Carmanah Reports Third Quarter 2014 Results

VICTORIA, BC, CANADA (November 13, 2014) Carmanah Technologies Corporation (TSX: CMH) (“the Company” or “Carmanah”) today reported its third quarter financial results for nine and three months ended September 30, 2014.

For the quarter ended September 30, 2014, the Company recorded revenues of $12.2 million, net income of $0.2 million and EBITDA of $0.4 million.  This is an increase from the same period in 2013 which had revenues of $4.9 million, a net loss of $1.4 million and an EBITDA loss of $1.3 million. 

“Our positive momentum continued in the third quarter with revenues up 149% compared to 2013’s third quarter,” stated John Simmons, CEO. “While some of the gain was attributed to the inclusion of revenues from our acquisition of Sol, Inc., our traditional Carmanah revenues were up 105% on a comparative basis.  Naturally, we are delighted with the results.”

Added Mr. Simmons, “For the first time in Carmanah’s recent history we have produced operating profit in three successive quarters.  As we enter our final quarter for 2014 we do so with an order backlog that continues to grow.  At the end of the third quarter our order backlog totalled $11.7 million which is up from $7.7 million at the end of the second quarter.

Highlights for the third quarter and year to date are provided below: 

  Three months endedSeptember 30, Nine months ended September 30,
(US$ thousands) 2014 2013 2014 2013
Revenue 12,168 4,863 30,281 18,147
Gross margin % 35.4% 23.7% 34.8% 26.5%
Operating expenditures (3,613) (2,599) (8,923) (8,439)
Net income/(loss) 195 (1,442) 710 (4,631)
EBITDA * 400 (1,297) 1,186 (3,901)
Adjusted EBITDA * 786 (1,131) 2,460 (2,770)

* A Non-IFRS measure

Financial Condition at September 30, 2014 compared to December 31, 2013

  • Cash and cash equivalents of $10.7 million, up from $5.2 million
  • Working capital of $16.0 million, up from $8.1 million
  • Continued debt-free operations

 

Business and operational highlights

During the third quarter the following events were announced and completed in the quarter or subsequent to quarter end:

  • On July 18, 2014, we announced our intention to complete a consolidation of our common shares on the basis of one (1) post-consolidation Common Share for every ten (10) pre-consolidation Common Shares (the “Consolidation”).  The Consolidation received approval from the TSX in early August and the post-consolidation shares began trading on the Toronto Stock Exchanges on August 14, 2014.  Prior to the consolidation we had 169,770,617 shares outstanding.  Fractional shares that might have been created by the consolidation were rounded down and as a result the total post consolidation shares outstanding on August 14, 2014 was 16,977,000. 
  • On July 17, 2014, we closed a placement which raised proceeds of approximately $3.0 million CDN from the issuance of 1,200,000 post consolidated shares at a price of $2.50 CDN a share.  This private placement was subscribed by members of our board of directors and was completed in an effort to bolster our working capital and balance sheet to position ourselves to take advantage of future growth opportunities.  
  • On July 2, 2014, we completed the acquisition of SOL Inc. (“Sol”), a Florida based solar outdoor lighting competitor.  The acquisition was completed through a merger, under which we acquired 100% ownership of Sol in exchange for the issuance of 3,785,860 post consolidated shares which were issued from treasury and a cash payment of $0.06 million.  This was a related party transaction, as our Chairman of the Board and largest shareholder, Michael Sonnenfeldt was also the majority shareholder of Sol.  Sol contributed approximately $2.0 million in reported revenue in the third quarter of 2014. 
  • In September 2014, we secured a long term U.S. Coast Guard contract under which we will fulfill with our new M800 series marine lantern.  The contract has no guaranteed financial value for purchases, but the solicitation provided a target for purchases of $3.4 million over the life of the contract, which may be up to 5 years if all option years are exercised. 

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 third quarter ended September 30, 2014 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 reconciliation

Three months ended September 30,

Nine months ended September 30,

(US$ in thousands) 2014 2013 2014 2013
Net income/(loss) 195 (1,442) 710 (4,631)
Add/(deduct):        
  Income tax - 3 (1) 5
  Amortization 93 217 264 692
  Non-cash stock based compensation 112 (75) 213 33
EBITDA* 400 (1,297) 1,186 (3,901)
  Merger and acquisition costs 129 - 609 -
  Extraordinary legal costs 257 166 665 166
  Restructuring and asset write offs - - - 965
Adjusted EBITDA* 786 (1,131) 2,460 (2,770)
  * 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.   

 

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About Carmanah Technologies Corporation.

Since it’s 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.

In 2013, through shareholder led initiatives, the company was restructured under the leadership of CEO John Simmons, while the Company’s largest shareholder, Michael W. Sonnenfeldt, became non-executive Chairman.  Carmanah’s current board members demonstrate their belief in Carmanah's future by having been the largest investors in each financing since the restructuring and now, as a group, own the majority of Carmanah's issued and outstanding shares.

Carmanah markets its products through three distinct divisions.  Carmanah’s Signals Division produces products and systems for marine aids to navigation, airfield ground lighting, obstruction and traffic control. Carmanah’s Power Division designs and builds systems that provide solar power in both grid connected and off-grid applications. Carmanah’s Illumination Division produces solar powered lighting solutions for street, parking lot and pathway applications.

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

 

Carmanah Technologies Corporation

“Stuart Williams”
Stuart Williams, Chief Financial Officer

For further information:

Investors:
Investor Relations: Stuart Williams
Toll Free: 1.877.722.8877
investors@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. Examples of forward-looking information in this news release include, but are not limited to, statements with respect to: future revenues attributable to the USCG contract award.  For additional information on these risks and uncertainties, see Carmanah’ s most recently filed Annual Information Form (AIF) and Annual MD&A, which are available on SEDAR at www.sedar.com and on the Company’s website at www.carmanah.com. The risk factors identified in Carmanah’ s AIF and MD&A 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.