Hemisphere GPS Reports 2012 Second Quarter Results

CALGARY, Aug. 1, 2012 /CNW/ - (TSX: HEM) Hemisphere GPS today reported financial results for the second quarter ended June 30, 2012. All currency amounts are expressed in U.S. dollars.

For the quarter ended June 30, 2012, Hemisphere GPS reported revenues of $19.6 million, a 3% decrease from revenues of $20.1 million reported for the second quarter of 2011. Revenue from the Company's Agriculture business decreased 3% year-over-year for the quarter, while revenue from its Precision Products business grew by 1%. Agriculture segment revenues contributed 80% of total second quarter revenues, compared with 81% in the second quarter of 2011.

Revenue growth of 10% in Canada was offset by a decline of 14% in the United States - primarily driven by the impact of the US drought. The Company also experienced declines in Europe and South America of approximately 6%, tempered by increased sales in Australia and Asia.

Revenue by Region		Q2 2012	Q2 2011
United States		$6,834,000	$7,910,000
Canada		5,555,000	5,056,000
North America		12,389,000	12,966,000
Europe		3,595,000	3,809,000
Australia		1,219,000	1,207,000
Other International		2,382,000	2,142,000
		7,196,000	7,158,000
Total		19,585,000	20,124,000

"Sales in the United States, our largest sales region, were negatively impacted by the substantial drought conditions, particularly with our direct-to-farmer business model" stated Steven Koles, President and CEO of Hemisphere GPS. "Primarily due to these drought conditions we have tempered our growth expectations for the year down to 10%. However our mid to long-term outlook remains attractive despite the unfavorable weather and crop conditions this year. The resulting high grain prices benefit farming operations that were not as impacted by the drought, and long-term, grain commodities are expected to remain at historically high levels.  Incentive remains with farmers to invest in productive technology, and we have made several product releases recently with a major product release slated for the autumn buying season. This will be the most important product launch in the company's history and includes full cloud-based asset and data management and processing capabilities through the integration of our AgJunction platform."

Gross margin for the second quarter was 43% compared to 47% in the second quarter of 2011, with the year-over-year difference related to product pricing promotions during the quarter, cost increases and the impact of foreign currency.

Total operating expenses increased by $0.1 million from the second quarter of 2011, with the acquisition of AgJunction responsible for $0.7 million of increased expenses. Research and development expenses increased to $3.2 million from $2.5 million in the second quarter of 2011, with AgJunction operating expenses and amortization accounting for $0.4 million of the increase. Sales and marketing expenses decreased by $0.1 million to $3.6 million for the reporting quarter, despite AgJunction expenses of $0.3 million.

Hemisphere GPS reported a net loss of $0.4 million, or ($0.01) per share (basic and diluted) in the second quarter of 2012 compared to net profit of $0.8 million, or $0.01 per share (basic and diluted) in the second quarter of 2011.

For the six months ended June 30, 2012, Hemisphere GPS reported revenues of $42.2 million, a 2% increase from revenues of $41.4 million, for the same period in 2011. Gross margin for the first six months of 2012 was 45.3% compared to 47.6% in the six months of 2011. Operating expenses of $17.9 million for the six months ended June 30, 2012 increased $1.0 million, or 6% from the first half of 2011. The acquisition of AgJunction during the first quarter added operating costs, including amortization, of $1.4 million to the first half of 2012. The Company reported a profit of $1.0 million in the first half of 2012 or $0.02 per share (basic and diluted), compared to a profit of $2.6 million, or $0.04 per share (basic and diluted) in the first half of 2011.

At June 30, 2012, the Company held cash of $6.0 million, or $0.10 per share, compared to $6.7 million at December 31, 2011. Working capital was approximately $29 million, consistent with December 31, 2011.

The Company has 66,280,777 common shares outstanding.

AgJunction

During the first quarter, Hemisphere GPS strategically entered the emerging data services market in precision agriculture with the acquisition of AgJunction, a provider of a cloud-based data management software platform and wireless hardware to precision agriculture retailers and growers. With this acquisition Hemisphere GPS brings real-time decision-making information into the farmer's cab, enabling lower use of pesticides, fertilizer and fuel, while generating higher crop yield, resulting in more profitable farming operations. AgJunction provides attractive growth prospects for Hemisphere GPS. New features and partners are being added, along with additional retail sales locations. Today, AgJunction's client acres under management is 23 million, and growing.

AgJunction serves an emerging growth segment in precision agriculture where ever-increasing global food demand and higher input costs drive the demand for data management services. Over 32,000 growers in the U.S. and Western Canada are benefiting from AgJunction's wireless two-way transfer of data between their farm equipment, their farm office and agriculture service providers. Major agriculture retailers such as the Wilbur-Ellis Company and Crop Production Services Inc. (CPS) use AgJunction to better serve their customers' farming operations by providing data management, site-specific recommendations, tracking work orders, crop inputs and expenses. Delays in viewing and analyzing field information are eliminated. The process of transferring data from field equipment to cloud servers for spatial sorting, field linking, analyzing and creating plans is fast and easy. This works for all major brands of agricultural equipment.

