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Article Excerpt
OPERATOR: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Carmanah Technologies Corporation quarter three 2008 results conference call.
At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to 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 risks and uncertainties that could cause actual results to differ materially 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 31, 2007 as filed on SEDAR and which is also posted on their website, www.carmanah.com. (OPERATOR INSTRUCTIONS)
I would like to remind everyone that this conference call is being recorded today, Wednesday, November 12, 2008 at 2 p.m. Pacific time and 5 p.m. Eastern time. I would now like to turn the conference call over to Mr. Ted Lattimore, Chief Executive Officer. Please go ahead, sir.
TED LATTIMORE, CEO, CARMANAH TECHNOLOGIES CORPORATION: Thank you, operator, and welcome all to this update of Carmanah's third quarter results. As usual, I am joined today by my colleagues, Roland Sartorius, our Chief Financial Officer; and Philippe Favreau, our Chief Operating Officer.
Within the worldwide turmoil of the financial markets during the last two months and the credit squeeze that has many companies, especially many of those in the new area of alternative energy, on life support, Carmanah has performed positively, as planned and disruption free. Stock price aside, it was a very good quarter. Our drive to emphasize higher margin business, ease away from the revenue of non-contributing businesses, and focus on EBITDA and cash has stood us well.
Sales are up year-over-year modestly. Gross margin percentages, however, are up over 20% from the previous year. And our best quarter to date in 2008. And as you would now come to expect, solar powered lighting is leading this surge in profitability.
In Q2, we told you about many changes and how we will operate the Company going forward. Remote sourcing of manufacturing to using independent distributors worldwide for sales. Transitioning our manufacturing to Flextronics is on plan and performing well. And Philippe Favreau, our Chief Operating Officer, will give you some highlights of that transfer momentarily.
About half of our manufacturing already takes place at Flextronics. The geographic sales channel management is really starting to take shape now as managers learn our product portfolio and contract agreements with independent dealers are put in place. For those of you who follow our announcements closely, you no doubt noticed that our last two large contracts were both outside North America; the United Arab Emirates, at more than $1.2 million, to enhance visibility and safety at remote airfields and an initial $1 million order to supply solar power systems for a telecommunications project in North Africa.
Our research and development is also paying off with the announcement of a new flagship product in the line solar powered marine beacons, the M708 marine lantern. The M708 is Carmanah's highest output LED marine lantern to date. Thus far, we can point to a business unaffected by a turbulent market and anxious marketplace. Will that continue? I can't soothe say, but I can tell you what we're emphasizing and examining.
Our safety and mission critical lighting products for industrial, government, and military customers, well, there's no reason to panic there. These are our largest and highest margin markets. Typically, these purchasers are limited in their ability to be discretionary in the timing of their purchases. Obviously, they can attempt to squeeze for better terms and pricing and will protect our market share position, but the market will not likely shrink or disappear.
Our general illumination products have thus far been a small part of our business. And although these purchases might be nor discriminatory, we are well placed and expect no reason for price erosion as the early adopter market is looking for quality, design, and differentiation.
Grid-tie and power systems also should stay on target as they are longer term commitments, of which we have reasonable visibility into. And our tactical businesses, now trending to be in the smaller part of our revenue, particularly after recently withdrawing from the sales and distribution of...
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