Carmanah Reports First Quarter 2015 Results

VICTORIA, BC, CANADA (May 13, 2015)

Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its first quarter financial results for the period ended March 31, 2015.  Currency amounts are in U.S. dollars unless otherwise noted.

For the quarter ended March 31, 2015, the Company recorded revenues of $11.3 million, and net income of $0.03 million.  This compares to revenues of $9.1 million and net income of $0.1 million in the first quarter of 2014.  On this comparative basis each of the Company’s Divisions grew revenues and within each Division all market verticals achieved growth.  And while this growth was universal, the Company’s overall revenues were still lower than expected due to winter weather which caused project completion delays in the Company’s On-Grid Division.  As a result of these weather delays the Company’s order backlog grew substantially in the quarter.

Gross profit margins also improved universally throughout each Division. While all margins increased, the largest margin improvements were recorded in the Company’s Signalling Division with improvement being the result of improved efficiency. Net income in the quarter was negligible and substantially unchanged from the same period in 2014. Net income was negatively impacted by (1) foreign exchange losses of $0.4 million, and (2) a $0.3 million one-time inventory write off. 

Carmanah management relies on adjusted EBITDA (a non-IFRS measure) to gauge financial performance. In the first quarter of 2015 the Company’s generated $0.8 million of adjusted EBITDA, up from $0.6 million in the same period of 2014.  A table reconciling net profit and adjusted EBITDA is included in this release.

“We are pleased with our financial performance during the first quarter of 2015 evidenced by record level order booking in the period but also as a result of improved gross margins,” said John Simmons, CEO. “Absent weather delays that unavoidably prevented project completions, our first quarter would have produced record operating revenues and profitability.”    

Highlights for the quarter and the year are provided below:

 
Three months ended March 31,
(US$ thousands)
2015
2014 4
Revenues
11,314
9,119
Gross Margin %
35.1%
32.7%
Total operating costs
3,393
2,464
Net income
30
77
Adjusted EBITDA*
781
603

*Adjusted EBITDA is a Non-IFRS measure

 

Financial Condition at March 31, 2015 compared to December 31, 2014

  • Cash and cash equivalents of $8.2 million, down $0.6 million from $8.8 million
  • Working capital of $16.2 million, up $0.1 million from $16.1 million
  • Continued debt-free operations

 

First quarter 2015 corporate highlights

  • Integration of Sol Inc. (“Sol”) – Since acquiring Sol on July 2, 2014, management has been working to complete the integration of Sol into Carmanah’s operations.  In the months following the acquisition to December 31, 2014, Sol’s core business functions were maintained to provide time to execute on the integration plan.  The majority of Sol’s back office functions were eliminated at the end of 2014.  Progress on the integration during the early part of 2015 was as follows:
    • During the first quarter we worked to close down Sol’s manufacturing facility and to transition production to contract manufacturers.  These efforts were largely completed in the quarter, with final production winding up on March 31, 2015.  The facility will be completely closed by May 31, 2015, when the lease on the building expires.  As a result of the wind down the headcount has been reduced by 50% and by the end of Q2 2015 we anticipate 9 full time employees who are focused on sales and sales support functions. 
    • From a systems perspective, Sol’s ERP system was successfully converted in Q1 to the same ERP system that Carmanah implemented in 2014. The CRM system transition is expected to occur in Q2 when Carmanah’s CRM platform is set to go live.
  • Executive changes – During the first quarter of 2015, the Company moved to strengthen its leadership team and initiated a recruiting effort to fill a newly created Chief Operating Officer role and to find a more experienced Chief Financial Officer. In April 2015, the Company welcomed Evan Brown as its new Chief Financial Officer and Tammy Neske as Chief Operating Officer. 
  • Share Offering - On April 7, 2015, the Company announced a plan to raise up to $32.0 million (CAD) through a “bought deal” financing (the “Offering”).  The financing was backed by a syndicate of underwriters led by Cormark Securities Inc. and including Canaccord Genuity Corp., GMP Securities LP and Salman Partners Inc. (collectively, the Underwriters”) who agreed to buy and sell to the public 5,650,000 of our common shares (“Common Shares”) at a price of $5.00 (CAD) per Commons Share.  The Underwriters also had an option, exercisable in whole or in part at any time up to 15 days after the closing of the Offering, to purchase up to an additional 750,000 Common Shares at the same price.  The Offering closed on April 28, 2015 with 5,650,000 shares issued from treasury.  On May 1, 2015, the Underwriters exercised their option to acquire the additional 750,000 shares.  Proceeds from this offering will largely be used for future mergers and acquisitions.  See the short form prospectus, filed on April 23, 2015 for further details. 

 

Reporting Currency

Unless otherwise indicated, all financial information presented in this press release is in US dollars.

 

Complete set of Financial Statements and Management Discussion & Analysis

A complete set of the March 31, 2015 Interim Financial Statements and Management’s Discussion & Analysis are available on Carmanah's corporate website. To view these documents, visit: www.carmanah.com/Company/Investors/Financial_Reports.aspx. Both documents are also filed on SEDAR (www.sedar.com). 

 

EBITDA

 

EBITDA reconciliations
Three months ended March 31,
(US$ in thousands)
2015
2014
Net income (loss)
30
77
Add/(deduct):
 
 
  Income taxes
-
(1)
  Amortization
148
89
  Non-cash stock based compensation
136
17
EBITDA*
314
182
  Merger and acquisition costs
62
275
  Extraordinary legal costs
1
146
  Restructuring and asset write offs
404
-
Adjusted EBITDA*
781
603

* A Non-IFRS measure

Management believes that the non-IFRS measures presented provide useful information by excluding certain items that may not be indicative of Carmanah’s core operating results and that this non-IFRS measure will allow for a better evaluation of the operating performance of the Company’s business and facilitate meaningful comparison of results in the current period to those in prior periods as well as future periods. Reference to this non-IFRS measure should not be considered as a substitute for results that are presented in a manner consistent with IFRS. This non-IFRS measure is provided to enhance investors’ overall understanding of Carmanah’s current financial performance.

A limitation of utilizing this non-IFRS measure is that the IFRS accounting effects of the non-recurring items do in fact reflect the underlying financial results of Carmanah’s business and these effects should not be ignored in evaluating and analyzing Carmanah’s financial results. Therefore, management believes that Carmanah’s IFRS measures of net loss and the same respective non-IFRS measure should be considered together.  

Non-IFRS measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. One such non-IFRS measure used for assessing financial performance is EBITDA, defined as net income before interest, income taxes, amortization, and non-cash stock based compensation.   The other non-IFRS measure used is Adjusted EBITDA, which adjusts EBITDA for unusual or non-operating items such as merger and acquisition costs, restructuring charges and asset write offs.   

 

###

 

About Carmanah Technologies Corporation.

Since its founding in 1996, Carmanah has become one of the most trusted names in solar technology, delivering reliable and cost-effective solar powered products and systems for industrial applications worldwide. To date, Carmanah's solutions for marine navigation, airfield ground lighting, aviation obstruction, roadway illumination, parking lot lighting, as well as on and off-grid power generation, have been successfully deployed in over 400,000 installations in 110 countries with proven performance in conditions ranging from desert heat to arctic cold.

Carmanah is publicly traded with common shares listed on the Toronto Stock Exchange under the symbol "CMH”. For more information, visit www.carmanah.com.

 

Contact
 
Carmanah Technologies Corporation:
Evan Brown, (250) 380-0052
Chief Financial Officer/Corporate Secretary
investors@carmanah.com