Dragonwave Inc. Announces First Quarter Fiscal Year 2011 Results
OTTAWA, ONTARIO, Jul 7, 2010 (Marketwire via COMTEX News Network) -- 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 its first quarter fiscal year 2011, ended May 31, 2010. All figures are reported in U.S. dollars and were prepared in accordance with Canadian generally accepted accounting principles.
Q1 FY2011 Performance Summary
- Revenue of $48.7 million, up 275% versus $13.0 million in Q1 FY2010
- Gross margin of 44% compared with 35% in Q1 FY2010 Operating margin of 20%
- GAAP diluted earnings per share of $0.26
- Cash generated from operations of $3.5 million
- Ending cash, cash equivalents and short-term investments of $115.8 million
Revenue for the first quarter of fiscal year 2011 was $48.7 million, compared with $13.0 million in the first quarter of fiscal year 2010 and $61.0 million in the fourth quarter of fiscal year 2010. Revenue from customers within North America was $42.9 million, compared with $10.5 million in the first quarter of the prior fiscal year. DragonWave had one major customer in the first quarter of fiscal year 2011 that generated 78% of revenue.
Net income in the first quarter of fiscal year 2011 was $9.7 million or $0.26 per diluted share, compared with a net loss of $2.4 million or ($0.08) per diluted share in the first quarter of 2010. Gross margin for the first quarter was 43.6%, compared with 34.5% in the first quarter of the prior fiscal year; operating margin was 20% in the quarter.
"DragonWave delivered strong year-over-year growth in the first quarter," said DragonWave President and CEO Peter Allen. "We are focused on achieving our key strategic objectives of broadening and deepening our global market presence, expanding our customer base and continuing to deliver innovative solutions. The global mobile broadband Internet is unstoppable, which will drive the growth for DragonWave solutions in markets throughout the world."
Cash, cash equivalents, and short-term investments totaled $115.8 million at the end of Q1 FY2011, compared to $113.4 million at the end of the prior quarter, and $20.0 million at the end of Q1 FY2010.
Revenue Outlook for Q2 FY2011
Beginning in Q1 FY2011, DragonWave is reporting financial results in US dollars. The Company expects revenue for Q2 FY2011 to be approximately $25 million. DragonWave's largest customer is expected to contribute approximately 25% of Q2 FY2011 revenue. We expect significant growth from other customers from the $10.7 million level in Q1 of FY2011 and estimate that revenue from these customers will be approximately 75% of total revenue in Q2 of FY2011.
Webcast and Conference Call Details
The DragonWave management team will discuss the results on a conference call and webcast beginning at 8:30 a.m. Eastern Time, tomorrow, July 8, 2010.
Toll-free North America Dial-in: 877-312-9202
International Dial-in: 408-774-4000
The live webcast and presentation slides will be available at: http://investor.dragonwaveinc.com/events.cfm.
An archive of the webcast will be available at the same link.
About DragonWave
DragonWave(R) 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(R) is a registered trademark of DragonWave Inc.
Forward-Looking Statements
Certain statements in this release, including the estimate and sources of revenue for the second quarter of fiscal year 2011 provided above, 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 such estimates include:
- DragonWave's expectations regarding network deployment plans of its existing and new customers; and
- DragonWave's expectations regarding the volume and timing of anticipated order activity.
Readers are cautioned not to place undue reliance on such 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 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 6, 2010 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, and include the following:
- DragonWave relies on a small number of customers for a large percentage of its revenue.
- DragonWave's growth is dependent on the development and growth of the market for high-capacity wireless communications services.
- DragonWave faces intense competition from several competitors and if it does not compete effectively with these competitors, its revenues may not grow and could decline. DragonWave also faces competition from indirect competitors.
- DragonWave relies on its suppliers to supply components for its products and the Company is exposed to the risk that these suppliers will not be able to supply components on a timely basis, or at all.
- DragonWave may conduct acquisitions of products and businesses. There are risks associated with such acquisitions.
