Coda Octopus Group, Inc. (“CODA” or the “Company”) (Nasdaq: CODA),
a global market leader in real-time 3D/4D/5D and 6D imaging sonar
technology for real-time subsea intelligence and diving technology,
today reported its unaudited financial results for its fiscal
second quarter ended April 30, 2023 (SQ2023) and the six months
then ended (YTD 2023).
Second Quarter 2023 Operational
Summary:
- CODA
continues to believe that its most promising pillars of growth are
its Echoscope® and Echoscope PIPE® products, as well as its Diver
Augmented Vision Display (DAVD) systems.
- During
SQ2023, the Company supported two US Defense Contractors with the
integration of their Echoscope PIPE® into their prototype
underwater vehicles. These programs are now entering their customer
trial phase.
-
Consistent with the Navy customer moving the DAVD tethered system
from its R&D phase to field operational phase, the Company sold
$1.0 million of DAVD tethered systems during SQ2023, representing
50% of CODA’s target for this product in FY2023.
- During
SQ2023, the Company had strong interest from the commercial sector
for rental options for the DAVD system. Making the DAVD available
on a rental basis represents a means of accelerating the adoption
process, while alleviating the costs associated with performing
trials.
-
Completion of successful second phase trials of the DAVD tethered
solution with a major tier-one European offshore service provider.
These trials were conducted on live operational projects. The
customer is reviewing investment options.
- Provided commercial proposal for
the DAVD tethered solution to a major Japanese construction company
that is an existing customer and an established user of the
Echoscope® solution.
- The DAVD
untethered version prototype is in the evaluation process with the
US Project Sponsor. In conjunction with the Project Sponsor, this
was showcased at two major events including Special Operations
Forces (SOF) Week, which was hosted in partnership with
USSOCOM.
- CODA was
invited to present and train in a closed-door event at the Military
Diver Training Continuum in Panama City, Florida, which had over
250 military divers participating, affording the Company the
opportunity to showcase both the DAVD and the Echoscope®
technology. This is a significant target market for the DAVD
untethered edition.
- CODA
anticipates purchases of a small batch of the DAVD untethered
variant as part of the ongoing evaluation that will be issued to
various potential users as part of the evaluation process. The DAVD
untethered variant hardware is complete and field evaluation will
be focused on software feature set. This evaluation presents our
biggest opportunity for this product in the military sector, both
domestic and foreign.
- Showcased and presented the DAVD
tethered solutions at the Dutch Diving Regulatory body SWOD
(Special Weapons Ordinance Device) Exchange events in Papendrecht,
Netherlands, which had a large turnout of diving companies, fire
departments and the Defense, Labor Inspectorate (NLA). This has
resulted in several good quality advanced discussions on the
DAVD.
-
Completion of successful first stage demonstration of the DAVD
tethered version with the Dutch Navy in a vessel rescue penetration
training facility in the Netherlands. The Company continues to
discuss next steps but expects to move into second phase trials
this year on a live underwater welding and cutting project,
scheduled for later this year.
- Had
successful engagement and demonstration of DAVD to new market
opportunities for the Deep Saturation diving sector and multiple
nations’ Special Forces untethered diving solutions.
SQ2023 Financial Summary:
The numbers below have been rounded to one
decimal point. The full SQ2023 and YTD financials can be found in
CODA’s Form 10-Q filed with the SEC.
- Total revenue was $5.3 million in
SQ2023 compared to $5.0 million during the same prior year period
(SQ2022), an increase of 6.4%. On a constant currency basis, total
revenue was $5.4 million, up 8.6% versus SQ2022.
- Revenues from the Marine Technology
Business (Products) were $3.6 million in SQ2023 compared to $3.5
million in SQ2022, a 2.6% increase. On a constant currency basis,
revenues were $3.7 million. Consistent with the Company’s goals
within the mix of sales, the Company sold $1.0 million in DAVD
tethered systems.
- Revenues from the Marine
Engineering Business (Services) were $1.72 million compared to $1.5
million in SQ2022, representing an increase of 15%. On a constant
currency basis, revenues were $1.75 million.
- In the SQ2023, the Company
generated gross profit of $3.6 million compared to $3.0 million in
SQ2022. Gross margin in SQ2023 was 68.3% compared to 60.8% in
SQ2022. This is largely attributable to the fact that in the
SQ2022, a large proportion of the Marine Engineering Business
revenue stemmed from a low-margin project with a new customer in
the motor sporting sector. The year-ago project was the first in
this sector, and the Company continues to work with this premier
customer and is hoping to provide more services to this customer on
an ongoing basis.
- Operating income in SQ2023 was
$855,000 compared to $481,000 in SQ2022. Operating margin was 16.1%
compared to 9.7% in the second quarter last year.
