Q3 2007 Summary
- Revenue increased to $4.0 million, up 26% from $3.1 million in Q3 2006
- Gross margin was 50%, compared to 23% for Q3 2006
- Net earnings were $0.2 million or $0.003 per share, representing Norsat’s fourth consecutive quarter of profitability, compared to net loss of $2.0 million, or $0.04 per share in Q3 2006
- Received
- Expanded Satellite System military customer base to a total of seven worldwide
- Unveiled the Norsat Rover, a single backpack portable satellite terminal
- Launched the Rapid Application Development Environment variant of GLOBETrekker, an ultra-portable satellite terminal which includes an environmentally-controlled baseband enclosure that is compatible with most commercial and specialized modems
“In the third quarter, we demonstrated notable financial and operational progress,” said Dr. Amiee Chan, president and CEO, Norsat International Inc. “We saw a significant improvement in our Satellite Systems segment, as revenue of $1.5 million was more than double compared to Q3 2006. In addition, as a result of new contract wins and additional sales into our existing customer base, we saw an increase in sales of higher-margin services.”
Dr. Chan continued: “Norsat is already a leader in the microwave product market, and we believe there continues to be significant opportunity for growth in the portable satellite systems industry. As we work to enhance our product offerings, expand into new market verticals and broaden our geographic reach, we believe we will be well positioned to extend our market leadership to span both our core business segments.”
Financial Review
Norsat’s revenue for Q3 2007 grew 26% to $4.0 million, from $3.1 million in Q3 2006, primarily driven by the Company’s increased penetration of the portable satellite systems market. Revenue from Satellite Systems grew to $1.5 million, from $0.7 million in Q3 2006, while revenue from Microwave Products was $2.5 million, in line with revenue of $2.5 million for the same period last year. Revenue for the nine months ended September 30, 2007 increased to $12.9 million from $9.8 million in 2006.
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Norsat’s overall gross margin improved to 50% of revenue, up from 23% of revenue in Q3 2006.
For Satellite Systems, gross margin improved to 51% in Q3 2007, compared to 5% last year, predominantly as a result of a provision for obsolete inventory and work-in-progress adjustments for customer orders that negatively impacted the Company’s gross margin in Q3 2006. Gross margins for Microwave Products increased to 49% in Q3 2007, compared to 28% last year, which reflects a one-time sale that was made at a lower margin in Q3 2006. Gross margin for the nine months ended September 30, 2007 increased to 54% from 37% for the same period in 2006.
Operating expenses for the three months ended September 30, 2007, decreased 41% to $1.6 million from $2.7 million for the same period last year. The year-over-year reduction reflects Norsat management’s continued commitment to maintaining tight cost controls. Operating expenses for the first nine months of 2007 were $5.0 million, compared to $8.2 million in 2006.
For Q3, net earnings were $0.2 million, or $0.003 per share, compared to a net loss of $2.0 million or $0.04 per share during the same period last year. Net income for the nine months ended September 30, 2007, was $1.3 million, or $0.03 per share, compared to a net loss of $4.9 million or $0.10 per share for the same period last year.
During the quarter, Norsat generated $0.2 million in cash from operations, compared to ($0.5) million in Q3 2006.
As at September 30, 2007, Norsat’s cash balance was $0.7 million, a decrease of $1.1 million from $1.8 million as at December 31, 2006. In Q2, Norsat eliminated its entire debt position by making the final payment, in cash, on its $1.0 million short-term debt. As a result of the reduction in debt obligations, Norsat’s working capital improved to $4.3 million as at September 30, 2007, from $2.3 million as at December 31, 2006.
Subsequent Event
In October, Norsat was awarded a non-repayable $0.2 million government contribution through
Notice of Conference Call and Webcast
Norsat will host a conference call on November 7, 2007 at 5:00 p.m. Eastern Standard Time. To access the conference call by telephone, dial 647-427-3420 or 1-888-300-0053. The conference call reference number is 22810826. Please connect approximately fifteen minutes prior to the beginning of the call to ensure participation.
About Norsat International Inc.
Norsat International In c. designs, engineers and markets intelligent satellite solutions for high-speed data transmission. Additional information is available at www.norsat.com. Further information is available through email at investor@norsat.com or by phone, 1-604-821-2808.
For further information, contact:
Kristen Dickson
The Equicom Group
Investor Relations
Tel: 416-815-0700 x 273
Email: kdickson@equicomgroup.com
Dr. Amiee Chan
Tel: 604 821-2808
Email: achan@norsat.com
Forward Looking Statements
Statements in this news release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in Norsat’s public filings with securities regulatory authorities.
This information should be read in conjunction with Norsat’s unaudited interim consolidated financial statements and related notes included therein for the nine months ended September 30, 2007, and the Management Discussion and Analysis for the nine months ended September 30, 2007. All of the company’s financial statements are prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). Additional information may be found at www.norsat.com.
