Norsat CEO: Remote Satellite Solutions Market Holds Attractive Growth Potential

[Satellite TODAY Insider 11-15-11] Canadian satellite company Norsat International said it is working to drive further revenue growth opportunities and diversification of its customers within its Satellite Solutions division by making investments in sales and marketing channels and activities.

   According to a statement by Norsat President and CEO Aimee Chan issued Nov. 14, along with the company’s latest financial results, Norsat believes its Satellite Solutions and Remote Networks segments hold attractive growth potential, as the markets are relatively untapped. “Given our strong market position, we also anticipate stable demand for our antenna and RF conditioning products, microwave products and maritime segments, especially as the global economy begins to strengthen. Accordingly, we believe we are well positioned to achieve sustained profitable growth over the long-term,” said Chan.

   Norsat increased its third-quarter revenues 153 percent to $11.4 million in 2011, which helped boost the company above its 2010 nine-month revenue position by 97 percent. Company management said the growth was largely driven by the addition of Norsat FNESS deliveries, as well as its new subsidiary Sinclair Division, which was acquired in January 2011. Sinclair contributed sales of $5.4 million during the quarter. Revenue from Norsat’s Satellite Solutions division was $3.3 million for the three-month period ending Sept. 30, 2011, compared with $2.2 million during the comparative period in 2010.

   Changes in Norsat’s product mix, however, led to a 3 percent decrease in third quarter margins, but management said pressure on gross margins is expected as the company continues to expand its product and customer base outside the U.S. military and into commercial applications.

   Chan noted that she expects operating expenses to increase modestly during future periods, as the company makes further investments in sales and marketing.  “During the third quarter, Norsat continued to incorporate Sinclair into its operations. To date, the integration of Sinclair has enabled Norsat to achieve modest cost savings as a result of efficiencies gained from being a larger organization. This is expected to partially offset future increases in company expenses,” Chan said in a statement.

   Net earnings for the three-month period were $1.1 million, compared with Norsat’s net earnings mark of $600,000 in the 2010 third quarter. Chan said Norsat’s 155 percent third-quarter year-over-year increase in EBITDA represented the company’s 20th straight quarter of positive EBITDA growth.

“The [Sinclair and FNESS contract] initiatives helped stabilize our quarter to quarter revenue, which was a key corporate goal. Historically, Sinclair has recorded strong revenues in the first half of the year. This is in contrast to our other three business divisions, which typically generate their strongest sales during the third and fourth quarters. The FNESS contract is partly comprised of recurring customer service fees related to the delivery of airtime,” said Chan.