- Net income before taxes was $1.0
million in SQ2023 compared to $493,000 in SQ2022. Net income after
taxes was $1.0 million in SQ2023 compared to $611,000 in
SQ2022.
- Diluted earnings per share in the
SQ2023 period was $0.09 compared to $0.05 in FQ2022.
- CODA’s balance sheet continued to
strengthen in SQ2023. The quarter-end cash balance of $23.5 million
represents a $1m reduction over SQ2022 but an increase of $0.6
million over the end of fiscal year 2022. The variance is due to
timing of tax payments.
YTD2023 Financial Summary:
- Total revenue for the YTD2023
period was $10.9 million compared to $10.8 million in YTD2022, an
increase of 0.7%. On a constant currency basis, total revenue was
$11.3 million, up 4.4% versus YTD2022.
- Year to date, the Company generated
gross profit of $7.4 million compared to $7.2 million in YTD2022.
Gross margin in YTD2023 was 67.7% compared to 66.4% in
YTD2022.
- Operating income in YTD2023 was
$2.2 million compared to $1.8m in YTD2022. Operating margin was
20.2% compared to 17.1% in the same period last year.
- Net income before taxes in the
YTD2023 period was $2.4 million compared to $1.9 million in
YTD2022. Net income after taxes was $2.4 million in the YTD2023
compared to $1.8 million in YTD2022 period.
- Year to date diluted earnings per
share were $0.21 compared to $0.16 in FY2022.
- Net profit before tax as a
percentage of revenues for the YTD2023 was 21.9% compared to 17.9%.
Research and Development expenditures for the YTD2023 were $970k
compared to $1.2 million in YTD2022, a reduction of 18.5%. SG&A
for the YTD2023 was $4.20 million compared to $4.16 million, an
increase of 1.2%.
Management Commentary
“Our management continues to focus on growing
the Company while demonstrating that we run a profitable business
year-on-year,” said Annmarie Gayle, CODA’s Chairman and CEO.
“With our research and development phase of our
growth pillars substantially completed, we are now focused on
growing the market for our core technologies. Although our
financial results for SQ2023 were not in line with our internal
business plan targets, we believe we have made good progress in the
areas which are critical for our growth strategy. Notable in the
SQ2023, we sold $1.0m of DAVD systems, which will now be
distributed to different US Navy commands. Field use of the
technology is vital for expediting the adoption of the technology
on a wider scale, and we believe we are making good progress to
achieve this. We are prioritizing and staying focused on converting
this transformational technology into full scale adoption both
within the US Defense market, as well as the global defense and
commercial markets.
“We had several pivotal events for the DAVD
technology, including showcasing the technology to Special
Operation Forces during SOF Week 2023, which was held in
partnership with USSOCOM. We were also invited to participate in
the closed-door event of the Military Diver Training Continuum
event in Panama City, Florida, which had over 250 military divers
participating and where our DAVD and Echoscope® technology were
very well received. In addition, we had a successful demonstration
with the Dutch Navy in the Netherlands and completed successful
trials of the DAVD with a major European Offshore Provider, with
whom we are actively engaged in follow-up discussions.
“We also saw strong interest from the commercial
offshore diving sector for rental of the DAVD. We believe renting
the DAVD will assist in fast-tracking the adoption of the
technology more broadly.
“A number of key technologies were developed as
part of the DAVD system, including the Digital Audio Communications
Module and the subsea Edge Enhanced Video Module. The US Navy has
placed a purchase order for a small number of these products on a
standalone basis that we expect to deliver in during Q3. We are
also in discussions with several underwater vehicle manufacturers
for the integration of our subsea Edge Enhanced Video Module. These
technologies allow us to expand our product portfolio through
discreet packaging of already-developed technology to further add
to and diversify our market reach and revenues. This product is
exciting for the Company, as the purchase process is significantly
shorter due to the price point of these Modules. We also believe
that there is a real requirement to advance underwater
communications systems by moving from analog communications to
digital communications, a purpose for which this new Digital Audio
Communications Module is designed. We believe the addressable
market for this is significant, if our product meets the
addressable market brief.
“In respect of Echoscope PIPE®, our strategy is
to grow the number of defense underwater vehicle programs that
utilize this technology. If these programs are successful, this
approach would secure long-tail recurring revenues for the
business. In the SQ2023, we successfully provided in-field support
to two of these US Defense Programs that are now preparing for
extended field trials with their own customers.
“As we enter the second half of fiscal year
2023, our priority continues to be making progress with the growth
strategy that we have outlined for our Echoscope® (Echoscope PIPE®)
products, as well as our DAVD systems, and also continuing to work
towards returning the Engineering Business to a solid $10 million
business.”
Conference Call
CODA will host a conference call today, June 14,
at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time) to discuss its
results for the second fiscal quarter ended April 30, 2023.
