Press Release

COM DEV Announces First Quarter Fiscal 2015 Results

By SpaceRef Editor
March 9, 2015
Filed under , ,
COM DEV Announces First Quarter Fiscal 2015 Results

COM DEV International Ltd. (TSX:CDV) today announced first quarter results for the three-month period ended January 31, 2015. All amounts are stated in Canadian dollars unless otherwise noted.

First Quarter Highlights

– Revenue was $53.6 million, a 3.5% increase over $51.8 million realized in Q1 2014.
– New orders received in the quarter totalled $51.7 million, a 41.3% increase over Q1 2014 and reflected continued strong growth in commercial satellites.
– Backlog was $165.2 million, a 10.5% increase over $149.5 million at the end of Q1 2014.
– EBITDA, when adjusted for non-recurring charges, was $12.1 million, compared to $11.4 million in adjusted EBITDA in Q1 2014. (A definition and reconciliation are provided below.)
– COM DEV’s exactEarth™ subsidiary had revenue of $5.3 million, up 60.6% from $3.3 million in Q1 2014.
– exactEarth™ had EBITDA of $0.6 million in Q1 2015, compared to $0.3 million in Q1 2014, a 50% increase.
– Net loss attributable to shareholders of $(11.6) million or $(0.15) per share was negatively affected by non-recurring items totalling $19.2 million, and compares to net income attributable to shareholders of $2.1 million or $0.03 per share in Q1 2014.
– Acquired MESL Microwave Ltd., a leading provider of components and subsystems for the radar, communications, defence and aerospace industries, for £12.8 million. Integration is proceeding well, and new opportunities have already been identified beyond what was initially envisioned.

“The strong performance of our core business in the first quarter of fiscal 2015 reflects the continuing growth in demand for commercial satellite components and our market leadership,” stated Michael Pley, CEO. “While these results were affected by one-time, non-cash foreign currency charges, the restructuring and wind-down of our U.S. facilities, and acquisition-related costs, we are confident that industry growth trends combined with the decisions made this quarter to stabilize the business position us well for a successful 2015.”

“We are also very pleased with the successful acquisition of MESL Microwave Ltd. during the quarter,” Mr. Pley added. “This adds needed capacity for our U.K. operations, expands our product offering and increases our opportunities in the growing European space industry.”

Financial Review

COM DEV’s first quarter 2015 revenues were $53.6 million, a 3.5% increase compared to $51.8 million in the previous year. The largest component of total revenues, SatCom equipment revenues, was $38.0 million compared to $39.0 million in Q1 2014. The breakdown of SatCom equipment revenues by sector during the first quarter of 2015 was 96% commercial (2014: 82%), 2% civil (2014: 5%) and 2% military (2014: 13%).

Revenues in the quarter were $4.0 million higher as a result of the weakened Canadian dollar due to the impact of contracts denominated in U.S. dollars. Approximately $2.0 million of that $4.0 million benefit is non-recurring since it reflects the movement in exchange rates between the prior quarter and Q1. The remainder would be considered ongoing if revenue profiles and rates remain constant.

COM DEV received new orders totalling $51.7 million during the quarter, an increase of 41.3% compared to $36.6 million of new orders in Q1 2014. SatCom equipment orders grew by 56.4% to $44.9 million, with a breakdown of 94% commercial, 4% civil, and 2% military. An additional $43.8 million of follow-on orders are expected to be realized from Authorities to Proceed (ATPs) already received, as well as highly probable unexercised options on contracts awarded during the current and previous quarters which management expects to realize. This compares to $38.1 million at the end of Q1 2014. COM DEV only includes these amounts in orders and backlog once the final contracts are in place.

Total backlog at January 31, 2015 was $165.2 million, and includes $12.0 million of backlog acquired in the MESL transaction, compared to $149.5 million a year earlier. SatCom equipment backlog of $97.6 million was split between the Company’s commercial, civil and military sectors at a ratio of 89%, 10% and 1% respectively, compared to 84%, 5% and 11% at January 31, 2014. The Company expects to convert approximately 75% of the total backlog into revenue during fiscal 2015.

Consolidated gross margin was $13.4 million in Q1 2015, representing 24.9% of total revenues, a decrease from Q1 2014 which had gross margin of $13.5 million representing 26.0% of total revenues. The Equipment segment gross margin percentage decreased from 26.5% during Q1 2014 to 24.5%, primarily as a result of the negative gross margin of $3.7 million realized in the Company’s U.S. operation. Excluding the U.S. operation, and the one-time benefit from exchange movement described above, the Equipment segment achieved a gross margin of 29.9% during Q1 2015 compared to 30.0% during the same period in 2014. Gross margin percentage increased during Q1 2015 in the Data Services segment due to higher revenue from its growing customer base, offsetting the increased operational costs of the expanded constellation of low earth orbiting satellites owned and operated by exactEarth™.

