COM DEV Announces Solid Second Quarter Fiscal 2013 Results

CAMBRIDGE, ON, June 6, 2013 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced second quarter results for the three-month period ended April 30, 2013. All amounts are stated in Canadian dollars unless otherwise noted.

Second Quarter Highlights

• Revenue was $55.2 million, up 10.2 percent over second quarter 2012 revenues of $50.1 million.
• Solid order performance with $57.0 million in new business in the quarter resulted in a book to bill ratio of 1.03 - the fifth consecutive quarter with a ratio greater than 1.0.
• 28% gross margin in the core space equipment business, up from 25% in Q2 2012, reflected the quality of the Company's underlying backlog, as well as solid engineering, manufacturing, and program management performance.
• Net income attributable to shareholders was $4.8 million, or $0.06 per share compared to Q2 2012, where the benefit of a one-time gain of $2.2 million from the sale of underutilized assets, boosted net income to $5.5 million, or $0.07.
• Increase in exactEarth subscription customer base to 70 from 41 in Q2 2012. In addition to subscription customers there are 60 customer trials currently underway, up from 16 in Q2 2012.
• Backlog grew by 11.8% to $149.1 million at April 30, 2013, up from $133.5 million at the end of Q2 2012.

"The second quarter of 2013 delivered solid results, with continued strong gross margins in our equipment business, and a book-to-bill ratio that stayed above 1.0 for the fifth consecutive quarter," stated Michael Pley, CEO of COM DEV. "Subsequent to our quarter-end we have seen a significant pick-up in announcements for new satellite orders and we maintain our outlook for growth in revenue in fiscal 2013."

Financial Review

COM DEV's fiscal 2013 second quarter revenues of $55.2 million increased by $5.1 million or 10.2 percent compared to $50.1 million the previous year. The revenue split between the three market segments was 47 percent commercial, 34 percent civil and 19 percent military, compared to a 54/28/18 split in 2012. It is important to note that communication satellite programs are increasingly being seen in the civil segment as emerging country national governments use satellites as an efficient means to provide communications infrastructure. These programs draw on the Company's same products as the more traditional commercial market segments. In general, bidding and order activity remains robust.

COM DEV received new orders totaling $57.0 million during the quarter, of which 44 percent were commercial, 41 percent were civil, and 15 percent were military. In the second quarter of 2012 the Company booked $59.3 million of new orders, with a commercial/civil/military split of 73/01/26.

Order backlog at April 30, 2013 was $149.1 million compared to $133.5 million at the end of the second quarter of fiscal 2012. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 54 percent, 29 percent and 17 percent respectively, compared to 55 percent 21 percent and 24 percent at April 30, 2012. The Company expects to convert approximately 61 percent of the total backlog into revenue during the balance of fiscal 2013.

Consolidated gross margin was $14.7 million in fiscal Q2 2013, representing 27 percent of total revenues, compared to $12.4 million or 25 percent of revenues in Q2 2012. The improvement was primarily the result of an increase in the Space Segment gross margin percentage to 28 percent (2012: 25 percent), slightly offset by a decrease in the Data Services Segment gross margin percentage due to higher depreciation from the successful commissioning of two exactEarth satellites and the higher operations costs of the expanded constellation to service exactEarth's growing customer base.

COM DEV recorded a net research and development expense of $0.1 million in Q2 2013, compared to $0.1 million in Q2 2012. Gross R&D spending declined to $2.8 million from $3.9 million while R&D funding from external sources decreased to $0.7 million from $1.0 million. The Company also recognized $2.0 million of Investment Tax Credits (ITCs) in Q2 2013, compared to $2.8 million in Q2 2012, which helped to offset income tax expense.

General expenses in Q2 2013 at $4.9 million were unchanged from the same quarter in the prior year, and selling expenses at $3.0 million were marginally higher than the $2.9 million from Q2 2012. In general, selling expenses fluctuate from quarter to quarter and year to year depending on the volume of bids and proposal work that is underway.

