Carmanah Reports First Quarter 2011 Results and Announces Resignation of CEO Ted Lattimore effective December 31, 2011
Carmanah Technologies Corporation (TSX: CMH) (the Company or Carmanah) today reported its first quarter financial results for the period ended March 31, 2011 and the resignation of Ted Lattimore, CEO, effective December 31, 2011.
Sales for the three months ended March 31, 2011 were $9.6 million, up 18% from $8.1 million for the same quarter in 2010. Net income for the quarter was $0.2 million compared to break-even in the same period of the prior year.
Revenue results for the first quarter of 2011 were ahead of plan, aligned with earlier provided guidance, the best quarterly performance in over two years; and profitability was greater than planned as the lower cost structure is already paying off, stated Ted Lattimore, Chief Executive Officer. Our Illumination outdoor area lighting business achieved $1.5 million revenue by way of a variety of purchase orders approximately $0.1 million short of our all-time quarterly high - and immediate results were achieved in Latin America with the introduction of the EG300 systems. Our Signals business experienced a shortfall in the Marine sector due to the slow seasonal breakout of winter ice conditions and our Grid-tie division over-contributed as a result of continuing success with Ontarios Feed-in-Tariff program.
Were encouraged with the performance in first quarter of 2011 and even more so as the momentum that has been building since late 2010 is overflowing into the second quarter, Lattimore commented. As we highlighted in our year-end review, many bold initiatives are beginning to be rewarded: the successful partnership with ADB has created a larger market for our Aviation Signal products and provides a much broader distribution channel to reach this market as Carmanahs products complement ADBs portfolio of airfield lighting systems. Our Mobile business is accelerating as the recession loosens its grip on the recreational vehicle and fleet markets and new customers purchase volume of our Go Power! brand through new channels such as Amazon.com. Carmanahs commitment to the Ontario FIT program has positioned us as the clear leader in roof-top industrial Grid-Tie in the province, with multi-million dollar contracts now being awarded. Our award winning EverGEN 1700 series Illumination outdoor area lighting is being installed in a variety of situations in North America, and the engineering platform resulting from the EverGEN allowed us to launch the lower cost EG300 series in record time in January for developing markets - with competitive pricing and immediate sales. A further boost to our Illumination outdoor area lighting effort came via a recent market assessment study published by lighting industry giant Philips. Philips estimates the global potential for solar powered outdoor LED lighting at $1.0 billion annually; two to three times larger than Carmanahs previous estimates. In all, were very pleased with the performance of both the Lighting and Solar Power Systems divisions, and see returns coming from our earlier strategic investments in product development, sales and distribution re-organization and partnerships, and aligning the operational structure along functional lines. Revenue per employee for 2011 is estimated to be in excess of $0.5 million, which is an increase of almost double the revenue per employee over the prior year. concluded Lattimore.
With regards to the lawsuits involving Lightech, Management is aggressively defending its rights and taking all measures to bring the matter to an end, Lattimore stated. In 2010, we embarked on our previously announced non-organic growth strategy with the signing of a definitive agreement to purchase Lightech Electronics subject to several conditions precedent of which the main one was the successful completion of an equity offering. As a result of steps taken by a previously unknown significant shareholder for the Company not to proceed with the equity offering, our Board of Directors determined after careful deliberation that it had no choice but to terminate the Lightech agreement in accordance with its rights under the Lightech agreement. That unfortunately resulted in legal actions initiated by both Carmanah and Lightech. Both actions are in the early stages of the litigation process.
Our 2011 performance is very sales focused, with additional efficiencies resulting from the restructuring initiatives we completed in 2010, to allow us to grow profitably, Lattimore continued. For the second quarter of 2011, we are anticipating revenues in the range of $10.5 million to $11.0 million, representing an increase of approximately 35% over the same period in 2010. We further anticipate a positive pre-tax income in the range of 3-5%, as we expect to benefit from a continued increase in Illumination and Grid-tie revenues and reduced operating expenses. Now that contracts are working their way through the FIT program process in Ontario, we see an inflow of million dollar plus contracts to the Grid-tie sector of our business during at least 2011. For 2011, we anticipate corporate organic revenue to increase approximately 15%, gross margins to be in the low 30% range, and lower overall operating expenses than 2010. This should enable us to achieve profitable operating results.
Carmanah today is also announcing the resignation of Ted Lattimore as CEO effective December 31, 2011. With Carmanah in profitable territory, enjoying some sales momentum, a more positive economic climate and having made some very positive steps into the $1 billion market for outdoor area lighting, it is best to act now to find the leader who can commit to realizing the Companys longer term potential said Lattimore. Rob Cruickshank, Chairman of the Company, states The turnaround of Carmanah, which has been the prime responsibility of Ted, is firmly in place. Were in a position now where the Board of Directors can manage and control a transition to a new CEO and position the role as a very attractive opportunity. The Company is now profitable, has a strong statement of financial position and solid footing and growth plans in each business unit. The Board is grateful for Teds contribution to the Company over the last 3 years and his anticipated involvement through the transition over the next few months. Lattimore will retain the CEO position and responsibilities until December 31, 2011, or earlier, if a replacement is assigned.
