BW Technologies Continues Revenue Growth in First Quarter.Business Editors CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--Sept. 12, 2002 BW Technologies Ltd. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :BWT BWT Burrows Wheeler Transform (compression technology) BWT Boundary Waters Treaty (United States and Canada) BWT Basic Warrior Training BWT Bronchial Wall Thickness BWT Big White Truck .TO) announced today that its revenue reached $9,114,000 for the first quarter ended July July: see month. 31, 2002. Revenue has increased by 14% compared to last year's total of $8,026,000. Net income grew by 9% to $748,000 from $687,000 in 2001. In reviewing the first-quarter results Cody Cody (kō`dē), city (1990 pop. 7,897), seat of Park co., NW Wyo., on the Shoshone River in a sheep, cattle, and irrigated farm area; founded and inc. 1901 by William F. Cody (Buffalo Bill). Slater slat·er n. 1. One employed to lay slate surfaces, as on roofs. 2. See pill bug. 3. See sow bug. Noun 1. , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , noted that, "We have continued our year over year growth despite the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in our major market areas. Initial second-quarter sales are showing a return to even stronger growth and our new miniature four-gas detector detector: see particle detector. , the GasAlertMicro, has been enthusiastically accepted by the market. We look forward to fiscal 2003 being another in a long series of record years for BW." BW Technologies is a Calgary-based company that designs, manufactures and markets gas-detection instruments that protect people and the facilities where they work from dangerous gases. BW is known for its reliable, innovative and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. equipment. The company has sales offices around the world, including the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the
Middle East and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. .Senior management will discuss the first-quarter results in a webcast beginning today at 3:00 pm MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → / 5:00 pm EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To listen to the webcast, go to: http://webevents.broadcast.com/cnw/bwtech20020912 MANAGEMENT DISCUSSION AND ANALYSIS SUMMARY OF FINANCIAL PERFORMANCE
Three months ended
July 31 Percent
2002 2001 Change
Revenue $9,114,000 $8,026,000 +14%
Gross margin 4,342,000 3,800,000 +14%
Net income 748,000 687,000 +9%
Earnings before interest, taxes,
depreciation and amortization 1,739,000 1,614,000 +8%
Operating cash flow 1,441,000 1,234,000 +17%
Operating cash flow per share .25 .22 +14%
Earnings per share
- Basic .13 .12 +8%
- Diluted .12 .12 +0%
RESULTS OF OPERATIONS BW Technologies Ltd. (BW) continued its successful string of quarter over quarter growth as revenues reached $9,114,000 for the first quarter ended July 31, 2002. Revenue increased 14% from the $8,026,000 recorded last year despite a sluggish North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. industrial market and the resulting weakness in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . Net income increased 9% to $748,000. First quarter growth was primarily attributable to BW's strong portable product line. Total portable sales increased by 16% over last year. As well, sales from the GasAlert suite of products increased by 30%, highlighted by the first commercial shipments of the recently released GasAlertMicro. This product is one of the world's smallest multi-gas detection instruments. It can be carried or clipped clip 1 v. clipped, clip·ping, clips v.tr. 1. To cut, cut off, or cut out with or as if with shears: clip coupons; clipped three seconds off the record. onto a belt, alerting workers to the presence of hydrogen sulphide hydrogen sulphide Noun a colourless poisonous gas with an odour of rotten eggs , carbon monoxide carbon monoxide, chemical compound, CO, a colorless, odorless, tasteless, extremely poisonous gas that is less dense than air under ordinary conditions. It is very slightly soluble in water and burns in air with a characteristic blue flame, producing carbon dioxide; , combustible com·bus·ti·ble adj. Capable of igniting and burning. n. A substance that ignites and burns readily. gases and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. an oxygen deficiency. Fixed products sales increased by 14%. While BW's core sales staff is directed towards the portable market, a manager is now dedicated to the fixed and commercial product area in order to intensify in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: the focus on this aspect of the business. Stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." product revenue declined significantly from the prior year. This is a direct result of declines in the drilling industry, particularly in Western Canada
Western Canada, commonly referred to as the West . A review of revenue by geographic region is also useful in analyzing operations. This is set out in the table below.
