CARMANAH ANNOUNCES RECORD THIRD QUARTER RESULTS
2003-10-23 12:24 (New York)
$2.3M in Sales
FSC / Press Release
CARMANAH ANNOUNCES RECORD THIRD QUARTER RESULTS
$2.3M in Sales with $114K Profit
Victoria, British Columbia CANADA, October 23, 2003 /FSC/ - Carmanah
Technologies Inc. (CMH - TSX Venture), is pleased to announce its third quarter
results for the three-month periods ended September 30, 2003 and 2002.
FINANCIAL HIGHLIGHTS:
Sales hit a record $2,340,810 for the three months ended September 30, 2003
* Increase of 20% over prior record set in 4Q2002 at $1,941,599
* Increase of 43% over same period in 2002 at $1,632,523
Sales hit a record $5,855,312 for the nine months ended September 30, 2003
* Increase of 28% over same period in 2002 at $4,545,858
Net earnings hit a record $114,381 for the three months ended September 30, 2003
* Increase of 163% over prior record set in same period in 2002 at $43,472
Carmanah's total revenue for the three months ended September 30, 2003
represented the highest quarterly sales in the Company's history. Total revenue
for the quarter increased by 45% over the previous quarter and by 43% over the
comparative 2002 quarter. The third quarter of 2003 also produced the largest
quarterly profit in the Company's history in the amount of $114,381.
"It is very encouraging to see so many key performance indicators showing
positive results at the same time," states Art Aylesworth, Carmanah's CEO. "We
are pleased that the effort and resources invested earlier this year are being
rewarded. Our sales ($2.3M) and net profits ($114K) in this quarter, as well as
the carry over backlog orders ($1.1M) heading into the fourth quarter, are all
at record levels. These results also do not include any revenue contributions
from our newly acquired subsidiary, AVVA Light Corp., which came on stream
October 1st, 2003. By all measureables, this was the best quarter in Carmanah's
history."
Carmanah has focused on broadening the markets for its technology to include new
verticals beyond the marine market. During the past three months, the Company
has seen a significant validation of its transit products with a $1.6M order for
300 bus shelter lighting systems to be installed in the city of London, England.
Carmanah also received over $1M in orders for its aviation runway and taxiway
solar-powered lighting systems during Q3. "The ongoing strength of our marine
product sales coupled with the rapid acceptance of transit and aviation products
confirms that our core technology is transferable to new markets", states
Aylesworth. "We are now planning a release of two new products for the roadways
market by the end of 2003 that use a combination of technologies from Carmanah
and AVVA."
MANAGEMENT DISCUSSION AND ANALYSIS:
3 Months Ended September 30
Carmanah achieved record sales for the three months ended September 30, 2003 in
the amount of $2,340,810. This is an increase of 20% over prior record set in
4Q2002 at $1,941,599, and an increase of
43% over the same period 2002 in the amount of $1,632,523. Sales are sourced
through a worldwide distribution network and direct sales efforts in key market
segments and territories. Direct sales efforts into new markets such as transit
and aviation contributed to these record results, with 30% of third quarter
sales coming from these two markets.
Carmanah also achieved record profitability for the three months ended September
30, 2003 in the amount of $114,381, an increase of 163% over the prior record
set in the same period in 2002 at $43,472. Earnings before interest, taxes,
depreciation and amortization (EBITDA) for the quarter were $198,551 compared
with $142,484 for the same quarter in 2002.
Carmanah's gross profit margin for the quarter was 54% of sales, a 5% reduction
over the comparative 2002 quarter. Gross margins have fluctuated more on a
month-to-month basis this year than last year due to a number of contributing
factors, with the largest being the result of fluctuations in the US dollar
relative to the Canadian dollar as the Company's product pricing was pegged in
US dollars. However, as our direct sales efforts continue to grow, we are
gaining margins as a result of the ratio split between direct sales and
distributor sales, as direct sales yield higher margins. Other factors that
affecting gross margins include size of order on a per customer basis due to
volume discounts, and adjustments made to the Company's purchasing practices.
