EX-99.1 2 exhibit99-1.htm NEWS RELEASE DATED AUGUST 4, 2016 Exhibit 99.1

Exhibit 99.1

For Immediate Release

NORSAT ANNOUNCES SECOND QUARTER
FISCAL YEAR 2016 FINANCIAL RESULTS

- Management to Host Conference Call at 8:30 am Pacific Time (11:30 am Eastern Time) -

Vancouver, British Columbia – August 4, 2016 – Norsat International Inc. (“Norsat” or the “Company”) (TSX: NII and NYSE MKT: NSAT), a provider of unique and customized communication solutions for remote and challenging applications, today reported financial results for the second quarter ended June 30, 2016.

Financial Highlights

For the three months ended June 30, 2016

  • $9.0 million in revenue for the quarter, consistent with the amount for the same period last year.

  • Gross profit margin of 46% for the quarter, an increase of 7% from 39% for the same period last year.

  • Net earnings for the quarter were $0.9 million, or $0.16 per share, basic and diluted, compared to $0.7 million, or $0.12 per share, basic and diluted, for the same period last year.

  • Adjusted EBITDA11 of $1.7 million for the quarter, an increase of 50% from $1.2 million for the same period last year.

For the six months ended June 30, 2016

  • $18.5 million in revenue for the six months ended June 30, 2016, an increase of 7% compared to $17.4 million for the same period last year.

  • Gross profit margin of 45% for the six months ended June 30, 2016, an increase of 6% from 39% for the same period last year.

  • Net earnings for the six months ended June 30, 2016 were $2.1 million, or $0.36 per share, basic and diluted, compared to $1.2 million, or $0.21 per share, basic and diluted, for the same period last year.

  • Adjusted EBITDA1 of $3.4 million for the six months ended June 30, 2016, an increase of 63% from $2.1 million for the same period last year.

  • $9.3 million of cash and cash equivalents at June 30, 2016, an increase of $4.7 million compared to $4.6 million at December 31, 2015.

  • $22.6 million of working capital at June 30, 2016, an increase of $3.2 million compared to $19.4 million at December 31, 2015.

____________________
1Adjusted EBITDA is a measure that the Company uses to reflect the results of its core earnings. Adjusted EBITDA is defined as earnings before income tax expense, financing costs, depreciation and amortization, foreign exchange gain or loss, corporate development costs, write-down of inventory, impairment charges or recoveries, discontinued operations and other non-cash charges.




“We are very pleased with the second quarter results. Despite continued softness in the Canadian infrastructure and public safety markets, our total revenue and profitability have remained strong as we continue to manage our cost structure while challenging ourselves to develop and market reliable products to meet customer needs,” said Dr. Amiee Chan, President and CEO of Norsat. “To demonstrate our continued commitment to our long-term strategy to expand our market share in remote and challenging applications, we have introduced new products and solutions during the quarter, including the Median 40W Ku-band BUC, along with a range of LNBs to our microwave product line,” added Dr. Chan.

A full set of financial statements and Management’s Discussion and Analysis for Norsat is available at

www.norsat.com and will be available at www.sedar.com.

Conference Call Details

Norsat will host a conference call today, August 4, 2016 at 8:30 am Pacific Time (11:30 am Eastern Time) to discuss its fiscal year 2016 second quarter results. To access the conference call, please dial toll-free 1-888-886-7786 or 416-764-8658. The conference call title is: ‘Norsat Investor Call’. Please connect approximately 10 – 15 minutes prior to the beginning of the call to ensure participation. A digital recording and transcript of the call will be available after the live call at: http://www.norsat.com/investors/financial-information/conference-call-recordings/




Norsat International Inc.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States dollars)
(Unaudited)

