VANCOUVER, Nov. 5, 2013 /CNW/ - Avigilon Corporation ("Avigilon" or the
"Company") (TSX: AVO), a leader in high-definition (HD) surveillance
systems, today announced its financial results for the three and nine
months ended September 30, 2013. All figures are stated in Canadian
dollars unless otherwise noted.
Third Quarter 2013 Financial Highlights
-
Revenue was $51.1 million, an increase of 101% over Q3 2012 revenue of
$25.5 million.
-
Gross margin was 53%, up from 51% a year earlier.
-
EBITDA1 was $12.7 million, a 213% increase over Q3 2012 EBITDA of $4.1 million.
-
Adjusted Earnings Per Share1 of $0.23, compared with $0.08 in Q3 2012
-
Net income rose to $8.6 million, a 298% increase from net income of $2.2
million in Q3 2012.
"Demand for our systems worldwide continues to grow rapidly, which is
clearly reflected in our financial performance for the third quarter as
we reached a milestone of more than $50 million in quarterly revenue,"
said Alexander Fernandes, president and chief executive officer at
Avigilon. "Our strategies are working, and we will continue to invest
to expand our global sales team, expand our product portfolio, and
increase marketing efforts. Combined with healthy underlying growth in
the high-definition surveillance market, these strategic investments
position us well to deliver sustainable long-term growth."
Financial Review
Avigilon reported Q3 2013 revenue of $51.1 million, an increase of 101%,
or $25.6 million, compared with revenue of $25.5 million for Q3 2012.
Revenue growth continued to be driven by a strong rise in product sales
volumes worldwide, reflecting greater customer adoption in existing
markets, further penetration of new target regions and sales of
recently launched products. In Q3 2013, Avigilon experienced
year-over-year sales growth between 46% and 115% in all six of its key
target geographic regions.
Gross margin was $27.2 million in Q3 2013 (53% of revenue), compared
with $13.0 million (51% of revenue) in Q3 2012. The increase in gross
margin percentage reflects higher-than-typical mix of software sales in
Q3 2013 due to the recent launch of Avigilon Control Center 5.0, as
well as the ongoing effects of greater purchasing power, economies of
scale and improved manufacturing efficiencies. Although the Company's
gross margin increased year-over-year, management does not expect
significant additional gross margin expansion in the near term due to
the Company's focus on rapid growth in revenue and market share.
Selling and marketing expenses in Q3 2013 were $10.0 million, a $4.0
million increase compared to $6.0 million in Q3 2012. The increase
reflects planned investments to significantly expand the Company's
global sales team and brand awareness, which it believes will drive
future revenue growth. As a result of these ongoing investments, sales
and marketing expenses could increase as a percentage of revenue in the
near-term, but over the longer-term, the Company expects selling and
marketing expenses as a percentage of revenue to decline.
Research and development (R&D) expenses, net of related income tax
credits, were $2.3 million for Q3 2013, a $1.1 million increase
compared to $1.2 million in Q3 2012. Gross R&D spend was $3.2 million
in Q3 2013, compared to $1.7 million in the prior year. The growth in
spending is consistent with the Company's plan to increase its
development team to further enhance and expand its product offering.
Avigilon expects to continue to increase its R&D investment to support
new product development.
General and administrative expenses (G&A) for Q3 2013 were $3.9 million,
an increase of $2.2 million from Q3 2012. The increase is primarily due
to additional personnel in finance, customer service and related areas
to support the Company's rapid growth. The Company expects continued
increases in G&A expenses in line with its growth plans, but believes
these increases will occur at a slower rate than revenue.
EBITDA was $12.7 million in Q3 2013, an increase of $8.7 million, or
213%, compared to $4.1 million in Q3 2012. The year-over-year
improvement largely reflects the Company's increase in revenue and
improved gross margin.