Net income attributable to shareholders was $4.8 million in Q2 2013, compared to $5.5 million in 2012.  While that net income figure is lower year over year by $0.7 million, current quarter gross margin percentage strength generated $2.3 million more in gross margin versus Q2 2012.  The comparative prior year's net income contained a $2.2 million one-time gain from the sale of underutilized Intellectual Property, as well as a $1.0 million higher valuation gain on the Company's foreign exchange hedge portfolio due to the strengthening of the Canadian dollar in Q2 of 2012.

The Company generated $11.9 million of cash from operating activities in Q2 2013, compared with 2012 when $1.8 million was generated. The Company generated $6.1 million in working capital in Q2 2013, which compares to $0.7 million generated in working capital in Q2 2012. This increase in working capital was mainly due to a decrease in accounts receivable, inventory and contracts in progress, offset by an increase in prepaid and decreases in accounts payable and billings in excess of costs and earnings on contracts in progress.

During the quarter the Company received a settlement proposal from the Canada Revenue Agency related to a dispute over Corporate Minimum Tax, and Capital Tax reassessments.  The terms of that proposal have been reflected in the Q2 financial statements, including comparative figures.

The Company's basic share count stood at 76,397,656 on June 6, 2013.

Conference Call

A conference call will be held Thursday, June 6, 2013 at 5:00 pm EDT to discuss this announcement.  To access the call, dial 647-427-7450 or 1-888-231-8191.  To access the live webcast, please visit the Company's website at www.comdevintl.com or www.newswire.ca for directions.  Participants will require Windows Media Player™ to listen to the webcast.

About COM DEV

COM DEV International Ltd. (www.comdevintl.com) is a leading global provider of space hardware and services.  With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced subsystems and microsatellites that are sold to major satellite prime contractors, government agencies and satellite operators, for use in communications, space science, remote sensing and defense applications. COM DEV's majority-owned subsidiary, exactEarth Ltd., provides satellite data services.

This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding COM DEV's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. COM DEV uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by COM DEV in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors COM DEV believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to COM DEV's expectations and predictions is subject to any number of risks, assumptions and uncertainties.  Many factors could cause COM DEV's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release.  These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of COM DEV's customers; the competition COM DEV faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of COM DEV's products or services.

The triangular logo and the word COM DEV are each registered trademarks and the property of COM DEV Ltd. All rights reserved.

COM DEV International Ltd.
Consolidated Interim Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited
For the three months ended April 30							2013					2012
	Revenue						$		55,229			$		50,110
	Cost of revenue								40,492					37,732
	Gross margin								14,737					12,378
	Research and development costs								2,777					3,853
	Research and development recovery								658					1,020
	Investment tax credits recoverable								2,011					2,798
	Net research and development expense (recovery)								108					35
	Selling expenses								2,977					2,946
	General expenses								4,948					4,881
									6,704					4,516
	Interest expense								169					257
	Foreign exchange gain								(111)					(1,158)
	Other expense (income)								267					(1,975)
Income before income taxes							$		6,379			$		7,392
	Income tax expense								1,932					2,247
Net income							$		4,447			$		5,145
Attributable to:
	Shareholders						$		4,780			$		5,529
	Non-controlling interest								(333)					(384)
							$		4,447			$		5,145
Other comprehensive income:
	Foreign currency translation								262					(497)
Comprehensive income							$		4,709			$		4,648
Earnings per share
Basic and diluted earnings per share									$0.06					$0.07
See accompanying notes to consolidated financial statements

COM DEV International Ltd.
Consolidated Interim Statements of Operations
(Canadian dollars in thousands, except for per share figures)
Unaudited
For the six months ended April 30							2013					2012
	Revenue						$		107,512			$		97,319
	Cost of revenue								79,150					71,891
	Gross margin								28,362					25,428
	Research and development costs								5,353					7,636
	Research and development recovery								1,139					2,788
	Investment tax credits recoverable								3,624					3,838
	Net research and development expense								590					1,010
	Selling expenses								5,550					5,559
	General expenses								9,487					9,279
									12,735					9,580
	Interest expense								287					503
	Foreign exchange gain								(463)					(1,513)
	Other expense (income)								105					(1,764)
Income before income taxes							$		12,806			$		12,354
	Income tax expense								4,182					3,743
Net income							$		8,624			$		8,611
Attributable to:
	Shareholders						$		9,369			$		9,424
	Non-controlling interest								(745)					(813)
							$		8,624			$		8,611
Other comprehensive income:
	Foreign currency translation								452					(476)
Comprehensive income							$		9,076			$		8,135
Earnings per share
Basic and diluted earnings per share									$0.12			$		0.12
See accompanying notes to consolidated financial statements

