CALGARY, May 2, 2012 — (TSX: HEM) Hemisphere GPS has reported financial results for the first quarter ended March 31, 2012. All currency amounts are expressed in U.S. dollars.

For the quarter ended March 31, 2012, Hemisphere GPS reported revenues of $22.6 million, a 7% increase from revenues of $21.2 million reported for the first quarter of 2011. Revenue from the company's Agriculture business increased 9% for the quarter, while revenue from its Precision Products business was lower by 3%.

"North American sales from the Company's largest sales regions — Canada and the United States — were up by 31% and 12% respectively year-over-year, or 16% combined," stated Steven Koles, president and CEO of Hemisphere GPS. "Strong North American markets are important to our overall sales due to their relative weighting to our overall revenues. North American results were indeed quite strong early in the first quarter, but mitigated in March as warm weather resulted in early planting activity, particularly in the U.S. corn belt."

Agriculture sales growth was supported by the Company's new Satloc G4 air-based product and its flagship Outback Guidance® products. Revenue from the recent AgJunction acquisition contributed modestly to revenue growth in the quarter. Because the related software licensing revenues are initially recorded as deferred revenue and are amortized into revenue over the software license period, the impact on revenue will increase over time and accelerate in the last half of the year. Agriculture segment revenues contributed 84% of total first quarter revenues.

In the Precision Product business, growth from sales of the Company's new S320 survey product in the quarter were offset by declines in sales in European markets.

The growth in Hemisphere GPS' largest markets during the first quarter was offset by sales outside North America:

Revenue by Region Q1 2012 Q1 2011
     
United States $11,693,000 $10,483,000
Canada 4,594,000 3,500,000
North America 16,287,000 13,983,000
     
Europe 3,437,000 3,712,000
Australia 1,073,000 1,057,000
Other International 1,836,000 2,476,000
  6,346,000 7,245,000
     
Total 22,633,000 21,228,000

International revenues were down by 12% compared to the first quarter of 2011. Continued uncertain economic circumstances in Europe, weather in certain parts of South America, and a strong quarter for international sales in 2011 contributed to this year-over-year decline.

Gross margin for the first quarter was 47.5% compared to 48.2% in the first quarter of 2011, with the year-over-year difference related to changes in the value of the Canadian dollar.

Total operating expenses increased by $0.8 million from the first quarter of 2011, with the acquisition of AgJunction contributing approximately $0.6 million of the increase. Excluding the impact of AgJunction, the increase in operating expenses was $0.2 million, or 2%, in line with management's profitability objectives. Research and development expenses increased to $3.3 million from $2.8 million in the first quarter of 2011, an increase of 14%, and sales and marketing expenses increased by $0.4 million, or 12%, to $4.0 million for the reporting quarter. The acquisition of AgJunction contributed to the increases in each of these categories.

Hemisphere GPS earned net profit of $1.4 million, or $0.02 per share (basic and diluted) in the first quarter of 2012 compared to net profit of $1.8 million, or $0.03 per share (basic and diluted) in the first quarter of 2011.

At March 31, 2012, the Company held cash of $6.9 million, or $0.10 per share, compared to $6.7 million at December 31, 2011. Working capital was approximately $28 million, and the Company had 66,280,777 common shares outstanding.

During the first quarter Hemisphere GPS entered the emerging data services market in precision agriculture with the acquisition of AgJunction, a provider of a cloud-based data management software platform and wireless hardware to precision agriculture retailers and growers. With this acquisition Hemisphere GPS brings real-time decision-making information into the farmer's cab, enabling lower use of pesticides, fertilizer and fuel, while generating higher crop yield, resulting in more profitable farming operations. AgJunction provides attractive growth prospects for Hemisphere GPS. New features and partners are being added, along with additional retail sales locations. Today, AgJunction's client acres under management is 18 million and growing.

On January 31, 2012, Hemisphere GPS purchased the AgJunction assets and operations for consideration at closing of US$2.0 million in cash and 5,447,410 common shares. As additional purchase consideration, Hemisphere GPS will pay earn-out payments to a maximum of US$0.5M cash and 2,723,705 common shares upon the achievement of revenue growth targets for each of the 2012 and 2013 fiscal years. The Company has signed a term sheet with Export Development Canada to finance $1.5 million of the purchase price, and to fund the earnout payments of $0.5 million that may be payable in February of 2013 and 2014 if the revenue targets are achieved. It is expected that this loan will close during the second quarter.

Q1 Product Releases

  • Hemisphere GPS released Satloc G4 - the most comprehensive and advanced aircraft guidance system for aerial applicators. Satloc G4 delivers Web-based connectivity along with a high level of guidance performance through an intuitive lightbar and graphical display. This new product enables aerial application companies and their pilots to leverage Web-based services in order to make their jobs more efficient and bring a higher quality of service to their customers. Satloc G4's connectivity feature offers pilots the ability to transfer application data wirelessly, accept work orders and maps through the Internet, access the guidance system from remote locations such as the office, truck or mobile device, and directly communicate through Skype audio and video.

  • Hemisphere introduced the Eclipse P300 and Eclipse P301 OEM modules -- the next-generation high performance compact modules ideal for developing integrated high-precision and control applications for geomatics, survey, machine control and unmanned vehicle solutions. Based on new Hemisphere GPS multifunction application firmware and Eclipse GNSS multi-constellation technology, improved GNSS positioning performance is achieved, particularly with RTK applications, through Hemisphere GPS's patent-pending SureTrack technology.

Many of the same technologies were integrated into the Company's new Vector H320 OEM module for precise positioning and heading data for marine navigation applications. The Vector H320 is also ideally suited to augment hydrographic, bathymetric and side scan survey packages as well as other machine control applications where centimetre-level precise positioning and heading are required for superior data representation.

  • Hemisphere GPS also released the Vector V103 GPS compass and Vector V113 GPS compass designed for professional, commercial marine and machine control applications. The all-new rugged enclosure gives these Vector models the advantage of working reliably in such harsh environments as side-scan survey, multi-beam and single-beam surveys, dredging, general navigation and machine control applications - including agriculture, heavy construction, mining, cranes, seismic drills and auger rigs where accurate heading and positioning are essential. They are also ideal for harbour pilots and tugboat operators.

  • Subsequent to the end of the first quarter, Hemisphere GPS and Stara announced their expanded OEM partnership as part of Stara's new SpeedDrive X system at the AgriShow Rabeirão Pretoin São Paulo State, Brazil. SpeedDrive X will be factory installed as standard equipment on various models of Stara tractors, sprayers, and spreaders.  The new SpeedDrive X combines a customized Hemisphere GPS eDriveX automated steering system and A320 GNSS smart antenna and Stara Topper 4500 terminal providing total user management for precision agriculture.