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Avigilon Corporation Announces First Quarter 2012 Results

05/10/2012

VANCOUVER, May 10, 2012 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in high-definition (HD) surveillance systems, today announced its financial results for the three months ended March 31, 2012. All figures are stated in Canadian dollars unless otherwise noted.

First Quarter 2012 Highlights

Revenue was $17.8 million, an increase of 77% over Q1 2011 revenue of $10.0 million.
Gross margin was 48%, compared to 44% a year earlier.
EBITDA was $1.2 million, an increase of 100% over Q1 2011 EBITDA of $0.6 million.
    • (See "Non-IFRS Measures" below.)
    Net income was $0.6 million, compared to $0.1 million in Q1 2011.

"In the first quarter of 2012, we effectively executed on our top priority of revenue growth," said Alexander Fernandes, president and chief executive office at Avigilon. "Our innovative HD technology is enjoying rapid and widespread global customer adoption while also accelerating the video surveillance market's transition from analog to high-definition."

Financial Review

Avigilon reported revenue of $17.7 million in the three months ended March 31, 2012, an increase of $7.7 million or 77% compared to $10.0 million of revenue in the comparable period of 2011.  The Company generated higher product sales volumes worldwide, as a result of new product offerings, expansion into new markets, and greater penetration in existing markets.  Revenue growth was particularly strong in the North America, EMEA, and Latin America regions.  Avigilon's revenues have historically experienced some seasonality, with the first and third quarters generally being slower than the second and fourth quarters.

Gross margin was $8.5 million in the first quarter, an increase of $4.1 million or 93% from $4.4 million the previous year. As a percentage of revenue, gross margins were 48% in Q1 2012 compared to 44% a year earlier, with the increase largely due to a change in sales mix towards higher margin products.

Selling and marketing expenses were $4.3 million in Q1 2012, an increase of $2.0 million or 82% over the prior year's first quarter. The increase was primarily due to a higher number of sales personnel to support continuing revenue growth, and the development of a new and expanded marketing program.

Research and development expenses, net of related income tax credits, were $1.1 million in the first quarter of 2012, a $0.5 million increase compared to the previous year.  The Company has increased its investment in R&D as it focuses on continuing to expand and enhance its product offering.

General and administrative expenses were $2.1 million in 2011, up $1.1 million from $1.0 million of G&A expense in 2010. The increase was primarily due to additional personnel and their related expenses to support Avigilon's growth and its status as a public company.

EBITDA was $1.2 million in the first quarter, an increase of $0.6 million or 100% compared to $0.6 million in Q1 2011.  The increase was attributable to the growth in revenue.

Net income for the quarter was $647,000, an increase of $526,000 compared to net income of $121,000 in Q1 2011. Earnings per share were $0.02 (basic and diluted), compared to $0.01 a year earlier.  Avigilon's basic share count at March 31, 2012 was 31, 261,287.

Financial statements can be downloaded from the Avigilon website at http://avigilon2012.q4web.com or SEDAR at http://www.sedar.com/.

Conference Call

Avigilon has scheduled a conference call to discuss these results on Thursday, May 10, 2012, beginning at 5:00 p.m. EDT (2:00 p.m. PDT). To access the call, dial 647-427-7450 or 1-888-231-8191, or view the webcast at http://avigilon2012.q4web.com. A replay will be available for one year on the Company's website, and for one week by dialing 778-371-8506, 416-849-0833 or 1-855-859-2056, reference number 77105786.

Non-IFRS Measures

The term "EBITDA" refers to earnings before deducting interest, taxes, depreciation, amortization, foreign exchange gain or loss, and stock-based compensation. Management believes that EBITDA is a useful measure as it provides an indication of the operational results of the business prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset amortization. EBITDA does not have a standardized meaning prescribed by International Financial Reporting Standards (IFRS) and is not necessarily comparable to similar measures provided by other companies. Accordingly, investors are cautioned that EBITDA should not be construed as an alternative to operating income or net income determined in accordance with IFRS as an indicator of the Company's financial performance or as a measure of its liquidity and cash flows.

About Avigilon

Avigilon (TSX: AVO) is defining the future of protection through innovative high-definition surveillance solutions. Delivering the world's best image quality, our industry-leading HD network video management software and megapixel cameras are reinventing surveillance. Information about Avigilon can be found at www.avigilon.com.

Forward Looking Statements

Certain statements contained in this news release, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws.  Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information contained herein, we have made numerous assumptions. Although our management believes that the assumptions made and the expectations represented by such statement or information are reasonable, there can be no assurance that any forward-looking statement or information referenced herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Such risks, uncertainties and other factors include, among other things those risks identified in Avigilon's prospectus filed on SEDAR at www.sedar.com.

Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Avigilon. Accordingly, readers should not place undue reliance on forward-looking statements or information. Avigilon undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement.