Q3 2013 net income was $8.6 million, up by $6.4 million, compared with
net income of $2.2 million in Q3 2012. Earnings per share were $0.22
(basic) and $0.21 (diluted) for Q3 2013, compared to $0.07 (basic) and
$0.06 (diluted) a year earlier. Adjusted earnings per share, which the
Company defines as earnings before share-based payments, foreign
exchange gain/loss, business acquisition costs and related tax effects,
were $0.23 in Q23 2013 compared with $0.08 in Q3 2012.
As at September 30, 2013, Avigilon had cash and cash equivalents of
$34.2 million, and 39,986,934 basic and 40,314,595 diluted shares
outstanding.
The Company's financial statements and MD&A can be downloaded from the
Avigilon website at http://ir.avigilon.com or from the Company's profile on SEDAR at http://www.sedar.com/.
Conference Call
Avigilon has scheduled a conference call to discuss these results on
Tuesday, November 5, 2013, beginning at 5:00 p.m. EDT (2:00 p.m. PDT).
To access the live call, dial 647-427-7450 or 1-888-231-8191, or view
the webcast at http://ir.avigilon.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 74249481.
1Non-IFRS Measures
Management uses certain non-IFRS measures that it believes are useful to
investors in evaluating the performance and results of the Company. 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. Management also believes that analyzing operating results
exclusive of significant non-cash items provides a useful measure of
the Company's performance. The term "Adjusted EPS" refers to earnings
before share-based payments, foreign exchange gain/loss, business
acquisition costs and related tax effects. Please refer to the
reconciliation table that accompanies the financial statements in this
press release and is included in the Company's Management's Discussion
& Analysis for Q3 2013.
EBITDA and Adjusted EPS do not have standardized meanings prescribed by
International Financial Reporting Standards (IFRS) and are not
necessarily comparable to similar measures provided by other companies.
Accordingly, investors are cautioned that EBITDA and Adjusted EPS
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.
Additional information about Avigilon can be found at 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 Final Short Form Prospectus dated August 29, 2012 and filed
on the Company's profile 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 income statement
|
(Unaudited)
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2013
|
2012
|
|
2013
|
2012
|
|
|
$
|
$
|
|
$
|
$
|
Sales
|
|
51,157
|
25,508
|
|
122,400
|
67,612
|
Cost of sales
|
|
(24,006)
|
(12,542)
|
|
(58,154)
|
(34,493)
|
|
|
27,151
|
12,966
|
|
64,246
|
33,119
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Selling and marketing
|
|
9,975
|
6,014
|
|
28,184
|
17,595
|
Research and development
|
|
2,311
|
1,247
|
|
6,378
|
3,516
|
General and administrative
|
|
3,904
|
2,231
|
|
10,315
|
5,886
|
|
|
16,190
|
9,492
|
|
44,877
|
26,997
|
Operating income
|
|
10,961
|
3,474
|
|
19,369
|
6,122
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
Interest and other, net
|
|
227
|
16
|
|
286
|
65
|
Foreign exchange gain (loss)
|
|
151
|
(498)
|
|
341
|
(542)
|
|
|
378
|
(482)
|
|
627
|
(477)
|
|
|
|
|
|
|
|
