COM DEV Announces First Quarter Fiscal 2010 Results
CAMBRIDGE - COM DEV International Ltd. announced first quarter financial results for the three month period ended January 31, 2010.
First Quarter Highlights
* Revenue was $56.7 million, compared to $56.5 million recorded in the first quarter of 2009.
* Gross margin was 24%, compared to 26% in Q1 2009.
* Net income was $2.2 million, or $0.03 per share, compared to $4.4 million or $0.06 per share for the prior year period.
* New orders won in the first quarter totaled $51 million, compared to $88 million a year earlier and $67 million in the fourth quarter of fiscal 2009.
* Backlog at January 31, 2010 was $157 million, compared to $163 million at the end of fiscal 2009. All amounts are stated in Canadian dollars unless otherwise noted.
“In the first quarter we maintained revenue levels from last year despite currency headwinds, but a number of additional factors contributed to suppressing our margins and profitability,” said John Keating, CEO of COM DEV. “The program performance issues identified at the end of fiscal 2009 had an impact on our margins this quarter, as anticipated, and we also experienced cost increases on a couple of other programs. Our continued investment in growth included over $1 million of operating expenses for our exactEarth subsidiary which did not exist a year ago.”
Mr. Keating continued: “We remain optimistic about our prospects for fiscal 2010. We have seen a good start to contract awards already in the second quarter, and our new business pipeline indicates a strong possibility of achieving record orders for the year. exactEarth continues to meet our expectations, having opened its new data centre and won a $1.4 million contract from the Canadian Government. The Government has also announced funding for the RADARSAT Constellation Mission, a program on which we expect to play an important role.”
COM DEV's fiscal 2010 first quarter revenues of $56.7 million represented an increase of $0.2 million or 0.3% over the first quarter of 2009. The revenue split between the three market segments was 59% commercial, 30% civil and 11% military, compared to a 59/24/17 split in the first quarter of 2009. Based on current market activity levels, and the Company’s historic success rate at winning new business, management continues to expect fiscal 2010 revenue to grow by at least 10% over fiscal 2009.
COM DEV received new orders totaling $51 million during the first quarter, of which 60% were commercial, 21% were civil, and 19% were military. In Q1 2009 the Company booked $88 million of new orders, with a commercial/civil/military split of 51/12/37.
Order backlog at quarter-end was $157 million, compared to backlog of $163 million three months earlier, and $189 million one year ago. These variations in backlog are consistent with historical patterns as the order profiles are typically lumpy in nature. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 46%, 34% and 20% respectively, compared to 44%, 35% and 21% at January 31, 2009.
Gross margin was $13.4 million in the first quarter, representing 24% of revenues, compared to $14.7 million or 26% of revenues in the first quarter of 2009. The decrease in gross margin percentage was mainly the result of a small number of projects with reduced gross margins, as announced in Q4 2009, cost increases on a small number of commercial programs in Q1 2010 and less favourable exchange rates.
Net research and development expense was $2.9 million in the quarter, compared to $2.8 million in the first quarter of 2009. Gross R&D spending decreased by 4% from a year earlier to $3.7 million, but outside funding of R&D decreased by 26% to $0.8 million.
Selling expenses were $2.7 million in the first quarter, compared to $2.0 million in Q1 2009. The increase was due to a higher level of bidding costs in support of increased bidding activity, higher business development and sales and marketing costs in exactEarth and our COM DEV Canada division, and to an increase in commission costs. General and administrative expenses were $6.3 million, compared with $5.4 million in Q1 2009, with the increase due primarily to the startup activities in the exactEarth subsidiary and higher salary and benefit costs.
Net income for the quarter was $2.2 million, compared to $4.4 million in Q1 2009, while earnings per share were $0.03, compared to $0.06 a year earlier.
COM DEV ended the quarter with $18.2 million of cash and equivalents, compared to $21.4 million at October 31, 2009. Operating activities generated $4.4 million of cash in the first quarter. Financing activities used $1.6 million of cash, while investing activities used $5.9 million of cash. At January 31, 2010, COM DEV had outstanding debt of $18.2 million including the current portion, and the Company’s $32 million credit facility was not drawn upon.
The Company’s basic share count did not change during the first quarter, and stood at 76,100,289 on January 31, 2010 (fully diluted: 77,249,777).