COM DEV recorded a net research and development expense of $1.5 million in Q1 2015, compared to an expense of $0.4 million in Q1 2014. The increase was primarily due to a $1.0 million decrease in investment tax credits recoverable compared to the same quarter of last year.

Selling expenses of $3.5 million were up by $0.7 million due to normal fluctuations that occur from quarter to quarter depending on the volume of bids and proposal work that is underway. General expenses increased by $0.7 million during Q1 2015 primarily as a result of corporate development costs and the inclusion of MESL’s general expenses for January 2015.

As indicated in its news release of February 19, 2015, COM DEV incurred a foreign exchange loss of $9.8 million in Q1 2015, compared with a loss of $1.5 million during Q1 2014. The foreign exchange loss is primarily attributed to the significant decline in the Canadian dollar relative to the U.S. dollar during the quarter which resulted in an unrealized loss of $11.6 million on the mark to market valuation of the Company’s forward currency derivative instruments. For accounting purposes, the unrealized loss relating to the derivative instruments, which mature over the next 33 months, must be recognized immediately. Partially offsetting the foreign exchange losses recognized during the first quarter of 2015 was a $4.0 million dollar increase in revenues relating to contracts denominated in U.S. dollars which benefitted from the decline in the Canadian dollar during the quarter. A review of the Company’s foreign exchange management strategy is underway with the objective of ensuring the objectives with respect to managing exchange risk are being met.

EBITDA attributable to shareholders was a loss of $7.1 million in Q1 2015, compared to positive $6.7 million in Q1 2014. The quarter over quarter decrease in EBITDA is primarily related to the higher foreign exchange loss ($8.3 million increase), higher restructuring and termination benefit expenses ($3.0 million increase) and $1.6 million of expenses associated with the acquisition of MESL. Adjusting for these items, EBITDA would be $12.1 million, compared to $11.4 million in Q1 2014.

Net loss attributable to shareholders was $11.6 million in Q1 2015, compared to net income attributable to shareholders of $2.1 million for the same period of 2014. The decrease in net income is primarily attributable to the foreign exchange loss, the restructuring and wind down of the U.S. operation, the MESL transaction expenses, and the increase in net R&D expense, all described above.

COM DEV ended Q1 2015 with $29.4 million of cash and equivalents, compared to $30.1 million in Q1 2014. The Company generated $5.3 million of cash from operating activities in Q1 2015, compared to Q1 2014 when $2.2 million was used. The Company invested $28.4 million of cash in the quarter, primarily related to the acquisition of MESL.

During Q1 2015, the Company’s lending consortium, which consists of CIBC, HSBC, Bank of America and GE Capital Solutions, advanced $17.9 million USD ($20.8 million CAD) to the Company under the non-revolving term facility, the proceeds of which were used to finance the MESL acquisition. The total amount outstanding under the non-revolving facility is repayable in quarterly payments equal to 5% of the U.S. dollar principal balance outstanding at the time.

The Company’s operating credit line of $20 million was not drawn upon at the end of Q1 2015, except for $2.8 million (Q1 2014: $2.8 million) in the form of guarantee letters issued to customers in the normal course of operations by the bank on behalf of the Company and to government agencies while certain tax objections are resolved.

The Company’s basic share count stood at 76,504,327 on March 6, 2015.

Detailed financial results available here (PDF).


The Board of Directors has declared a quarterly dividend of $0.03 per share, to be paid on March 31, 2015, to shareholders of record on March 18, 2015.

Conference Call

A conference call will be held Monday, March 9, 2015 at 10:00 am 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 or for directions. Participants will require Windows Media Player™ to listen to the webcast.


COM DEV International Ltd. ( is a leading global provider of space hardware and services. The company has a staff of 1,200, annual revenues of $208 million, and facilities in Canada, the United Kingdom, the United States, India and China. COM DEV designs manufactures, and integrates advanced products, 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 defence applications. The company has won contracts to supply its equipment on over 900 spacecraft. COM DEV’s majority-owned subsidiary, exactEarth Ltd., provides satellite data services for global maritime surveillance.

SpaceRef staff editor.