Carmanah Announces Financial Results for Q1 2008

Victoria, British Columbia, Canada - Tuesday, May 13, 2008 - Carmanah Technologies Corporation (TSX: CMH) announces its financial results for the three months ended March 31, 2008.

First quarter of 2008 represented a further milestone for Carmanah as the company refocused attention on growing its strategic businesses, while ensuring operating costs remain at levels supportable by current sales and margins. Although sales and margins were slightly lower than the same period in 2007, the company recorded net income of $0.1 million compared with a loss of $0.5 million in the same period of 2007. This represents the first quarterly profit since Q3 2006.

Highlights for the Quarter

  • Improved bottom line: net income of $0.1 million compared to $(0.5) million in the same period of 2007
  • Higher EBITDA: $0.7 million in Q1 2008 compared to $(0.3) million in the same period of 2007
  • Positive cash flow from operations: $0.1 million, compared to negative operating cash flow of $3.9 million in 2007
  • Cash balance at the end of the quarter: $4.1 million, same as at December 31, 2007
  • Sales: $15.1 million for the first quarter of 2008, down marginally from $15.3 million for the same period of 2007
    (Adjusting for Q4 2007 sale of the home power business, year-over-year sales are up approximately 4%)
  • Gross margin: 33.6% for 2008, down from 34.7% in 2007
  • Improved operating costs: $5.0 million for Q1 2008, down $0.6 million (10%) from the same quarter in 2007

Summary of Results

According to Ted Lattimore, Carmanah CEO, the first quarter of 2008 delivered further positive evidence that Carmanah is on the right track. "In February, we released a strategic plan for the revised business, emphasizing the transitional nature of 2008 as Carmanah returns to profitability, based on steady sales year over year from existing lines of business," said Lattimore. "Having increased our focus and streamlined the business (through positive action such as the home power divestiture), our first priority is to meet expectations that the company can manage a breakeven position from the current Strategic and Tactical business alignment. This quarter provides the first confirmation that the plan is underway, and that the company can indeed perform to plan levels. Cost controls implemented in 2007 have been carried forward, margins have improved materially, expenses are flat and our strategic solar powered lighting business has led the way in sales. Throughout Q2 we plan to build on this momentum, with the continued implementation of the new strategic plan."

With better working capital management, right-sized inventories, a solid cash balance and no debt, Roland Sartorius, Carmanah CFO, commented on how Carmanah's December 31, 2007 balance sheet provided the platform the company needed to successfully execute on the first stage of its strategic renewal. "With the first quarter behind us, we can see how a positive balance sheet helps the company progress according to plan," said Sartorius. "With increased revenues and margin percentages back in the thirties, we've stabilized operating expenses and achieved a bottom line, all the while protecting our cash position," added Sartorius. "As we head into the second quarter, the company is performing in line with the guidance we provided in 2007. Finally, we received further external support for our plan through the provision of a $10 million three-year committed lending facility that is currently being documented with the Bank of Montreal."

Sales

Sales for the first quarter of 2008 were $15.1 million, $0.2 million lower than the same period in 2007 but over 60% higher for our Strategic business segments than during the same period last year. A summary of revenues from each of the Strategic and Tactical business segments is shown below:

Sales Summary (CAD1,000's)
  Q1 2008 Mix
  $15,148 100%
Strategic $8,057 53.2%
   Solar LED Lights 7,199 47.5%
   Solar Power Systems 858 5.7%
Tactical $7,091 46.8%
   Distribution 5,652 37.3%
   Signage 1,439 9.5%

Sales Summary (CAD1,000's)
  Q1 2007 Mix
  $15,254 100%
Strategic $4,997 32.8%
   Solar LED Lights 4,234 27.8%
   Solar Power Systems 763 5.0%
Tactical $10,257 67.2%
   Distribution 8,957 58.7%
   Signage 1,300 8.5%

Sales Summary (CAD1,000's)
  Change Mix
  (106) (0.7%)
Strategic $3,060 61.2%
   Solar LED Lights 2,965 70.0%
   Solar Power Systems 95 12.5%
Tactical (3,166) (30.9%)
   Distribution (3,305) (36.9%)
   Signage 139 10.7%

EBITDA for Q1 2008 was $0.7 million, compared to $(0.3) million for the same period in 2007.

Net income for Q1 2008 was $0.1 million compared to a loss of ($0.5) million for the same period of 2007

Non-GAAP Measures

The company uses certain non-GAAP measures to assist in assessing its financial performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. One such non-GAAP measure used for assessing financial performance is earnings before interest, taxes and amortization (EBITA).