- DragonWave's success depends on its ability to develop new products and enhance existing products.
- If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected.
- DragonWave's quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.
- DragonWave has a lengthy and variable sales cycle.
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
As at As at
May 31, February 28,
2010 2010
--------------------------------
Assets
Current Assets
Cash and cash equivalents 70,559 105,276
Short term investments 45,266 8,074
Trade receivables 17,687 28,926
Other receivables 983 1,801
Inventory 28,006 23,910
Prepaid expenses 1,336 721
Future income tax asset 331 436
--------------------------------
164,168 169,144
Long Term Assets
Property, equipment and intangible
assets 8,517 7,546
Future income tax asset 155 59
--------------------------------
8,672 7,605
Total Assets 172,840 176,749
--------------------------------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities 21,317 33,949
Income taxes payable 363 835
Deferred revenue 800 1,017
--------------------------------
22,480 35,801
Long Term Liabilities 2,436 2,102
Shareholders' equity
Capital stock 178,482 179,174
Contributed surplus 1,663 1,375
Deficit (22,603) (32,085)
Accumulated other comprehensive income (9,618) (9,618)
--------------------------------
147,924 138,846
Total Liabilities and Shareholders' Equity 172,840 176,749
--------------------------------
Shares issued & outstanding 36,789,760 36,934,917
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE INCOME (LOSS)
Expressed in US $000's except share and per share amounts
Three months ended
------------------------------
May 31
------------------------------
2010 2009
REVENUE 48,726 12,999
Cost of sales 27,495 8,509
------------------------------
Gross profit 21,231 4,490
------------------------------
EXPENSES
Research and development 4,698 2,465
Selling and marketing 4,136 2,069
General and administrative 2,576 1,003
Investment tax credits - (49)
------------------------------
11,410 5,488
------------------------------
Income (Loss) from operations 9,821 (998)
Interest income 32 22
Investment loss (49) -
Foreign exchange gain (loss) 117 (1,374)
------------------------------
Income (Loss) before income taxes 9,921 (2,350)
Income tax expense 231 -
------------------------------
Net and Comprehensive Income (Loss) 9,690 (2,350)
Income (Loss) per share
Basic 0.26 (0.08)
Diluted 0.26 (0.08)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Expressed in US $000's
Three months ended
---------------------
May 31
---------------------
2010 2009
---------------------
Operating Activities
Net Income (loss) 9,690 (2,350)
Items not affecting cash
Depreciation 713 248
Stock-based compensation 295 197
Unrealized foreign exchange loss 16 841
Inventory impairment (recovery) (57) 20
Unrealized loss on short term investments 49 -
Accrued interest on short term investments (7) -
---------------------
10,699 (1,044)
Changes in non-cash working capital items (5,034) 3,883
---------------------
5,665 2,839
---------------------
Investing Activities
Acquisition of property, equipment and intangible
assets (2,225) (482)
Purchase of short term investments (45,308) -
Maturity of short term investments 8,074 11,800
---------------------
(39,459) 11,318
---------------------
Financing Activities
Change in line of credit - 30
Share repurchase (1,054) -
Issuance of common shares net of issuance costs 147 9
---------------------
(907) 39
---------------------
Effect of foreign exchange on cash and cash
equivalents (16) (841)
Net increase (decrease) in cash and cash equivalents (34,717) 13,355
Cash and cash equivalents at beginning of period 105,276 6,693
---------------------
Cash and cash equivalents at end of period 70,559 20,048
---------------------
Cash paid during the period for interest - 6
---------------------
SOURCE: DragonWave Inc.
Investor Contact: DragonWave Inc. John Lawlor VP, Investor Relations 613-599-9991 ext 2252 jlawlor@dragonwaveinc.com Media Contact: DragonWave Inc. Nadine Kittle Marketing Communications 613-599-9991 ext 2262 nkittle@dragonwaveinc.com
Copyright (C) 2010 Marketwire. All rights reserved.
News Provided by COMTEX