TMCnet News
Inseego Reports First Quarter 2017 Financial ResultsInseego Corp. (Nasdaq: INSG) (the "Company"), a leading global provider of software-as-a-service ("SaaS") and solutions for the Internet of Things ("IoT"), announced financial results for the first quarter ended March 31, 2017. "Our first quarter business performance was not what we had hoped as the pending MiFi divestiture transaction resulted in management and operational distraction throughout the quarter. We continue to see financial strength and market opportunity for our portfolio of SaaS, software and services solutions for the Internet of Things, and we need to drive excellence in execution throughout the organization," said Sue Swenson, Chair and CEO of Inseego. "We now have 633,000 total subscribers for our comprehensive IoT solutions, including 428,000 subscribers for our Ctrack telematics offerings. The Ctrack business, in particular, operates in a vibrant environment, with a physical presence in global regions experiencing rapid telematics growth and a portfolio of products that address a wide variety of targeted and emerging market needs. While we remain dedicated to the completion of our corporate transformation from a hardware supplier into a pure-play IoT solutions provider, in the event that the sale of the MiFi mobile broadband business to T.C.L. is blocked by the U.S. government, we would consider all strategic alternatives available with respect to the MiFi mobile broadband business or otherwise." First Quarter 2017 Financial Highlights The Company announced the following U.S. GAAP ("GAAP") financial results for the first quarter of 2017:
The Company also announced the following non-GAAP financial results for the first quarter of 2017. A reconciliation of these non-GAAP financial measures to the Company's GAAP financial results is included in the tables accompanying this news release:
Closing of $20.0 Million Financing Transaction The Company announced today that on May 8, 2017, it closed the funding of a term loan in the principal amount of $20.0 million (the "Loan") with a maturity date of May 8, 2018 (the "Maturity Date"). The Loan is secured by a first priority lien on substantially all of the assets of the Company, including its equity interests in certain of its direct and indirect subsidiaries, subject to certain exceptions and permitted liens. Interest on the Loan will be payable on the last business day of each calendar month and on the Maturity Date. The Loan will bear interest at a rate per annum equal to the three-month LIBOR, but in no event less than 1.00%, plus 10.00%. The Company also paid a $2.0 million commitment fee in conjunction with the closing of the Loan, and is required to repay the Loan with the proceeds from any sale of significant assets, including its pending divestiture of its MiFi mobile broadband business. In addition, upon entering into the Loan described above, the Company terminated its revolving credit facility with Wells Fargo Bank, National Association. Divestiture of MiFi Mobile Broadband Business and Strategic Transactions On April 24, 2017, the Company announced that in connection with the proposed sale of its MiFi mobile broadband business, with its subsidiary, Novatel Wireless, Inc. ("Novatel Wireless"), to T.C.L. Industries Holdings (H.K.) Limited and Jade Ocean Global Limited (together with the Company and Novatel Wireless, the "Parties"), the Parties voluntarily withdrew and re-filed the Joint Voluntary Notice that they had previously submitted to the Committee on Foreign Investment in the United States ("CFIUS") under the Defense Production Act of 1950 in order to provide additional time for CFIUS to evaluate possible terms of mitigation which would allow the transaction to be approved. The Parties and CFIUS have been working for four months to identify mitigation terms, and with CFIUS's consent for the second time since the review process commenced, the parties were permitted to withdraw and re-file in order to initiate a new period of review. In the event that the sale of Novatel Wireless to T.C.L. is not permitted by the U.S. government, the Company would need to consider all strategic alternatives available to it with respect to the MiFi mobile broadband business or otherwise, including other divestiture opportunities. Second Quarter Outlook The following statements are forward-looking and actual results may differ materially. Please see the section titled "Cautionary Note Regarding Forward-Looking Statements" at the end of this news release. A more detailed description of risks related to our business is included in the reports filed by the Company with the Securities and Exchange Commission (the "SEC"). Our guidance for the second quarter of 2017 reflects current business indicators and expectations as of the date of this news release, including current exchange rates for foreign currencies. Given the pending divestiture of the Company's MiFi mobile broadband business, the Company will not provide overall corporate guidance for the second quarter of 2017. However, in order to provide visibility into some of the Company's core metrics, including one of the Company's key post-divestiture businesses, the Company is providing guidance for the second quarter of 2017, as follows:
Conference Call Information Inseego will host a conference call and live webcast for analysts and investors today at 5:00 p.m. ET. To access the conference call:
Inseego will offer a live audio webcast of the conference call, which will be accessible from the "Investors" section of the Company's website at investor.inseego.com. The webcast will be archived for a period of 90 days. An audio replay of the conference call will also be available beginning one hour after the call, through May 24, 2017. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 10097515#. International parties may call 1-412-317-0088 and enter the same code. About Inseego Corp. Inseego Corp. (Nasdaq: INSG) is a leading global provider of software-as-a-service (SaaS) and solutions for the Internet of Things (IoT). The Company sells its telematics solutions under the Ctrack brand, including its fleet management, asset tracking and monitoring, stolen vehicle recovery, and usage-based insurance platforms. Inseego Corp. also sells business connectivity solutions and device management services. Inseego Corp. has over 30 years of experience providing customers with secure and insightful solutions and analytics, with approximately 633,000 global subscribers, including 189,000 fleet management subscribers. The Company is headquartered in San Diego, California. www.inseego.com Twitter @inseego Cautionary Note Regarding Forward-Looking Statements Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as "may," "estimate," "anticipate," "believe," "expect," "intend," "plan," "project," "will" and similar words and phrases indicating future results. The information presented in this news release related to our outlook for the second quarter ending June 30, 2017 and our future business outlook, the future demand for our products, the expected timing and impact of anticipated divestiture and restructuring activities, prospects for CFIUS approval and satisfaction of other closing conditions related to the sale of the MiFi mobile broadband business, statements made by Sue Swenson, as well as other statements that are not purely statements of historical fact, are forward-looking in nature. These forward-looking statements are made on the basis of management's current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements. Actual results could differ materially from our expectations. Factors that could cause actual results to differ materially from the Company's expectations include (1) failure to obtain CFIUS approval, satisfy other closing conditions and complete the sale of the Company's MiFi mobile broadband business in a timely manner on the terms previously approved by the Company's stockholders; (2) the future demand for wireless broadband access to data and fleet management software and services; (3) the growth of wireless wide-area networking and fleet management software and services; (4) customer and end-user acceptance of the Company's current product and service offerings and market demand for the Company's anticipated new product and service offerings; (5) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (6) dependence on third party manufacturers and key component suppliers worldwide; (7) the success of the Company's corporate development activities, including divestitures of lines of business that are not essential to the Company's strategy; (8) unexpected liabilities or expenses; (9) the Company's ability to introduce new products and services in a timely manner; (10) litigation, regulatory and IP developments related to our products or components of our products; (11) dependence on a small number of customers for a significant portion of the Company's revenues; and (12) the Company's plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters and cost containment initiatives, including restructuring activities. These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause actual results to differ materially from those expressed in the Company's forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as otherwise required pursuant to applicable law and our on-going reporting obligations under the Securities Exchange Act of 1934, as amended. Non-GAAP Financial Measures Inseego Corp. has provided financial information in this news release that has not been prepared in accordance with GAAP. Non-GAAP gross profit, gross margin, operating expenses, adjusted EBITDA, net loss and net loss per share exclude restructuring charges, share-based compensation expense, amortization of the debt discount and debt issuance costs associated with the Company's convertible notes, and charges related to the Company's acquisition and divestiture activities. Adjusted EBITDA also excludes interest, taxes, depreciation and amortization (unrelated to acquisitions and the convertible notes), and foreign currency transaction gains and losses. Non-GAAP gross profit, gross margin, operating expenses, adjusted EBITDA, net loss and net loss per share are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool and are not intended to be used in isolation or as a substitute for gross profit, gross margin, operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present non-GAAP gross profit, gross margin, operating expenses, adjusted EBITDA, net loss and net loss per share because we consider each to be an important supplemental measure of our performance. Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company's performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new grants issued to both current and new employees, the number of grants forfeited by former employees, and changes in the Company's stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP gross profit, gross margin, operating expenses, adjusted EBITDA, net loss and net loss per share, management excludes certain non-cash and one-time items in order to facilitate comparability of the Company's operating performance on a period-to-period basis because such expenses are not, in management's view, related to the Company's ongoing operating performance. Management uses this view of the Company's operating performance for purposes of comparison with its business plan and individual operating budgets and in the allocation of resources. The Company further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that the use of non-GAAP gross profit, gross margin, operating expenses, adjusted EBITDA, net loss and net loss per share also facilitates a comparison of our underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results. In the future, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures contained within this news release with our GAAP financial results. (C) 2017 Inseego Corp. All rights reserved. The Inseego, Ctrack, FW, Novatel Wireless and Enfora names and logos are trademarks of Inseego Corp.
See "Non-GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
See "Non-GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
See "Non-GAAP Financial Measures" for information regarding our use of Non-GAAP financial measures.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170510006547/en/ |