The 54% margin achieved for the three months ended September 30, 2003 is
consistent with year to date average of 54%.
9 Months Ended September 30
Carmanah recorded a record $5,855,312 in sales for the nine months ended
September 30, 2003, an increase of 28% over the same period in 2002 at
$4,545,858.
Direct cost of goods totaled $2,683,907 as compared to $1,913,786 for the nine
months ended September 30, 2002. Gross profit as a percentage of sales was 54%
as compared to 57% during the same period in 2002.
Sales and marketing expenses for the nine months ended September 30, 2003 were
$477,946, representing a 14% increase or $60,277 over 2002 at $417,669. As a
percentage of sales, year to date sales and marketing for 2003 are 8% of sales,
compared to 9% for same period 2002. Carmanah continues sales and marketing
activities for new and existing product lines throughout its worldwide
marketplace, broadening its scope to include investment in emerging markets,
such as transit, aviation and roadways. Given the additional vertical markets
that require sales and marketing support, the Company continues to manage its
activity and expense relative to sales growth, and is beginning to realize
revenues from investment into new markets.
For the nine months ended September 30, 2003, research and development expenses
of $642,891 represented a 35% increase over the previous year's $474,565. The
$642,891 research and development expense incurred to September 30, 2003 is net
of eligible expenses recovered under a grant awarded to the Company by
Sustainable Development Technology Canada. Under the terms of the agreement,
the Company will be reimbursed for certain research and development costs
incurred to develop and commercialize specific projects to a maximum
contribution of $500,000. For the nine months ended September 30, 2003,
eligible research and development expenses in the amount of $124,690 were
recovered (2002 - $142,734). As a percentage of sales, research and development
expenses for the nine months ended September 30, 2003 were 13% (before grant
recovery), whereas they were 10% for the same period in 2002.
Wages and benefits expense increased 26% to $1,307,571, compared with $1,039,075
for the same period in 2002. This increase is the result of an increase in
sales and administrative staff in support of planned sales growth. The Company
also hired a Vice President of Sales and Marketing in July 2002, whose wage cost
is not reflected in the September 30, 2002 comparative figures. As a percentage
of sales, wage and benefits expense for the nine months ended 2003 is consistent
with the same period for 2002, at 22% of sales.
Office and administration expenses are $503,698, representing a 28% increase
over 2002 at $393,662. During the first half of 2002, Carmanah was operating
out of one building. It has since expanded into an adjacent building, resulting
in increased rent, utilities and general office costs. This move was required
to support the expansion of the Company's production facility as a result of new
product offerings, as well as to support growth of sales, administration,
research and development staff.
Interest and other income in the amount of $9,209, is a 76% reduction from 2002
at $38,504. This is due to reduced interest income on Advances Receivable in
the amount of $8,384 as a result of new terms negotiated effective April 1,
2003, and reduced interest income on term deposits in the amount of $21,941 as a
result of reduced investment in term deposits and lower interest rates.
Net income was $44,409 compared to $49,729 for the same period in 2002.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was
$239,299, compared with $307,101 for the same period in 2002.
Carmanah's cash and cash equivalents at September 30, 2003 was $1,444,851,
compared to $679,100 at December 31, 2002. The increase is due primarily to
receipt of funds raised on the issuance of 2,000,000 shares at $0.74, resulting
in net proceeds of $1,264,519 and the issuance of 294,327 shares for total
proceeds of $219,745 from the exercise of options and warrants. Approximately
$778,000 of the cash usage is the result of increased inventory levels, and
acquisition of capital equipment and leasehold improvements. The Company's net
working capital at September 30, 2003 is $3,446,353 (current ratio of 4.17:1) as
compared to $2,006,148 (current ratio of 2.71:1) at December 31, 2002. |