CODA management will provide prepared remarks,
followed by a question-and-answer period.
Date: Wednesday, June 14, 2023Time: 10:00 a.m.
Eastern time (7:00 a.m. Pacific time)U.S. dial-in number:
1-877-451-6152International number: 1-201-389-0879Conference ID:
13739034
The conference call will broadcast live and
available for replay here.
Persons interested in attending are required to
call the conference telephone number approximately 10 minutes
before the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact the Company’s investor relations
team at 1-949-574-3860.
A replay of the call will be available after
2:00 p.m. Eastern time on the same day through June 28, 2023.
Toll-free replay number:
1-844-512-2921International replay number: 1-412-317-6671Conference
ID: 13739034
About Coda Octopus Group, Inc.
The Company, founded in 1994, innovates,
develops, manufactures and markets subsea products (hardware and
software) and solutions including its flagship real-time 3D, 4D, 5D
and 6D underwater imaging sonar technology, marketed under the name
“Echoscope®” and Echoscope PIPE® and its recently launched Diver
Augmented Vision Display system (“CodaOctopus® DAVD”). This sonar
technology generates real-time 3D, 4D, 5D and 6D imaging data for
inspection and mapping underwater and is used globally for numerous
applications including the commercial and defense underwater
market. Applications for the Echoscope® technology include
complex mapping underwater, subsea intervention, subsea asset
placements, offshore renewables cable installations and surveys,
marine construction, subsea infrastructure installation, mining
applications, breakwater construction and monitoring,
decommissioning, diving applications and port and harbor security.
The recently launched new generation of diving technology, DAVD, is
expected to change the way global diving operations are performed
(both in the Defense and Commercial space) because it provides real
time digital information for use and consumption by both the divers
and the dive supervisor top-side team. It is also expected to
transform the way communications are made in diving from analog
audio to digital audio and to 2D and 3D visual imagery, both in
textual and video format. In addition to the Marine Products
business, Coda Octopus Products Ltd., CODA’s two defense
engineering services businesses are operated through Coda Octopus
Colmek and Coda Octopus Martech. For further information, please
visit http://www.codaoctopusgroup.com or contact us
at coda@codaoctopusgroup.com.
Forward Looking Statement
This press release contains forward-looking
statements concerning Coda Octopus Group, Inc. within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
When used in this document, the words “may”, “would”, “could”,
“will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”,
“expect” and similar expressions are intended to identify
forward‐looking statements. Those forward-looking statements
include, without limitation, statements regarding the Company's
expectations for the growth of the Company's operations and
revenue. Such statements are subject to certain risks and
uncertainties, and actual circumstances, events or results may
differ materially from those projected in such forward-looking
statements. Factors that could cause or contribute to differences
include, but are not limited to, restrictions on our business
operations due to the Pandemic, customer demand for our products
and market prices; the outcome of our ongoing research and
development efforts relating to our products including our patented
real time 3D solutions; our ability to develop the sales force
required to achieve our development and other examples of forward
looking statement set forth in our Annual Report on Form 10-K for
the year ended October 31, 2022, filed with the Securities and
Exchange Commission on January 30, 2023. Coda Octopus Group, Inc.
does not undertake, and specifically disclaims any obligation to
update or revise such statements to reflect new circumstances or
unanticipated events as they occur.
Contact:
Cody Slach or Jackie KeshnerGateway Group, Inc.
