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COM DEV Announces Third Quarter Fiscal 2009 Results

^{Published on 2009-09-03 13:08:32 - Market Wire}
 

 CAMBRIDGE, ON, Sept. 3 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced its third quarter financial results for the three-month period ended July 31, 2009. All amounts are stated in Canadian dollars unless otherwise noted. Third Quarter Highlights - Revenue was $61.5 million, an increase of 19% over the $51.5 million recorded in the third quarter of 2008. - Gross margin was 29%, compared to 26% in Q3 2008. - Net income was $5.2 million, or $0.07 per share, compared to $4.3 million or $0.06 per share for the prior year period. - New orders won in the third quarter totaled $45 million, compared to $95 million a year earlier and $50 million in the second quarter of fiscal 2009. - Backlog at July 31, 2009 was $156 million, compared to $173 million three months earlier. - During the quarter the Company established a subsidiary, exactEarth(TM) Ltd, to implement full commercialization of its space-based AIS technology. "Excellent operational performance in the third quarter allowed us to deliver our best gross margin percentage in over two years, and our best ever in dollar terms," said John Keating, CEO of COM DEV. "Our business development team has been very busy pursuing new contracts as satellite order activity has been very healthy. For fiscal 2009 we remain on track to achieve record orders and revenue growth of at least 15%." Financial Review COM DEV's fiscal 2009 third quarter revenues of $61.5 million represented an increase of $10.0 million or 19% over the third quarter of 2008. While revenues declined by $2.6 million compared to the record level of Q2 2009, the strengthening of the Canadian dollar versus the U.S. dollar during the third quarter negatively impacted reported revenues by $3.5 million, and gross margin by $2.5 million. The revenue split between the three market segments was 52% commercial, 32% civil and 16% military, compared to a 59/26/15 split in the third quarter of 2008. On a year-to-date basis, revenues of $182.1 million are 21% higher than revenues in the first nine months of fiscal 2008. Management continues to anticipate full year revenue growth of at least 15%. COM DEV received new orders totaling $45 million during the quarter, of which 60% were commercial, 23% were civil, and 17% were military. In Q3 2008 the Company booked $95 million of new orders, with a commercial/civil/military split of 38/43/19. Order backlog at quarter-end was $156 million, compared to a backlog of $173 million three months earlier, and $161 million one year ago. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 46%, 35% and 19% respectively, compared to 45%, 40% and 15% at the end of Q2 2009. Gross margin was $18.0 million in Q3 2009, representing 29% of revenues, compared to $13.1 million or 26% of revenues in Q3 2008. Improved margins reflect the positive impacts of a stronger U.S. dollar compared to a year earlier, and higher volumes of work flowing through the organization during the period. Net research and development expense in Q3 2009 was $3.6 million, representing a $1.5 million increase from one year earlier, but a $0.9 million decrease from Q2 2009 levels. Gross R&D spending of $4.5 million in the quarter was consistent with $4.6 million in Q3 2008 and down from $5.5 million in Q2 2009. The year-over-year increase in net R&D expense was due to a reduction in outside funding to $0.9 million in the current quarter, compared to $2.5 million a year earlier, and $1.0 million in Q2 2009. Selling, general and administrative expenses were $8.5 million in the third quarter, compared to $6.5 million in Q3 2008. As a percentage of total revenue, SG&A was 14%, compared to 13% a year earlier. The increase is due to the incremental SG&A cost of the COM DEV USA operations, increased foreign exchange rate impact on those U.S. costs, increased long-term incentive compensation costs, higher selling and business development costs and the increased costs of the exactEarth initiative. Net income for the quarter was $5.2 million, up from $4.3 million in Q3 2008, while earnings per share were $0.07, compared to $0.06 a year earlier. Net income improved from $4.9 million in Q2 2009. COM DEV ended the quarter with $19.8 million of cash and equivalents, compared to $31.9 million at April 30, 2009. During the third quarter the Company used $6.2 million of cash for operating activities, $1.8 million for financing activities, primarily for debt repayment, and $4.2 million for investing activities, including the $2.2 million purchase of a 30,000 square foot building in Cambridge, Ontario to provide office and lab space to the Company's Missions Development Group and its exactEarth subsidiary. At July 31, 2009, the Company had outstanding debt of $21.5 million including the current portion. Its operating line of credit, renegotiated during the third quarter to a maximum of $32 million, was not drawn upon. COM DEV's basic share count averaged 76,100,289 (fully diluted: 76,185,520) in the third quarter, and stood at 76,100,289 on July 31, 2009. Conference Call A conference call will be held Thursday, September 3, 2009 at 5:00 pm EDT to discuss this announcement. 