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News ReleaseNovAtel Inc. Reports Record Revenue for the Third Quarter 2007
(Calgary, Alberta, Canada, November 8, 2007) — NovAtel Inc. (NASDAQ: NGPS), a precise positioning technology company, today reported its financial results for the third quarter ended September 30, 2007. Revenues in the third quarter 2007 were CDN $23.3 million (US $22.2 million), compared to CDN $19.0 million (US $16.9 million) in the similar period a year ago. Net income for the third quarter 2007 was CDN $5.3 million (US $5.1 million) or CDN $0.60 (US $0.57) per share (diluted), compared to a net income of CDN $5.6 million (US $5.0 million) or CDN $0.63 (US $0.56) per share (diluted) in the similar period a year ago. Revenues in the nine months ended September 30, 2007 were CDN $65.3 million (US $59.2 million), compared to CDN $58.4 million (US $51.3 million) in 2006. The Company is reporting net income for the nine months ended September 30, 2007 of CDN $16.3 million (US $14.8 million) or CDN $1.84 (US $1.67) per share (diluted), compared to net income of CDN $16.3 million (US $14.3 million) or CDN $1.84 (US $1.61) per share (diluted), in the 2006 period. “Revenue for the third quarter of 2007 grew 23% compared to the similar period last year, and surpasses our previous record achieved during the second quarter 2007,” said Jon Ladd, President and CEO. “We were able to achieve this despite the continued weakening of the US dollar relative to the Canadian dollar, which adversely affected revenue by approximately $1.6 million during the quarter, relative to the third quarter a year ago.” “Growth was primarily driven by our largest customer category, Special Applications, with revenue of $15.7 million, an improvement of 24% over the similar period in 2006,” continued Ladd. Revenue growth in the quarter was the result of increased shipments of precise positioning components into Asia and strong sales into the precision agriculture market. Revenue from shipments to Leica Geosystems AG, despite declining 5% compared to the third quarter 2006, accounted for approximately 18% of total revenue for the quarter. Sales related to Antcom Corporation, which NovAtel acquired on September 18, 2007, contributed $0.3 million to revenue. Revenue in the Geomatics category increased 42% to $4.7 million in the third quarter 2007, compared to the third quarter 2006. The majority of the Geomatics revenue is comprised of the composite business attributable to Point, Inc., NovAtel’s joint venture with Sokkia Co. Ltd. During the quarter, the Company reverted to its standard accounting policy of recognizing revenue at the point of shipment instead of upon collection of payment from Point, which provided a benefit of approximately $0.6 million to Geomatics revenue in the current quarter. Third quarter 2007 revenue of $2.8 million from the Aerospace and Defence category declined by 7% over the similar period a year ago, largely due to timing of deliveries under large, government-funded contracts. The majority of the third quarter 2007 revenue was derived from the achievement of project milestones associated with Europe’s future Galileo system. “Our third quarter 2007 revenue growth over the comparable period last year was dampened by approximately 6% due to the effect of the US dollar, which continued to weaken relative to the Canadian dollar. Net income for the current quarter declined to $5.3 million, compared to $5.6 million in the third quarter of last year, primarily due to legal costs relating to an intellectual property dispute and the impact of foreign exchange. Gross margins remained strong at 61.1% of revenue in the current quarter,” said Werner Gartner, Executive Vice President and CFO at NovAtel. Foreign ExchangeAlthough approximately 98% of NovAtel’s revenues in the first nine months of 2007 were earned in US dollars, the financial results are reported in Canadian dollars and in accordance with Canadian generally accepted accounting principles. The CDN/US dollar exchange rate has declined from an average rate of approximately CDN $1.14 per US dollar in all of 2006 to a rate of approximately CDN $1.00 per US dollar as of September 30, 2007. The US dollar financial information presented above is translated from the Canadian dollar financial information at the average rates in effect during the relevant reporting periods, as follows:
* * * * * Due to the pending tender offer by Hexagon for all the outstanding shares of NovAtel, NovAtel will not host a conference call to discuss further the third quarter 2007 financial results. About NovAtelNovAtel Inc. (NASDAQ:NGPS) is a leading provider of precision Global Navigation Satellite System (GNSS) components and subsystems that afford its customers rapid integration of precise positioning technology. The Company’s mission is to provide exceptional return on investment and outstanding service to our customers. An ISO 9001 certified company, NovAtel is focused on developing quality OEM products including receivers, antennas, enclosures and firmware that are integrated into high precision positioning applications worldwide. These applications include surveying, Geographical Information System (GIS) mapping, precision agriculture machine guidance, port automation, mining, marine and defence industries. NovAtel’s reference receivers are also at the core of national aviation ground networks in the USA, Japan, Europe, China and India. The Company is committed to providing its customers with advanced positioning technology through significant R&D investment focusing on the modernized Global Positioning System (GPS), the revitalized Russian GLONASS and the emerging European Galileo satellite systems, as well as the integration of additional complementary technologies such as Inertial Measurement Units (IMUs). For more information, visit www.novatel.com. Certain statements in this press release are forward-looking statements. These forward-looking statements are not based on historical facts but rather on management’s current expectations regarding NovAtel’s future growth, results of operations, performance, future capital and other expenditures, competitive advantages, business prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expect”, “may”, “could”, “potential”, “intend”, “estimate”, “should”, “plan”, “predict”, “forecast” or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements, including operating results of the Company’s joint venture Point, Inc. (“Point”), U.S. dollar to Canadian dollar exchange rate fluctuations, establishing and maintaining effective distribution channels, certification and market acceptance of NovAtel’s new products, the impact and timing of large orders, dependence on key customers, credit risks of customers and the Company’s joint venture Point, pricing pressures in the market and other competitive factors, maintaining technological leadership, timing of revenue recognition in connection with certain contracts, the ability to maintain supply of products from subcontract manufacturers, the procurement of components to build products, product defects, the impact of industry consolidations, including the proposed acquisition of NovAtel Inc. by Hexagon AB and proposed merger between Sokkia Co. Ltd. and Topcon Corp., vulnerability to general economic, market and business conditions, competition, environmental and other actions by governmental authorities, reliance on key personnel and other factors described in the Company’s Form 20-F for the year ended December 31, 2006 and other SEC filings, many of which are beyond the control of NovAtel. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. These forward-looking statements are made as of the date of this news release, and NovAtel assumes no obligation to update or revise them to reflect new events or circumstances. NOVATEL INC. CONDENSED CONSOLIDATED BALANCE SHEETS
NOVATEL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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