March Networks Announces Third Quarter Fiscal 2011 Financial Results
Summary Operating Results:
| $Cdn millions except EPS data | Q3 2011 |
Q3 2010 |
Q1-Q3 2011 |
Q1-Q3 2010 |
| Revenue | $20.6 | $20.0 | $75.3 | $65.4 |
| Non-GAAP operating earnings (loss)* | (3.0) | (3.2) | 0.1 | (2.7) |
| Net loss | $(3.8) | $(3.5) | $(3.4) | $(5.0) |
| Loss per share | $(0.21) | $(0.20) | $(0.19) | $(0.29) |
| Cash and short-term investments | $38.5 | $50.2 | $38.5 | $50.2 |
* Non-GAAP measure: earnings (loss) before stock based compensation, amortization of acquired intangibles, special charges, interest and income taxes. This measure may not be comparable to similar measures used by other companies.
OTTAWA, March 3 /PRNewswire/ - March Networks® (TSX:MN), a global provider of intelligent IP video solutions, today announced financial results for the fiscal quarter and nine months ended January 31, 2011. All figures are in Canadian dollars and in accordance with Canadian GAAP unless otherwise specified.
The Company's third quarter fiscal 2011 revenue was $20.6 million, representing an increase of 3% as compared to revenue of $20.0 million in the third quarter of fiscal 2010. Revenue for the first nine months of fiscal 2011 of $75.3 million increased by 15% as compared to revenue of $65.4 million in the first nine months of fiscal 2010.
The Company recorded a non-GAAP operating loss of $3.0 million in the third quarter of fiscal 2011 representing an improvement of $152,000 relative to a non-GAAP loss of $3.2 million in the third quarter of fiscal 2010. Non-GAAP operating earnings improved by $2.8 million to $88,000 in the first nine months of fiscal 2011 relative to a non-GAAP loss of $2.7 million recorded in the first nine months of fiscal 2010.
Net GAAP loss for the third quarter of fiscal 2011 increased to $3.8 million or $0.21 per common share relative to a net loss of $3.5 million or $0.20 per common share in the third quarter of fiscal 2010. Year to date net GAAP loss of $3.4 million has improved by $1.6 million or $0.10 per common share relative to a net GAAP loss of $5 million or $0.29 per share in the first nine months of fiscal 2010.
The Company's cash and short-term investment position decreased by $6.3 million during the third quarter of fiscal 2011 to $38.5 million at January 31, 2011 due mainly to non-GAAP losses in the quarter and the timing of payments to suppliers as the Company increased its working capital ratio to 4.1:1 at January 31, 2011 from 3.3:1 at October 31, 2010.
"The Company's profitability in the first nine months of fiscal 2011 was negatively impacted by a stronger Canadian dollar, weaker than expected revenues from EMEA and lower than expected service gross margin", said Ken Taylor, CFO of March Networks. "Newly announced products
are expected to compete more favorably, particularly in the commercial industrial markets, delivering better profitability and service gross margin, both of which are expected to improve in the fourth quarter of fiscal 2011".
"Based on fourth quarter pipeline activity, the Company expects to record 10 to 15% revenue growth in fiscal 2011." said Peter Strom, CEO of March Networks. "We expect to continue to build on this growth next fiscal year with our suite of new products that are being introduced over the next few months."
The Company will discuss the results on a conference call and webcast on Friday, March 4, 2011 at 8:30 a.m. EDT (1:30 p.m. UTC). The conference call may be accessed by dialing 1-800-814-4860 (North America) or +1 416-644-3417.
The conference call webcast can be accessed at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3399000
A replay of the conference call will be available from March 4, 2011 at 10:30 a.m. EST until March 11, 2011 at 11:59 p.m. EST. The replay can be accessed at 1-877-289-8525 or +1 416-640-1917. The passcode for the replay is 4409755 followed by the number sign.
About March Networks
March Networks® (TSX:MN) is a global provider of intelligent IP video solutions. For close to a decade, the company has helped some of the world's largest commercial and government organizations transition from traditional CCTV to networked video surveillance used for advanced security, loss prevention and risk mitigation. VideoSphere®, the company's enterprise-class video management portfolio, includes open-platform VMS software complemented by high-definition IP cameras, encoders, video analytics and recording platforms, as well as outstanding professional and managed services. March Networks systems are delivered through an extensive distribution and partner network and currently support over one million channels of video in more than 50 countries. www.marchnetworks.com.
*MARCH NETWORKS, VideoSphere and the MARCH NETWORKS logo are registered trademarks of March Networks Corporation. All other trademarks are the property of their respective owners.
