VANCOUVER, Aug. 7, 2014 /CNW/ -Avigilon Corporation ("Avigilon" or the "Company") (TSX: AVO), a leading
global provider of end-to-end security solutions, today announced its
financial results for the three and six months ended June 30, 2014. All
figures are stated in Canadian dollars unless otherwise noted.
Second Quarter 2014 Financial Highlights
Revenue was $65.2 million, an increase of 66% over Q2 2013 revenue of
Gross margin percentage was 55%, up from 53% a year earlier.
Adjusted EBITDA* was $8.7 million, a 61% increase over Q2 2013 Adjusted
EBITDA of $5.4 million.
Net income was $2.8 million, compared with net income of $3.4 million in
Adjusted Earnings* was $5.7 million, a 49% increase over Q2 2013
Adjusted Earnings of $3.8 million.
Fully Diluted Adjusted Earnings Per Share* of $0.12, compared with $0.10
in Q2 2013.
"It was another quarter of profitable growth for Avigilon, highlighted
by record revenue and increased EBITDA, while we made significant
investments for future growth," said Alexander Fernandes, founder,
president, CEO and chairman of the Board of Avigilon. "At our current
annualized run rate, we are more than halfway to our target of $500
million by the end of 2016. To achieve this target, we are continuing
our successful strategy of expanding our sales team, enhancing
marketing and brand awareness, and increasing research and development
activities. With a view to augmenting our organic growth, we continue
to evaluate acquisitions of complementary technologies in the security
Avigilon reported Q2 2014 record revenue of $65.2 million, an increase
of 66%, or $26.0 million, compared to revenue of $39.2 million in Q2
2013. Revenue growth continues to reflect increased product sales
worldwide, driven by greater customer adoption in existing markets,
further penetration of new target regions and sales of new products.
Revenue was strong across all regions, with year-over-year sales growth
ranging up to 123% in the Company's six target geographic regions.
Gross margin was $36.0 million in Q2 2014 (55% of revenue), compared
with $20.7 million (53% of revenue) in Q2 2013. The year-over-year
increase in gross margin percentage mainly reflects the ongoing effects
of greater purchasing power, economies of scale, and improved
Sales and marketing expenses in Q2 2014 were $18.1 million, an increase
of 69% compared to $10.7 million in Q2 2013. The increase reflects
planned growth spending to expand the Company's global sales and
marketing team, which management believes will drive continued revenue
growth. In Q2 2014, sales and marketing expenses represented 28% of
revenue, compared with 27% in Q2 2013.
Research and development (R&D) expenses, net of related income tax
credits and capitalized development costs, were $4.4 million in Q2
2014, compared to $2.3 million in Q2 2013. Gross R&D spend was $6.4
million in Q2 2014, a $3.6 million increase compared with $2.8 million
in Q2 2013. The growth in spending is consistent with the Company's
plan to increase its R&D team to further enhance and expand its product
offering. Avigilon expects to continue to increase its R&D investment,
in dollars and as a percentage of revenue, to support accelerated
General and administrative expenses (G&A) in Q2 2014 were $7.8 million,
compared with $3.4 million in Q2 2013. The increase is primarily due to
additional personnel and their related expenses, including new
headcount in customer support, human resources, finance and legal. G&A
expenses in Q2 2014 also include $0.7 million in business
acquisition-related costs. The Company expects its administrative
expenses to increase in the near term as it continues to expand
infrastructure to support planned growth, but believes these expenses
will increase at a slower rate than revenue.
Adjusted EBITDA increased 61% year-over-year to $8.7 million in Q2 2014,
compared with $5.4 million in Q2 2013. The year-over-year improvement
largely reflects the Company's increase in revenue and improved gross
Net income for Q2 2014 was $2.8 million, compared with net income of
$3.4 million in Q2 2013. Net income for Q2 2014 was impacted by a
foreign exchange loss of $1.9 million, compared with a $0.3 million
gain in the same period last year, and $1.5 million in acquisitions
Removing the effects of foreign exchange and acquisition related
expenses, Adjusted Earnings increased 49% year-over-year to $5.7
million in Q2 2014, compared with $3.8 million in Q2 2013.
Earnings Per Share were $0.06 (basic and diluted) for Q2 2014, compared
to $0.09 (basic) and $0.08 (diluted) a year earlier. Fully Diluted
Adjusted Earnings Per Share were $0.12 in Q2 2014, compared with $0.10
in Q2 2013.