Income before taxes
|
|
11,339
|
2,992
|
|
19,996
|
5,645
|
Current tax expense
|
|
(1,806)
|
(60)
|
|
(3,285)
|
(130)
|
Deferred tax expense
|
|
(911)
|
(768)
|
|
(1,900)
|
(1,392)
|
Net income
|
|
8,622
|
2,164
|
|
14,811
|
4,123
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
|
0.22
|
0.07
|
|
0.38
|
0.13
|
Diluted
|
|
0.21
|
0.06
|
|
0.37
|
0.12
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
Basic
|
|
39,973
|
32,710
|
|
39,114
|
31,713
|
Diluted
|
|
41,370
|
36,436
|
|
40,315
|
34,754
|
|
Consolidated statements of other comprehensive income
(Unaudited)
|
|
|
Three months ended
|
|
Nine months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2013
|
2012
|
|
2013
|
2012
|
|
|
$
|
$
|
|
$
|
$
|
Net income
|
|
8,622
|
2,164
|
|
14,811
|
4,123
|
Income (loss) on translation of foreign subsidiaries
|
|
34
|
-
|
|
(14)
|
-
|
Total comprehensive income
|
|
8,656
|
2,164
|
|
14,797
|
4,123
|
Avigilon Corporation
|
|
|
|
|
Consolidated statements of financial position
(Unaudited)
|
|
|
September 30,
2013
|
|
December 31,
2012
|
|
|
$
|
|
$
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
34,209
|
|
49,859
|
|
Trade and other receivables
|
|
30,221
|
|
18,453
|
|
Inventories
|
|
16,660
|
|
11,906
|
|
Prepaid expenses
|
|
1,622
|
|
1,283
|
|
|
82,712
|
|
81,501
|
Non-current assets
|
|
|
|
|
|
Property and equipment
|
|
6,927
|
|
3,669
|
|
Intangible assets
|
|
285
|
|
43
|
|
Deposits and prepaid expenses
|
|
369
|
|
613
|
|
Deferred tax assets
|
|
904
|
|
1,145
|
|
Goodwill
|
|
17,480
|
|
-
|
|
|
108,677
|
|
86,971
|
Liabilities
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade and other payables
|
|
17,417
|
|
15,572
|
|
Derivative financial instruments
|
|
158
|
|
-
|
|
Short-term leasehold incentive
|
|
149
|
|
109
|
|
|
17,724
|
|
15,681
|
Non-current liabilities
|
|
|
|
|
|
Long-term leasehold incentive
|
|
287
|
|
398
|
|
|
18,011
|
|
16,079
|
Shareholders' equity
|
|
|
|
|
Capital stock
|
|
70,769
|
|
66,559
|
Equity compensation reserve
|
|
4,430
|
|
3,663
|
Accumulated other comprehensive loss
|
|
(14)
|
|
-
|
Surplus
|
|
15,481
|
|
670
|
|
|
90,666
|
|
70,892
|
|
|
108,677
|
|
86,971
|
Avigilon Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of changes in equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Accumulated other
|
|
Total
|
|
|
Capital Stock
|
|
compensation
|
|
Surplus/
|
|
comprehensive
|
|
shareholders'
|
|
|
Shares
|
|
Amount
|
|
reserve
|
|
(Deficit)
|
|
loss
|
|
equity
|
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
January 1, 2012
|
|
31,021,287
|
|
37,251
|
|
4,099
|
|
(6,499)
|
|
-
|
|
34,851
|
Net income
|
|
-
|
|
-
|
|
-
|
|
4,123
|
|
-
|
|
4,123
|
Share issue costs
|
|
-
|
|
(1,732)
|
|
-
|
|
-
|
|
-
|
|
(1,732)
|
Share-based payments
|
|
-
|
|
-
|
|
557
|
|
-
|
|
-
|
|
557
|
Issuance of capital stock
|
|
5,152,812
|
|
27,471
|
|
-
|
|
-
|
|
-
|
|
27,471
|
Transfer to capital stock upon exercise of options
|
|
-
|
|
641
|
|
(641)
|
|
-
|
|
-
|
|
-
|
Deferred income tax effect on share issuance costs adjustments
|
|
|
|
433
|
|
|
|
|
|
|
|
433
|
Balance, September 30, 2012
|
|
36,174,099
|
|
64,064
|
|
4,015
|
|
(2,376)
|
|
-
|
|
65,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2013
|
|
37,705,799
|
|
66,559
|
|
3,663