Certain statements included in this release constitute forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect the Company's current assumptions and expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current assumptions and expectations. Assumptions made in preparing the forward-looking statements contained in this release include, but are not limited to, the following:
Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following:
Additional risks are discussed herein and under "Risk Factors" in the Company's Annual Information Form available online at www.sedar.com. |
| March Networks Corporation | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| (Canadian dollars, amounts in thousands, except share and per-share data) (Unaudited) |
||||||
| Three Months Ended | Nine Months Ended | |||||
| January 31, 2011 |
January 31, 2010 |
January 31, 2011 |
January 31, 2010 |
|||
| REVENUE | $20,619 | $20,005 | $75,252 | $65,391 | ||
| Cost of revenue | 13,073 | 12,200 | 43,374 | 37,443 | ||
| GROSS MARGIN | 7,546 | 7,805 | 31,878 | 27,948 | ||
| EXPENSES: | ||||||
| Selling, marketing and support | 4,798 | 5,281 | 15,365 | 15,338 | ||
| Research and development | 3,168 | 3,663 | 8,648 | 8,768 | ||
| General and administrative | 2,584 | 2,017 | 7,777 | 6,502 | ||
| Stock based compensation | 242 | (109) | 704 | 682 | ||
| Amortization of acquired intangible assets | 807 | 888 | 2,398 | 2,683 | ||
| Restructuring costs | — | — | 909 | — | ||
| Total expenses | 11,599 | 11,740 | 35,801 | 33,973 | ||
| LOSS BEFORE UNDERNOTED ITEMS | (4,053) | (3,935) | (3,923) | (6,025) | ||
| Interest and other income, net | 84 | 192 | 191 | 356 | ||
| LOSS BEFORE INCOME TAXES | (3,969) | (3,743) | (3,732) | (5,669) | ||
| Current income tax expense | — | 21 | — | 82 | ||
| Future income tax recovery | (218) | (242) | (373) | (722) | ||
| NET LOSS | ($3,751) | $(3,522) | ($3,359) | $(5,029) | ||
| Loss per share: | ||||||
| Basic | ($0.21) | $ (0.20) | ($0.19) | $ (0.29) | ||
| Diluted | ($0.21) | $ (0.20) | ($0.19) | $ (0.29) | ||
| Shares used in per-share calculation: | ||||||
| Basic and Diluted | 17,559,758 | 17,201,220 | 17,554,134 | 17,199,657 | ||
| March Networks Corporation | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Canadian dollars, amounts in thousands) (Unaudited) |
||
| January 31, 2011 |
April 30, 2010 |
|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 8,346 | $ 9,492 |
| Short-term investments | 30,106 | 38,384 |
| Accounts receivable | 16,758 | 16,441 |
| Inventories | 13,776 | 11,337 |
| Prepaid expenses and other current assets | 3,144 | 3,549 |
| Future tax assets | 518 | 315 |
| Total current assets | 72,648 | 79,518 |
| Property and equipment | 4,515 | 5,205 |
| Intangible assets | 7,734 | 10,192 |
| Future tax assets | 3,754 | 4,200 |
| Goodwill | 22,429 | 22,429 |
| TOTAL ASSETS | $111,080 | $121,544 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $5,843 | $ 8,658 |
| Accrued liabilities | 7,817 | 7,192 |
| Deferred revenue | 4,018 | 7,795 |
| Deferred leasehold inducement | 132 | 132 |
| Income taxes payable | — | 101 |
| Total current liabilities | 17,810 | 23,878 |
| Deferred revenue | 3,639 | 4,789 |
| Deferred leasehold inducement | 869 | 968 |
| Long-term compensation | 560 | 439 |
| Future tax liabilities | 1,718 | 2,372 |
| Total liabilities | 24,596 | 32,446 |
| Shareholders' equity | 86,484 | 89,098 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $111,080 | $121,544 |
| March Networks Corporation | ||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (Canadian dollars, amounts in thousands) (Unaudited) |
||||
| Three Months Ended | Nine Months Ended | |||
| January 31, 2011 |
January 31, 2010 |
January 31, 2011 |
January 31, 2010 |
|
| Cash flows from operating activities: | ||||
| Net loss | $(3,751) | $ (3,522) | ($3,359) | $ (5,029) |
| Items not affecting cash: | ||||
| Amortization of capital and intangible assets | 494 | 679 | 1,474 | 1,520 |
| Amortization of intangible assets related to business acquisitions | 807 | 888 | 2,398 | 2,683 |
| Stock based compensation and shares issued to directors | 252 | (109) | 724 | 682 |
| Unrealized foreign exchange (gain)/ loss | 142 | (290) | 145 | (776) |
| Future income taxes and non-refundable investment tax credits | (218) | (542) | (373) | (1,620) |
| Net change in non-cash items | (3,787) | 2,635 | (9,856) | 3,565 |
| Net cash generated (consumed) by operating activities | (6,061) | (261) | (8,847) | 1,025 |
| Cash flows from investing activities: | ||||
| Redemption (purchase) of short-term investments | 31 | (36) | 8,278 | 2,241 |
| Purchase of capital and intangible assets | (156) | (489) | (512) | (1,387) |
| Net cash generated (consumed) by investing activities | (125) | (525) | 7,766 | 854 |
| Cash flows from financing activities: | ||||
| Issuance (repurchase) of share capital, net | 21 | 2 | 24 | 11 |
| Net cash generated by financing activities | 21 | 2 | 24 | 11 |
| Net increase (decrease) in cash and cash equivalents | (6,165) | (784) | (1,057) | 1,890 |
| Foreign exchange loss on foreign cash held | (141) | (71) | (89) | (305) |
| Cash and cash equivalents, beginning of period | 14,652 | 12,566 | 9,492 | 10,126 |
| Cash and cash equivalents, end of period | $8,346 | $11,711 | $8,346 | $11,711 |
SOURCE MARCH NETWORKS CORPORATION
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