CAMBRIDGE, ON , Jan. 9, 2014 /CNW/ - COM DEV International Ltd. (TSX: CDV) today announced fourth quarter and year-end financial results for the three- and twelve-month periods ended October 31, 2013. All amounts are stated in Canadian dollars unless otherwise noted. Fiscal Year 2013 Highlights New order intake for the year was $243.3 million , growing by 9.3% over 2012 order levels. Backlog at October 31, 2013 was $164.7 million , which is the highest backlog since early 2009, and is the highest year-end backlog for the Company since it began tracking it in 2006. An additional $35.3 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded, increases the backlog ultimately expected to be realized to $200.0 million , compared to an expected total backlog of $177.9 million a year earlier. Revenue increased year over year by 3.3%, to $215.5 million , up from $208.6 million in fiscal year 2012. Gross margins averaged 26.8% for the year, compared to 25.8% in fiscal 2012, reflecting effective program execution during the year, and year over year growth in revenues from the Company's exactEarth™ subsidiary. Majority-owned subsidiary exactEarth achieved positive EBITDA of $0.4 million compared to negative EBITDA of $2.7 million in fiscal 2012, and had revenue of $11.4 million , compared to $9.3 million in 2012, a 22.6% increase year over year. Net income attributable to shareholders was $18.6 million or $0.24 per share, an increase of $2.2 million compared to $16.4 million or $0.22 per share Fourth Quarter Highlights The Company booked $87.9 million in new orders, including the largest commercial order ever received by the Company, compared to $56.1 million in the fourth quarter of 2012 and $36.6 million in the third quarter of 2013. Included in the total new orders for the quarter was $4.2 million in new orders for the Company's exactEarth™ subsidiary, a 44.8% increase over 2012 Q4 when $2.9 million in new orders were won. Revenue was $53.8 million , a 5% decline from $56.7 million in the fourth quarter of 2012, due to continuing federal government budget pressures in the United States and the impact of sequestration on the Company's U.S. operation. Gross margins averaged 27.3%, compared to 27.1% in fiscal Q4 2012. The Company recorded a non-cash impairment loss on its U.S. operation in the amount of $3.5 million , resulting from the impact of government budget sequestration in the United States . Net income attributable to shareholders was $4.1 million or $0.05 per share, compared to $3.0 million or $0.04 per share in the fourth quarter of 2012. "At the beginning of fiscal 2013 we stated that our objective was to continue our disciplined approach with a focus on profitability and lean operations." stated Michael Pley , President and CEO. "We are very pleased that, despite the significant impact of U.S. sequestration, we achieved a 13% increase in net income and an almost 60% increase in cash from operations. Going forward into fiscal 2014 we will look at opportunities to deploy these resources to grow the Company and to deliver value to our shareholders." Financial Review COM DEV saw a 9% increase in new orders, totaling $243.3 million during the year, of which 68% were commercial, 26% were civil, and 6% were military. In fiscal 2012 the Company booked $222.7 million of new orders, with a commercial/civil/military split of 48/28/24. The growth in orders in 2013 is an indication of the strength of the commercial market, and came in the face of headwinds in the U.S. government market. COM DEV's fiscal 2013 revenues of $215.5 million increased by $6.7 million or 3.3% compared to $208.6 million the previous year. The revenue split between the three market segments was 48% commercial, 35% civil and 17% military, compared to a 48/32/20 split in 2012. It is important to note that communication satellite programs are increasingly being seen in the civil segment as emerging country national governments use satellites as an efficient means to provide communications infrastructure. These programs draw on the Company's same core equipment as the more traditional commercial market segments. In general, bidding and order activity remains robust. Order backlog at October 31, 2013 was $164.7 million , compared to $131 million three months earlier, and $139 million at the end of fiscal 2012. An additional $35.3 million of follow-on orders are expected to be realized from ATPs already received; COM DEV only includes these ATP amounts in orders and backlog once the final contracts are in place. