COM DEV International Ltd. (TSX:CDV) today announced second quarter financial results for the three- and six-month periods ended April 30, 2015. All amounts are stated in Canadian dollars unless otherwise noted.

Second Quarter Highlights

– Revenue was $56.4 million, a 3.9% increase over $54.3 million in the second quarter of 2014.
– New orders totalled $43.8 million, up 24.4% from $35.2 million in Q2 2014.
– Backlog closed at $152.1 million, a 16.9% increase over $130.1 million at the end of Q2 2014.
– Gross margin was 21.6%, down from 29.0% in Q2 2014. Negative impacts on margins included $2.8 million from the wind-down of the U.S. facility and $2.4 million due to higher material content in current Product division projects, and unabsorbed labour and overheads associated with the Company’s Systems division, where key skills have been maintained in advance of expected orders being received. Absent these factors, gross margin would have been 30.9%.
– Adjusted EBITDA was $2.3 million, compared to $8.0 million in Q2 2014. (A definition and reconciliation are provided below.)
– COM DEV’s exactEarth™ subsidiary grew its revenue by 36.4% to $6.0 million, and increased EBITDA by 25.3% to $0.9 million.
– Net loss attributable to shareholders was $(3.5) million or $(0.05) per share, compared to net income attributable to shareholders of $5.0 million or $0.07 per share in Q2 2014.

Update on Strategic Initiatives

– Completed the wind-down of operations at our facility in El Segundo, California, and the transfer of intellectual property to our Cambridge facility.
– Announced the US$20.2 million acquisition of leading waveguide manufacturer Pacific Wave Systems, and completed the transaction subsequent to quarter-end.
– Integration of the previously completed MESL Microwave acquisition is on track, and has contributed to $15 million of recently announced new business for our UK facilities.
– Subsequent to quarter-end, announced a strategic alliance between exactEarth™ and Harris Corporation that enables real-time tracking of maritime vessels and significantly advances exactEarth’s™ growth strategy.
– Subsequent to quarter-end, made a US$500,000 strategic investment in RF integrated circuit designer Anokiwave Inc. to secure access to key technology.

“This year has been one of our most active periods ever for executing on new strategic initiatives to strengthen the Company,” said Michael Pley, CEO. “Our exactEarth™ subsidiary has just established a strategic alliance that has the potential to transform its business. Our two recent acquisitions have added new products to our equipment portfolio while expanding our production capacity and geographic reach. We are investing in new technologies to capitalize on exciting new areas of growth in our industry. Finally, we have now fully wound down our legacy U.S. facility. Most of these initiatives had short-term impacts on our second quarter results, but I believe they position us very favourably for longer-term growth and operational improvements.”

Financial Review

COM DEV’s second quarter 2015 revenues were $56.4 million, a 3.9% increase compared to $54.3 million in Q2 2014. The largest component of total revenues, SatCom equipment revenues, was $37.8 million compared to $39.2 million in Q2 2014. The breakdown of SatCom equipment revenues by sector during Q2 2015 was 92% commercial (2014: 82%), 7% civil (2014: 6%) and 1% military (2014: 12%).

Second quarter 2015 results include $3.7 million of revenue from MESL, the company COM DEV acquired in December 2014. The Data Services segment also contributed $1.6 million of revenue growth compared to the prior year period. These gains were partially offset by a $2.8 million revenue decrease at the Company’s El Segundo facility, which was wound down during the quarter and generated less than $0.2 million of revenue. In addition, the shift in CAD/USD currency exchange rates during the second quarter resulted in a $1.4 million decrease in revenues and gross margins on contracts denominated in USD.

The Company received new orders totalling $43.8 million during the quarter, an increase of 24.4% compared to $35.2 million of orders booked in Q2 2014. SatCom equipment orders nearly doubled to $32.5 million, with a breakdown of 69% commercial and 31% civil.

Total backlog at April 30, 2015 was $152.1 million, compared to $130.1 million a year earlier. The SatCom equipment backlog of $91.9 million was split between the Company’s commercial, civil and military sectors at a ratio of 80%, 19% and 1% respectively, compared to a 79%, 13% and 8% split of $74.8 million SatCom equipment backlog at April 30, 2014. The Company expects to convert approximately 57% of the total backlog into revenue during fiscal 2015. An additional $28.5 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 $41.1 million at the end of Q2 2014. COM DEV only includes amounts in orders and backlog once the final contracts are in place.