COM DEV International Ltd.
Consolidated Interim Statements of Financial Position
(Canadian dollars in thousands)
Unaudited
							As at					As at				As at
							April 30,					October 31,				November 1,
							2013					2012				2011
Assets
	Current
		Cash and cash equivalents					$	33,101			$	25,794			$	27,618
		Accounts receivable						37,703				41,722				47,563
		Inventory						56,826				64,763				46,147
		Prepaid and other						3,612				3,214				1,421
		Income taxes recoverable						2,384				2,266				2,159
		Investment tax credits - current						2,422				2,162				4,684
								136,048				139,921				129,592
	Non-current
		Property, plant and equipment						87,774				86,000				73,973
		Intangible assets						14,424				14,600				15,576
		Goodwill						2,245				2,205				2,200
		Investment tax credits						4,185				2,124				9,493
		Deferred income tax assets						12,520				14,728				1,779
Total assets							$	257,196			$	259,578			$	232,613
Liabilities
	Current
		Accounts payable and accrued liabilities					$	22,968			$	30,622			$	25,830
		Income taxes payable						1,279				851				302
		Provisions						833				430				1,172
		Billings in excess of costs and earnings on contracts in progress						18,307				22,448				9,977
		Current portion of loans payable						4,481				3,978				8,867
								47,868				58,329				46,148
	Non-current
		Loans payable						15,764				16,358				14,687
		Accounts payable and accrued liabilities						398				525				930
		Employee future benefits						3,823				3,719				4,494
								19,985				20,602				20,111
	Total liabilities							67,853				78,931				66,259
Shareholders' equity
	Share capital							346,262				345,876				345,666
	Treasury stock							(1,516)				(432)				-
	Contributed surplus							9,616				9,298				9,570
	Deficit							(171,955)				(181,324)				(197,720)
	Non-controlling interest							6,572				7,317				8,976
	Accumulated other comprehensive loss							364				(88)				(138)
	Total shareholders' equity							189,343				180,647				166,354
Total liabilities and shareholders' equity							$	257,196			$	259,578			$	232,613
See accompanying notes to consolidated financial statements

COM DEV International Ltd.
Consolidated Interim Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited
For the three months ended April 30					2013					2012
Operating activities
	Net income				$		4,447			$		5,145
	Amortization						2,800					2,040
	Gain on disposal of assets						-					(2,197)
	Defined benefit plan expenses						138					153
	Defined benefit plan contributions						(231)					(961)
	Stock based compensation expense						204					423
	Employee stock ownership plan awards						48					52
	Amorization of issue costs, effective interest, and unrealized foreign exchange on loans						284					159
	Investment tax credits recoverable						(2,011)					(2,798)
	Deferred income tax expense						16					1,760
	Payment of withholding tax on behalf of employees upon settlement of restricted stock units						-					(881)
	Unrealized foreign exchange loss (gain) on derivatives						159					(1,746)
							5,854					1,149
	Net change in non-cash working capital items						6,085					686
Operating activities							11,939					1,835
Financing activities
	Purchase of treasury stock						(625)					(355)
	Advance of long-term debt						540					-
	Repayment of long-term debt						(865)					(2,215)
Financing activities							(950)					(2,570)
Investing activities
	Acquisition of property, plant and equipment						(3,787)					(3,725)
	Proceeds on disposal of property, plant and equipment						-					2,197
	Acquisition of intangible assets						(480)					96
Investing activities							(4,267)					(1,432)
Effect of exchange rate changes on cash							(7)					(197)
Net increase (decrease) in cash							6,715					(2,364)
Cash and cash equivalents, beginning of the period							26,386					23,521
Cash and cash equivalents, end of the period					$		33,101			$		21,157
Interest paid					$		128			$		271
Taxes paid					$		-			$		4
See accompanying notes to consolidated financial statements