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 58%, 33% and 9% respectively, compared to 36% 36% and 28% at October 31, 2012. The Company expects to convert approximately 76% of the total backlog into revenue during fiscal 2013. Consolidated gross margin was $54.3 million in fiscal 2013, representing 25.2% of total revenues, compared to $53.7 million or 25.8% of revenues in 2012. COM DEV recorded a net recovery of research and development of $3.9 million in 2013, compared to an expense of $2.6 million in 2012. Gross R&D spending declined to $9.9 million from $12.9 million while R&D funding from external sources decreased to $2.1 million from $4.3 million . The Company also recognized $11.7 million of Investment Tax Credits (ITCs) in 2013, compared to $6.0 million in 2012. Selling expenses were $11.9 million in 2013, compared to $11.6 million in 2012. Selling expenses fluctuate from quarter to quarter depending on the bids and proposal work that is underway. General expenses are managed against the budgets set for the general and administrative functions, with a view to minimizing these costs, while not hindering the achievement of the Company's business objectives. Net income attributable to shareholders was $18.6 million in 2013, an increase of $2.2 million from $16.4 million in 2012. The increase in net income is the result of higher gross margin, net research and development recovery compared to a prior year expense, improved performance in exactEarth™, and lower interest and other expense, offset by the previously noted impairment charge, higher selling and general expenses and a lower foreign exchange gain. COM DEV ended the year with $34.9 million of cash and equivalents, compared to $25.8 million at October 31, 2013 . Operating activities generated $31.9 million of cash for the year, compared to $20.7 million in fiscal 2012. For 2013, $9.1 million of cash was generated compared to $1.8 million invested in 2012. The Company generated $3.9 million of cash from working capital in 2013 which compares to the $19.4 million generated from working capital in 2012. This decrease in working capital was mainly due to decreases in accounts receivable and inventory plus an increase in current portion of loans payable offset by decreases in accounts payable and accrued liabilities and billings in excess of costs and earnings on contracts in progress. The Company's operating credit line of $20 million was not drawn upon at the end of 2013, except for $2.8 million (2012: $2.8 million ) in the form of guarantee letters issued to customers in the normal course of operations by the bank on behalf of the Company and to government agencies while certain tax objections are resolved. The Company's basic share count stood at 76,486,125 on January 9, 2014 . Conference Call A conference call will be held Thursday, January 9, 2014 at 5:00 pm EST to discuss this announcement. To access the call, dial 647-427-7450 or 1-888-231-8191. To access the live webcast, please visit the Company's website at www.comdevintl.com or www.newswire.ca for directions. Participants will require Windows Media Player™ to listen to the webcast. About COM DEV COM DEV International Ltd. ( www.comdevintl.com ) is a leading global provider of space hardware and services. The company has a staff of 1,300, annual revenues of $215 million , and facilities in Canada , the United Kingdom and the United States . COM DEV designs, manufactures and integrates advanced products, subsystems and microsatellites that are sold to major satellite prime contractors, government agencies and satellite operators, for use in communications, space science, remote sensing and defence applications. The company has won contracts to supply its equipment on over 900 spacecraft. COM DEV's majority-owned subsidiary, exactEarth Ltd., provides satellite data services for global maritime surveillance. This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding COM DEV's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. COM DEV uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by COM DEV in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors COM DEV believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to COM DEV's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause COM DEV's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of COM DEV's customers; the competition COM DEV faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of COM DEV's products or services. The triangular logo and the word COM DEV are each registered trademarks and the property of COM DEV Ltd. All rights reserved. COM DEV International Ltd. Consolidated Statements of Financial Position (Canadian dollars in thousands) As at October 31 , 2013 As at October 31 , 2012 As at November 1 , 2011 (note 20) (note 20) Assets Current assets Cash and cash equivalents $ 34,897 $ 25,794 $ 27,618 Accounts receivable 37,460 41,722 47,563 Inventory 59,383 64,763 46,147 Prepaid expenses and other 2,716 3,214 1,421 Income taxes recoverable 2,245 2,266 2,159 Investment tax credits 2,961 2,162 4,684 Total current assets 139,662 139,921 129,592 Non-current assets Property, plant and equipment 92,340 86,000 73,973 Intangible assets 16,416 14,600 15,576 Goodwill - 2,205 2,200 Investment tax credits 9,933 2,124 9,493 Deferred income tax assets 9,552 14,728 1,779 Total non-current assets 128,241 119,657 103,021 Total Assets $ 267,903 $ 259,578 $ 232,613 Liabilities Current liabilities Accounts payable and accrued liabilities $ 26,334 $ 30,622 $ 25,830 Income taxes payable 4 851 302 Provisions 1,215 430 1,172 Billings in excess of costs and earnings on contracts in progress 17,047 22,448 9,977 Current portion of loans payable 5,787 3,978 8,867 Total current liabilities 50,387 