Positive Cash Flow Generated Despite Slower Growth Due to the Economic Downturn

MONTREAL, Feb. 13 /PRNewswire-FirstCall/ -- Avensys Corporation (OTC Bulletin Board: AVNY; FRANKFURT WKN: A0M9YA), a leading manufacturer of high-end fiber optic components, and a distributor and integrator of environmental and process monitoring systems, today reported its financial results for the second quarter of fiscal year 2009, ended December 31, 2008.

Second Quarter Fiscal 2009 Results

Total consolidated revenue for the fiscal second quarter 2009 ended December 31, 2008, rose 32% to $5.4 million as compared to $4.1 million in the year ago period, as a result of increased revenue from Avensys' environmental and process monitoring business, Avensys Solutions. For the second quarter of fiscal 2009, consolidated gross profit was $1.8 million as compared to $1.3 million year-over-year. Gross margin for the quarter was 33%, as a percentage of revenues, a slight increase compared to the same period a year ago. Cash flow generated by operations for the second quarter was $535,000 as compared to cash used in operations of $345,000 for the same period a year ago.

Net loss for the second quarter was $3.4 million compared to $609,000 for the same period the previous year. The Company wrote down the full amount of goodwill for the second quarter of fiscal 2009, a negative impact of $3.9 million on the operating results. The fair values of the Company's reporting units have been impacted by the continued decline in the Company's market capitalization, coupled with weak industry outlook and a change in the timeframe to realize growth and cash flows objectives.

Six Month Fiscal 2009 Results

Total consolidated revenue for the six months ended December 31, 2008, rose 25% to $11.1 million, from the $8.9 million recorded for the same period a year ago.

First half gross profit on a consolidated basis was $3.6 million as compared to $3.3 million in the year ago period. First half gross margin was 32%, as a percentage of consolidated revenues, compared to 37% for the same period a year ago. Cash flow used in operations for the first six months was $319,000, compared to cash flow used in operations of $882,000 for the same period a year ago.

Net loss for the six months was $3.9 million as compared to $2.6 million a year ago.

Avensys Solutions

Avensys' environmental and process monitoring business, Avensys Solutions continues to see the positive returns from the Willer acquisition with revenues of $4.6 million for the six month period ended December 31, 2008, which has more than doubled from the same period a year ago. Avensys Solutions also realized more than $1.8 million in systems integration orders during the six month period, an indication that it is successfully moving up the value chain.

Avensys Tech

Avensys' optical component business, Avensys Tech reported revenues of $6.5 million for the six month period ending December 31, 2008, a 5% decline from the $6.8 million reported for the same period a year earlier. Avensys Tech experienced a decline in demand from the telecommunications market, particularly as it relates to undersea components and demodulators during this period. Partially offsetting this decline has been an increase in demand of multi-mode combiners for the industrial fiber laser market and an increase in revenues derived from contracts to build leading-edge high power fiber laser components and systems. We continue to ship substantial quantities of Fiber Bragg Gratings.

President and Chief Executive Officer, John G. Fraser of Avensys Corporation, commented, "We are working hard in the current economic environment to conserve cash, to match costs with revenues, to intensify our sales efforts, and to diversify our portfolio. Currently, the impact of the global economic downturn has, in part, been mitigated by Avensys Corporations' balanced portfolio of businesses, diverse client base, and product lines. We will continue to monitor the situation and act accordingly."

Mr. Fraser added, "In addition, our new and expanded Avensys Solutions division is allowing us to seek ways of benefiting from the recent focus on government sponsored infrastructure projects."

About Avensys Corporation

Avensys Corporation operates Avensys Inc., its wholly-owned core subsidiary. Avensys Inc., through its manufacturing division Avensys Technologies, designs, manufactures, distributes, and markets high reliability optical components and modules as well as FBGs for the telecom market, and high power devices and sub-assemblies for the industrial market. Avensys Technologies is also a pioneer in the development of packaged fiber-based sensors and possesses licences in regards to leading edge intellectual property. Avensys Solutions, the other division of Avensys Inc., is an industry leader in providing instrumentation and integrated solutions for the monitoring of industrial processes and environmental surveillance applications for air, water and soil in the Canadian marketplace. To find out more about Avensys Solutions, please visit our website at www.avensyssolutions.com. For Avensys Corporation company news and updates you can also visit www.avensyscorporation.com.