Three months ended Percent
(thousands of dollars) ended July 31 Change
----------------------------------------------------------------------
2002 2001
United States $4,475 $3,567 +25%
Canada 1,537 1,856 -17%
International 1,369 1,367 +0%
Europe 1,733 1,236 +40%
----------------------------------------------------------------------
$9,114 $8,026
BW's sales growth in the quarter was attributable to the United States and Europe. The United States is BW's largest market and continues to represent an excellent growth opportunity. Sales in Europe increased by 40% as BW continues to increase its exposure in the market. The complete sales and service office in Oxfordshire Oxfordshire or Oxon, county (1991 pop. 553,800), 749 sq mi (1,940 sq km), S central England. The county seat is Oxford. The terrain is generally flat except for a branch of the Chiltern Hills in the southeast. , United Kingdom provides BW with competitive advantages, including same day delivery for core BW products. Sales in Canada were adversely affected by the decline in drilling in Western Canada. BW's core Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. market is oil and gas and the decline in results was consistent with other support companies in the sector. Going forward drilling activity looks strong and should result in improved Canadian sales. International sales were consistent with the prior year. This was below expectations as each of BW's international regions was impacted by negative market factors. The Middle East was hindered by decreased capital spending; Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. continued its recession; and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. continued to face political and economic instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability . However, BW continued to receive positive response to its products throughout the quarter and expects to improve its international sales as a more favourable business climate emerges in these three key international areas. BW also anticipates improving results from Australia as
pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. office begins to make an impact. Gross margin for the quarter was 47.6% compared with 47.3% last year and 52.7% in the fourth quarter of fiscal 2002. As expected, margins in the quarter were negatively impacted by relatively low revenues in what is traditionally BW's slowest quarter. The decreased production resulted in significant unapplied overhead costs overhead costs see fixed costs. . Excluding unapplied overhead, margins for the first quarter were higher than the margins achieved in the fourth quarter of last year. As a result, BW expects margins for the remainder of the year to improve with increased revenue levels. Selling, general and administrative expenses for the first quarter ended July 31, 2002 were $2,849,000, a 21% increase over the $2,363,000 recorded in the first quarter of last year and a 1% increase from fourth quarter 2002 levels. 88% of the year over year increase was due to the expanding sales and marketing efforts of the company. Total costs for sales and marketing salaries/commissions, travel, tradeshows, literature and advertising increased 30% over the same period last year as BW continues to invest the resources necessary to aggressively expand its markets. FINANCIAL CONDITION AND CASH FLOWS BW's balance sheet continues to be strengthened by strong operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. that increased 17% to reach $1,441,000 during the period from the $1,234,000 achieved during the first quarter of fiscal 2002. The $2,221,000 decline in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying was the result of the normal decline in revenue from the fourth quarter to the first quarter. Total accounts receivable represented 60 days sales, which is consistent with previous quarters. The lower revenue level also accounted for the $1,259,000 decline in accounts payable as raw material purchases decreased. BW was required to make its final income tax installments for fiscal 2002 during the quarter. As a result, income taxes payable decreased by $1,716,000. Product development costs were $623,000 during the quarter as BW continued its aggressive product development program. Capital asset additions were $350,000 during the period. The main additions were $115,000 in production equipment, $90,000 in moulds, tools and dies for new products and $58,000 in computer software upgrades. At July 31, 2002, BW had $3,353,000 in cash and cash equivalents on hand. As well, the company continues to maintain an unused $2.75 million bank operating line of credit. The following table summarizes the company's financial position.
(thousands of dollars except ratios)
July 31, 2002 April 30, 2002
----------------------------------------------------------------------
Cash $3,353 $3,642
Working capital $16,692 $16,069
Working capital ratio 5.88 3.51
Quick ratio 2.86 1.92
Shareholders' equity $22,184 $21,240
Debt equity ratio 0.18 0.33
-- debt includes debt financing and current liabilities
Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain statements in this press release constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of BW to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include the following: general economic and business conditions, changing foreign exchange rates, actions by government authorities, rapid technology development and changes, industry pricing pressures, capacity and other trends and misjudgments in the course of preparing forward-looking statements.
CONSOLIDATED BALANCE SHEETS (Unaudited)
July 31 April 30
(Thousands of Dollars) 2002 2002
----------------------------------------------------------------------
ASSETS
Current Assets
Cash and short-term investments $ 3,353 $ 3,642
Accounts receivable 6,442 8,663
Inventory (note 3) 9,575 9,713
Prepaid expenses and deposits 654 450
Income taxes recoverable 159 -
----------------------------------------------------------------------
20,183 22,468
Other assets 70 64
Deferred product development costs 4,313 4,000
Capital assets 3,557 3,453
----------------------------------------------------------------------
$ 28,123 $ 29,985
----------------------------------------------------------------------
----------------------------------------------------------------------
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 3,337 $ 4,596
Income taxes payable - 1,647
Current portion of long-term debt (note 4) 155 156
----------------------------------------------------------------------
3,492 6,399
Long-term debt (note 4) 486 525
Future income taxes 1,961 1,821
----------------------------------------------------------------------
$ 5,939 $ 8,745
SHAREHOLDERS' EQUITY
Capital stock (note 5) 12,269 12,073
Retained earnings 9,915 9,167
----------------------------------------------------------------------
22,184 21,240
----------------------------------------------------------------------
$ 28,123 $ 29,985
----------------------------------------------------------------------
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
(Thousands of Dollars)
Three months ended July 31 2002 2001
----------------------------------------------------------------------
Retained earnings - Beginning of period $ 9,167 $ 4,234
Net income for the period 748 687
----------------------------------------------------------------------
Retained earnings - End of period $ 9,915 $ 4,921