Hemisphere GPS announced several products and enhancements to its AgJunction precision agriculture data services platform during the quarter:

• AgJunction expanded its compatibility with in-field systems through integration with the John Deere AgLogic fleet logistics management solution. Through the AgJunction cloud-based system, agricultural service providers such as fertilizer dealers, agronomists and co-ops benefit from the seamless two-way transfer of data and in-field work order management.
  
  
• Hemisphere GPS announced the new AgJunction Mobile for iOS, an enhancement to AgJunction, an in-field data collection system featuring global-positioning-system-enabled (GPS-enabled) boundary mapping and soil sampling. Available for both iPhone and iPad, AgJunction Mobile for iOS enables users to synchronize data based on their growers, farms, fields, field boundaries and directed sample locations. Recorded field data are automatically synchronized with the AgJunction cloud system for use in the field, back at the office or through an agriculture service provider.
  
  
• AgJunction added advanced weather data services provided by Weather Decision Technologies Inc. (WDT), providing AgJunction customers more insight and convenience into making weather-related decisions. WDT data includes high-resolution weather map overlays including current radar for the United States and Canada, one-hour and 24-hour precipitation totals, current wind speed, temperature and dew point.

Q2 Product Announcements

• Hemisphere GPS and Stara announced an expanded OEM partnership as part of Stara's new SpeedDrive X system at the AgriShow Rabeirão Pretoin São Paulo State, Brazil. SpeedDrive X will be factory installed as standard equipment on various models of Stara tractors, sprayers, and spreaders.  The new SpeedDrive X combines a customized Hemisphere GPS eDriveX automated steering system and A320 GNSS smart antenna and Stara Topper 4500 terminal providing total user management for precision agriculture.
  
  
• Hemisphere GPS released an affordable A325 GNSS Smart Antenna. This new design incorporates professional-level centimetre and submetre positioning accuracy powered by Hemisphere GPS's Eclipse receiver technology and includes L-band and Bluetooth communications support. A325 is a great fit for a variety of applications including agriculture, construction, straddle carriers, robotics, marine, survey and GIS.
  
  
• Hemisphere GPS announced multiple enhancements to its popular eDriveX automated steering system. With support for the VSi electric steering interface, improved contour functionality, and additional vehicle kit support, eDriveX v2.1 provides an accurate and affordable steering platform for precision farming applications. For eDriveX users needing long-range functionality, Hemisphere GPS released 400-megahertz radio repeater kits that extend the range of the company's RTK systems.
  
  VSi support brings high-performance steering to the simplicity of an electric steering wheel solution and allows eDriveX to be installed on vehicle platforms not previously targeted with hydraulic kits. VSi is a quick and easy performance solution when using eDriveX on a second tractor or other farm machinery.
  
  "We are constantly enhancing our successful eDriveX product line which offers industry leading performance and great value," said Kip Pendleton, senior vice-president and general manager of the Agriculture business for Hemisphere GPS. "Providing new and innovative product features is at the core of our solution-based approach to helping current and new customers become more efficient and productive."

Conference Call - 11:00 a.m. EDT

A conference call and webcast for shareholders, analysts and other members of the investment community has been scheduled for today at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) to discuss the financial results and provide an update on operations.

To participate in the conference call, please dial 1-647-427-7450 or 1-888-231-8191 approximately 10 minutes before the conference call and provide conference ID 12337426. Please note that a live webcast of the call will be available on the Hemisphere GPS Web site at http://www.hemispheregps.com.  The webcast will be archived for later review.

A recording of the call will be available through August 8. Please dial 1-416-849-0833 or 1-855-859-2056 and enter passcode 12337426 to listen to the rebroadcast.

About Hemisphere GPS

Hemisphere GPS designs and manufactures innovative, cost-effective GPS (GNSS) products for positioning, guidance, and machine control applications in agriculture, marine, survey, construction, and other markets. The Company holds numerous patents and other intellectual property and owns several leading brand names, including Outback Guidance®, a leading brand in precision GPS for agriculture. The Company is headquartered in Calgary, Alberta, with major product development, sales, and marketing facilities in Arizona, Kansas, and Australia. Hemisphere GPS is listed on the Toronto Stock Exchange (TSX) trading under the symbol "HEM" and is one of the TSX Cleantech designated companies. For more information about Hemisphere GPS, please go to www.hemispheregps.com.

The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Hemisphere GPS' control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Hemisphere GPS' actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceed, that Hemisphere GPS will derive therefrom.

Hemisphere GPS Inc.

