Avigilon Corporation Announces Third Quarter 2012 Results

VANCOUVER, Nov. 7, 2012 /CNW/ - Avigilon Corporation (TSX: AVO), a leader in 
high-definition (HD) surveillance systems, today announced its financial 
results for the three and nine months ended September 30, 2012. All figures 
are stated in Canadian dollars unless otherwise noted. 
Third Quarter 2012 Highlights 


    --  Revenue was $25.5 million, an increase of 69% over Q3 2011
        revenue of $15.1 million.
    --  Gross margin was 51%, compared with 45% a year earlier.
    --  EBITDA rose to $4.1 million, compared with Q3 2011 EBITDA of
        $1.5 million. (See "Non-IFRS Measures" below.)
    --  Net income was $2.2 million, compared with net income of $1.0
        million in Q3 2011.
    Year-to-Date 2012 Highlights
    --  Revenue was $67.6 million in the first nine months of 2012, an
        increase of 64% from $41.2 million in the same period last
        year.
    --  Gross margin was 49%, up from 44% in the prior year.
    --  EBITDA was $7.4 million, an increase of 77% over $4.2 million
        in the first nine months of 2011. (See "Non-IFRS Measures"
        below.)
    --  Net income was $4.1 million, an 87% increase compared to $2.2
        million a year earlier.


"It was another strong quarter for Avigilon as we delivered record revenues 
and earnings in a traditionally slower third-quarter sales season," said 
Alexander Fernandes, president and chief executive officer at Avigilon. "The 
third quarter was also highlighted by a $26 million financing, which further 
strengthens our balance sheet to pursue the significant growth opportunities 
in global surveillance markets. To capitalize on these opportunities, we are 
highly focused on adding new talent to our sales team, continuing our track 
record of product innovation, and investing in marketing to make Avigilon a 
household name in our industry." 
Financial Review 
Avigilon reported revenue of $25.5 million in the three months ended September 
30, 2012, an increase of 69% compared with revenue of $15.1 in the third 
quarter of 2011. Revenue growth continues to be driven by a strong rise in 
product sales volumes worldwide, reflecting sales of new product offerings, 
entry into new global markets, and greater customer adoption in existing 
markets. Avigilon experienced strong year-over-year sales growth in most 
regions, particularly in areas where the Company expanded sales staff over the 
past year. 
Gross margin was $13.0 million in the third quarter (51% of revenue), compared 
with $6.9 million (45% of revenue) the previous year. The increased gross 
margin year over year reflects the sales mix as well as the impact of higher 
purchasing power and improved manufacturing efficiencies. Given the 
Company's near-term objective of rapid growth in revenue and market share, 
management is actively targeting a gross margin between 45% and 50%. 
Selling and marketing expenses were $5.6 million in the third quarter of 2012, 
a $2.2 million, or 64% increase from a year earlier. The increase reflects 
planned growth spending to significantly expand the global sales team and 
marketing efforts, which the Company expects will drive future revenue growth. 
Research and development (R&D) expenses, net of related income tax credits, 
were $1.2 million in the third quarter of 2012, a $0.4 million increase 
compared to $0.8 million in the prior year's third quarter. Gross R&D spend 
was $1.7 million in the third quarter of 2012, compared to $1.1 million in the 
prior year. The increase in spending is due to additional new hires, in line 
with the Company's plan to increase the product development team to enhance 
its product offering. 
General and administrative expenses were $2.7 million in the third quarter, an 
increase of $1.3 million from a year earlier. 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 $4.1 million in the third quarter, an increase of 173% over the 
prior year, reflecting increased revenue and lower cost of sales. Net income 
in Q3 2012 was $2.2 million, compared with net income of $1.0 million in the 
same period last year. Earnings per share were $0.07 (basic) and $0.06 
(diluted) for the third quarter of 2012, compared to $0.06 (basic) and $0.04 
(diluted) a year earlier. At September 30, 2012, Avigilon had 36,174,099 basic 
and 41,863,699 diluted shares outstanding. 
Financial statements can be downloaded from the Avigilon website at 
http://ir.avigilon.com or SEDAR at http://www.sedar.com/. 
Conference Call 
Avigilon has scheduled a conference call to discuss these results on 
Wednesday, November 7, 2012, 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 45260871. 
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 Comprehensive Income                       

