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RuggedCom Posts Record Revenue for Q3 Fiscal 2012
(Canada Newswire Via Acquire Media NewsEdge)
(All dollar amounts are in US dollars)
Highlights from the Quarter:
17% increase in Revenue year over year, to $29.9 million, a new record
13% increase in Purchase Orders year over year, to $28.1 million
21% increase in Gross Margin year over year
Net Income of $2.8 million, EPS (fully diluted) of $0.22
Added 112 new customers
CONCORD, ON, Feb. 14, 2012 /CNW/ - RuggedCom Inc. ("RuggedCom")
(TSX:RCM), a leading provider of rugged communications networking
solutions designed for mission-critical applications in harsh
environments, today announced its financial results for the third
quarter of fiscal 2012, ended December 31, 2011.
"RuggedCom has achieved another record quarter for revenues," said
Marzio Pozzuoli, President and Chief Executive Officer. "Contributing
to this quarter's solid performance was a 36% increase in our North
American revenue, a 5th consecutive record quarter for that region."
Key Financial Metrics(All $ amounts in US$000s)
(Q3-F12)(Q3-F11)ChangeOrders
$28,054
$24,840
+13%Revenue
$29,862
$25,595
+17%Gross Margin %
58.6%
56.5%
+210 bpsOperating Expenses (OpEx)
$13,413
$9,605
+40%OpEx as a % of revenue
44.9%
37.5%
+740 bpsAdjusted OpEx*
$13,589
$10,568
+29%Adjusted OpEx as a % of revenue*
45.5%
41.3%
+420 bpsNet Income
$2,814
$3,360
-16%Net Profit Margin %
9.4%
13.1%
- 370 bpsAdjusted Net Income*
$2,684
$2,669
+1%Adjusted Net Profit Margin %*
9.0%
10.4%
- 140 bpsEarnings Per Share (basic)
$0.23
$0.28
- 5 centsAdjusted Earnings Per Share (basic)*
$0.22
$0.22
--Earnings Per Share (diluted)
$0.22
$0.27
- 5 centsAdjusted Earnings Per Share (diluted)*
$0.21
$0.21
--
* Adjusted is defined as excluding all foreign exchange gains and losses
Third Quarter Results
Total revenue for the quarter was $29.9 million, representing an
increase of 17% from the comparable quarter a year ago and a new
company record. Revenue was driven primarily by the electric power
market, which grew 17% over the same quarter last year. Military sales
also contributed to the quarter's record performance, increasing 74%
over the same quarter last year.
The Company booked customer purchase orders totaling $28.1 million for
the quarter, representing an increase of 13% over the same quarter last
year.
Gross margin for the quarter was $17.5 million, an increase of 21% over
the comparable period last year. On a percentage of revenue basis,
third quarter gross margin was 58.6%, an increase of 2.1 percentage
points from a gross margin of 56.5% for the same period last year. The
increase in gross margin percentage was due to favourable sector,
product and region mix as well as improved material cost productivity.
Beginning in Q1-F12 the Company converted to a US dollar functional
currency as a result of implementing IFRS. Accordingly, the Company
converted most of its Canadian dollar denominated cash balances to US
dollars at the beginning of fiscal 2012 in order to minimize the
foreign exchange effect on cash. The application of IFRS on the
Company's comparable fiscal 2011 results however, has created
significant foreign exchange losses and gains for those periods due to
the fact that most of the Company's cash balances during that time were
still denominated in Canadian dollars. This has resulted in skewed
comparisons when measuring current results against the prior year's
quarters. Accordingly, beginning with Q2-F12, the Company incorporated
additional key financial metrics, as shown in the table above, which
factor out the effect of foreign exchange gains and losses. Management
believes the "adjusted" metrics, which are non-IFRS financial measures,
are a more accurate measure of the Company's past financial
performance.
