OTTAWA, CANADA--(Marketwired - May 8, 2013) - DragonWave Inc. (TSX:DWI)(NASDAQ:DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the fourth quarter and full fiscal year ended February 28, 2013. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.
Revenue for the fourth quarter of fiscal year 2013 was $28.3 million, compared with $38.5 million in the third quarter of fiscal year 2013 and $9.2 million in the fourth quarter of fiscal year 2012. Revenue from the Nokia Siemens Networks channel represented 61% of revenue in the fiscal quarter.
Gross margin for the fourth quarter of fiscal year 2013 was 5.3%, compared with 18.6% in the third quarter of fiscal year 2013 and 13% in the fourth quarter of fiscal year 2012. The gross margins in the fourth quarters of fiscal years 2013 and 2012 reflect the inclusion of inventory impairment provisions of $0.8 million and $1.7 million respectively.
"During the fourth quarter, several factors contributed to the low gross margin including the inventory provision, a larger mix of account incentives, and higher than expected manufacturing and logistics costs. While some of these pressures will continue in the short term we expect to return to Q3 FY13 gross margin levels over the next two quarters" said DragonWave CFO Russell Frederick. "Another important step in our integration and cost reduction activities has taken place with the renewed framework with Nokia Siemens Networks that we announced on April 10, 2013. As a result of this announcement and our other actions, our expense base has now been reduced by about 40% since the middle of last year and we expect to see some further reductions over the next couple of quarters", he added.
Net loss applicable to shareholders in the fourth quarter of fiscal year 2013 was $27.3 million or ($0.71) per basic and diluted share. This compares to a net loss applicable to shareholders of $13.9 million or ($0.36) per basic diluted share in the third quarter of fiscal year 2013 and net loss of $13.4 million or ($0.38) per basic and diluted share in the fourth quarter of fiscal year 2012.
"Based on the renewed framework with Nokia Siemens Networks that we announced on April 10, 2013, it is clear that Nokia Siemens Networks is committed to offering customers the best mobile broadband solution possible including the microwave that DragonWave brings to the table. We have strong alignment with Nokia Siemens Networks on the approach to sales push, business model, and incentives for the microwave business as a part of mobile broadband offering. I am convinced that the positive actions taken to reset our operating framework are the right steps to maximize the value of the relationship. We are currently seeing a stronger sales funnel, and increased trial activity over the coming months," said DragonWave President and CEO Peter Allen.
Cash, cash equivalents, restricted cash, and short-term investments totaled $23.0 million at the end of the fourth quarter of fiscal year 2013, compared to $36.8 million at the end of the third quarter of fiscal year 2013, and $53.0 million at the end of the fourth quarter of fiscal year 2012.
Revenue for the full fiscal year 2013 was $123.9 million, compared with $45.7 million for the prior fiscal year. Net loss applicable to shareholders for the full fiscal year 2013 was $54.7 million or ($1.46) per basic and diluted share.
Webcast and Conference Call Details:
The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on May 9, 2013.
The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm . An archive of the webcast will be available at the same link.
Conference call dial-in numbers:
- Toll-free North America: (866) 393-0571
- International: (760) 536-8545
U.S. Filings
DragonWave has filed its Form 40-F with the U.S. Securities and Exchange Commission (SEC). A copy of the Form 40-F is available on the DragonWave investor website at http://investor.dragonwaveinc.com/ .
DragonWave shareholders may request a printed copy of the complete audited financial statements, free of charge, at http://investor.dragonwaveinc.com/contactus.cfm , or by regular mail at Shareholder Services, DragonWave Inc., 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.
About DragonWave
DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com .
DragonWave® and Horizon® are registered trademarks of DragonWave Inc.
Forward-Looking Statements
Certain statements in this release, including our statements regarding gross margins, targeted expense reductions, and our relationship with and the transactions involving Nokia Siemens Networks constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties.
Material factors and assumptions used to develop forward-looking statements include DragonWave's expectations and plans regarding:
- The successful implementation of the renewed framework with Nokia Siemens Networks that was announced on April 10, 2013.
- Our ability to obtain operating expense reductions through measures including consolidation and rationalization of the business acquired from Nokia Siemens Networks, migration to new contract manufacturers, and optimization of our logistical framework to reduce overhead costs related to hardware sales.
There are risks associated with these assumptions, including that expected synergies will not materialize; that unexpected costs will be incurred; or that end-customer demand will not meet expectations.
Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated May 8, 2013 and on pages 19-22 of the Company's Annual Information Form, dated May 11, 2012.
Readers are cautioned not to place undue reliance on forward-looking statements. These statements are provided to assist external stakeholders in understanding DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements.
Risk factors, in addition to those detailed above, that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave's Annual Information Form dated May 11, 2012 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov , respectively.
DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.
| CONSOLIDATED BALANCE SHEETS |
| Expressed in US $000's except share amounts |
| As at | As at | ||||
| February 28, | February 29, | ||||
| 2013 | 2012 | ||||
| Assets | |||||
| Current Assets | |||||
| Cash and cash equivalents | 22,959 | 52,798 | |||
| Restricted cash | - | 177 | |||
| Trade receivables | 35,452 | 9,850 | |||
| Inventory | 32,722 | 27,043 | |||
| Other current assets | 6,077 | 5,501 | |||
| Contingent receivable | 13,843 | - | |||
| Deferred tax asset | 69 | 69 | |||
| 111,122 | 95,438 | ||||
| Long Term Assets | |||||
| Property and equipment | 7,444 | 5,184 | |||
| Deferred tax asset | 1,581 | 1,308 | |||
| Deferred financing cost | 149 | - | |||
| Intangible assets | 2,771 | 6,264 | |||
| Goodwill | 11,927 | 11,927 | |||
| 23,872 | 24,683 | ||||
| Total Assets | 134,994 | 120,121 | |||
| Liabilities | |||||
| Current Liabilities | |||||
| Accounts payable and accrued liabilities | 56,962 | 12,720 | |||
| Debt facility | 15,000 | - | |||
| Deferred revenue | 1,163 | 725 | |||
| Capital lease obligation | 3,251 | - | |||
| Contingent liabilities | 255 | 372 | |||
| Contingent consideration | - | 1,884 | |||
| 76,631 | 15,701 | ||||
| Long Term Liabilities | |||||
| Capital lease obligation | 1,451 | - | |||
| Other long term liabilities | 783 | 1,063 | |||
| Contingent liabilities | 519 | 1,292 | |||
| 2,753 | 2,355 | ||||
| Commitments | |||||
| Shareholders' equity | |||||
| Capital stock | 179,429 | 172,264 | |||
| Contributed surplus | 6,047 | 4,606 | |||
| Deficit | (120,197 | ) | (65,448 | ) | |
| Accumulated other comprehensive loss | (9,685 | ) | (9,658 | ) | |
| Total Shareholders' equity | 55,594 | 101,764 | |||
| Non-controlling interests | 16 | 301 | |||
| Total Equity | 55,610 | 102,065 | |||
| Total Liabilities and Shareholders' equity | 134,994 | 120,121 | |||
| Shares issued & outstanding | 38,048,297 | 35,586,206 | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| Expressed in US $000's and per share amounts |
| Three months ended | Year ended | ||||||||
| February 28, | February 29, | February 28, | February 29, | ||||||
| 2013 | 2012 | 2013 | 2012 | ||||||
| REVENUE | 28,294 | 9,150 | 123,877 | 45,656 | |||||
| Cost of sales | 26,807 | 8,006 | 104,376 | 29,255 | |||||
| Gross profit | 1,487 | 1,144 | 19,501 | 16,401 | |||||
| EXPENSES | |||||||||
| Research and development | 7,713 | 5,400 | 34,020 | 22,898 | |||||
| Selling and marketing | 4,138 | 3,585 | 16,088 | 15,307 | |||||
| General and administrative | 6,600 | 4,735 | 26,601 | 17,653 | |||||
| Government assistance | - | - | - | (902 | ) | ||||
| 18,451 | 13,720 | 76,709 | 54,956 | ||||||
| Income (loss) before amortization of intangible assets and other items | (16,964 | ) | (12,576 | ) | (57,208 | ) | (38,555 | ) | |
| Amortization of intangible assets | (845 | ) | (373 | ) | (3,748 | ) | (1,986 | ) | |
| Accretion expense | (56 | ) | (38 | ) | (124 | ) | (650 | ) | |
| Restructuring expense | (448 | ) | - | (2,085 | ) | - | |||
| Interest income (expense) (net) | (451 | ) | 39 | (1,662 | ) | 393 | |||
| Investment gain (loss) | - | 46 | - | 67 | |||||
| Impairment of intangible assets | (5,388 | ) | - | (13,812 | ) | (8,315 | ) | ||
| Gain on change in estimate | - | 623 | 6,958 | 15,146 | |||||
| Gain on purchase of business | - | - | 19,397 | - | |||||
| Loss on sale of assets | (2,827 | ) | - | (2,827 | ) | - | |||
| Foreign exchange gain (loss) | 145 | 218 | 23 | 100 | |||||
| Income (loss) before income taxes | (26,834 | ) | (12,061 | ) | (55,088 | ) | (33,800 | ) | |
| Income tax expense (recovery) | 428 | 1,354 | (81 | ) | (104 | ) | |||
| Net Income (loss) | (27,262 | ) | (13,415 | ) | (55,007 | ) | (33,696 | ) | |
| Net Loss Attributable to Non-Controlling Interest | 81 | 47 | 258 | 215 | |||||
| Net Income (loss) applicable to shareholders | (27,181 | ) | (13,368 | ) | (54,749 | ) | (33,481 | ) | |
| Income (loss) per share | |||||||||
| Basic | (0.71 | ) | (0.38 | ) | (1.46 | ) | (0.94 | ) | |
| Diluted | (0.71 | ) | (0.38 | ) | (1.46 | ) | (0.94 | ) | |
| Weighted Average Shares Outstanding | |||||||||
| Basic | 38,043,594 | 35,573,810 | 37,495,818 | 35,506,689 | |||||
| Diluted | 38,043,594 | 35,573,810 | 37,495,818 | 35,506,689 | |||||
