Mr. John Simmons reports
CARMANAH REPORTS FOURTH QUARTER, AND FISCAL 2016 RESULTS
Carmanah Technologies Corp. has released its fourth-quarter and fiscal 2016 financial results for the period ended Dec. 31, 2016. Currency amounts are in U.S. dollars unless otherwise noted.
All figures below, unless otherwise stated, are for Carmanah's continuing operations and exclude the operating results from the Company's Power business segment. The planned disposal was announced in a press release dated October 11, 2016.
Fourth Quarter Revenues and Profitability
Revenues in the fourth quarter of 2016 were USD $10.7 million, down 32% over the same period in 2015 which generated revenues of USD $15.8 million. The overall decline in revenues was primarily attributable to lower:
Marine and Offshore Wind sales, both of which had exceptionally strong revenues in the fourth quarter of 2015 due to several larger projects completed in the period.
Illumination sales due to a significant decline in international revenues.
Net income in the fourth quarter of 2016 was USD $0.1 million down from USD $1.3 million in the fourth quarter of 2015. Management relies on Adjusted EBITDA(1) (a non-IFRS measure) to gauge financial performance, a table reconciling Adjusted EBITDA is provided in this press release. Adjusted EBITDA in the fourth quarter was $1.3 million or 12% of revenue, which is down from $3.1 million, or 19% of revenue in the same period in 2015. The variance is largely a result of lower revenues.
Fiscal 2016 Revenues and Profitability
Revenues for the year were USD $47.7 million, up 11% over 2015 revenues of USD $43.1 million. The overall increase for the yearly revenues was primarily due to the inclusion of a full year of the Sabik group of companies in 2016, while 2015 only included the final two quarters.
(1) NON-GAAP FINANCIAL MEASURES: EBITDA and Adjusted EBITDA. This news release presents information about EBITDA and Adjusted EBITDA, both of which are non-IFRS financial measures, to provide supplementary information about 2016 operating performance. Carmanah defines EBITDA as net income or loss before interest, income taxes, amortization, and non-cash stock based compensation. Adjusted EBITDA removes unusual or non-operating items from EBITDA, such merger and acquisition costs, restructuring charges, asset write offs, and foreign exchange gains and losses. Carmanah uses these non-IFRS measures internally to make strategic decisions, forecast future results and evaluate its performance. EBITDA and Adjusted EBITDA are not intended as a substitute for IFRS measures. A limitation of utilizing these non-IFRS measures 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. Readers should refer to the "Definitions and Reconciliations" section of the Company's most recently filed MD&A for the three and twelve months period ended December 31, 2016 for a more detailed discussion of these measures and their calculation.
Net income for the year was USD $2.9 million, down from USD $9.7 million in fiscal 2015. This decrease is mainly due to the recognition in 2015 of investment tax credits and deferred income tax assets which were previously unrecognized. Management relies on Adjusted EBITDA (a non-IFRS measure) to gauge financial performance. Adjusted EBITDA for the year was USD $7.0 million or 15% of revenue, which is up from USD $6.3 million, or 15% of revenue in the same period in 2015.
John Simmons, Chief Executive Officer commented. "2016 was pivotal for Carmanah. During the year, we decided to focus on our Signals and Illuminations businesses and began the process of divesting our Power businesses. Despite these distractions, and lower than expected 4
quarter revenues, our Adjusted EBITDA for the year exceeded 15% of revenue and we generated over USD $7.0 million in cash. We ended the year with nearly USD $22 million in cash which should become significantly larger as we complete the divestitures of our Power businesses. We are now focused and have ample resources to pursue organic growth and strategic acquisitions."
Highlights for the quarter are provided below:
Three months ended December 31,Year ended December 31,
(US$ thousands) 2016 2015 2016 2015
Revenue 10,714 15,824 47,742 43,090
Gross margin % 41.6% 41.4% 43.0% 41.2%
Core operating expenditures1 (3,802) (4,939) (16,531) (15,168)
Net income 80 1,288 2,917 9,694
Adjusted EBITDA1 1,316 3,089 7,020 6,308
Financial Condition at December 31, 2016 compared to December 31, 2015
Cash and cash equivalents of USD $21.9 million, up USD $7.0 million from USD $14.9 million
Working capital was USD $21.6 million, down USD $6.7 million from USD $28.3 million. The decrease is due to the net assets of the Power segment being classified as Assets held for sale.
Complete set of Financial Statements and Management Discussion & Analysis
A complete set of the fourth quarter ended December 31, 2016 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). The financial information included in this release is qualified in its entirety and should be read together with the audited consolidated financial statements for the year ended December 31, 2016, including the notes thereto.
About Carmanah Technologies Corporation
Carmanah designs, develops and distributes a portfolio of products focused on energy optimized LED solutions for infrastructure. Since 1996, we have earned a global reputation for delivering durable, dependable, efficient and cost-effective solutions for industrial applications that perform in some of the world's harshest environments. We manage our business within three reportable segments: Signals, Illumination and Power. The Signals segment includes serves the Airfield Ground Lighting, Aviation Obstruction, Offshore Wind, Marine and Traffic markets. The Illumination segment provides solar powered LED outdoor lights for municipal and commercial customers. The Power segment serves both On-Grid and Off-Grid verticals.
We seek Safe Harbor.
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