(949) 574-3860CODA@Gateway-grp.com
CODA OCTOPUS GROUP,
INC.Consolidated Balance
SheetsApril 30, 2023 and October 31,
2022
|
|
2023 |
|
|
2022 |
|
|
|
Unaudited |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
23,455,118 |
|
|
$ |
22,927,371 |
|
Accounts Receivable, net |
|
|
3,894,794 |
|
|
|
2,870,600 |
|
Inventory |
|
|
11,233,685 |
|
|
|
10,027,111 |
|
Unbilled Receivables |
|
|
1,099,066 |
|
|
|
602,115 |
|
Prepaid Expenses |
|
|
738,167 |
|
|
|
240,464 |
|
Other Current Assets |
|
|
422,371 |
|
|
|
343,061 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
40,843,201 |
|
|
|
37,010,722 |
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS |
|
|
|
|
|
|
|
|
Property and Equipment, net |
|
|
6,070,666 |
|
|
|
5,832,532 |
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Goodwill and Other Intangibles, net |
|
|
3,851,229 |
|
|
|
3,824,394 |
|
Deferred Tax Asset |
|
|
138,366 |
|
|
|
259,810 |
|
|
|
|
|
|
|
|
|
|
Total Other Assets |
|
|
3,989,595 |
|
|
|
4,084,204 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
50,903,462 |
|
|
$ |
46,927,458 |
|
CODA OCTOPUS GROUP,
INC.Consolidated Balance Sheets
(Continued)April 30, 2023 and October 31,
2022
|
|
2023 |
|
|
2022 |
|
|
|
Unaudited |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
776,185 |
|
|
$ |
793,247 |
|
Accrued Expenses and Other Current Liabilities |
|
|
704,521 |
|
|
|
1,731,706 |
|
Deferred Revenue |
|
|
1,023,757 |
|
|
|
943,569 |
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
2,504,463 |
|
|
|
3,468,522 |
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Revenue, less current portion |
|
|
88,258 |
|
|
|
76,127 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
2,592,721 |
|
|
|
3,544,649 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock, $.001 par value; 150,000,000 shares authorized,
11,042,897 issued and outstanding as of April 30, 2023 and
10,916,853 shares issued and outstanding as of October 31,
2022 |
|
|
11,043 |
|
|
|
10,918 |
|
Treasury Stock |
|
|
(31,175 |
) |
|
|
(28,337 |
) |
Additional Paid-in Capital |
|
|
62,692,276 |
|
|
|
62,313,988 |
|
Accumulated Other Comprehensive Loss |
|
|
(2,591,101 |
) |
|
|
(4,737,124 |
) |
Accumulated Deficit |
|
|
(11,770,302 |
) |
|
|
(14,176,636 |
) |
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity |
|
|
48,310,741 |
|
|
|
43,382,809 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
50,903,462 |
|
|
$ |
46,927,458 |
|
CODA OCTOPUS GROUP,
INC.Consolidated Statements of Income and
Comprehensive Income(Unaudited)
|
|
Three Months Ended April 30, |
|
|
Six Months Ended April 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues |
|
$ |
5,301,509 |
|
|
$ |
4,984,838 |
|
|
$ |
10,897,793 |
|
|
$ |
10,823,046 |
|
Cost of Revenues |
|
|
1,678,268 |
|
|
|
1,953,132 |
|
|
|
3,521,547 |
|
|
|
3,631,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
3,623,241 |
|
|
|
3,031,706 |
|
|
|
7,376,246 |
|
|
|
7,191,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & Development |
|
|
525,939 |
|
|
|
517,378 |
|
|
|
970,397 |
|
|
|
1,190,268 |
|
Selling, General & Administrative |
|
|
2,242,194 |
|
|
|
2,033,116 |
|
|
|
4,204,645 |
|
|
|
4,155,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
|
2,768,133 |
|
|
|
2,550,494 |
|
|
|
5,175,042 |
|
|
|
5,345,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
|
855,108 |
|
|
|
481,212 |
|
|
|
2,201,204 |
|
|
|
1,846,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income |
|
|
173,376 |
|
|
|
14,497 |
|
|
|
189,141 |
|
|
|
94,491 |
|
Interest Expense |
|
|
- |
|
|
|
(2,502 |
) |
|
|
- |
|
|
|
(2,902 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income |
|
|
173,376 |
|
|
|
11,995 |
|
|
|
189,141 |
|
|
|
91,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX
EXPENSE |
|
|
1,028,484 |
|
|
|
493,207 |
|
|
|
2,390,345 |
|
|
|
1,937,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX (EXPENSE)
BENEFIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Tax Expense |
|
|
(68,773 |
) |
|
|
109,150 |
|
|
|
(68,784 |
) |
|
|
(176,459 |
) |
Deferred Tax Benefit |
|
|
48,766 |
|
|
|
8,946 |
|
|
|
84,773 |
|
|
|
67,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Income Tax (Expense) Benefit |
|
|
(20,007 |
) |
|
|
118,096 |
|
|
|
15,989 |
|
|
|
(109,304 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,008,477 |
|
|
$ |
611,303 |
|
|
$ |
2,406,334 |
|
|
$ |
1,828,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
0.06 |
|
|
$ |
0.22 |
|
|
$ |
0.17 |
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.21 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
11,010,077 |
|
|
|
10,857,673 |
|
|
|
10,970,806 |
|
|
|
10,857,429 |
|
Diluted |
|
|
11,330,754 |
|
|
|
11,405,507 |
|
|
|
11,291,483 |
|
|
|
11,405,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
1,008,477 |
|
|
$ |
611,303 |
|
|
$ |
2,406,334 |
|
|
$ |
1,828,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation Adjustment |
|
|
538,373 |
|
|
|
(2,266,751 |
) |
|
|
2,146,023 |
|
|
|
(2,025,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Comprehensive Income |
|
$ |
538,373 |
|
|
$ |
(2,266,751 |
) |
|
$ |
2,146,023 |
|
|
$ |
(2,025,601 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
1,546,850 |
|
|
$ |
(1,655,448 |
) |
|
$ |
4,552,357 |
|
|
$ |
(197,050 |
) |
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