AIOCF earnings release

This is part of the release I got in an email from their Investor Relations.

Second Quarter 2014 Financial Highlights

Revenue was $65.2 million, an increase of 66% over Q2 2013 revenue of $39.2 million.
Gross margin percentage was 55%, up from 53% a year earlier.
Adjusted EBITDA* was $8.7 million, a 61% increase over Q2 2013 Adjusted EBITDA of $5.4 million.
Net income was $2.8 million, compared with net income of $3.4 million in Q2 2013.
Adjusted Earnings* was $5.7 million, a 49% increase over Q2 2013 Adjusted Earnings of $3.8 million.
Fully Diluted Adjusted Earnings Per Share* of $0.12, compared with $0.10 in Q2 2013.
“It was another quarter of profitable growth for Avigilon, highlighted by record revenue and increased EBITDA, while we made significant investments for future growth,” said Alexander Fernandes, founder, president, CEO and chairman of the Board of Avigilon. “At our current annualized run rate, we are more than halfway to our target of $500 million by the end of 2016. To achieve this target, we are continuing our successful strategy of expanding our sales team, enhancing marketing and brand awareness, and increasing research and development activities. With a view to augmenting our organic growth, we continue to evaluate acquisitions of complementary technologies in the security space.”…

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Some points from conference call:

Revenue
Financial highlights include record revenue of $65.2 million, up 66% from Q2, 2013.

Gross Margin
Gross margin of 55% and adjusted EBITDA of 8.7%, a 61% increase over Q2, 2013.

Growing very Fast
For greater perspective, this quarter sales surpassed our annual sales from 2011 the year we went public.

1/2 way there
At our current run rate of a little over $260 million in annual revenue, we are more than half way to our target of $500 million.

(65.2 * 4 =~ 260)

CFO Search
With respect to the ongoing CFO search, a comprehensive process is underway and we are actively interviewing candidates. We’ve also strengthened our Board of Directors with the recent addition of Fred Withers as an independent director and a new member of our Audit Committee.

Fred was a Partner and Chief Development Officer for Ernst & Young. He has over a 30-year of senior level financial experience with Ernst & Young, including significant involvement in the firm’s governance and operations as the member of its executive committee. We look forward to his contribution as we continue to expand our business globally.

He is from Ernst & Young - that should help AIOCF with credibility, especially with CFO leaving

Reason for Net Income being lower this Q
Revenue in the second quarter also reflected the impact of a relatively stronger Canadian dollar compared to Q1. Our large portion of revenue is denominated in U.S. dollars, British pounds and Euros. Depending under region of our exposure to the U.S. dollar is the most significant.
We estimate that every penny change in the exchange rate of Canadian dollar per U.S. dollar has an estimated $900,000 impact on our adjusted EBITDA and a $650,000 impact on net income. Our gross margin grew from 53% in Q2 2013 to 55% in Q2 2014

Impact of Currency
Adjusted EBITDA for Q2 was $8.7 million an increase of 61% compared to $5.4 million last year. Net income for Q2, 2014, was impacted by a foreign exchange loss of $1.9 million, compared with a $300,000 gain in the same period last year and $1.5 million in acquisitions related expenses.

Good Financial position
As of June 30, 2014 we had cash for $157 million, no debt and net working capital of $209 million, compared to working capital of $136 million at the end of 2013.

Link

http://seekingalpha.com/article/2399185-avigilons-aiocf-ceo-…

Analysts $45

Research analysts at CIBC decreased their target price on shares of Avigilon Corp (TSE:AVO) from C$50.00 to C$45.00 in a report released on Wednesday. The firm currently has a “sector outperform” rating on the stock. CIBC’s price objective would suggest a potential upside of 86.49% from the stock’s previous close.

http://www.intercooleronline.com/stocks/avigilon-corp-price-…

LegoAbs

Lowest P/E now
Q3 usually flat historically

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AIOCF, UBNT, and BOFI all reported great quarters. It’s rare to go for 3/3!

Clearly these analysts didn’t like the report. Can anyone provide some color here? A few things I noticed on the call that may have been uninspiring:

  • The FX loss. Obviously there will be some currency risk, but I much rather have the majority of this risk be in $:C$ than any other currencies. We are talking about probably two out of the three of the most stable reserve currencies in the world.

  • Massive increase in sales and marketing expense. This line caused the net income line to look ugly. CEO did mention that over time they will taper the spend as optimal market penetration is achieved. Seems normal to me.

Am I missing something? Where is the negative sentiment coming from?

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Beside the massive increase in sales & marketing expense, the dilution didn’t help the bottom line either. Sorry for all the posts, trying to document whatever key info I can this morning!

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