CALGARY, Aug. 1, 2012 /CNW/ - (TSX: HEM) Hemisphere GPS today reported financial results for the second quarter ended June 30, 2012. All currency amounts are expressed in U.S. dollars.
For the quarter ended June 30, 2012, Hemisphere GPS reported revenues of $19.6 million, a 3% decrease from revenues of $20.1 million reported for the second quarter of 2011. Revenue from the Company's Agriculture business decreased 3% year-over-year for the quarter, while revenue from its Precision Products business grew by 1%. Agriculture segment revenues contributed 80% of total second quarter revenues, compared with 81% in the second quarter of 2011.
Revenue growth of 10% in Canada was offset by a decline of 14% in the United States - primarily driven by the impact of the US drought. The Company also experienced declines in Europe and South America of approximately 6%, tempered by increased sales in Australia and Asia.
|Revenue by Region||Q2 2012||Q2 2011|
"Sales in the United States, our largest sales region, were negatively impacted by the substantial drought conditions, particularly with our direct-to-farmer business model" stated Steven Koles, President and CEO of Hemisphere GPS. "Primarily due to these drought conditions we have tempered our growth expectations for the year down to 10%. However our mid to long-term outlook remains attractive despite the unfavorable weather and crop conditions this year. The resulting high grain prices benefit farming operations that were not as impacted by the drought, and long-term, grain commodities are expected to remain at historically high levels. Incentive remains with farmers to invest in productive technology, and we have made several product releases recently with a major product release slated for the autumn buying season. This will be the most important product launch in the company's history and includes full cloud-based asset and data management and processing capabilities through the integration of our AgJunction platform."
Gross margin for the second quarter was 43% compared to 47% in the second quarter of 2011, with the year-over-year difference related to product pricing promotions during the quarter, cost increases and the impact of foreign currency.
Total operating expenses increased by $0.1 million from the second quarter of 2011, with the acquisition of AgJunction responsible for $0.7 million of increased expenses. Research and development expenses increased to $3.2 million from $2.5 million in the second quarter of 2011, with AgJunction operating expenses and amortization accounting for $0.4 million of the increase. Sales and marketing expenses decreased by $0.1 million to $3.6 million for the reporting quarter, despite AgJunction expenses of $0.3 million.
Hemisphere GPS reported a net loss of $0.4 million, or ($0.01) per share (basic and diluted) in the second quarter of 2012 compared to net profit of $0.8 million, or $0.01 per share (basic and diluted) in the second quarter of 2011.
For the six months ended June 30, 2012, Hemisphere GPS reported revenues of $42.2 million, a 2% increase from revenues of $41.4 million, for the same period in 2011. Gross margin for the first six months of 2012 was 45.3% compared to 47.6% in the six months of 2011. Operating expenses of $17.9 million for the six months ended June 30, 2012 increased $1.0 million, or 6% from the first half of 2011. The acquisition of AgJunction during the first quarter added operating costs, including amortization, of $1.4 million to the first half of 2012. The Company reported a profit of $1.0 million in the first half of 2012 or $0.02 per share (basic and diluted), compared to a profit of $2.6 million, or $0.04 per share (basic and diluted) in the first half of 2011.
At June 30, 2012, the Company held cash of $6.0 million, or $0.10 per share, compared to $6.7 million at December 31, 2011. Working capital was approximately $29 million, consistent with December 31, 2011.
The Company has 66,280,777 common shares outstanding.
During the first quarter, Hemisphere GPS strategically entered the emerging data services market in precision agriculture with the acquisition of AgJunction, a provider of a cloud-based data management software platform and wireless hardware to precision agriculture retailers and growers. With this acquisition Hemisphere GPS brings real-time decision-making information into the farmer's cab, enabling lower use of pesticides, fertilizer and fuel, while generating higher crop yield, resulting in more profitable farming operations. AgJunction provides attractive growth prospects for Hemisphere GPS. New features and partners are being added, along with additional retail sales locations. Today, AgJunction's client acres under management is 23 million, and growing.
