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NINE MONTHS: HEMISPHERE GPS' SALES UP 1%, RECORDS LOSS
Source: Hemisphere GPS news release

To view entire report, click here.

Hemisphere GPS today provided an update on its corporate restructuring and new corporate strategy, along with its financial results for the third quarter ended September 30, 2012.

For the three months ended September 30, 2012, revenue was $14.0 million, compared to revenues of $14.1 million for the same period of 2011. Segmented revenue contribution from the Agriculture business segment grew year-over-year to $10.5 million, up 5% from $10.0 million for the third quarter of 2011while revenue from the Precision Products business was $3.5 million compared to $4.1 million in the third quarter of 2011.

Consolidated revenue growth was 22% in Canada and 6% in the United States. European sales were down 1% due to Europe's struggling economies, and sales to other international regions including Australia, Asia and South America decreased by 25% compared to the third quarter of 2011 primarily due to a single large order in the previous year that wasn't repeated this year.

Segmented revenues from the Company's core Agriculture business increased revenue contribution to 75% of total third quarter revenues, compared with 71% in the third quarter of 2011. Precision Products contributed 25% of total revenue in the third quarter of 2012 compared to 29% in 2011.

On August 27, 2012, Hemisphere GPS announced the launch of Outback MAX™, its new flagship product for the precision agriculture market. Market and customer reception has been positive and initial sales have been encouraging, building optimism for 2013.

Third quarter gross margin of $6.7 million and 48% was unchanged from the third quarter of 2011. Inclusive of restructuring costs, operating expenses in the third quarter were up by 16% year over year at $9.5 million in the third quarter of 2012 compared to $8.2 million in 2011. The company incurred $0.5 million of restructuring costs in the third quarter. Excluding restructuring costs, operating expenses increased by 10% from 2011, primarily due to the addition of Ag Junction operations.

Research and Development expenses increased by $0.3 million or 10% year over year to $3.4 million compared to $3.1 million in 2011. Sales and Marketing expenses for the quarter increased by $0.3 million or 8% to $3.7 million from $3.4 million in 2011. General and Administrative expenses increased by 13% to $2.0 million compared to $1.7 million in 2011 with the increase arising primarily from increased staffing and other administrative costs.

Hemisphere GPS incurred a loss of $2.8 million, or $(0.04) per share (basic and diluted) in the third quarter of 2012 compared to a loss of $1.6 million, or $(0.03) per share (basic and diluted) in the third quarter of 2011.

For the nine months ended September 30, 2012, Hemisphere GPS reported revenues of $56.2 million, a 1% increase from $55.5 million for the same period in 2011. Gross margin for the first nine months of 2012 was 46% compared to 48% in the first nine months of 2011. Operating expenses of $27.4 million for the nine months ended September 30, 2012 increased $2.3 million, or 9% over the same period of 2011.

The acquisition of AgJunction at the beginning of 2012 added operating costs, including amortization, to the nine-month period.

The Company reported a loss of $1.8 million in the first nine months of 2012 or ($0.03) per share (basic and diluted), compared to a profit of $1.1 million, or $0.02 per share (basic and diluted) in the nine months of 2011, before the deduction of one-time expenses related to strategic initiatives in 2011 of $0.8 million.

At September 30, 2012, the Company held cash of $4.3 million, compared to $6.7 million at December 31, 2011. Working capital was approximately $25.9 million, debt was $1.3 million and the Company maintains an unused operating line of credit with its bank with a maximum borrowing limit of Cdn $3million.

The Company had 66,280,777 common shares outstanding at September 30, 2012.


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