Third quarter operating expenses increased to $13.4 million, or 44.9% of
revenue compared with $9.6 million, or 37.5% of revenue for the same
period a year ago, as reported under IFRS. The increase in percentage
of revenue is principally due to the inclusion of a $1.0 million
foreign exchange gain in Q3-F11 compared to only a $0.2 million gain
for Q3-F12 - a net effect of $0.8 million. If the effect of foreign
exchange is factored out, the "adjusted" operating expenses show a
narrower increase year over year, to 45.5% for Q3-F12 from 41.3% for
Q3-F11. Also contributing to the increase was approximately $0.3
million of professional fees related to the Siemens Canada Limited
Offer, described later in this press release.
Net income for the third quarter was $2.8 million, compared to $3.4
million in the comparable period a year ago, representing 9.4% and
13.1% of revenue respectively, as reported under IFRS. When the
after-tax effect of foreign exchange is eliminated from both periods,
Q3-F12 "adjusted" net income becomes $2.7 million, unchanged from the
year ago period, or 9.0% and 10.4% of revenue respectively.
Third quarter basic earnings per share were $0.23 compared to $0.28 for
the same quarter last year while fully diluted earnings per share were
$0.22 compared to $0.27 for the same quarter last year, as reported
under IFRS. On an "adjusted" basis with the effect of foreign exchange
removed, third quarter basic "adjusted" earnings per share were $0.22
compared to $0.22 for the same quarter last year. Fully diluted
"adjusted" earnings per share were $0.21 for Q3-F12 compared to $0.21
for the same quarter last year.
The Company added 112 new customers in the quarter.
Siemens Canada Limited Offer to Purchase RuggedCom Inc.
As previously announced, on January 27, 2012, RuggedCom entered into an
agreement with Siemens Canada Limited ("Siemens"), pursuant to which
Siemens agreed to make an offer to purchase all outstanding common
shares of RuggedCom by way of take-over bid at a price of C$33.00 per
share in cash (the "Siemens Offer"). For details of the reasons for
the Board's recommendation to accept the Siemens Offer, refer to the
Directors' Circular of the Board dated February 8, 2012 available on
SEDAR at www.sedar.com and on RuggedCom's website.
The Siemens Offer is open for acceptance until 8:00 p.m. (Toronto time)
on March 15, 2012. Full details of the Siemens Offer are included in a
take-over bid circular that was mailed to RuggedCom's shareholders
during the week of February 6, 2012, and is available on SEDAR at
www.sedar.com.
Non-IFRS Measures
This press release contains references to certain non-IFRS financial
measures such as EBITDA, EBITDA Margin, Adjusted Operating Expenses,
Adjusted Net Income and Adjusted Earnings Per Share (Basic and
Diluted). Non-IFRS financial measures are used by management to
evaluate the performance of the Company. Non-IFRS financial measures do
not have any meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other reporting issuers.
Non-IFRS financial measures used herein have been applied on a
consistent basis. "EBITDA" means earnings before interest, income
taxes, depreciation and amortization. "EBITDA Margin" means the
percentage obtained by dividing "EBITDA" by revenue. "EBITDA" is a
measure used by many investors to compare issuers on the basis of their
ability to generate cash from operations. Adjusted Operating Expenses
means operating expenses excluding the effect of foreign exchange
included therein. Adjusted Net Income means net income excluding the
after-tax foreign exchange effect included therein. Adjusted Earnings
Per Share (Basic and Diluted) is the adjusted net income divided by the
weighted average number of common shares outstanding for the period
(basic or diluted). We believe that EBITDA and EBITDA Margin is useful
supplemental information as they provide an indication of the results
generated by the Company's main business activities before taking into
consideration how they are financed or taxed. Adjusted Operating
Expenses, Adjusted Net Income and Adjusted Earnings Per Share (Basic
and Diluted) are useful measures of the Company's business activities
and exclude the effect of foreign exchange gains and losses. Investors
are cautioned that non-IFRS measures, such as those presented herein,
should not be construed as an alternative to net income or loss
determined in accordance with IFRS.
About RuggedCom Inc.
RuggedCom is a leading provider of rugged communications networking
solutions designed for mission-critical applications in harsh
environments. RuggedCom's technology solutions include Ethernet
switches, network routers, wireless devices, serial servers, media
converters, software and professional services. RuggedCom's products
are
designed for use in harsh environments such as those found in electrical
power substations and "Smart Grids", intelligent transportation
systems, industrial process control and military applications. For
further information, please visit www.RuggedCom.com.