EBITA Reconciliation
(CAD1,000's)
Three months ended
March 31,
  2008 2007
EBITA $657 $(260)
Net income (loss) $83 $(464)
Add (deduct):    
   Interest Income   (29) 26
   Income taxes 349 (79)
   Amortization 254 257

Progress During the Quarter (including subsequent events)

With net income of $0.1 million compared with a loss of ($0.5) million in the same period of 2007, Q1 2008 represents the first quarterly profit since Q3 2006. Other highlights included:

  • Carmanah completed its strategic review, and restructured the company around "strategic" and "tactical" business segments (February 2008)
  • Carmanah provided solar LED aviation lights for airfield upgrades in United Arab Emirates (February 13, 2008)
  • Carmanah Introduced LED Edge-Lit gaming signs to the Asian market at the International Gaming and Entertainment Expo (February 27, 2008)
  • BC's City of Kelowna announced the deployment of 100 Carmanah EverGEN™ solar-powered area lights (March 13, 2008)
  • Carmanah announced a contract to supply New Jersey Lottery with LED-illuminated signage (March 03, 2008)
  • Carmanah introduced a bright new style, inspired by the company's renewed focus, for all online and print media (March 2008)
  • Carmanah upgraded the LED technology of its light emitting diode (LED) luminaires to improved high-flux LED technology, effectively doubling the raw lumen output of its LEDs (March 26, 2008)
  • Carmanah introduced the DuraGEN" solar engine - a complete stand-alone solar power supply that provides a reliable source of high-quality power for remote applications (March 26, 2008)
  • Carmanah negotiated a three-year $10 million committed credit facility with BMO Financial Group (May 2008)

Complete set of Financial Statements and Management Discussion & Analysis

A complete set of the first quarter 2008 Financial Statements and Management's Discussion & Analysis are available on Carmanah's corporate website. To view full financials, visit: www.carmanah.com/content/investors/financialreports.aspx

Conference Call Details

To discuss the Q1 2008 results, Carmanah has scheduled a conference call for 2:00 pm PT (5:00 pm ET) on Tuesday, May 13th. To access this conference call by telephone, dial 1.888.882.9090 (Canada and US) or +1.403.770.0861 (international) approximately five to ten minutes before start time. When prompted for the conference ID, enter 2510558. A recording of the conference will also be available on Carmanah's corporate website within three business days.

Cautionary Note on Forward-looking Information

This release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "intends," "believes," "could," "might," "will" or variations of such words and phrases. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Carmanah to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties which are described under the caption "Note Regarding Forward-looking Statements" and "Key Information - Risk Factors" and elsewhere in Carmanah's Annual Report for the fiscal year ended December 31, 2006, as filed on SEDAR at www.sedar.com. The risk factors identified in Carmanah's Annual Report are not intended to represent a complete list of factors that could affect Carmanah. Accordingly, readers should not place undue reliance on forward-looking statements. Carmanah does not assume any obligation to update the forward-looking information contained in this press release.

About Carmanah Technologies Corporation

As one of most trusted names in solar technology, Carmanah has earned a reputation for delivering strong and effective products for industrial applications worldwide. Industry proven to perform reliably in some of the world's harshest environments, Carmanah's LED lights and power systems provide a durable, dependable and cost effective energy alternative. Carmanah is a publicly traded company, with common shares listed on the Toronto Stock Exchange under the symbol "CMH" and on the Berlin and Frankfurt Stock Exchanges under the symbol "QCX". For more information, visit carmanah.com.

Carmanah Technologies Corporation

"Roland Sartorius "

Roland Sartorius, Chief Financial Officer

For further information:

Investors:

Investor Relations: Roland Sartorius

Toll-Free: 1.877.722.8877
investors@carmanah.com

Media:

Public Relations: David Davies

Tel: +1.250.382.4332
ddavies@carmanah.com

This release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "intends," "believes," "could," "might," "will" or variations of such words and phrases. Forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Carmanah to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties which are described under the caption "Note Regarding Forward-looking Statements" and "Key Information - Risk Factors" and elsewhere in Carmanah's Annual Report for the fiscal year ended December 31, 2007, as filed on SEDAR at www.sedar.com. The risk factors identified in Carmanah's Annual Report are not intended to represent a complete list of factors that could affect Carmanah. Accordingly, readers should not place undue reliance on forward-looking statements. Carmanah does not assume any obligation to update the forward-looking information contained in this press release.