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Carmanah Announces Financial Results for Q2 2008
(Marketwire Via Acquire Media NewsEdge) VICTORIA, BC, August 13 / MARKET WIRE/ --
Carmanah Technologies Corporation (TSX: CMH)
announces its second quarter financial results for the three-month period
ended June 30, 2008.
The second quarter of 2008 represented a further milestone for Carmanah as
the Company completed the final phase of its strategic renewal, entering
into some significant partnerships, increasing sales, further reducing
expenses, improving efficiency and achieving its second profitable Adjusted
EBITDA (adjusted for restructuring charge) quarter in a row.
Highlights for the Quarter
* Increased sales: quarter-over-quarter sales up approximately 13.2%, after
adjusting for the late 2007 sale of the home power business
* Gross margin up: 32.5% for 2008, up from 20.1% in 2007
* Operating costs reduced: $5.0 million (excluding restructuring costs),
down from $6.7 million for the same period of 2007
* Improved bottom line: Net loss of $0.4 million compared to $3.0 million
for the same period of 2007
* Higher Adjusted EBITDA: Adjusted EBITDA of $0.4 million compared to
$(3.9) million for the same period in 2007
* Continued positive cash flow from operations: $1.5 million, compared to
$2.2 million for the same period in 2007
* Cash balance increased: $5.5 million, up from $1.5 million for the same
period of 2007
Summary of Results
The second quarter of 2008 saw considerable change, as Carmanah embarked on
the next phase in its restructuring with the goal of increasing its focus
and returning the Company to sustained, profitable growth. According to Ted
Lattimore, Carmanah CEO, these changes have laid the groundwork for a more
focused and responsive organization. "Based on the findings of our
Company-wide evaluation completed in the first quarter of 2008, it became
clear that some significant changes were necessary to return the Company to
a more profitable footing," said Lattimore. "On June 25th we implemented
these changes, and now with the majority of this transition behind us, the
Company is free to move ahead as a more agile and responsive business. By
focusing on our core strengths, controlling costs, and increasing the
scalability and efficiency of our supply chain, we're now free to focus on
what we do best: delivering quality solar-powered lights and power systems.
And we can do it more efficiently and effectively than ever before."
Confirming this assessment, Roland Sartorius, Carmanah CFO, commented that
throughout the second quarter of 2008, the Company has maintained its
positive growth trend, showing increased sales and improved earnings over
the same period last year, while benefiting from lower operating costs and
a healthy cash balance. "Even with the costs and strategic challenges of
implementing this comprehensive restructuring, the Company has achieved its
second quarterly positive Adjusted EBITDA in a row," said Sartorius. "As
expected, the restructuring charge, which will be recorded over the next
several quarters, is on schedule and to be recovered during the 2009 fiscal
year. With increased cash, no bank debt, and continued positive cash flow,
we're going into the next quarter looking stronger than ever."
Sales
Sales for the second quarter of 2008 were $15.7 million, $0.3 million
higher than the same period in 2007. Solar LED sales provided strong growth
in the quarter, with our solar marine, aviation and obstruction beacons
leading the way. This growth was offset by lower sales in Solar Power
Systems, primarily due to the fact that a significant grid tie project in
Prince Edward Island was completed in the second quarter of 2007. There
were no such comparable large scale projects in the second quarter of 2008.
A summary of revenues from each of the Strategic and Tactical business
segments is shown below:
-***-
Sales For the period ended June 30,
($ thousands) 2008 2007 Change
$ Mix $ Mix $ %
Strategic
Solar LED Lights 5,727 36.4% 4,138 26.8% 1,589 38.4%
Solar Power Systems 552 3.5% 2,046 13.3% (1,494) (73.0%)
6,279 39.9% 6,184 40.1% 95 1.5%
Tactical
Distribution 6,485 41.2% 7,401 48.0% (916) (12.4%)
Signage 2,984 18.9% 1,840 11.9% 1,144 62.2%
9,469 60.1% 9,241 59.9% 228 2.5%
=========================================================================
Total 15,748 100.0% 15,425 100.0% 323 2.1%
-****-
Summary of EBITDA and Net Income
* Adjusted EBITDA for Q2 2008 was $0.4 million, compared to $(3.9) million
for the same period in 2007.
* Adjusted EBITDA year to date was $1.1 million, compared with $(4.2)
million for the same period in 2007.
* Net loss for Q2 2008 was $0.4 million compared to $3.0 million for the
same period of 2007.
* Net loss year to date was $0.3 million compared to $3.5 million for the
same period in 2007.
Non-GAAP Measures
The Company uses certain non-GAAP measures to assist in assessing its
financial performance. Non-GAAP measures do not have any standardized
meaning prescribed by GAAP and are therefore unlikely to be comparable to
similar measures presented by other companies. One such non-GAAP measure
used for assessing financial performance is net income (loss) before
interest, income taxes, amortization, and restructuring charge ("Adjusted
EBITDA").