Avigilon Corporation

Consolidated Statements of Income and Comprehensive Income

for the three months ended March 31, 2012 and 2011
(Expressed in thousands of Canadian dollars except number of shares and per share data)
(Unaudited)

  Three months ended
  March 31, March 31,
            2012          2011
  $ $
     
Sales        17,754       10,034
Cost of sales        (9,260)       (5,637)
           8,494         4,397
     
Operating expenses    
     
Selling and marketing          4,342         2,381
Research and development          1,068            520
General and administrative          2,117            992
Amortization               68             38
           7,595         3,931
     
Operating income             899            466
     
Other income (expense)    
     
Accretion expense                 -          (137)
Interest and other, net               30            (14)
Foreign exchange loss           (138)            (94)
            (108)          (245)
     
Income before income taxes             791            221
Income tax expense           (144)          (100)
Net income and total comprehensive income             647            121
     
Earnings per share    
Basic            0.02           0.01
Diluted            0.02           0.01
     
Weighted average number of shares outstanding (000s)    
Basic        31,051       17,248
Diluted        34,832       19,767



Avigilon Corporation


Consolidated Statements of Financial Position

as at March 31, 2012 and December 31, 2011
(Expressed in thousands of Canadian dollars except number of shares and per share data)

(Unaudited)    
  March 31, December 31,
            2012                2011
  $ $
Assets    
Current assets    
  Cash and cash equivalents          9,498             12,418
  Trade and other receivables        13,065             13,291
   Inventories        13,390             11,254
  Other financial assets               -                     88
  Prepaid expenses             588                 605
  Research tax credits          1,249                 973
         37,790             38,629
Non-current assets    
  Property and equipment          2,587               2,304
   Intangible assets               37                   46
  Deposits             275                 272
  Deferred tax assets          1,558               1,703
         42,247             42,954
     
Liabilities    
Current liabilities    
  Trade and other payables          6,237               7,765
  Bank loan               -                      -  
  Leasehold incentive               59                   59
           6,296               7,824
Non-current liabilities    
   Leasehold incentive             264                 279
           6,560               8,103
     
Shareholders' equity    
Capital stock        37,336             37,251
Equity compensation reserve          4,203               4,099
Deficit        (5,852)             (6,499)
         35,687             34,851
         42,247             42,954
     

 



Avigilon Corporation

Consolidated Statements of Changes in Equity

for the three months ended March 31, 2012 and 2011
(Expressed in thousands of Canadian dollars except number of shares and per share data)
(Unaudited)

          Total
  Capital stock Equity   shareholders'
  Shares Amount reserve Deficit equity
Balance, January 1, 2011   17,248,202         9,559         3,753         (10,328)              2,984
Net income and total comprehensive income                -               -                - 121                121
Stock-based compensation                -                -             18                 18
Balance, March 31, 2011   17,248,202         9,559         3,771         (10,207)              3,123
            
Balance, January 1, 2012   31,021,287       37,251         4,099           (6,499)             34,851
Net income and total comprehensive income -                -                -             647                647
Share issue costs         (20)              -       -                  (20)
Stock-based compensation -         104 -                  104
Issuance of common stock      105,000          105              -   -                  105
Balance, March 31, 2012   31,126,287       37,336         4,203           (5,852)             35,687
           



Avigilon Corporation


Consolidated Statements of Cash Flows

for the three months ended March 31, 2012 and 2011

(Expressed in thousands of Canadian dollars except number of shares and per share data)
(Unaudited)

  Three months ended
  March 31, March 31,
          2012          2011
  $ $
Cash flows from operating activities    
  Net income for the period                   647                   121
  Adjustments for non-cash items    
      Amortization                   160                   106
      Stock-based compensation                   104                    18
      Dividend Expense                       -                   137
      Tax expense                   144                   100
      Unrealized foreign exchange loss (gain)                    29                      8
     Interest expense (income)                   (30)                    14
                    1,054                   504
  Changes in working capital    
      Decrease (increase) in trade & other receivables                   296                   235
      Decrease (increase) in deposits                     (2)                 (443)
      Increase in inventories              (2,137)              (2,538)
      Decrease (increase) in prepaid expenses and deposits                    17                 (458)
      Decrease (increase) in research tax credits                 (276)                 (136)
      Increase (decrease) in trade and other payables              (1,518)                   236
  Net changes in working capital              (3,620)              (3,104)
   Interest (paid) received                    30                   (14)
Net cash used in operating activities              (2,536)              (2,614)
Cash flows from investing activities    
  Purchase of property and equipment                 (449)                   (89)
  Purchase of intangible assets                       -                     (7)
Net cash used in investing activities                 (449)                   (96)
Cash flows from financing activities    
  Proceeds from (to) bank loan                       -                1,370
  Issuance of common stock                   105                       -
  Share issuance costs                   (20)                       -
Net cash provided by financing activities                    85                1,370
Effect of foreign exchange rate changes on cash                   (20)                   (40)
Increase (decrease) in cash              (2,920)              (1,380)
Cash, beginning of period              12,418                2,330
Cash, end of period                9,498                   950