Condensed Consolidated Statements of Financial Position
(Unaudited - expressed in U.S. dollars)
			June 30,  2012		December 31, 2011
Assets
	Cash and cash equivalents	$	6,003,024	$	6,721,314
	Accounts receivable		12,771,620		7,738,247
	Income tax credits receivable		477,972		237,224
	Inventories		19,315,207		20,383,734
	Prepayments and deposits		803,154		699,889
			39,370,977		35,780,408
Property, plant and equipment			5,841,308		5,805,906
Intangible assets			8,737,711		4,555,068
Goodwill			42,230,519		38,082,358
		$	96,180,515	$	84,223,740
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities		7,319,802		5,952,383
	Provisions		361,320		225,265
	Derivative financial liability		43,000		-
	Deferred revenue		1,592,357		681,226
	Finance lease		114,793		110,252
	Current portion of contingent consideration		244,000		-
	Current portion of long-term debt		600,000		-
			10,275,272		6,969,126
Deferred revenue			1,064,514		778,717
Finance lease			-		52,184
Contingent consideration			244,000		-
Long-term debt			900,000		-
Shareholders' equity:
	Share capital		119,258,485		115,168,510
	Equity reserve		7,001,263		4,783,284
Deficit			(42,520,019)		(43,528,081)
Accumulated other comprehensive loss			(43,000)		-
			83,696,729		76,423,713
		$	96,180,515	$	84,223,740

HEMISPHERE GPS INC.

Condensed Consolidated Statements of Comprehensive Income and Loss
(Unaudited - expressed in U.S. dollars)
		Three months ended				Six months ended
		June 30,				June 30,
		2012		2011		2012		2011
Sales		$	19,584,545	$	20,124,477	$	42,217,844	$	41,352,719
Cost of sales			11,203,463		10,669,319		23,086,761		21,666,272
			8,381,082		9,455,158		19,131,083		19,686,447
Expenses:
	Research and development		3,204,423		2,507,046		6,454,929		5,348,431
	Sales and marketing		3,614,038		3,724,173		7,604,887		7,267,312
	General and administrative		1,961,178		1,602,146		3,768,288		3,556,978
	Acquisition costs		-		-		117,475		-
	Strategic transaction investigation costs		-		800,320		-		800,320
			8,779,639		8,633,685		17,945,579		16,973,041
Results from operating activities			(398,557)		821,473		1,185,504		2,713,406
Foreign exchange loss			30,982		40,507		131,159		93,656
Interest and other income			(2,064)		(11,376)		(2,367)		(18,595)
			28,918		29,131		128,792		75,061
Profit (loss) for the period before
Income tax			(427,475)		792,342		1,056,712		2,638,345
Income tax			-		-		48,650		-
Profit (loss) for the period			(427,475)		792,342		1,008,062		2,638,345
Comprehensive income (loss)			(197,000)		3,000		(43,000)		333,000
Total comprehensive income (loss)		$	(624,475)	$	795,342	$	965,062	$	2,971,345
Earnings (loss) per common share:
Basic and diluted		$	(0.01)	$	0.01	$	0.02	$	0.04

Hemisphere GPS Inc.

Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2012 and 2011
(Unaudited - expressed in U.S. dollars)
				2012		2011
Cash flows from (used in) operating activities:
	Profit		$	1,008,062	$	2,638,345
	Items not involving cash:
		Depreciation and amortization		1,991,558		1,590,479
		Share-based payment transactions		207,600		330,889
		Unrealized foreign exchange gain		(5,014)		(46,625)
				3,202,206		4,513,088
	Change in non-cash operating working capital:
		Accounts receivable		(5,033,373)		(2,501,215)
		Income tax credits receivable		(240,748)		(354,198)
		Inventories		1,068,527		(31,003)
		Prepayments and deposits		(103,265)		(180,782)
		Accounts payable and accrued liabilities		1,367,419		285,907
		Provisions		136,055		(80,841)
		Deferred revenue		997,284		57,094
				1,394,105		1,708,050
Cash flows from (used in) financing activities:
	Finance lease			(47,643)		(42,659)
	Issue of debt			1,500,000		-
	Issue of share capital, net			7,435		7,436,400
				1,459,792		7,393,741
Cash flows used in investing activities:
	Purchase of property and equipment			(603,040)		(619,869)
	Intangible asset addition			(903,080)		(571,000)
	Business acquisition			(2,071,081)		-
				(3,577,201)		(1,190,869)
Increase (decrease) in cash position				(723,304)		7,910,922
Effect of exchange rate fluctuations on cash and cash equivalents				5,014		46,625
Cash and cash equivalents, beginning of period				6,721,314		5,319,385
Cash and cash equivalents, end of period			$	6,003,024	$	13,276,932

 

 

 

SOURCE: Hemisphere GPS Inc.

Cameron Olson
Chief Financial Officer
Hemisphere GPS Inc.
403-259-3311
[email protected] 

Cory Pala
Investor Relations
e.vestor Communications Inc.
416-657-2400
[email protected]