Aug 01, 2001 Earnings grow by 28%, Revenues by 122%
Montreal, August 1, 2001--Coreco Inc. today announced its results for the second quarter and six-month period ended June 30, 2001.
Second-quarter revenues grew 122% to US$7,625,606 from US$3,432,767 last year. Net earnings from operations rose 28% to US$832,972 from US$650,272, representing US$0.11 per share versus US$0.09 in 2000. After accounting for acquisition-related charges, the Company reported a loss of US$608,495 (US$0.08 per share), compared with net earnings of US$701,256 (US$0.10 per share) a year earlier.
For the six-month period, revenues increased 133% to US$15,209,204 and net earnings from operations grew 29% to US$1,548,859 (US$0.21 per share from US$0.16 per share). The net loss, after acquisition-related charges, was US$1,333,569 (US$0.18 per share) compared with net earnings of US$1,227,013 (US$0.17 per share) a year ago.
The gross profit in the second quarter improved by 98% to US$4,300,730 over the same period last year, representing 56.4% of sales. This compares with 56.2% in the recent first quarter and 63.3% in the second quarter of last year prior to the acquisition of the Company�s U.S. group. The Company continues to target a blended gross margin of 60% by the end of fiscal 2001 as it achieves full synergies with its U.S. subsidiary.
Selling and marketing expenses represented 15.1% of sales in the second quarter, compared with 14.1% in the same period last year and 16.6% in the recent first quarter. This increase is mainly attributable to the addition of the U.S. sales force in mid-2000.
R&D expenditures in the second quarter increased by 60% to US$1,218,368 from US$762,665 in the same period last year. As a percentage of sales, R&D represented 16% compared with 22% last year, reflecting synergies with the U.S. company. General and administrative expenses were consistent with levels achieved in recent quarters, representing 9% of sales.
Cash flow generated from operating activities in the second quarter amounted to US$1,406,130. At June 30, 2001, the Company reported working capital of US$9,166,478 and a cash balance of US$1,624,900.
Coreco continues to expand its global presence with all geographic regions contributing to revenue growth. For the year to date, sales to Asia, Europe and the U.S. increased by 94%, 287% and 117%, respectively. At June 30th, Asia accounted for 16% of total sales, Europe for 31% and the U.S. for 50%. Sales to Canada accounted for 3% of the total.
�We are very encouraged by the results of our second quarter,� commented CEO
Keith Reuben, �especially in view of the downturn that is currently affecting the semi-conductor industry. We have seen some delays in orders from a couple of our semi-conductor OEMs but they are not significant even less so given our focus over the last two years on diversifying our product line and our markets. In general, we are noticing that this downturn is affecting current OEM equipment to which Coreco has little exposure, but we are continuing to monitor the situation very closely for any changes. �
During the second quarter, Coreco was awarded the largest contract in its history valued at US$3 million over a three-year period. The contract is for the Company�s PC-Series frame grabbers and software, which were developed and marketed by the Company�s U.S. group. The first deliveries began this quarter and the bulk is scheduled to follow in fiscal 2002. This order, which was received from one of Europe�s leading OEM suppliers of machine vision inspection systems, demonstrates Coreco�s ability to provide machine vision solutions for a wide range of industries.
The Company also continues to penetrate the OEM market for integrated vision solutions. After qualifying in product trials, the Company received a volume order from a major OEM in Asia for complete vision solutions integrating hardware and application-specific software. This order is scheduled for delivery in the third quarter of the current fiscal year.
During this quarter, Coreco marked an important milestone in targeting end-users by shipping its first easy-to-use factory floor application to a pharmaceutical manufacturer in the U.S. Unlike OEM applications, the end-user market represents a much larger customer base and a greater number of machine vision applications.
In the second quarter, new products accounted for 44% of total sales, compared with 30% in the same quarter last year. Of the Company�s product categories, frame grabbers accounted for 59% of sales in the second quarter, embedded products for 35% and software for 6%, all of which contributed significantly to year-over-year revenue growth. The Company achieved 11 design-wins in the quarter.
Mr. Reuben concluded, �Our new products targeted at end-users as well as our complete vision solutions are serving us well. At present, the semi-conductor industry is using this quiet period to further enhance their product lines with newer technologies. Coreco�s embedded products are being designed into this next-generation inspection equipment. While these customers currently account for a very small portion of revenues, we expect to see an increase when the semi-conductor industry returns to its traditional growth patterns. By maintaining our focus on new products so as to address the new requirements of the semi-conductor industry, Coreco is positioned to gain market share when the market turns around.�
Measurement Currency
Effective January 1, 2001, the Company adopted the U.S. dollar as its measurement currency as a result of the significance of business activities conducted in the United States and the increasing proportion of operating, financing and investing transactions in the Canadian operations that are denominated in U.S. dollars.
In accordance with Canadian GAAP, comparative figures for the consolidated financial statements for the period ended June 30, 2000 have also been presented in U.S. dollars, using the convenience translation method whereby all Canadian dollars amounts were converted into U.S. dollars at the closing exchange rate at December 31, 2000, which was $1.5002 Canadian dollar per U.S. dollar.
Webcast
The Company�s conference call will be webcast on http://www.Q1234.com at 10 a.m. EST on Wednesday, August 1, 2001.
Coreco Inc. is a leader in the design, development, manufacturing and marketing of hardware and software for high-performance computer vision applications, primarily in the medical imaging, machine vision and industrial inspection markets. The Company employs approximately 160 people and has operations in Montreal (QC), Ottawa (ON), Vancouver (BC) and Bedford (MA), with additional sales offices in Cleveland (OH) and San Juan Capistrano (CA). Founded in 1979, Coreco�s success is driven by sound financial management combined with its commitment to the research and development of value-added products to serve the evolving needs of the computer vision market.
This press release contains statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.
All data in U.S. dollars unless otherwise indicated.