Revenue results for the first quarter of 2011 were ahead of plan, aligned with earlier provided guidance, the best quarterly performance in over two years; and profitability was greater than planned as the lower cost structure is already paying off, stated Ted Lattimore, Chief Executive Officer. Our Illumination outdoor area lighting business achieved $1.5 million revenue by way of a variety of purchase orders approximately $0.1 million short of our all-time quarterly high - and immediate results were achieved in Latin America with the introduction of the EG300 systems. Our Signals business experienced a shortfall in the Marine sector due to the slow seasonal breakout of winter ice conditions and our Grid-tie division over-contributed as a result of continuing success with Ontarios Feed-in-Tariff program.
Were encouraged with the performance in first quarter of 2011 and even more so as the momentum that has been building since late 2010 is overflowing into the second quarter, Lattimore commented. As we highlighted in our year-end review, many bold initiatives are beginning to be rewarded: the successful partnership with ADB has created a larger market for our Aviation Signal products and provides a much broader distribution channel to reach this market as Carmanahs products complement ADBs portfolio of airfield lighting systems. Our Mobile business is accelerating as the recession loosens its grip on the recreational vehicle and fleet markets and new customers purchase volume of our Go Power! brand through new channels such as Amazon.com. Carmanahs commitment to the Ontario FIT program has positioned us as the clear leader in roof-top industrial Grid-Tie in the province, with multi-million dollar contracts now being awarded. Our award winning EverGEN 1700 series Illumination outdoor area lighting is being installed in a variety of situations in North America, and the engineering platform resulting from the EverGEN allowed us to launch the lower cost EG300 series in record time in January for developing markets - with competitive pricing and immediate sales. A further boost to our Illumination outdoor area lighting effort came via a recent market assessment study published by lighting industry giant Philips. Philips estimates the global potential for solar powered outdoor LED lighting at $1.0 billion annually; two to three times larger than Carmanahs previous estimates. In all, were very pleased with the performance of both the Lighting and Solar Power Systems divisions, and see returns coming from our earlier strategic investments in product development, sales and distribution re-organization and partnerships, and aligning the operational structure along functional lines. Revenue per employee for 2011 is estimated to be in excess of $0.5 million, which is an increase of almost double the revenue per employee over the prior year. concluded Lattimore.
With regards to the lawsuits involving Lightech, Management is aggressively defending its rights and taking all measures to bring the matter to an end, Lattimore stated. In 2010, we embarked on our previously announced non-organic growth strategy with the signing of a definitive agreement to purchase Lightech Electronics subject to several conditions precedent of which the main one was the successful completion of an equity offering. As a result of steps taken by a previously unknown significant shareholder for the Company not to proceed with the equity offering, our Board of Directors determined after careful deliberation that it had no choice but to terminate the Lightech agreement in accordance with its rights under the Lightech agreement. That unfortunately resulted in legal actions initiated by both Carmanah and Lightech. Both actions are in the early stages of the litigation process.
Our 2011 performance is very sales focused, with additional efficiencies resulting from the restructuring initiatives we completed in 2010, to allow us to grow profitably, Lattimore continued. For the second quarter of 2011, we are anticipating revenues in the range of $10.5 million to $11.0 million, representing an increase of approximately 35% over the same period in 2010. We further anticipate a positive pre-tax income in the range of 3-5%, as we expect to benefit from a continued increase in Illumination and Grid-tie revenues and reduced operating expenses. Now that contracts are working their way through the FIT program process in Ontario, we see an inflow of million dollar plus contracts to the Grid-tie sector of our business during at least 2011. For 2011, we anticipate corporate organic revenue to increase approximately 15%, gross margins to be in the low 30% range, and lower overall operating expenses than 2010. This should enable us to achieve profitable operating results.
Carmanah today is also announcing the resignation of Ted Lattimore as CEO effective December 31, 2011. With Carmanah in profitable territory, enjoying some sales momentum, a more positive economic climate and having made some very positive steps into the $1 billion market for outdoor area lighting, it is best to act now to find the leader who can commit to realizing the Companys longer term potential said Lattimore. Rob Cruickshank, Chairman of the Company, states The turnaround of Carmanah, which has been the prime responsibility of Ted, is firmly in place. Were in a position now where the Board of Directors can manage and control a transition to a new CEO and position the role as a very attractive opportunity. The Company is now profitable, has a strong statement of financial position and solid footing and growth plans in each business unit. The Board is grateful for Teds contribution to the Company over the last 3 years and his anticipated involvement through the transition over the next few months. Lattimore will retain the CEO position and responsibilities until December 31, 2011, or earlier, if a replacement is assigned.
About Carmanah Technologies Corporation
As one of the most trusted names in solar technology, Carmanah has earned a reputation for delivering strong and effective products for industrial applications worldwide. Industry proven to perform reliably in some of the world's harshest environments, Carmanah solar LED lights and solar power systems provide a durable, dependable and cost effective energy alternative. Carmanah is a publicly traded company, with common shares listed on the Toronto Stock Exchange under the symbol "CMH.
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