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Q4 2008 CARMANAH TECHNOLOGIES CORP Earnings Conference Call - Final.

Article Excerpt
OPERATOR: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Carmanah Technologies Corp. Q4, 2008 results conference call. At this time all participants are in a listening mode. Following the presentation we will conduct a question-and-answer session. Instructions will be provided at that time for to you queue up for questions.

Before beginning its formal remarks Carmanah would like to remind listeners that certain portions of today's discussion may contain forward-looking statements that reflect views with respect to future events. Any such statements are subject to risk and uncertainties that could cause actual results to differ materially from all those in these forward-looking statements. For more information on the forward-looking statements and the Company's risks and uncertainties relating to such forward-looking statements please read Carmanah's annual report for the fiscal year ended December 21, 2008, as filed on SEDAR and which is also posted on their website www.carmanah.com. As well, Carmanah would like to highlight that unless noted, all currency amounts in today's conference call are expressed in Canadian dollars and the Company's financial statements are prepared in accordance with Canadian GAAP.

During this call Carmanah will also refer to adjusted EBITDA, a non-GAAP financial measure which they calculate as earnings before interest, income tax, amortization, goodwill and intangible asset impairment and restructuring costs. Carmanah uses this metric internally in addition to others to make strategic decisions and evaluate performance. Carmanah also feels that adjusted EBITDA is a useful measure for investors but is non-GAAP and is not intended to substitute GAAP measures. For a reconciliation of their adjusted EBITDA please refer to the Carmanah 2008 results news release or MD&A.

(Operator Instructions) I'd like to remind everyone that his conference call is being recorded today, Tuesday, March 10, 2008 (sic) at 2:00 p.m. Pacific and 5:00 p.m. Eastern time. I would now like to turn the call over to Mr. Ted Lattimore, Chief Executive Officer. Please go ahead.

TED LATTIMORE, CEO, CARMANAH TECHNOLOGIES CORP: Thank you, Operator. Welcome all to this update of Carmanah's fourth quarter and year end 2008 results. I'm joined today by my colleague Roland Sartorius, our Chief Financial Officer.

Carmanah wrapped up a dramatic and ultimately satisfying year. Growth in the strategic business was 40% year over year. Full year achievement of CAD4.7 million EBITDA adjusted with CAD2.2 million of that coming in Q4. The year-over-year cash was improved by CAD3.8 million to CAD7.9 by the end of the year. And the Company closed the year with head count of 179 versus 248 at year end 2007. However, we are now down to 152 as of the end of February with the closing of our manufacturing facility which closed on time. Moreover, Carmanah's current employees are definitely motivated. Employees have confidence in the new direction and see themselves as growing with the Company. There are lots more positive in Carmanah Q4 and year end financial statements and I will let Roland provide you with that detail in a few minutes. Let me highlight however, a few operational and directional points that I consider to be important.

The strategic overhaul of the Company has largely been completed. More and more the Company is blazing the path of product design, sales distribution and ease of doing business with us. So new products are designed for ease of installation and use in multiple markets. Distributor-based sales requires that our products be engineered to be robust, reliable and easy to implement. The switch rom direct sales to indirect with the worldwide distributor implementation was carried out without negative impacting sales in 2008 and now we will build on this to expand our sales of our strategic product line. Sales distribution and contract manufacturing are equally important in making Carmanah easy to do business with, as well they are foundation blocks in Carmanah's drive to scalability.

Despite the overall concern that the world faced with the banking crisis 2008 going forward the year culminated in financial success for Carmanah. The Company felt no significant impact in Q4 or any previous quarter largely due to the long lead times for our products and the mission critical or safety requirement nature of most of our products. By exiting home power and customized transit early in the year Carmanah removed low margin businesses from our profile. The next phase of our exiting strategy proved even more fortuitous with the closure of Calgary and Santa Cruz facilities as the Company avoided the harsh slowdown and margin collapse experienced in the solar components distribution business at year end.

Our strategic renewal has further refined the operating focus of the business. The articulation and introduction of monitoring of process for four key tactics. Partnerships, scalability, worldwide sales, and investment. I've spoken of three of these tactics often. Our need for partnerships to ensure we have best in class components providing for us to create best in class end products. Scalability which includes outsourcing for lower costs, more flexible manufacturing and supply management, and the fact that outsourcing positions us to best work through local content requirement for some countries and to maneuver through trade barriers of others. And worldwide sales to get closer to the global opportunity for our products that building relationships with dealers while connected in host countries.

Now let me spend a moment on that last tactic investment. Outdoor area lighting is a big opportunity for solar. Cost effective solar power can have a game changing approach on outdoor area lighting. For Carmanah to realize the opportunity solar powered outdoor area lighting, the total cost of ownership of solar powered outdoor area lighting must approach equilibrium with incumbent grid tie power solutions. Now, today, solar is more expensive than traditional grid tie in most situations. Carmanah is investing. We are investing in...

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