Lighting Firm's Results Reveal Bright Future

Carmanah's international LED sales bring in $6.5 million

Tuesday, April 1, 2003

A Victoria company has used its rugged technology to cut through market gloom and illuminate a path to profits.

Carmanah Technologies Corp. (CMH: TSX Venture), which provides solar-powered lights for marine and other markets, recently announced results that reveal bright prospects.

Sales for 2002 came in at $6.5 million, up from $3.4 million a year earlier. The firm also posted earnings of $36,393, an encouraging result considering Carmanah's loss of $676,498 in 2001.

Looking ahead, Carmanah's CEO is confident the growth will continue.

"Our year was about two things - top-line revenue and diversifying the company," said Art Aylesworth, who joined the company in May 2000. "Now's the time to brand ourselves and take position."

He said profits will eventually rise, but plans call for more groundwork first. Aylesworth said the majority of research and development spending would focus on developing products for new markets.

"It would be short-term to take profits now, when the company is poised to take position and control in a very large space before it is cluttered with competitors," Aylesworth said, noting that bigger bottom-line growth will be a theme for 2004/05.

More hires are also expected. When Aylesworth came on board, Carmanah had 14 employees. Now it has 50, most of whom are in Victoria.

Four new staffers with technical expertise have been hired this year, and Aylesworth expects another five will join the team throughout 2003.

Marcel Brichon, an analyst at Vancouver's Global Securities Corp., is optimistic about the company's prospects. "It's got a world-class product that appeals to a lot of different markets," he said. "It's still a young company, and there is a lot of room for growth."

Carmanah chairman David Green founded the firm in 1994, and it was incorporated four years later. The company manufactures solar-powered LED (light emitting diode) products renowned for their ability to operate in extreme conditions - such as the Norwegian Sea in the middle of winter - even when light is at a minimum. They should be maintenance-free for up to five years.

Brichon is one onlooker who's been impressed. "If you can work in the dead of winter in Norway, you've passed some pretty rigorous tests," he said.

The marine market accounted for about 77 per cent of last year's overall revenues, Aylesworth said. The company's systems are designed for marking areas such as channels, waterways, vessels and aquaculture facilities, and two of its biggest customers are the U.S. and Canadian coast guards.

Aylesworth said Carmanah's team spent years developing circuit boards and software to maximize the energy available from sunlight and minimize the product's power consumption.

Although Carmanah's clients typically use its products for night-time uses, Aylesworth said they can also be used during the day. And as the technology advances, he expects daytime applications to grow.

Newer markets include the transit and aviation industries, which Aylesworth expects to become increasingly important. Indeed, he cites Carmanah's i-STOP product - a bus-stop illumination system - as its biggest product announcement in 2002.

At the end of March, Carmanah stated it had sold i-STOP systems to the Metropolitan Atlanta Rapid Transit Authority for $125,000, the biggest such deal yet.

So far, Carmanah's products have benefited from a global appeal, as more than 50,000 of its units have been installed in 110 countries.

Just under half of its sales come from North America, with the remainder stemming from countries and regions including the U.K., Europe, Indonesia and the Middle East.

Sales are made directly and via distributors. In addition, in the past three years, online sales of Carmanah's products have also surged and now account for 21 per cent of overall figures, Aylesworth said.

The company's share price, which has risen steadily during the past year, has benefited from all the activity. At press time, it stood at $0.92, a shade under its 52-week high. Brichon, who holds a buy recommendation on the stock, recently updated his 12-month target to $1.50 from $1.20.