COM DEV International Ltd.
Consolidated Interim Statements of Cash Flows
(Canadian dollars in thousands)
Unaudited
For the six months ended April 30					2013					2012
Operating activities
	Net income				$		8,624			$		8,611
	Amortization						5,401					4,583
	Gain on disposal of assets						(5)					(2,167)
	Defined benefit plan expenses						273					312
	Defined benefit plan contributions						(231)					(1,211)
	Stock based compensation expense						673					914
	Employee stock ownership plan awards						110					119
	Amorization of issue costs, effective interest, and unrealized foreign exchange on loans						527					285
	Investment tax credits recoverable						(3,624)					(3,838)
	Deferred income tax expense						2,208					2,945
	Payment of withholding tax on behalf of employees upon settlement of restricted stock units						(33)					(881)
	Unrealized foreign exchange loss (gain) on derivatives						286					(2,167)
							14,209					7,505
	Net change in non-cash working capital items						2,946					(103)
Operating activities							17,155					7,402
Financing activities
	Shares issued						6
	Purchase of treasury stock						(1,136)					(355)
	Advance of long-term debt						540					-
	Repayment of long-term debt						(1,158)					(4,687)
Financing activities							(1,748)					(5,042)
Investing activities
	Acquisition of property, plant and equipment						(5,526)					(8,925)
	Proceeds on disposal of property, plant and equipment						43					2,201
	Acquisition of intangible assets						(1,207)					(1,406)
Investing activities							(6,690)					(8,130)
Effect of exchange rate changes on cash							(1,410)					(691)
Net increase (decrease) in cash							7,307					(6,461)
Cash and cash equivalents, beginning of the period							25,794					27,618
Cash and cash equivalents, end of the period					$		33,101			$		21,157
Interest paid					$		276			$		533
Taxes paid					$		222			$		169
See accompanying notes to consolidated financial statements

COM DEV International Ltd.
Consolidated Interim Statements of Changes in Equity
(Canadian dollars in thousands)
Unaudited
For the six months ended April 30, 2013				Total			Deficit			Accumulated Other Comprehensive Loss			Share Capital			Treasury Stock			Non-controlling Interest			Contributed Surplus
Balance, October 31, 2012		$		180,647		$	(181,324)		$	(88)		$	345,876		$	(432)		$	7,317		$	9,298
Comprehensive income				9,076			9,369			452			-			-			(745)			-
Common stock issued				6			-			-			386			-			-			(380)
Expense recognized for ESOP awards				110			-			-			-			-			-			110
Treasury stock				(1,136)			-			-			-			(1,136)			-			-
Settlement of long-term incentive plans				(33)			-			-			-			52			-			(85)
Expense recognized for long-term incentive plans				517			-			-			-			-			-			517
Expense recognized for stock-based compensation				156			-			-			-			-			-			156
Balance, April 30, 2013		$		189,343		$	(171,955)		$	364		$	346,262		$	(1,516)		$	6,572		$	9,616
For the six months ended April 30, 2012
Balance, October 31, 2011		$		166,355		$	(197,720)		$	(138)		$	345,666		$	-		$	8,977		$	9,570
Comprehensive income				8,135			9,424			(476)			-			-			(813)			-
Common stock issued				-			-			-			196			-			-			(196)
Expense recognized for ESOP awards				119			-			-			-			-			-			119
Treasury stock				(355)			-			-			-			(355)			-			-
Settlement of long-term incentive plans				(881)			-			-			-			-			-			(881)
Expense recognized for long-term incentive plans				750			-			-			-			-			-			750
Expense recognized for stock-based compensation				164			-			-			-			-			-			164
Balance, April 30, 2012		$		174,287		$	(188,296)		$	(614)		$	345,862		$	(355)		$	8,164		$	9,526
See accompanying notes to consolidated financial statements

SOURCE: Com Dev International Ltd.

Gary Calhoun
Chief Financial Officer
Tel:  [phone] ext. 2826
[email protected]

Craig MacPhail
TMX Equicom
Tel: [phone] ext. 290
[email protected]