|
|
670
|
|
-
|
|
70,892
|
Net income
|
|
-
|
|
-
|
|
-
|
|
14,811
|
|
-
|
|
14,811
|
Translation of foreign subsidiaries
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(14)
|
|
(14)
|
Share-based payments
|
|
-
|
|
-
|
|
2,317
|
|
-
|
|
-
|
|
2,317
|
Issuance of capital stock
|
|
2,281,135
|
|
2,660
|
|
-
|
|
-
|
|
-
|
|
2,660
|
Transfer to capital stock upon exercise of options
|
|
-
|
|
1,550
|
|
(1,550)
|
|
-
|
|
-
|
|
-
|
Balance, September 30, 2013
|
|
39,986,934
|
|
70,769
|
|
4,430
|
|
15,481
|
|
(14)
|
|
90,666
|
Avigilon Corporation
|
|
|
|
|
|
|
|
|
Consolidated statements of cash flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net income for the period
|
|
8,622
|
|
2,164
|
|
14,811
|
|
4,123
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
448
|
|
234
|
|
1,044
|
|
621
|
|
|
Lease incentives amortized
|
|
(22)
|
|
(15)
|
|
(70)
|
|
(44)
|
|
|
Write off of intangible assets
|
|
-
|
|
-
|
|
45
|
|
-
|
|
|
Write off of property and equipment
|
|
-
|
|
20
|
|
-
|
|
20
|
|
|
Share-based payments
|
|
880
|
|
333
|
|
2,316
|
|
557
|
|
|
Deferred tax expense
|
|
911
|
|
768
|
|
1,900
|
|
1,392
|
|
|
Current tax expense
|
|
1,806
|
|
60
|
|
3,285
|
|
130
|
|
|
Investment tax credits
|
|
(911)
|
|
(426)
|
|
(1,659)
|
|
(1,006)
|
|
|
Unrealized foreign exchange (gain) loss
|
|
631
|
|
240
|
|
(76)
|
|
237
|
|
|
Change in FV of derivative financial instrument
|
|
(462)
|
|
-
|
|
158
|
|
-
|
|
|
Interest income
|
|
(80)
|
|
(16)
|
|
(312)
|
|
(65)
|
|
|
11,823
|
|
3,362
|
|
21,442
|
|
6,840
|
|
Movements in working capital
|
|
|
|
|
|
|
|
|
|
|
(Increase) in trade and other receivables
|
|
(4,809)
|
|
1300
|
|
(11,526)
|
|
(270)
|
|
|
(Increase)/decrease in inventories
|
|
(1,962)
|
|
238
|
|
(4,724)
|
|
1,739
|
|
|
(Increase)/decrease in prepaid expenses and deposits
|
|
77
|
|
(96)
|
|
(5)
|
|
(592)
|
|
|
Increase/(decrease) in trade and other payables
|
|
939
|
|
4,113
|
|
130
|
|
2,966
|
|
Net movements in working capital
|
|
(5,755)
|
|
5,555
|
|
(16,125)
|
|
3,843
|
|
Interest (paid) received
|
|
80
|
|
16
|
|
312
|
|
65
|
|
Income taxes paid
|
|
(1,520)
|
|
(130)
|
|
(2,684)
|
|
(526)
|
Net cash provided by (used in) operating activities
|
|
4,628
|
|
8,803
|
|
2,945
|
|
9,347
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Acquisition net of cash acquired
|
|
-
|
|
-
|
|
(16,915)
|
|
-
|
|
Purchase of property and equipment
|
|
(2,545)
|
|
(851)
|
|
(4,185)
|
|
(1,758)
|
|
Purchase of intangible assets
|
|
(338)
|
|
(1)
|
|
(335)
|
|
(37)
|
Net cash used in investing activities
|
|
(2,883)
|
|
(852)
|
|
(21,435)
|
|
(1,795)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Issuance of capital stock
|
|
311
|
|
27,041
|
|
2,660
|
|
27,471
|
|
Share issuance costs
|
|
-
|
|
(1,704)
|
|
-
|
|
(1,732)
|
Net cash provided by financing activities
|
|
311
|
|
25,337
|
|
2,660
|
|
25,739
|
Effect of foreign exchange rate changes on cash
|
|
48
|
|
(139)
|
|
180
|
|
(157)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
2,104
|
|
33,149
|
|
(15,650)
|
|
33,134
|
Cash and cash equivalents, beginning of period
|
|
32,105
|
|
12,403
|
|
49,859
|
|
12,418
|
Cash and cash equivalents, end of period
|
|
34,209
|
|
45,552
|
|
34,209
|
|
45,552
|
SOURCE Avigilon Corporation