Forward-Looking Statements:

Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievement in the future to differ materially from forecasted results, performance, and achievement. These risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectations.


    For more information, please contact:
    Ms. Sherine Attia
    Avensys Corporation
    Tel:  1.877.904.6030

Use of Non-GAAP Financial Measures

The Company provides non-GAAP financial measures, such as adjusted EBITDA, to complement its consolidated financial statements presented in accordance with GAAP. Non-GAAP financial measures do not have any standardized definition and, therefore, are unlikely to be comparable to similar measures presented by other reporting companies. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial and operating performance and its prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by identifying certain expenses, gains and losses that, when excluded from the GAAP results, may provide additional understanding of the Company's core operating results or business performance, which management uses to evaluate financial performance for purposes of planning for future periods. However, these non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results.

The company uses adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted for debentures and preferred shares accretion, and changes in fair value of derivative instruments) as a non-GAAP financial measure in this press release. A reconciliation of EBITDA to the operating loss for the first quarter of 2009 is as follows: 


                               Adjusted EBITDA
                   (Expressed in thousands of US Dollars)

                                           For the Three     For the Six
                                           Months Ended      Months Ended
                                           December 31,      December 31,
                                          2008      2007    2008      2007

    Net Income (Loss)                   (3,351)     (420) (3,921)   (2,562)
    Plus
     Interest expense, net                 112       106     232       243
     Depreciation and amortization         266       320     572       618
     Loss on impairment of goodwill      3,889         -   3,889         -
     Loss on redemption of convertible
      debentures                             -     1,423       -     1,423
     Debentures and preferred shares
      accretion                            308       219     610       445
     Change in fair value of derivative
      financial instruments               (845)     (611) (1,177)     (339)
     Income Tax Benefit                   (199)     (425)   (357)     (594)

    Adjusted EBITDA (Loss)                 180       612    (152)     (766)




    Condensed Financial Statements

                     Consolidated Statements of Operations
     (Expressed in thousands of U.S. Dollars, except for per share amounts)


                                    For the Three           For the Six
                                    Months Ended            Months Ended
                                     December 31,            December 31,
                                  2008         2007       2008         2007

                                    $           $           $           $
    Revenue                       5,396       4,080      11,088       8,878
    Cost of Revenue               3,594       2,812       7,524       5,561
    Gross Margin                  1,802       1,268       3,564       3,317

    Operating Expenses
    Depreciation and
     amortization                   204         281         436         490
    Selling, general and
     administration               1,501       1,546       3,272       3,110
    Loss on impairment of
     goodwill                     3,889           -       3,889           -
    Research and development        357         698         754       1,162

    Total Operating Expenses      5,951       2,525       8,351       4,762

    Loss from Operations         (4,149)     (1,257)     (4,787)     (1,445)

    Other Income (Expenses)         599         222         508      (1,996)
    Income Tax Benefit -
     Refundable tax credits         199         425         357         594
    Non-Controlling Interest          -           -           -           -
    Results of Discontinued
     Operations                       -         189           -         285

    Net Loss                     (3,351)       (421)     (3,922)     (2,562)

    Net Loss per share -
     Basic and Diluted            (0.03)      (0.00)      (0.04)      (0.03)

    Weighted Average Common
     Shares Outstanding      99,086,152  97,096,800  99,079,359  96,154,500






                               Consolidated Balance Sheets
                        (Expressed in thousands of U.S. Dollars)

                                                      December 31,    June 30,
                                                         2008           2008
                                                           $              $
                     ASSETS
    Current Assets                                      8,962           9,836
    Property and equipment, net                         1,905           2,490
    Intangible assets                                   2,983           3,879
    Goodwill                                                -           4,645
    Deferred financing costs                              333             405
    Deposits                                              139              85
    Total Assets                                       14,322          21,340

      LIABILITIES AND STOCKHOLDERS' EQUITY
    Total Current Liabilities                           8,879           9,137
    Long-term debt, less current portion                  119             191
    Convertible debentures                              1,456           1,299
    Balance of purchase price payable                   1,294           1,706
    Derivative financial instruments                      559           1,364
    Total Liabilities                                  12,307          13,697
    Non-controlling Interest                                -               8
    Total Stockholders' Equity                          2,015           7,635
    Total Liabilities and Stockholders' Equity         14,322          21,340

SOURCE Avensys Corporation