COM DEV Financial Results Sees Military Segment Rise but Civil and Commercial Segments Decline

COM DEV saw revenues decrease in the first quarter (Q1) of 2011 as compared to Q1 in 2010 from $56.7 million to $48.7 million but saw new orders rise to $59 million as compared to $51 million a year ago. In a move to show support for its stock COM DEV will also repurchase up to 10% of its stock.

The move to repurchase its stock comes after a reorganization of the company last summer where it replaced its CEO, cut 5% of its staff and exited some electronic products markets.
COM DEV’s commercial segment saw a small decrease in revenues of 2.9% while its military segment saw an 11.1% increase. However the civil (government) sector saw a decrease of 46.7% over the same period last year. COM DEV cites the civil downturn to large civil programs nearing completion without a substantial replacement of new orders to replenish their backlog.
Other Q1 highlights include:
– Gross margin in the core space equipment business was 21%, compared to 24% in Q1 2010.
– Net income attributable to shareholders was $1.3 million, or $0.02 per share, compared to $2.2 million or $0.03 per share in the first quarter of the previous year.
– New orders won in the first quarter totaled $59 million, compared to $51 million a year earlier and $80 million in the fourth quarter of fiscal 2010.
– Backlog at January 31, 2011 was $157 million, plus an additional $23 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded.
“We continue to demonstrate solid performance in our commercial segment, effective control of operating expenses, and strong order activity,” said Michael Pley, CEO of COM DEV. “While we saw a further cost increase on a small number of troublesome programs, which affected revenue, the gross margin achieved in the core space equipment business reached 21% in the first quarter. But we have now completed two of these five programs, and we have been replenishing our backlog with new contracts that offer a more favourable margin profile. The robust orders we have booked in the past two quarters are typically a good leading indicator for us, and we should see the positive effects on our revenue beginning next quarter.”
Canaccord Genuity has cut its price target for COM DEV to C$2.30 from C$2.75 with a hold rating.
COM DEV Q1 2011 Report Final (PDF)

About Marc Boucher

Boucher is an entrepreneur, writer, editor & publisher. He is the founder of SpaceQ Media Inc. and CEO and co-founder of SpaceRef Interactive LLC. Boucher has 20+ years working in various roles in the space industry and a total of 30 years as a technology entrepreneur including creating Maple Square, Canada's first internet directory and search engine.

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