The unaudited consolidated interim financial statements and management's
discussion and analysis of the results of operations and financial
condition for the three month periods ended December 31, 2011 and
December 31, 2010 can be found under the Company's profile at www.sedar.com. They can also be found in the Investor Relations section of the
Company's website at www.RuggedCom.com.
Forward Looking Information
This news release contains certain statements that constitute
forward-looking information within the meaning of applicable securities
laws ("forward-looking statements"). Forward-looking statements include
all disclosure regarding possible events, conditions, results of
operations or the Siemens Offer that is based on assumptions about
future economic conditions and courses of action. RuggedCom cautions
readers not to place undue reliance upon any such forward-looking
statements, which speak only as of the date they are made.
Forward-looking statements are based on RuggedCom's current plans,
estimates, projections, beliefs and opinions, and RuggedCom does not
undertake any obligation to update forward-looking statements should
assumptions related to these plans, estimates, projections, beliefs and
opinions change, except as required by law. When used in this news
release, words such as "plans", "expects", "intends", "anticipates",
"will", "believes" or variations of such words and phrases often, but
not always, identify forward-looking statements. The forward-looking
information in this news release includes, but is not limited to, the
Siemens Offer. Although RuggedCom believes that the expectations
reflected in such forward-looking statements are reasonable, all
forward-looking information is subject to risks, uncertainties and
other factors that could cause actual results to differ materially from
historical results or results anticipated by the forward-looking
information. The factors which could cause actual results or events to
differ materially from current expectations include, but are not
limited to:Siemens' ability to consummate the proposed transaction (including the
satisfaction of the conditions to the Siemens Offer), continued growth
in RuggedCom's key markets; RuggedCom's ability to manage its growth;
RuggedCom's dependence on the electric power industry; the impact of
the global financial crisis; foreign currency fluctuations; RuggedCom's
ability to identify suitable acquisitions at reasonable prices and its
ability to manage their integration; changes in environmental and other
regulation; RuggedCom's reliance on key personnel; RuggedCom's reliance
on third-party suppliers, contract manufacturers and channel partners;
RuggedCom's ability to protect its intellectual property; rapid
technological change; potential product liability claims; RuggedCom's
dependence on certain licensed intellectual property; potential
infringement by RuggedCom of third party intellectual property rights;
and other factors identified under the headings "Risks and
Uncertainties" in RuggedCom's management's discussion and analysis for
the third quarter ended December 31, 2011, dated February 14, 2012, and
"Risk Factors" in RuggedCom's annual information form dated June 15,
2011, each filed on SEDAR at www.sedar.com.
RuggedCom Inc.
Third Quarter 2012 Consolidated Interim Financial Statements and Results
of Operations}
(Unaudited)
RuggedCom Inc.
Consolidated Interim Balance Sheets
(In thousands of US dollars)
(Unaudited)
December 312011$March 312011$Assets
Current assets
Cash and cash equivalents (note 6)
42,886
38,106
Trade receivables (note 7)
21,070
18,265
Inventories (note 8)
17,172
14,509
Prepaid expenses
2,487
2,184
83,61573,064Non-current assets
Prepaid expenses
248
272
Deferred income taxes
615
676
Property and equipment (note 9(a))
10,832
10,299
Intangible assets (note 9(b))
8,870
10,311
Goodwill
3,133
3,133
23,698
24,691
Total assets107,31397,755Liabilities
Current liabilities
Trade and other payables (note 10)
9,534
7,835
Income taxes payable
1,038
1,299
Provisions (note 11)
997
921
Other liabilities (note 12)
900
351
12,46910,406Non-current liabilities
Provisions (note 11)
589
697
Other liabilities (note 12)
2,819
3,221
3,408
3,918
Total liabilities 15,87714,324Equity
Share capital
51,188
49,574
Contributed surplus
5,567
5,147
Retained earnings
34,681
28,710
Total equity91,43683,431Total liabilities and equity107,31397,755
Contingencies and guarantees (note 15)
Peter Crombie - Director J. Ian Giffen - Director
The accompanying notes form an integral part of these consolidated
interim financial statements.
