2008 first half earnings reach $9.0M, or $0.17, on revenues of $49M
CALGARY, July 29 /CNW/ - (TSX: HEM) Hemisphere GPS, a designer and
manufacturer of advanced GPS products, today reported financial results for
the second quarter and first six months of 2008. All amounts in this news
release are in US dollars.
For the second quarter ended June 30, 2008, Hemisphere GPS reported a 59%
increase in revenues to a second quarter record of $23.0 million, a
substantial increase from revenues of $14.5 million in the second quarter of
2007. Significant revenue growth was realized in all product lines and regions
for Ground Agriculture, Air Agriculture and Precision Products - which
includes marine GPS Compass applications. Revenue growth continues to be
driven by strong fundamentals in the agriculture market where record grain
prices are resulting in higher farm incomes. In addition, the Company's
patented Crescent(R) Vector(TM) GPS Compass technology has experienced strong
growth for marine applications.
"We have seen a significant increase in revenues since the North American
harvest began in the third quarter of 2007, and the acceptance of GPS and
auto-steering within precision agriculture is at an all time high," stated
Steven Koles, President & CEO of Hemisphere GPS. "Our total revenues for the
trailing twelve months have reached $71 million, which represents growth of
66% over the prior year comparable twelve month period".
The Company commenced shipments of its Outback Guidance(R) S3(TM) product
at the end of March, which contributed to revenue growth in the quarter. For
the second quarter of 2008, Hemisphere GPS saw year-over-year growth of
approximately 48% in North American revenues and 91% growth in non-North
American revenues, demonstrating the strength of the global agricultural
markets.
Revenues from the Company's Precision Products line - focused on
non-agriculture markets - continued to show very strong growth, increasing by
71% in the second quarter and 75% year-to-date. The growth in this product
line has been driven by strong demand for the Company's Vector GPS Compass
sensor products, differential GPS receivers and GPS components sold to
original equipment manufacturers ("OEM's") and system integrators.
Gross margin for the second quarter increased to 52.5% of revenues from
46.7% for the same quarter of 2007. Gross margin has improved as a result of
initiatives focused on margin improvement including new products, pricing
programs, outsourcing of higher volume components and finished goods to
third-party manufacturing overseas and the inclusion of software revenues from
the Beeline(R) integration which generate very high gross margins.
Second quarter research and development expenses were $2.0 million, or
8.8% of revenues, an increase of 72%, including Beeline expenses, compared to
the second quarter of 2007 (44% excluding Beeline). During 2007, and in the
first half of 2008, the Company has made a number of significant new hires
continuing to build the strength of its research and development capabilities.
The acquisition of Beeline Technologies in December 2007 added approximately
20 engineering employees, greatly strengthening the Company's software
engineering capability. The investment in research and development activities
is critical for the Company to maintain and build its position in current and
targeted markets and the Company is targeting to spend at least 10% on such
activities on an annualized basis.
Total operating expenses in the second quarter of 2008, which include
operating expenses from the acquired Beeline business, were $8.6 million, an
increase of $3.3 million, or 63% compared to the second quarter of 2007.
Adjusting for the impact of Beeline operating expenses and the strengthening
Canadian dollar, normalized operating expenses increased by approximately 36%,
or $1.9 million, when compared to the second quarter of 2007. Revenue growth
was over 50% during this period, excluding Beeline revenues, demonstrating the
scalability of the Company's business model as revenues grow.
Hemisphere GPS reported record second quarter net income of $3.2 million,
or $0.06 per share (basic and diluted), an increase from $0.2 million, or
$0.00 per share (basic and diluted), in the second quarter of 2007.
For the first six months of 2008, Hemisphere GPS reported record revenues
of $49.0 million, a 57% increase over revenues of $31.1 million for the same
period in 2007. Gross margin for the first half of the year increased to
51.4%, from 48.2% for the first half of 2007. Year-over-year expenses
increased to $16.7 million from $10.9 million, $2.2 million of which were
associated with the Beeline acquisition. Net income jumped to $9.0 million, or
$0.17 per share (basic and diluted), compared to $2.4 million, or $0.05 per
share (basic and diluted) in the first half of 2007.
At June 30, 2008, the Company held cash of approximately $21.9 million
compared to a balance of $13.5 million at December 31, 2007 and $17.4 million
at March 31, 2008. Working capital at June 30, 2008 was approximately
$37 million.
Mr. Koles added: "With the maturity now generated in the business and
continued strength in our balance sheet, we are well poised for further
scalability as we continue to grow the business in all segments."
As of June 30, 2008, there were 56,401,276 common shares outstanding.
During the quarter, the Company issued 1,500,028 common shares related to
performance warrants issued in connection with the 2005 acquisition of the
Outback sales and distribution business assets. There are no further
performance warrants outstanding.
Operational Highlights
- The Company's next generation in Outback Guidance, the new Outback
S3, which began shipping in March, continues to be one of the most
successful product launches in the history of Hemisphere GPS. The S3
is loaded with the latest technology and features, and is expandable
to work with other Outback Guidance products and accessories
including the Outback eDriveTC(TM) GPS assisted steering system which
automatically steers the vehicle. Combined with BaselineHD(TM),
Outback S3 and eDriveTC provide centimeter-level accuracy.
- Hemisphere GPS released its new Air IntelliFlow(TM) dual-rate system
product for the aerial application market that will greatly improve
the efficiency of applications and the productivity of pilots. The
product addresses a broad range of applications, including crop
spraying, pest control, forestry and fire management.
- Based on the company's patented Crescent Vector technology,
Hemisphere GPS added the LV100 GPS Compass Board to its innovative
precise heading and positioning product line. An industry first, the
LV100 is a complete GPS compass and positioning assembly utilizing a
unique design featuring a single carrier board with integrated
GPS antennas, designed for easy integration by OEM customers. The
LV100 GPS Compass Board is ideal for a wide array of applications,
especially in the marine, machine control and precision agriculture
markets. An alternative to traditional gyro and fluxgate compass
sensors, it provides precise positioning and speed measurements while
being immune to magnetic interference typically present on vessels.
- Hemisphere GPS expanded its intellectual property portfolio with the
awarding of four new patents for its latest innovations in the areas
of GPS positioning and automated steering. The new patents are
related to:
- Hemisphere's Crescent Vector technology used in marine navigation
and various precise positioning and attitude determination
applications.