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(TM) to listen to the webcast. About COM DEV COM DEV International Ltd. ([ www.comdevintl.com ]) is a leading global designer and manufacturer of space hardware subsystems. With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced products and subsystems that are sold to major satellite prime contractors for use in communications, space science, remote sensing and military satellites. 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 Operations (Canadian dollars in thousands, except for per share figures) Unaudited For the three months ended July 31 2009 2008 ------------------------------------------------------------------------- Revenue $ 61,451 $ 51,483 Cost of revenue 43,440 38,123 ------------ ------------ Gross margin 18,011 13,360 ------------ ------------ Research and development costs 4,531 4,576 Research and development recovery 912 2,492 ------------ ------------ Net research and development 3,619 2,084 Selling and general expenses 8,519 6,541 ------------ ------------ Operating income 5,873 4,735 Interest expense 44 594 Foreign exchange loss (gain) 510 (148) Other expense 83 10 ------------ ------------ Income before non-controlling interest 5,236 4,279 Non-controlling interest (5) (6) ------------ ------------ Net income $ 5,241 $ 4,285 ------------ ------------ ------------ ------------ Earnings per share Basic and diluted earnings per share $ 0.07 $ 0.06 COM DEV International Ltd. Consolidated Statements of Operations (Canadian dollars in thousands, except for per share figures) Unaudited For the nine months ended July 31 2009 2008 ------------------------------------------------------------------------- Revenue $ 182,066 $ 150,528 Cost of revenue 131,611 113,553 ------------ ------------ Gross margin 50,455 36,975 ------------ ------------ Research and development costs 13,902 11,983 Research and development recovery 2,943 4,922 ------------ ------------ Net research and development 10,959 7,061 Selling and general expenses 23,994 21,886 ------------ ------------ Operating income 15,502 8,028 Interest expense 366 363 Foreign exchange loss (gain) 423 (122) Other expense 290 186 ------------ ------------ Income before non-controlling interest 14,423 7,601 Non-controlling interest (25) 7 ------------ ------------ Net income $ 14,448 $ 7,594 ------------ ------------ ------------ ------------ Earnings per share Basic and diluted earnings per share $ 0.20 $ 0.11 COM DEV International Ltd. Consolidated Balance Sheets (Canadian dollars in thousands) Unaudited As at As at July 31, October 31, 2009 2008 ------------------------------------------------------------------------- Assets Current Cash and cash equivalents $ 19,802 $ 16,102 Accounts receivable 38,634 41,085 Inventory 64,395 45,941 Prepaids and other 5,221 1,772 Income taxes recoverable 4,395 2,819 Future income tax assets - current 3,957 3,957 ------------ ------------ 136,404 111,676 Property, plant and equipment 66,346 70,748 Intangible assets 16,071 14,625 Goodwill 2,378 2,522 Future income tax assets - long term 3,958 3,958 ------------ ------------ Total assets $ 225,157 $ 203,529 ------------ ------------ ------------ ------------ Liabilities Current Accounts payable and accrued liabilities $ 29,897 $ 35,467 Deferred revenue 15,007 14,828 Current portion of loans payable 6,583 6,203 ------------ ------------ 51,486 56,498 ------------ ------------ Long term Loans payable 14,912 23,223 Employee future benefits 1,895 2,224 ------------ ------------ 16,807 25,447 ------------ ------------ Total liabilities 68,294 81,945 ------------ ------------ Non-controlling interest 499 524 ------------ ------------ Shareholders' equity Share capital 345,946 323,975 Contributed surplus 2,514 1,879 Deficit (189,617) (204,065) Accumulated other comprehensive income (2,479) (729) ------------ ------------ Total shareholders' equity 156,364 121,060 ------------ ------------ Total liabilities and shareholders' equity $ 225,157 $ 203,529 ------------ ------------ ------------ ------------ COM DEV International Ltd. Consolidated Statements of Cash Flows (Canadian dollars in thousands) Unaudited For the three months ended July 31 2009 2008 ------------------------------------------------------------------------- Operating activities Net income $ 5,241 $ 4,285 Amortization 2,809 3,086 Gain on disposal of assets (15) - Stock compensation expense 271 206 Employee stock option plan awards 40 38 Unrealized foreign exchange loss on long term debt - 