-***-
Adjusted EBITDA reconciliation Three months ended Six months ended
($ thousands) June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Net income (loss) (354) (3,050) (271) (3,514)
Add (deduct):
* Interest (30) 58 (59) 84
* Income taxes (32) (1,263) 318 (1,342)
* Amortization 267 313 521 570
* Restructuring charge 551 - 551 -
==========================================================================
Adjusted EBITDA 402 (3,942) 1,060 (4,202)
-****-
Progress During the Quarter (including subsequent events)
With a 2008 second quarter Adjusted EBITDA of $0.4 million compared to loss
of $(3.9) million for the same period of 2007, the second quarter of 2008
continues the momentum initiated in the first quarter of 2008. During this
quarter, Carmanah announced a decision based on first-quarter results and
market trends in both of strategic and tactical segments to further refine
and accelerate the Company's focus on its strategic direction. As a result,
four major restructuring initiatives were announced, effective June 25th,
2008:
* Outsourcing of manufacturing: To help maximize the efficiency of its
supply chain while providing a flexible infrastructure for scalable growth,
the Company partnered with electronics manufacturing services provider
Flextronics International to outsource production of its solar technology
products to Flextronics' manufacturing facilities around the world.
* Exiting of certain tactical distribution businesses: Faced with increased
commoditization and pricing pressures on its solar component and
solar-powered bus shelter distribution businesses, Carmanah consolidated
its operations by initiating the closure of its US solar component
distribution business, Santa Cruz, California warehouse, and Calgary,
Alberta office and warehouse.
* Moving to a more efficient regional geographic sales model: To increase
the efficiency of its sales organization and improve customer service,
Carmanah restructured its global sales force from a vertical-specific
format to a regional geographic model. The more versatile regional sales
model is expected to create new opportunities for sales representatives and
customers by making all Carmanah products accessible to all complementary
markets.
* Simplifying and reducing the cost of its organizational structure: To
increase operational efficiency and effectiveness while further reducing
operating costs, Carmanah streamlined its organizational structure and
reduced staff across various departments including operations, marketing,
and general and administrative departments.
Other highlights during this quarter included:
* Carmanah announced the appointment of Grant Byers and Rob Cruickshank to
the Board of Directors, with Carmanah founder Dr. David Green accepting the
role of Chairman of the Board, in place of Art Aylesworth (June 19)
* Carmanah provided solar-powered airfield lights for a United States Air
Force installation in the Middle East. The $463,000 order will upgrade the
facility's five-year-old system of A702 solar-powered airfield lights with
wireless, high-visibility A704-5 GEN II runway lights. (June 13)
* Carmanah received an additional purchase order of $1.1 million from
Trueform Engineering Ltd. for London Bus Stop systems as part of an ongoing
commitment to equip Transport for London transit routes with solar-powered
lighting and communications technology. (May 29)
* Innovation Award: In a competitive category filled with more than 20
outdoor lighting products from industry leaders such as GE, Cooper Lighting
and Philips, Carmanah's EverGEN(TM) solar-powered LED area light received
the "Judges' Citation" Innovation Award at LIGHTFAIR International 2008 --
North America's premier annual lighting industry event for architectural
and commercial lighting products and services. (May 28)
* Carmanah and Beta Lighting partnered to deliver a BetaLED(TM)
solar-powered lighting solution. BetaLED developed an LED lighting fixture
designed specifically for Carmanah's EverGEN(TM) solar engine to make
Carmanah's award-winning EverGEN solar area light even better. (May 20)
* Carmanah formerly announced a new $10.0 million, three-year committed
operating facility arrangement with BMO Financial Group that will offer
greater convenience, flexibility and stability for the long term. (May 13)
* Carmanah received an order to supply solar-powered portable airfield
lights for Bariven S.A. in Venezuela, a subsidiary of PDVSA. The $800,000
order will provide the tools to equip Venezuela's Carupano Airport with a
stand-alone system of solar-powered LED aviation lights. (April 02)
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the second 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 second quarter 2008 results, Carmanah has scheduled a
conference call for 2:00 pm PT (5:00 pm ET) on Wednesday, August 13, 2008.
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 participant code, enter
2510558.
A recording of the conference will also be available on Carmanah's
corporate website within three business days. For more information, visit
www.carmanah.com.
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 www.carmanah.com.
Carmanah Technologies Corporation
"Roland Sartorius"
Roland Sartorius, Chief Financial Officer
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.
we put solar to work(TM)
Building 4, 203 Harbour Road, Victoria, BC, Canada, V9A 3S2
Telephone +1.250.380.0052 Toll Free 1.877.722.8877
Fax +1.250.380.0062 E-mail: investors@carmanah.com
Distributed by Filing Services Canada and retransmitted by Marketwire
For further information:
Investors:
Investor Relations:
Roland Sartorius
Toll-Free: 1.877.722.8877Email Contact
Media:
Public Relations:
David Davies
Tel: 1.250.382.4332Email Contact
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