RuggedCom Inc.
Consolidated Interim Statements of Operations and Comprehensive Income
(In thousands of US dollars, except share and per share amounts)
(Unaudited)
Three months endedDecember 31Nine months endedDecember 31
2011201020112010
$$$$
Revenues
29,862
25,595
85,048
67,277
Cost of sales
12,350
11,135
35,739
28,220
Gross profit17,51214,46049,30939,057
Operating expenses
Sales and marketing
6,219
4,744
18,241
13,382
Research and product development (note 14)
3,805
3,082
11,282
9,183
General and administrative
3,389
1,779
10,383
7,613
13,413
9,605
39,906
30,178
Income from operations4,0994,8559,4038,879
Finance income (expenses), net
Interest income
24
84
82
179
Interest expense
(34)
(41)
(92)
(71)
Other finance income (expenses)
(143)
(91)
27
(235)
Finance income (expenses), net(153)(48)17(127)
Income before income taxes
3,946
4,807
9,420
8,752
Income tax expense (note 17)
1,132
1,447
3,449
3,375
Net income and comprehensive income for the period2,8143,3605,9715,377
Income per common share (note 16)
Basic
0.23
0.28
0.48
0.44
Diluted
0.22
0.27
0.47
0.43
Weighted average number of common shares outstanding (note 16)
The accompanying notes form an integral part of these consolidated
interim financial statements.
RuggedCom Inc.
Consolidated Interim Statements of Changes in Equity
(In thousands of US dollars, except share and per share amounts)
(Unaudited)
Share capitalContributedRetainedTotal
NumberAmountsurplusearningsequity
$$$$Balance at April 1, 201012,144,45848,9633,69520,03372,691
Comprehensive income for the period
-
-
-
5,377
5,377
Employee stock options exercised
43,859
346
(119)
-
227
Stock option expense for the period
-
-
1,279
-
1,279
Balance at December 31, 201012,188,31749,3094,85525,41079,574
Balance at April 1, 201112,241,49549,5745,14728,71083,431
Comprehensive income for the period
-
-
-
5,971
5,971
Employee stock options exercised
188,492
1,614
(532)
-
1,082
Stock option expense for the period
-
-
952
-
952
Balance at December 31, 2011 12,429,98751,1885,56734,68191,436
The accompanying notes form an integral part of these consolidated
interim financial statements.
RuggedCom Inc.
Consolidated Interim Statements of Cash Flows
(In thousands of US dollars)
(Unaudited)
Three months endedDecember 31Nine months endedDecember 31
2011$2010$2011$2010$Cash and cash equivalents provided by (used in)
Operating activities
Net income for the period
2,8143,3605,9715,377
Items not affecting cash
Amortization and depreciation
1,403
1,277
4,143
3,717
Unrealized finance (gain) loss
143
91
(27)
235
Stock-based compensation
295
389
952
1,279
Gain on disposal of property and equipment
(14)
(27)
(72)
(27)
Deferred income tax expense
67
29
61
315
Net change in non-cash working capital (note 18(a))
(505)
(1,112)
(4,167)
(3,493)
Cash provided by operating activities
4,2034,0076,8617,403
Investing activities
Purchase of property and equipment
(761)
(326)
(2,821)
(1,461)
Acquisition of business assets
-
(2,119)
-
(2,119)
Proceeds from disposal of property and equipment
111
31
199
51
Purchase of intangibles
(113)
(76)
(541)
(435)
Cash used in investing activities
(763)(2,490)(3,163)(3,965)
Financing activities
Common shares issued for options exercised
401
150
1,082
227
Cash provided by financing activities
4011511,082228
Increase in cash and cash equivalents during the period
3,8411,6674,7803,666
Cash and cash equivalents - Beginning of period39,04535,14438,10633,145Cash and cash equivalents - End of period42,88636,81142,88636,811
Supplemental disclosure (note 18(b))
The accompanying notes form an integral part of these consolidated
interim financial statements.
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