199 Unrealized foreign exchange (gain) loss on derivatives (2,847) 198 Non-controlling interest (5) (6) ------------ ------------ 5,494 8,006 Net change in non-cash working capital items (11,657) (5,770) ------------ ------------ Operating activities (6,163) 2,236 ------------ ------------ Financing activities Shares issued (60) - Advance of long term debt - 18,174 Repayment of long term debt (1,711) (1,110) ------------ ------------ Financing activities (1,771) 17,064 ------------ ------------ Investing activities Acquisition of capital assets (2,821) (3,210) Proceeds on disposal of property, plant, and equipment 18 - Acquisition of intangible assets (1,439) (357) Business acquisition - (13,111) ------------ ------------ Investing activities (4,242) (16,678) ------------ ------------ Effect of exchange rate changes on cash 82 (370) ------------ ------------ Net (decrease) increase in cash (12,094) 2,252 Cash and cash equivalents, beginning of period 31,896 8,875 ------------ ------------ Cash and cash equivalents, end of period $ 19,802 $ 11,127 ------------ ------------ ------------ ------------ Interest paid $ 205 $ 612 ------------ ------------ ------------ ------------ COM DEV International Ltd. Consolidated Statements of Cash Flows (Canadian dollars in thousands) Unaudited For the nine months ended July 31 2009 2008 ------------------------------------------------------------------------- Operating activities Net income $ 14,448 $ 7,594 Amortization 8,500 7,030 Gain on disposal of assets (41) (211) Stock compensation expense 657 605 Employee stock option plan awards 137 134 Unrealized foreign exchange loss on long term debt - 842 Unrealized foreign exchange (gain) loss on derivatives (5,482) 2,870 Non-controlling interest (25) 7 ------------ ------------ 18,194 18,871 Net change in non-cash working capital items (20,937) (31,672) ------------ ------------ Operating activities (2,743) (12,801) ------------ ------------ Financing activities Shares issued 21,813 2 Advance of long term debt - 18,174 Repayment of long term debt (5,325) (2,011) ------------ ------------ Financing activities 16,487 16,165 ------------ ------------ Investing activities Acquisition of capital assets (5,708) (9,109) Proceeds on disposal of property, plant, and equipment 44 213 Acquisition of intangible assets (3,952) (992) Business acquisition (140) (13,485) ------------ ------------ Investing activities (9,756) (23,373) ------------ ------------ Effect of exchange rate changes on cash (288) (306) ------------ ------------ Net increase (decrease) in cash from continuing operations 3,700 (20,315) Net cash used in discontinued operations - (271) ------------ ------------ Net increase (decrease) in cash 3,700 (20,586) Cash and cash equivalents, beginning of period 16,102 31,713 ------------ ------------ Cash and cash equivalents, end of period $ 19,802 $ 11,127 ------------ ------------ ------------ ------------ Interest paid $ 780 $ 1,079 ------------ ------------ ------------ ------------ COM DEV International Ltd. Consolidated Statements of Changes in Equity (Canadian dollars in thousands) Unaudited Accumulated For the nine Other months ended Comprehensive Share Contributed July 31, 2009 Total Deficit Income Capital Surplus ------------------------------------------------------------------------- Balance, October 31, 2008 $ 121,060 $(204,065) $ (729) $ 323,975 $ 1,879 Comprehensive income Net Income 14,448 14,448 - - - Foreign currency translation adjustments (net of taxes of $nil) (1,750) - (1,750) - - ---------- ---------- ---------- ---------- ---------- 12,698 14,448 (1,750) - - Common stock issued 21,812 21,971 (159) Value of ESOP awards 137 - - - 137 Expense recognized for stock-based compensation 657 - - - 657 ---------- ---------- ---------- ---------- ---------- Balance, July 31, 2009 $ 156,364 $(189,617) $ (2,479) $ 345,946 $ 2,514 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------------------------------------------------------------------- For the nine months ended July 31, 2008 Balance, October 31, 2007 $ 106,424 $(216,444) $ (1,993) $ 323,862 $ 999 Comprehensive income Net Income 7,594 7,594 - - - Foreign currency translation adjustments (net of taxes of $nil) 133 - 133 - - ---------- ---------- ---------- ---------- ---------- 7,727 7,594 133 - - Common stock issued 2 - - 113 (111) Value of ESOP awards 134 - - - 134 Expense recognized for stock-based compensation 605 - - - 605 ---------- ---------- ---------- ---------- ---------- Balance, July 31, 2008 $ 114,892 $(208,850) $ (1,860) $ 323,975 $ 1,627 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- %SEDAR: 00003673E 

For further information: Gary Calhoun, Chief Financial Officer, Tel: (519) 622-2300 ext. 2826, Fax: (519) 622-2158, [ gary.calhoun@comdev.ca ]; Jeff Codispodi, The Equicom Group, Tel: (416) 815-0700 ext. 261, Fax: (416) 815-0080, [ jcodispodi@equicomgroup.com ]