In 2014, Avigilon plans to continue to invest significantly to expand
sales reach, accelerate innovation and build brand awareness, which
management believes will contribute to further revenue growth. In the
short term, however, as the necessary investments are incurred in
advance of associated revenue, these initiatives are expected to put
pressure on the Company's Adjusted EBITDA and net income.
As at June 30, 2014, Avigilon had working capital of $208.8 million,
including cash and cash equivalents of $156.7 million. The weighted
average number of common shares outstanding for the quarter was 46.2
million basic and 47.0 million diluted. On April 8, 2014, the Company
completed a bought deal financing, issuing 3,448,280 common shares at a
price of $29.00 per share for gross proceeds of $100.0 million.
This news release is qualified in its entirety by the Company's
financial statements and MD&A, which can be downloaded from the
Avigilon website at http://ir.avigilon.com or from the Company's profile on SEDAR at http://www.sedar.com/.
Avigilon has scheduled a conference call to discuss these results on
Thursday, August 7, 2014, beginning at 5:00 p.m. EDT (2:00 p.m. PDT).
To access the live call, dial 647-427-7450 or 1-888-231-8191, or view
the webcast at http://ir.avigilon.com. A replay will be available for one year on the Company's website, and
for one week by dialing 416-849-0833 or 1-855-859-2056, reference
Management uses certain non-IFRS measures that it believes are useful to
investors in evaluating the performance and results of the Company. The
term "Adjusted EBITDA" refers to earnings before deducting interest
expense, taxes, depreciation, amortization, foreign exchange gain or
loss, and share-based payments. Management believes that Adjusted
EBITDA is a useful measure as it provides an indication of the
operational results of the business prior to taking into consideration
how those activities are financed and taxed and also prior to taking
into consideration asset amortization.
Management also believes that analyzing operating results exclusive of
significant non-cash items provides a useful measure of the Company's
performance. The term "Adjusted Earnings" and "Adjusted Earnings Per
Share" refers to net earnings and earnings per share, respectively,
before share-based payments, foreign exchange gain or loss, business
acquisition-related costs and related tax effects. Please refer to the
reconciliation table that accompanies the financial statements in this
press release and which is included in the Company's Management's
Discussion & Analysis for Q2 2014. Adjusted EBITDA, Adjusted Earnings
and Adjusted Earnings Per Share do not have standardized meanings
prescribed by International Financial Reporting Standards ("IFRS") and
are not necessarily comparable to similar measures provided by other
Accordingly, investors are cautioned that Adjusted EBITDA, Adjusted
Earnings and Adjusted Earnings Per Share should not be construed as an
alternative to operating income or net income determined in accordance
with IFRS as an indicator of the Company's financial performance or as
a measure of its liquidity and cash flows.
Avigilon Corporation is defining the future of protection through
innovative end-to-end security solutions. Avigilon's industry-leading
HD network video management software, megapixel cameras, access control
and video analytics products are reinventing the security market.
Information about Avigilon can be found at avigilon.com.
Forward Looking Statements
Certain statements contained in this news release, including all
statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. Forward-looking statements normally
contain words like believe, expect, anticipate, plan, intend, continue,
estimate, may, will, should and similar expressions. Such statements
are not guarantees of future performance. They are based on
management's expectations and assumptions regarding historical trends,
current conditions and expected future developments, as well as other
factors that we believe are appropriate in the circumstances.
Management has based these statements on estimates and assumptions that
they believed were reasonable when the statements were prepared. Actual
results could be substantially different because of the risks and
uncertainties associated with the Company's business. Important risks
that could cause such differences include, but are not limited to, the
length of sales cycles, rapid technological advancement, competition,
the availability of critical inputs, foreign exchange rate occurrences
and doing business in foreign countries. Additionally, differences
could arise because of events that are announced or completed after the
date of this news release, including mergers, acquisitions, other
business combinations and divestitures. More information about the
risks and uncertainties affecting the Company's business can be found
in the "Risk Factors" section of our final short form prospectus
dated March 31, 2014 and of our Annual Information Form dated March 28,
2014 each of which is available under the Company's profile at SEDAR (www.sedar.com). Although we have attempted to identify factors that would cause
actual actions, events or results to differ materially from those
disclosed in the forward-looking statements or information, there may
be other factors that cause actions, events or results not to be as
anticipated, estimated or intended. Also, many of the factors are
beyond the control of Avigilon. Accordingly, readers should not place
undue reliance on forward-looking statements or information. Avigilon
undertakes no obligation to reissue or update any forward-looking
statements or information as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements and information herein are qualified by this
SOURCE Avigilon Corporation