Consolidated gross margin was $12.2 million in Q2 2015, representing 21.6% of total revenues, compared to gross margin of $15.8 million or 29.0% of total revenues in Q2 2014. The Equipment segment gross margin percentage decreased from 29.3% during Q2 2014 to 19.8%, primarily as a result of the negative gross margin of $2.8 million realized in the Company’s U.S. operation in El Segundo. In addition, a shift in the mix of work within the Company’s Products division resulted in $1.4 million in higher material content than in Q2 2014, and delays in expected contract awards for the Company’s Systems division resulted in an impact of approximately $1.0 million from lower revenue and unabsorbed labour and overheads.

Selling expenses of $4.1 million increased by $1.1 million due to an increased volume of bids and proposal work, and the addition of MESL’s selling expenses for the second quarter. General expenses were up by $0.8 million during Q2 2015 primarily as a result of corporate development costs and the inclusion of MESL’s general expenses.

Net research and development expense of $1.4 million was up from $1.1 million in Q2 2014, as increased investments designed to favourably position the Company to participate in “new space” initiatives outpaced increases in both R&D funding recoveries and investment tax credits recoverable.

The Company recognized an impairment loss of $1.7 million associated with the planned sale of the El Segundo land and building at an amount anticipated to be below its book value, and a deferred tax expense of $0.8 million related to the building.

COM DEV recognized a foreign exchange gain of $1.2 million in Q2 2015 primarily due to an increase in the value of the Canadian dollar relative to the U.S. dollar during the quarter, compared with a gain of $1.2 million a year earlier. The foreign exchange gain is the result of three factors: (i) an unrealized gain of $5.9 million (which must be recognized immediately for accounting purposes) on the mark-to-market valuation of the Company’s forward currency derivative instruments; (ii) a realized loss of $1.4 million on the settlement of foreign currency derivatives maturing in the quarter; and (iii) losses of $3.3 million related to the translation of balance sheet accounts and settlements during the quarter. Offsetting this foreign exchange gain was a $1.4 million decrease in revenue and gross margin relating to U.S. dollar-denominated contracts, which decreased in value during the second quarter as a result of the strengthening Canadian dollar.

EBITDA attributable to shareholders was $3.0 million in the second quarter, compared to $9.4 million in Q2 2014. The decrease in EBITDA is primarily related to losses associated with the wind-down of the U.S. operation, acquisition related costs, and an increase in selling and general expenses. Adjusted EBITDA attributable to shareholders, which adjusts for some of those costs as well as an unrealized gain on foreign currency derivatives, was $2.3 million, compared to $8.0 million in Q2 2014. (A definition and reconciliation of adjusted EBITDA are provided below.)

Net loss attributable to shareholders was $3.5 million in the second quarter, compared to net income attributable to shareholders of $5.0 million for Q2 2014. The decrease in net income is primarily attributable to losses associated with the wind-down of the U.S. operation, acquisition related costs, and an increase in selling and general expenses.

COM DEV had $36.9 million of cash and equivalents at April 30, 2015, compared to $33.6 million at the end of fiscal 2014. The Company generated $14.5 million of cash from operating activities in Q2 2015, compared to Q2 2014 when $19.6 million was generated.

The Company’s operating credit line of $20 million was not drawn upon at the end of Q2 2015, except for $2.8 million (Q2 2014: $2.8 million) in the form of guarantee letters issued to customers and government agencies in the normal course of operations.

The Company’s basic share count stood at 76,554,352 on June 10, 2015.


The Board of Directors has declared a quarterly dividend of $0.03 per share, to be paid on June 30, 2015, to shareholders of record on June 19, 2015.

Conference Call

A conference call will be held Thursday, June 11, 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 more than 1,250, annual revenues of over $200 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 950 spacecraft. COM DEV’s majority-owned subsidiary, exactEarth Ltd., provides satellite data services for global maritime surveillance.