 $ 3,584     Attributable to:     Shareholders $ 12,872 $ 5,093 Non-controlling interest (1,230) (1,509)  $ 11,642 $ 3,584     Earnings per share    Basic and diluted earnings per share $0.17 $0.07 COM DEV International Ltd.Consolidated Statements of Financial Position(Canadian dollars in thousands)Unaudited    As at As at  July 31, October 31,  2012 2011Assets     Current        Cash and cash equivalents   $ 16,930 $ 27,618  Accounts receivable 48,662 47,563  Inventory 56,188 46,147  Prepaids and other 2,970 1,422  Income taxes recoverable 4,673 4,788  Investment tax credit - current 4,034 4,684      133,457 132,222 Non-current        Property, plant and equipment 83,872 73,973  Intangible assets 15,150 15,576  Goodwill 2,217 2,200  Investment tax credit 9,782 9,493  Deferred income tax assets 2,372 1,088Total assets     $ 246,850 $ 234,552         Liabilities         Current        Accounts payable and accrued liabilities $ 26,187 $ 25,830  Income taxes payable 605 302  Provisions 396 1,172  Deferred revenue 14,396 9,977  Current portion of loans payable 3,339 8,867  44,923 46,148      Non-current        Loans payable 17,347 14,687  Accounts payable and accrued liabilities 314 930  Employee future benefits 4,270 4,494  21,931 20,111      Total liabilities   66,854 66,259     Shareholders' equity         Share capital   345,862 345,666 Treasury Stock   (11) -  Contributed surplus   9,409 9,570 Deficit   (182,910) (195,782) Non-controlling interest   7,747 8,977 Accumulated other comprehensive loss   (101) (138) Total shareholders' equity   179,996 168,293     Total liabilities and shareholders' equity     $ 246,850 $ 234,552 COM DEV International Ltd.Consolidated Statements of Cash Flows(Canadian dollars in thousands)Unaudited       For the three months ended July 31   2012 2011       Operating activities       Net income $ 3,596 $ 3,180 Amortization 2,249 3,211 (Gain) loss on disposal of assets (106) 12 Defined benefit plan expenses 157 (169) Defined benefit plan contributions (301) (286) Stock compensation expense 398 439 Employee stock ownership plan awards 45 47 Investment tax credits recoverable (2,293) (1,700) Deferred tax expense 1,553 1,700 Unrealized foreign exchange loss on derivatives 795 145    6,093 6,579 Net change in non-cash working capital items (5,347) (6,282)Operating activities   746 297       Financing activities       Shares repurchased and cancelled -  (114) Non-controlling interest investment, net -  (2) Cash settlement of restricted stock units (216) -  Advance of long term debt 17,308 -  Repayment of long term debt (15,710) (2,280)Financing activities   1,382 (2,396)       Investing activities       Acquisition of property, plant and equipment (5,371) (3,008) Proceeds on disposal of property, plant and equipment 105 94 Acquisition of intangible assets (485) (140)Investing activities (5,751) (3,054)Effect of exchange rate changes on cash (604) 174     Net decrease in cash (4,227) (4,979)Cash and cash equivalents, beginning of period 21,157 39,794Cash and cash equivalents, end of period $ 16,930 $ 34,815     Interest paid $ 240 $ 349Taxes paid $ 91 $ -COM DEV International Ltd.Consolidated Statements of Cash Flows(Canadian dollars in thousands)Unaudited         For the nine months ended July 31 2012 2011     Operating activities     Net income $ 11,642 $ 3,584 Amortization 6,832 8,575 Gain on disposal of assets (2,273) (270) Defined benefit plan expenses 469 252 Defined benefit plan contributions (1,512) (694) Stock compensation expense 1,312 1,102 Employee stock ownership plan awards 164 160 Investment tax credits recoverable (6,131) (4,000) Deferred tax expense 5,861 4,000 Unrealized foreign exchange (gain) loss on derivatives (1,372) 259  14,992 12,968 Net change in non-cash working capital items (6,248) (1,570)Operating activities 8,744 11,398     Financing activities     Shares issued -  514 Shares repurchased and cancelled -  (114) Non-controlling interest investment, net -  2,618 Cash settlement of restricted stock units (1,097) -  Purchase of treasury stock (355) -  Advance of long term debt 17,308 15,000 Repayment of long term debt (20,334) (5,611)Financing activities (4,478) 12,407      Investing activities     Acquisition of property, plant and equipment (14,296) (6,034) Proceeds on disposal of property, plant and equipment 2,306 1,560 Acquisition of intangible assets (1,891) (1,243)Investing activities (13,881) (5,717)Effect of exchange rate changes on cash (1,073) (709)     Net (decrease) increase in cash (10,688) 17,379Cash and cash equivalents, beginning of period 27,618 17,436Cash and cash equivalents, end of period $ 16,930 $ 34,815     Interest paid $ 773 $ 618Taxes paid $ 260 $ - COM DEV International Ltd.Consolidated Statements of Comprehensive Income(Canadian dollars in thousands)Unaudited     For the three months ended July 31 2012 2011     Net Income $ 3,596 $ 3,180     Other comprehensive income:     Foreign currency translation adjustment (net of taxes of $nil) 513 85     Comprehensive income $ 4,109 $ 3,265          For the nine months ended July 31 2012 2011     Net Income $ 11,642 $ 3,584     Other comprehensive income (loss):     Foreign currency translation adjustment (net of taxes of $nil) 37 (1,137)     Comprehensive income $ 11,679 $ 2,447 COM DEV International Ltd.Consolidated Statements of Changes in Equity(Canadian dollars in thousands)Unaudited               For the nine months ended July 31, 2012 Total Deficit AccumulatedOther ComprehensiveLoss 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 income 11,679 12,872 37 -  -  (1,230) -                Common stock issued -  -  -  196   -  (196)Expense recognized for ESOP awards 164 -  -  -    -  164Treasury stock (11) -  -  -  (11) -  - Expense recognized for stock-based compensation and long-term incentive plans 1,312 -  -  -    -  1,312Settlement of long-term incentive plans (1,441) -  -  -    -  (1,441)Balance, July 31, 2012 $179,996 $(182,910) $ (101) $ 345,862 $ (11) $ 7,747 $ 9,409                              For the nine months ended July 31, 2011                             Balance, October 31, 2010 $ 154,805 $ (207,026) $ -  $ 346,068 $ -  $ 8,328 $ 7,435               Comprehensive income 2,447 5,093 (1,137) -  -  (1,509) -                Common stock issued 514 -  -  871 -  -  (357)Common stock repurchased and cancelled (114) -  -  (231) -  -  117Expense recognized for ESOP awards 160 -  -  -  -  -  160Non-controlling interest investment 2,618 -  -  -  -  2,700 (82)Expense recognized for stock-based compensation and long-term incentive plans 1,102 -  -  -  -  -  1,102Balance, July 31, 2011 $161,532 $(201,933) $ (1,137) $346,708 $ -  $ 9,519 $ 8,375  SOURCE: Com Dev International Ltd.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