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Thousands of Dollars Except Per Share Amounts)
2002 2001
----------------------------------------------------------------------
REVENUE $ 9,114 $ 8,026
Cost of sales 4,772 4,226
----------------------------------------------------------------------
Gross margin 4,342 3,800
----------------------------------------------------------------------
EXPENSES
Selling, general & administrative 2,849 2,363
Amortization of product development costs 310 314
Interest 8 1
----------------------------------------------------------------------
3,167 2,678
----------------------------------------------------------------------
Net income before tax 1,175 1,122
Income taxes
Current 273 379
Future 154 56
----------------------------------------------------------------------
427 435
----------------------------------------------------------------------
NET INCOME $ 748 $ 687
----------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Basic $ 0.13 $ 0.12
Diluted $ 0.12 $ 0.12
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Thousands of Dollars)
2002 2001
----------------------------------------------------------------------
Cash provided by (used in)
OPERATING ACTIVITIES
Net income $ 748 $ 687
Items not affecting cash
Depreciation 246 177
Amortization of product development costs 310 314
Amortization of other assets - -
Future income taxes and utilization of
investment tax credits 140 56
----------------------------------------------------------------------
1,444 1,234
Net change in non-cash working capital (910) (531)
----------------------------------------------------------------------
534 703
----------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital assets (350) (896)
Purchase of other assets (6) (11)
Additions to deferred product
development costs (623) (408)
----------------------------------------------------------------------
(979) (1,315)
----------------------------------------------------------------------
FINANCING ACTIVITIES
Long-term debt (40) (5)
Issuance of capital stock 196 242
----------------------------------------------------------------------
156 237
----------------------------------------------------------------------
Increase in cash and short-term
investments (289) (375)
Cash and short-term investments -
beginning of period 3,642 2,727
----------------------------------------------------------------------
Cash and short-term investments - end of
period $ 3,353 $ 2,352
----------------------------------------------------------------------
Notes to Interim Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (unaudited) (tabular tab·u·lar adj. 1. Having a plane surface; flat. 2. Organized as a table or list. 3. Calculated by means of a table. tabular resembling a table. amounts are in thousands of Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents ("$") except as noted) 1. NATURE OF OPERATIONS BW Technologies Ltd. (the "company") commenced operations in 1987. The company develops and manufactures gas detection equipment, which it sells throughout the world. 2. ACCOUNTING POLICIES a) Basis of presentation The Interim Consolidated Financial Statements of BW Technologies Ltd. have been prepared by management in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in Canada. Certain information and disclosures normally required to be included in notes to annual consolidated financial statements has been condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. or omitted. The Interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. in the company's Annual Report for the year ended April 30, 2002. b) Significant accounting policies The Interim Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. as the Consolidated Financial Statements for the year ended April 30, 2002. c) Comparative figures Certain of the comparative amounts have been reclassified to conform with the presentation adopted in the current period.
3. INVENTORY
July 31, 2002 April 30, 2002
$ $
----------------------------------------------------------------------
Parts 4,325 4,236
Sub-assemblies 740 621
Work-in-progress and finished goods 4,510 4,856
----------------------------------------------------------------------
9,575 9,713
----------------------------------------------------------------------
4. LONG-TERM DEBT
July 31, 2002 April 30, 2002
$ $
----------------------------------------------------------------------
Bank loan (i) 638 675
Capital leases 3 6
----------------------------------------------------------------------
641 681
Less: Current portion (155) (156)
----------------------------------------------------------------------
486 525
i) The bank loan bears interest at prime plus 0.50% and is secured
by a fixed charge under the bank's general security agreement. The
loan matures in October, 2006.
5. CAPITAL STOCK
a) Authorized
Unlimited common shares and unlimited preferred shares issuable in
series at the discretion of the directors of the company.
b) Issued
Number Amount
Common Shares $
Balance - April 30, 2002 5,762,753 12,073
Exercise of stock options 26,600 196
----------------------------------------------------------------------
Balance - April 30, 2002 5,789,353 12,269
----------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS The fair values of monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. approximate their carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. . Interest rate risk The company is not exposed to significant interest rate risk with respect to interest bearing debt. Credit and foreign currency risk The company is not exposed to significant credit risk as it sells mainly to a diverse group of established distributors and users. Foreign currency risk exists as the majority of the company's non-domestic sales are denominated in US dollars. The company manages this risk by using hedging instruments as described below. Hedging instruments The company often enters into forward exchange contracts to protect its future Canadian dollar earnings and cash flows from the potential adverse impact of unfavourable rates of exchange of U.S. dollars and pounds sterling into Canadian dollars. The forward contracts reduce fluctuations in sales revenues by locking in exchange rates on the portion of its sales covered by the contracts. While forward contracts reduce the risk of exposure to adverse change in exchange rates, they also reduce the potential benefit of favourable changes in exchange rates. At July 31, 2002, the company had entered into a series of risk reversal Risk Reversal 1. In commodities trading, it is a hedge strategy that consists of selling a call and buying a put option. This strategy protects against unfavorable, downward price movements but limits the profits that can be made from favorable upward price movements. 2. options covering US$1,200,000, 150,000 and 900,000 Euros expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. April 30, 2003, October 30, 2002 and March 31, 2003 respectively. The company had also contracted the forward sale of 100,000 Euros on each of August 31 and September 30, 2002. Unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on outstanding forward contracts and options are not recorded in the financial statements until completion of the underlying transactions. The Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. has neither approved nor disapproved of the information contained herein. |
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