      June 30, 2016     December 31, 2015  
ASSETS              
Current assets              
Cash and cash equivalents   $ 9,318,248   $ 4,585,754  
Trade and other receivables     8,753,411     8,987,392  
Inventories     11,339,377     10,956,524  
Prepaid expenses and other     258,347     394,617  
      29,669,383     24,924,287  
Non-current assets              
Property and equipment, net     570,756     558,609  
Intangible assets, net     4,434,258     4,724,490  
Goodwill     4,097,751     4,097,751  
Investment tax credits recoverable     4,694,480     4,985,139  
Deferred income tax assets     1,704,126     2,218,848  
      15,501,371     16,584,837  
Total assets   $ 45,170,754   $ 41,509,124  
LIABILITIES              
Current liabilities              
Trade and other payables   $ 2,545,612   $ 1,906,703  
Accrued liabilities     2,149,332     2,375,107  
Provisions     957,466     947,682  
Deferred revenue     1,430,914     286,432  
      7,083,324     5,515,924  
Non-current liabilities              
Long-term deferred revenue     14,199     45,889  
Total liabilities     7,097,523     5,561,813  
SHAREHOLDERS' EQUITY              
Issued capital     39,995,215     39,850,648  
Treasury shares     (431,547 )   (320,750 )
Contributed surplus     4,148,106     4,318,487  
Accumulated other comprehensive loss     (4,508,316 )   (4,673,811 )
Deficit     (1,130,227 )   (3,227,263 )
Total shareholders' equity     38,073,231     35,947,311  
Total liabilities and shareholders' equity   $ 45,170,754   $ 41,509,124  
Commitments and Contingencies (Note 12)              

 




Norsat International Inc.
Condensed Interim Consolidated Statements of Earnings and Comprehensive Income
(Expressed in United States dollars, except per share amount)
(Unaudited)

      Three months ended June 30     Six months ended June 30  
      2016     2015     2016     2015  
                           
Revenue   $ 8,959,936   $ 8,950,091   $ 18,513,363   $ 17,360,416  
Cost of sales     4,846,117     5,467,065     10,224,397     10,519,547  
Gross profit     4,113,819     3,483,026     8,288,966     6,840,869  
                           
Expenses:                          
Selling and distributing     1,259,794     1,271,795     2,663,736     2,538,788  
General and administrative     821,057     734,713     1,703,158     1,759,170  
Product development     856,782     730,932     1,640,777     1,489,708  

Less: Government contributions

     (387,703 )   (312,933 )   (767,178 )   (643,957 )
Loss on foreign exchange     131,550     210,792     82,391     388,541  
Interest and bank charges     27,583     40,908     54,383     76,306  
Total expenses     2,709,063     2,676,207     5,377,267     5,608,556  
                            
Earnings before income taxes     1,404,756     806,819     2,911,699     1,232,313  
                           
Current income tax expense/(recovery)   3,373     -     3,373     (66,068 )
Deferred income tax expense     466,382     132,710     811,290     64,585  
Net earnings   $ 935,001   $ 674,109   $ 2,097,036   $ 1,233,796  
                           
Other comprehensive income (loss)                          

Exchange differences on translation of operations in currencies other than United States dollars

   148,558     464,402     165,495     (79,377 )
Total comprehensive income   $ 1,083,559   $ 1,138,511   $ 2,262,531   $ 1,154,419  
                           
Net earnings per share                          

Basic earnings per share

   $ 0.16   $ 0.12   $ 0.36   $ 0.21  

Diluted earnings per share

   $ 0.16   $ 0.12   $ 0.36   $ 0.21  
                           
Weighted average number of shares outstanding                        

Basic

     5,764,892     5,759,439     5,765,922     5,762,789  

Diluted

     5,815,681     5,783,048     5,800,064     5,785,985  

 




Norsat International Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States dollars)
(Unaudited)

      Three months ended June 30     Six months ended June 30  
      2016     2015     2016     2015  
Cash and cash equivalents provided by/(used in)                          
Operating activities:                          
Net earnings for the period   $ 935,001   $ 674,109   $ 2,097,036   $ 1,233,796  
Income taxes paid     (3,373 )   (43,270 )   (3,373 )   (43,270 )
Adjustments for items not affecting cash:                          

Depreciation and amortization

     201,919     329,742     431,247     657,791  

Write-off of property and equipment

     -     -     -     31,139  

Unrealized foreign exchange loss

     119,569     210,793     144,425     388,541  

Acquisition loan cost amortization

     -     -     -     2,262  

Other income

     -     (198,997 )   -     (198,997 )

Current income tax expense/(recovery)

     3,373     -     3,373     (66,068 )

Deferred income tax expense

     466,382     132,710     811,290     64,585  

Share-based payments

     84,531     64,410     129,407     118,361  

Vesting of RSUs

     -     (14,632 )   -     (14,632 )