AgJunction serves an emerging growth segment in precision agriculture where ever-increasing global food demand and higher input costs drive the demand for data management services. Over 32,000 growers in the U.S. and Western Canada are benefiting from AgJunction's wireless two-way transfer of data between their farm equipment, their farm office and agriculture service providers. Major agriculture retailers such as the Wilbur-Ellis Company and Crop Production Services Inc. (CPS) use AgJunction to better serve their customers' farming operations by providing data management, site-specific recommendations, tracking work orders, crop inputs and expenses. Delays in viewing and analyzing field information are eliminated. The process of transferring data from field equipment to cloud servers for spatial sorting, field linking, analyzing and creating plans is fast and easy. This works for all major brands of agricultural equipment.
Hemisphere GPS announced several products and enhancements to its AgJunction precision agriculture data services platform during the quarter:
AgJunction expanded its compatibility with in-field systems through
integration with the John Deere AgLogic fleet logistics management
solution. Through the AgJunction cloud-based system, agricultural
service providers such as fertilizer dealers, agronomists and co-ops
benefit from the seamless two-way transfer of data and in-field work
Hemisphere GPS announced the new AgJunction Mobile for iOS, an
enhancement to AgJunction, an in-field data collection system featuring
global-positioning-system-enabled (GPS-enabled) boundary mapping and
soil sampling. Available for both iPhone and iPad, AgJunction Mobile
for iOS enables users to synchronize data based on their growers,
farms, fields, field boundaries and directed sample locations. Recorded
field data are automatically synchronized with the AgJunction cloud
system for use in the field, back at the office or through an
agriculture service provider.
- AgJunction added advanced weather data services provided by Weather Decision Technologies Inc. (WDT), providing AgJunction customers more insight and convenience into making weather-related decisions. WDT data includes high-resolution weather map overlays including current radar for the United States and Canada, one-hour and 24-hour precipitation totals, current wind speed, temperature and dew point.
Q2 Product Announcements
Hemisphere GPS and Stara announced an expanded OEM partnership as part
of Stara's new SpeedDrive X system at the AgriShow Rabeirão Pretoin São
Paulo State, Brazil. SpeedDrive X will be factory installed as standard
equipment on various models of Stara tractors, sprayers, and
spreaders. The new SpeedDrive X combines a customized Hemisphere GPS
eDriveX automated steering system and A320 GNSS smart antenna and Stara
Topper 4500 terminal providing total user management for precision
Hemisphere GPS released an affordable A325 GNSS Smart Antenna. This new
design incorporates professional-level centimetre and submetre
positioning accuracy powered by Hemisphere GPS's Eclipse receiver
technology and includes L-band and Bluetooth communications support.
A325 is a great fit for a variety of applications including
agriculture, construction, straddle carriers, robotics, marine, survey
Hemisphere GPS announced multiple enhancements to its popular eDriveX
automated steering system. With support for the VSi electric steering
interface, improved contour functionality, and additional vehicle kit
support, eDriveX v2.1 provides an accurate and affordable steering
platform for precision farming applications. For eDriveX users needing
long-range functionality, Hemisphere GPS released 400-megahertz radio
repeater kits that extend the range of the company's RTK systems.
VSi support brings high-performance steering to the simplicity of an electric steering wheel solution and allows eDriveX to be installed on vehicle platforms not previously targeted with hydraulic kits. VSi is a quick and easy performance solution when using eDriveX on a second tractor or other farm machinery.
"We are constantly enhancing our successful eDriveX product line which offers industry leading performance and great value," said Kip Pendleton, senior vice-president and general manager of the Agriculture business for Hemisphere GPS. "Providing new and innovative product features is at the core of our solution-based approach to helping current and new customers become more efficient and productive."
Conference Call - 11:00 a.m. EDT
A conference call and webcast for shareholders, analysts and other members of the investment community has been scheduled for today at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) to discuss the financial results and provide an update on operations.
To participate in the conference call, please dial 1-647-427-7450 or 1-888-231-8191 approximately 10 minutes before the conference call and provide conference ID 12337426. Please note that a live webcast of the call will be available on the Hemisphere GPS Web site at http://www.hemispheregps.com. The webcast will be archived for later review.
A recording of the call will be available through August 8. Please dial 1-416-849-0833 or 1-855-859-2056 and enter passcode 12337426 to listen to the rebroadcast.
