Norsat Announces 2010 First Quarter Financial Results

May 06, 2010

Norsat International Inc. announces its financial results for the three-month period ended March 31, 2010. All financial results are in U.S. dollars unless otherwise stated.  

"I'm pleased with the first quarter results, which typically is our slowest quarter due to seasonality," said Dr. Amiee Chan, President and CEO, Norsat International Inc. "While revenues were slightly lower, we did see a nice improvement from our Microwave Products division, which grew by 26.2% to $1.9 million, due to our focus on issuing new and improved products within this division. It is refreshing to see renewed interest in this division and expect it to help us meet our revenue growth goals for fiscal 2010 as we continue to offer new products to our loyal customers."

Dr. Chan continued, "Switching to our Satellite Systems division, despite the lower revenues reported in the quarter, we don't view this as a long-term concern since last year's results included a large order we were completing for the U.S. Department of Defense. We continue to review more request for proposals within this division and landed a new European military during the quarter, which should be delivered in the next couple of quarters."

Dr. Chan concluded, "We continue to remain focused on our core businesses, which are operating as expected. We anticipate delivering year-on-year revenue growth in the range of 15 -- 20%. At the same time we continue to work diligently to build up our other three new business units -- Maritime, Wireless Networks and Norsat Capital -- to be a premiere communications provider for remote and austere regions of the world and to have the Company participate in larger growth opportunities."

Financial Review

Revenue was $4.9 million for Q1 2010, down from $5.0 million in Q1 2009. The year-over-year decrease in total revenue was due to the fact that there was stronger Satellite systems sales in the first quarter of 2009 attributable to the backlog resulting from a large U.S. Department of Defense order carried over from September 2008. Revenue from the Satellite Systems segment was $2.9 million in Q1 2010, down from $3.4 million in Q1 2009. Revenue from the company's Microwave Products segment was $1.9 million in Q1 2010, up from $1.5 million in Q1 2009.

Norsat's overall gross margin for Q1 2010 was 48%, compared to 49% in Q1 2009. These overall gross margins continue to be in a range consistent with the gross margins earned during the past several quarters. Management anticipates that overall margins will continue to hold around the current levels.

Operating expenses for Q1 2010 were $1.8 million, compared to $1.6 million in Q1 2009. The increase resulted primarily from the non-recurring foreign exchange gains earned in Q1 2009, when the Company's functional currency was in Canadian Dollars.

For Q1 2010, net earnings were $0.5 million, or $0.01 per share, down from the $0.8 million or $0.02 per share reported in Q1 2009.

Cash used in operating activities was $2.1 million in Q1 2010, compared to generation of $1.7 million for the same period last year. At March 31, 2010, Norsat had cash and cash equivalents of $2.8 million, compared to $4.7 million as at December 31, 2009.

As at March 31, 2010, total shares issued and outstanding were 53,699,359.