for the three and nine months ended September 30, 2012 and 2011

(Expressed in thousands of Canadian dollars, except number of shares
and per share amounts)
(Unaudited)
                               Three months ended    Nine months ended
                                       September 30,    September 30,
                                 2012           2011     2012     2011
                                    $              $        $        $
                                                                      

Sales                          25,508         15,109   67,612   41,180

Cost of sales                (12,542)        (8,252) (34,493) (23,242)
                               12,966          6,857   33,119   17,938
                                                                      

Operating expenses                                                    

Selling and marketing           5,596          3,406   16,488    8,724

Research and development        1,247            805    3,516    1,981

General and administrative      2,649          1,368    6,993    3,626
                                9,492          5,579   26,997   14,331

Operating income                3,474          1,278    6,122    3,607
                                                                      

Other income (expense)                                                

Accretion expense                   -          (138)        -    (413)

Interest and other, net            16           (55)       65    (101)

Foreign exchange gain           (498)            479    (542)      323
(loss)
                                (482)            286    (477)    (191)
                                                                      

Income before taxes             2,992          1,564    5,645    3,416

Current tax expense              (60)           (76)    (130)    (135)

Deferred tax expense            (768)          (481)  (1,392)  (1,076)

Net income and total            2,164          1,007    4,123    2,205
comprehensive income
                                                                      

Earnings per share                                                    

Basic                            0.07           0.06     0.13     0.13

Diluted                          0.06           0.04     0.12     0.09
                                                                      

Weighted average number of                                            
shares outstanding (000s)

Basic                          32,710         17,248   31,713   17,248

Diluted                        36,436         30,166   34,754   29,817
    

Avigilon Corporation                                                   

Consolidated Statements of Financial Position

as at September 30, 2012 and December 31, 2011                         

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

(Unaudited)                                                            
                                             September 30, December 31,
                                                      2012         2011
                                                         $            $

Assets                                                                 

Current assets                                                         

  Cash and cash equivalents                         45,552       12,418

  Trade and other receivables                       14,552       13,291

  Inventories                                        9,515       11,254

  Other financial assets                                 -           88

  Prepaid expenses                                   1,056          605

  Research tax credits                                   -          973
                                                    70,675       38,629

Non-current assets                                                     

  Property and equipment                             3,453        2,304

  Intangible assets                                     52           46

  Deposits                                             409          272

  Deferred tax assets                                1,749        1,703

Total assets                                        76,338       42,954
                                                                       

Liabilities                                                            

Current liabilities                                                    

  Trade and other payables                          10,338        7,765

  Other financial liabilities                            3            -

  Leasehold incentive                                   59           59
                                                    10,400        7,824

Non-current liabilities                                                

  Leasehold incentive                                  235          279
                                                    10,635        8,103
                                                                       

Shareholders' equity                                                   

Capital stock                                       64,064       37,251

Equity compensation reserve                          4,015        4,099

Deficit                                            (2,376)      (6,499)
                                                    65,703       34,851

Total liabilities and shareholders' equity          76,338       42,954
                                                                       



Avigilon Corporation 
Consolidated Statements of Changes in Equity 
for the nine months ended September 30, 2012 and 2011 
(Expressed in thousands of Canadian dollars except number of shares and
per share data)
(Unaudited) 


                                          Equity                  Total
                    Capital stock   compensation          shareholders'
                     Shares  Amount      reserve  Deficit        equity
                                  $            $        $             $
                                                                       

Balance, January 17,248,202   9,559        3,753 (10,328)         2,984
1, 2011

Net income and            -       -            -    2,205         2,205
total
comprehensive
income

Share issue               -   (421)            -        -         (421)
costs

Stock-based               -       -          232        -           232
compensation

