Hemisphere GPS Reports 41% Growth In First Quarter
May 28, 2011Hemisphere GPS reported financial results for the first quarter ended March 31, 2011. Hemisphere GPS achieved revenue growth of 41%, reporting $21.2 million in revenues, compared to $15.1 million in the first quarter of 2010. Revenues from all market segments increased in the first quarter. "The recovery in our business that began in the back half of last year continued and strengthened in the first quarter of 2011 with a return to profitability," stated Steven Koles, President and CEO of Hemisphere GPS. "Traction from new products, stronger grain prices and signs of global economic recovery contributed to stronger growth in every geographic market, and all of our product lines."
All currency amounts are expressed in U.S. dollars. The Company notes that its financial results are reported under International Financial Reporting Standards ("IFRS") for the first time this quarter. While the conversion did not have a significant impact on the Company's results, certain components, as well as 2010 comparatives, have been reclassified and adjusted within the financial statements to reflect the conversion. The most significant change resulting from the conversion to IFRS is the change in the Company's functional or measurement currency from the Canadian dollar to the United States dollar.
Reclassifications and adjustments will be described in the notes to the first quarter financial statements, which will be filed on www.sedar.com upon their completion.
Gross margins were relatively consistent year over year at 48.5% compared to 49.2% for the first quarter of 2010, which have been revised based upon the conversion from Canadian to US functional currency under IFRS. Revised gross margins for 2010 are higher than originally reported under Canadian generally accepted accounting principles as a result of the impact of a strengthening Canadian dollar on the weighted average costing of Canadian inventories when using the US dollar as functional currency.
Although revenues grew 41% in the first quarter, total operating expenses for the quarter were flat year-over-year at $8.4 million, in-line with Management's objectives. This demonstrates the scalability of the Company's business model. Effective January 1, 2011, Management implemented a hedging program focused on mitigating the impact of foreign currency changes on Canadian and Australian operating expenses. Hedging gains earned in the quarter were offset against the related operating expenses, mitigating the impact of stronger Canadian and Australian currencies in the first quarter.
Research and development expenses for the first quarter remained unchanged year-over-year at $2.4 million, and were down by approximately $0.4 million from the fourth quarter of 2010. As a percentage of revenues, R&D expenses decreased to 11% of revenues for the first quarter of 2011, as compared to 16% of revenues for the first quarter of 2010. This is in line with Management's general objectives of investing approximately 11% to 12% of total revenues into R&D. Sales and marketing expenses for the quarter were lower by 1% to $3.3 million. General and administrative expenses were unchanged, at $1.8 million. In accordance with IFRS, stock-based compensation is not reported separately and has been allocated to the functional expense categories for both 2011 and 2010.
Hemisphere GPS reported a first quarter net margin of 9%, resulting in net income of $1.8 million, or $0.03 per share, a significant improvement from a net loss of $1.0 million, or ($0.02) per share, for the first quarter of 2010.
Comprehensive income of $330 thousand in the first quarter, represents the mark-to-market gain on hedging instruments put in place to hedge operating expenses for the remainder of 2011. There were no outstanding hedging instruments in place at March 31, 2010.
The Company generated $3.0 million in positive cash flow from operations before working capital changes during the quarter, compared to $50 thousand in the first quarter of 2010. In addition, during the first quarter of 2011, the Company completed an equity financing for net proceeds of approximately $7.5 million. At March 31, 2011, the Company held cash of approximately $12.0 million and had working capital of approximately $31 million.
At March 31, 2011, Hemisphere GPS had 60,824,409 common shares outstanding.
Total sales for the Agriculture segment increased by 40% compared to the first quarter of 2010. Sales of the Company's ground-based agriculture products, including the Outback Guidance branded products, increased 47% year over year. Agriculture revenues contributed 83% of total first quarter revenues, consistent with the first quarter of 2010. Sales of the eDrive auto-steering portfolio, including the new Outback eDriveX and Outback eDriveVSi offerings helped to drive growth in this segment.
Total sales for the Precision Products segment were up 44%, contributing 17% of total revenue in the quarter in both comparable quarters. Sales of Vector heading sensor products to the marine markets and GPS boards to OEM customers continue to lead the growth in this segment.
Total revenues from the United States and Canada grew by approximately 32% each. The US remains Hemisphere GPS' largest market, contributing 49% of revenues in the first quarter.
RSS
Become a Fan
Join our Network
Follow Us
Please send any technical comments or questions to our webmaster.