About Hemisphere GPS
Hemisphere GPS designs and manufactures innovative, cost-effective GPS (GNSS) products for positioning, guidance, and machine control applications in agriculture, marine, survey, construction, and other markets. The Company holds numerous patents and other intellectual property and owns several leading brand names, including Outback Guidance®, a leading brand in precision GPS for agriculture. The Company is headquartered in Calgary, Alberta, with major product development, sales, and marketing facilities in Arizona, Kansas, and Australia. Hemisphere GPS is listed on the Toronto Stock Exchange (TSX) trading under the symbol "HEM" and is one of the TSX Cleantech designated companies. For more information about Hemisphere GPS, please go to www.hemispheregps.com.
The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Hemisphere GPS' control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Hemisphere GPS' actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceed, that Hemisphere GPS will derive therefrom.
Hemisphere GPS Inc.
|Condensed Consolidated Statements of Financial Position|
|(Unaudited - expressed in U.S. dollars)|
|Cash and cash equivalents||$||6,003,024||$||6,721,314|
|Income tax credits receivable||477,972||237,224|
|Prepayments and deposits||803,154||699,889|
|Property, plant and equipment||5,841,308||5,805,906|
|Liabilities and Shareholders' Equity|
|Accounts payable and accrued liabilities||7,319,802||5,952,383|
|Derivative financial liability||43,000||-|
|Current portion of contingent consideration||244,000||-|
|Current portion of long-term debt||600,000||-|
|Accumulated other comprehensive loss||(43,000)||-|
HEMISPHERE GPS INC.
|Condensed Consolidated Statements of Comprehensive Income and Loss|
|(Unaudited - expressed in U.S. dollars)|
|Three months ended||Six months ended|
|June 30,||June 30,|
|Cost of sales||11,203,463||10,669,319||23,086,761||21,666,272|
|Research and development||3,204,423||2,507,046||6,454,929||5,348,431|
|Sales and marketing||3,614,038||3,724,173||7,604,887||7,267,312|
|General and administrative||1,961,178||1,602,146||3,768,288||3,556,978|
|Strategic transaction investigation costs||-||800,320||-||800,320|
|Results from operating activities||(398,557)||821,473||1,185,504||2,713,406|
|Foreign exchange loss||30,982||40,507||131,159||93,656|
|Interest and other income||(2,064)||(11,376)||(2,367)||(18,595)|
|Profit (loss) for the period before|
|Profit (loss) for the period||(427,475)||792,342||1,008,062||2,638,345|
|Comprehensive income (loss)||(197,000)||3,000||(43,000)||333,000|
|Total comprehensive income (loss)||$||(624,475)||$||795,342||$||965,062||$||2,971,345|
|Earnings (loss) per common share:|
|Basic and diluted||$||(0.01)||$||0.01||$||0.02||$||0.04|
Hemisphere GPS Inc.
|Condensed Consolidated Statements of Cash Flows|
|Six months ended June 30, 2012 and 2011|
|(Unaudited - expressed in U.S. dollars)|
|Cash flows from (used in) operating activities:|
|Items not involving cash:|
|Depreciation and amortization||1,991,558||1,590,479|
|Share-based payment transactions||207,600||330,889|
|Unrealized foreign exchange gain||(5,014)||(46,625)|
|Change in non-cash operating working capital:|
|Income tax credits receivable||(240,748)||(354,198)|
|Prepayments and deposits||(103,265)||(180,782)|
|Accounts payable and accrued liabilities||1,367,419||285,907|
|Cash flows from (used in) financing activities:|
|Issue of debt||1,500,000||-|
|Issue of share capital, net||7,435||7,436,400|
|Cash flows used in investing activities:|
|Purchase of property and equipment||(603,040)||(619,869)|
|Intangible asset addition||(903,080)||(571,000)|
|Increase (decrease) in cash position||(723,304)||7,910,922|
|Effect of exchange rate fluctuations on cash and cash equivalents||5,014||46,625|
|Cash and cash equivalents, beginning of period||6,721,314||5,319,385|
|Cash and cash equivalents, end of period||$||6,003,024||$||13,276,932|
SOURCE: Hemisphere GPS Inc.
Chief Financial Officer
Hemisphere GPS Inc.
e.vestor Communications Inc.