58,329 46,148 Non-current liabilites Accounts payable and accrued liabilities 33 525 930 Loans payable 14,890 16,358 14,687 Employee future benefits 3,719 3,719 4,494 Total non-current liabilities 18,642 20,602 20,111 Total liabilities 69,029 78,931 66,259 Shareholders' equity Share capital 346,572 345,876 345,666 Treasury stock (1,051) (432) - Contributed surplus 8,326 9,298 9,570 Accumulated other comprehensive income (loss) 1,559 (88) (138) Non-controlling interest 6,221 7,317 8,976 Deficit (162,753) (181,324) (197,720) Total shareholders' equity 198,874 180,647 166,354 Total Liabilities and Shareholders' Equity $ 267,903 $ 259,578 $ 232,613 On behalf of the Board: ___________________________________ ___________________________________ Terry Reidel Kym Anthony Chairman of the Board Chairman of the Audit Committee COM DEV International Ltd. Consolidated Statements of Changes in Equity (Canadian dollars in thousands) For the year ended ended October 31, 2013 Total Deficit Accumulated Other Comprehensive Income (Loss) Share Capital Treasury Stock Non-Controlling Interest Contributed Surplus Balance, October 31, 2012 (note 20) $ 180,647 $ (181,324) $ (88) $ 345,876 $ (432) $ 7,317 $ 9,298 Comprehensive income 19,122 18,571 1,647 (1,096) Common stock issued 222 696 (474) Expense recognized for ESOP awards 203 203 Treasury stock (1,870) (1,870) Settlement of long-term incentive plans (867) 1,251 (2,118) Expense recognized for long-term incentive plans 1,030 1,030 Expense recognized for stock-based compensation 387 387 Balance, October 31, 2013 $ 198,874 $ (162,753) $ 1,559 $ 346,572 $ (1,051) $ 6,221 $ 8,326 For the year ended ended October 31, 2012 Balance, October 31, 2011 (note 20) $ 166,354 $ (197,720) $ (138) $ 345,666 $ - $ 8,976 $ 9,570 Comprehensive income 14,787 16,396 50 (1,659) Common stock issued 10 210 (200) Expense recognized for ESOP awards 217 217 Treasury stock (787) (787) Settlement of long-term incentive plans (1,123) 355 (1,478) Transfer of long-term incentive plans to equity (259) (259) Expense recognized for long-term incentive plans 1,087 1,087 Expense recognized for stock-based compensation 361 361 Balance, October 31 2012 $ 180,647 $ (181,324) $ (88) $ 345,876 $ (432) $ 7,317 $ 9,298 COM DEV International Ltd. Consolidated Statements of Comprehensive Income (Canadian dollars in thousands, except for per share figures) For the years ended ended October 31 2013 2012 (note 20) Revenue $ 215,449 $ 208,553 Cost of revenue 157,708 154,816 Gross margin 57,741 53,737 Research and development costs 9,939 12,839 Research and development recovery (2,098) (4,281) Investment tax credits recoverable (11,722) (5,968) Net research and development (recovery) expense (3,881) 2,590 Selling expenses 11,870 11,617 General expenses 20,061 19,081 Impairment losses 3,486 - Operating income 26,205 20,449 Interest expense 528 1,418 Foreign exchange gain (926) (2,313) Other expense (income) 223 2,572 Income before income taxes 26,380 18,772 Income tax expense 8,905 4,035 Net income $ 17,475 $ 14,737 Attributable to: Shareholders 18,571 16,396 Non-controlling interest (1,096) (1,659) $ 17,475 $ 14,737 Other comprehensive income: Foreign currency translation 1,647 50 Comprehensive income $ 19,122 $ 14,787 Attributable to: Shareholders 19,125 14,785 Non-controlling interest (3) 2 $ 19,122 $ 14,787 Earnings per share Basic and diluted earnings per share $ 0.24 $ 0.22 COM DEV International Ltd. Consolidated Statements of Cash Flows (Canadian dollars in thousands) For the years ended October 31 2013 2012 (note 20) Operating activities Net income $ 17,475 $ 14,737 Amortization 10,659 9,643 Impairment of assets 3,486 - Loss (gain) on disposal of assets 588 (2,312) Defined benefit plan expenses 536 614 Defined benefit plan contributions (704) (1,512) Stock-based compensation expense 1,417 1,448 Employee stock ownership plan awards 203 217 Non-cash loan adjustments 758 491 Investment tax credits recoverable (11,722) (5,968) Deferred income tax expense (recovery) 5,176 (13,043) Unrealized foreign exchange loss (gain) on derivatives 868 ( 1,928) Cash settlement of restricted stock units (867) ( 1,123) Discounting of investment tax credits 398 - 28,271 1,264 Net change in non-cash working capital balances 4,318 19,364 Operating activities 32,589 20,628 Financing activities Shares issued 222 10 Purchase of treasury stock (1,870) (787) Proceeds from advance of long-term debt 2,959 18,388 Repayment of long-term debt ( 3,238) (22,063) Financing activities ( 1,927) (4,452) Investing activities Acquisition of property, plant and equipment (14,100) (18,100) Proceeds on disposal of property, plant and equipment 143 3,618 Acquisition of intangible assets (5,797) (2,553) Investing activities (19,754) (17,035) Effect of exchange rate changes on cash (1,805) (965) Net increase (decrease) in cash 9,103 (1,824) Cash and cash equivalents, beginning of the year 25,794 27,618 Cash and cash equivalents, end of the year $ 34,897 $ 25,794 Supplemental cashflow information Interest paid $ 527 $ 934 Taxes paid $ 1,607 $ 260 SOURCE COM DEV International Ltd.
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