Balance,         17,248,202   9,138        3,985  (8,123)         5,000
September 30,
2011
                                                                       

Balance, January 31,021,287  37,251        4,099  (6,499)        34,851
1, 2012

Net income and            -       -            -    4,123         4,123
total
comprehensive
income

Share issue               - (1,732)            -        -       (1,732)
costs

Stock-based               -       -          557        -           557
compensation

Issuance of       5,152,812  27,471            -        -        27,471
common stock
(Note 8)

Transfer to               -     641        (641)        -             -
capital stock on
exercise of
options

Deferred income           -     433            -        -           433
tax effect on
share issue
costs

Balance,         36,174,099  64,064        4,015  (2,376)        65,703
September 30,
2012
                                                                       
      

Avigilon Corporation    

Consolidated Statements of Cash Flows    

for the three and nine months ended September 30, 2012 and 2011 

(Expressed in thousands of Canadian dollars except number of shares and
per share data)
(Unaudited)    
                                   Three months ended Nine months ended
                                      September 30,      September 30,
                                      2012       2011    2012      2011
                                         $          $       $         $

Cash flows from operating                                              
activities

  Net income for the period          2,164      1,007   4,123     2,205

  Adjustments for non-cash items                                       
     Amortization                      219         66     577       283
     Write off of property and          20         77      20        79
     equipment
     Stock-based compensation          333        136     557       232
     Accretion expense                   -        138       -       413
     Deferred tax expense              768        481   1,392     1,076
     Deferred tax credits            (426)          - (1,006)         -
     Unrealized foreign exchange       240      (411)     237     (388)
     loss (gain)
     Interest expense (income)        (16)         55    (65)       101
                                     3,302      1,549   5,835     4,001

  Changes in working capital                                           
     Decrease (increase) in            327      3,735 (1,243)   (1,963)
     trade & other receivables
     Decrease (increase) in          (124)        (3)   (136)     (444)
     deposits
     Decrease (increase) in            238      (944)   1,739   (4,692)
     inventories
     Decrease (increase) in             28       (45)   (456)     (127)
     prepaid expenses and
     deposits
     Decrease (increase) in            973        255     973      (46)
     research tax credits
     Increase (decrease) in          4,173    (2,902)   3,096        63
     trade and other payables

  Net changes in working capital     5,615         96   3,973   (7,209)

  Interest (paid) received              16       (55)      65     (101)

  Income taxes paid                  (130)          -   (526)         -

Net cash provided by (used in)       8,803      1,590   9,347   (3,309)
operating activities
                                                                       

Cash flows from investing                                              
activities

  Purchase of property and           (851)       (68) (1,758)     (289)
  equipment

  Purchase of intangible assets        (1)          -    (37)       (7)

Net cash used in investing           (852)       (68) (1,795)     (296)
activities
                                                                       

Cash flows from financing                                              
activities

  Proceeds from bank loan                -    (1,014)       -     2,125

  Issuance of common stock          27,041          -  27,471       -  

  Share issuance costs             (1,704)      (125) (1,732)     (421)

Net cash provided by financing      25,337    (1,139)  25,739     1,704
activities
                                                                       

Effect of foreign exchange rate      (139)         43   (157)       (3)
changes on cash and cash
equivalents
                                                                       

Increase (decrease) in cash and     33,149        426  33,134   (1,904)
cash equivalents

Cash, beginning of period           12,403          -  12,418     2,330

Cash, end of period                 45,552        426  45,552       426













Investor relations: Craig Armitage, TMX Equicom  T: (416) 
815-0700 ext. 278  carmitage@tmxequicom.com 

Media relations: Angela St-Amour, Avigilon Corporation T: (604) 630-3410 
angela.stamour@avigilon.com

SOURCE: Avigilon Corporation

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/07/c5951.html

CO: Avigilon Corporation
ST: Ontario
NI: CPR ELE ERN CONF 

-0- Nov/07/2012 21:00 GMT


 
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