Government contributions

     (387,703 )   (312,933 )   (767,178 )   (643,957 )
Changes in non-cash working capital     1,065,497     (1,977,058 )   1,298,835     (2,888,486 )
Net cash flows provided by/(used in) operating activities     2,485,196     (1,135,126 )   4,145,062     (1,358,935 )
                           
Investing activities:                          

Purchase of intangible assets, property and equipment, net of SADI

     (111,222 )   (43,454 )   (134,640 )   (99,549 )
Net cash flows used in investing activities     (111,222 )   (43,454 )   (134,640 )   (99,549 )
                           
Financing activities:                          
Repayment of acquisition loan     -     (1,306,762 )   -     (2,286,762 )
Purchase of treasury shares, including purchase costs     (266,018 )   (273,298 )   (266,018 )   (273,298 )
Government contributions     46,058     69,727     1,000,518     833,211  
Net cash flows (used in)/provided by financing activities     (219,960 )   (1,510,333 )   734,500     (1,726,849 )
                           

Effect of foreign currency translation on cash and cash equivalents

     (7,514 )   (73,410 )   (12,428 )   266,812  
                           
Increase/(decrease) in cash and cash equivalents     2,146,500     (2,762,323 )   4,732,494     (2,918,521 )
Cash and cash equivalents, beginning of period     7,171,748     5,357,535     4,585,754     5,513,733  
Cash and cash equivalents, end of period   $ 9,318,248   $ 2,595,212   $ 9,318,248   $ 2,595,212  

 




Norsat International Inc.
Reconciliation of IFRS to non-IFRS Measures
(Expressed in United States dollars)

    Three months ended June 30     Six months ended June 30  
    2016     2015     2016   2015  
Net earnings for the period $ 935,001   $ 674,109   $ 2,097,036 $ 1,233,796  
Interest (income)/expense   (2,258 )   7,139     (3,816 ) 21,644  
Depreciation and amortization   201,919     329,742     431,247   657,791  
Tax expense/(recovery)   469,755     132,710     814,663   (1,483 )
EBITDA (2) $ 1,604,417   $ 1,143,700   $ 3,339,130 $ 1,911,748  
Loss on foreign exchange   131,550     210,792     82,391   388,541  
Other income   -     (198,997 )   -   (198,997 )
Adjusted EBITDA (2) $ 1,735,967   $ 1,155,495   $ 3,421,521 $ 2,101,292  

 

(2)     

We disclose non-IFRS measures as we believe they provide useful information on actual operating results and assist in comparisons from one period to another. Readers are cautioned that non-IFRS measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. For a more detailed description of non-IFRS measures, please refer to Management’s Discussion and Analysis for the three and six months ended June 30, 2016 posted on Norsat’s website and SEDAR.




About Norsat International Inc.

Founded in 1977, Norsat International Inc. is a provider of unique and customized communication solutions for remote and challenging applications. Norsat’s products and services include leading-edge product design and development, production, distribution and infield support and service of fly-away satellite terminals, microwave components, antennas, Radio Frequency (RF) conditioning products, maritime based satellite terminals and remote network connectivity solutions. More information is available at www.norsat.com, via email at investor@norsat.com or by phone at 1-604-821-2800.

Forward Looking Statements

The discussion and analysis of this news release contains forward-looking statements concerning anticipated developments in Norsat’s operations in future periods, the adequacy of its financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,”, “predicts,” “potential,” “targeted,” “plans,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” occur or be achieved. These forward-looking statements include, without limitation, statements about Norsat’s market opportunities, strategies, competition, expected activities and expenditures as it pursues its business plan, the adequacy of available cash resources and other statements about future events or results. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, such as business and economic risks and uncertainties. The forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward-looking statements made in this news release are qualified by this cautionary statement and there can be no assurance that actual results or anticipated developments will be realized. For the reasons set forth above, investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date of this news release and Norsat assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law.

###

For further information, contact:

Dr. Amiee Chan Mr. Arthur Chin
President & CEO Chief Financial Officer
Tel: 604-821-2800 Tel: 604-821-2800
Email: achan@norsat.com Email: achin@norsat.com