RuggedCom reports record revenue and purchase orders for Q2 fiscal 2012

(All dollar amounts are in US dollars)

Highlights from the Quarter:

  • 38% increase in Purchase Orders year over year, to $30.6 million, a new record
  • 32% increase in Revenue year over year, to $28.6 million, a new record
  • 29% increase in Gross Margin year over year
  • Net Income of $1.9 million, EPS (basic and diluted) of  $0.15
  • Added 125 new customers

CONCORD, ON, Nov. 9, 2011 /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 second quarter of fiscal 2012, ended September 30, 2011.

"We are very pleased to again report record orders and revenues for Q2-F12." said Marzio Pozzuoli, President and Chief Executive Officer. "The electric power market once again continued to be the major contributor to our growth for the quarter, with the North America and APAC regions both achieving record revenues in Q2-F12."

Key Financial Metrics (All $ amounts in US$000s)
  (Q2-F12) (Q2-F11) Change
Orders $30,579 $22,204 +38%
Revenue $28,624 $21,692 +32%
Gross Margin % 57.7% 59.3% -160 bps
Operating Expenses (OpEx) $13,817 $9,153 +51%
OpEx as a % of revenue 48.3% 42.2% +610 bps
Adjusted OpEx* $13,310 $10,170 +31%
Adjusted OpEx as a % of revenue* 46.5% 46.9% -40 bps
Net Income $1,886 $2,772 -32%
Net Profit Margin % 6.6% 12.8% -620 bps
Adjusted Net Income* $2,262 $1,755 +29%
Adjusted Net Profit Margin %* 7.9% 8.1% -20 bps
Earnings Per Share (basic) $0.15 $0.23 -8 cents
Adjusted Earnings Per Share (basic)* $0.18 $0.14 +4 cents
Earnings Per Share (diluted) $0.15 $0.22 -7 cents
Adjusted Earnings Per Share (diluted)* $0.18 $0.14 +4 cents

_________________________________________________________

* Adjusted is defined as excluding all foreign exchange gains and losses

Second Quarter Results

Total revenue for the quarter was $28.6 million, representing an increase of 32% from the comparable quarter a year ago and a new company record.  Revenue was primarily driven by the electric power market, which grew 45% over the same quarter last year.  North America and APAC regions achieved growth of 17% and 37%, respectively, over Q2-F11.

The Company booked customer purchase orders totaling $30.6 million for the quarter, representing an increase of 38% over the same quarter last year, also a new company record.

Gross margin for the quarter was $16.5 million, an increase of 29% over the comparable period last year.  On a percentage of revenue basis, second quarter gross margin was 57.7%, a decrease of 1.6 percentage points from a gross margin of 59.3% for the same period last year.  The decrease in gross margin percentage was due to an unfavourable combination of product, sector and geographic mix.

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 is incorporating 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 are a more accurate measure of the Company's past financial performance.

Second quarter operating expenses increased to $13.8 million, or 48.3% of revenue compared with $9.2 million, or 42.2% 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 $0.5 million foreign exchange loss in Q2-F12 while the comparable quarter of a year ago included a foreign exchange gain of $1.0 million - a combined effect of $1.5 million.  If the effect of foreign exchange is factored out, the "adjusted" operating expenses actually show a year over year decline as a percentage of revenue, from 46.9% to 46.5%.

Net income for the second quarter was $1.9 million, compared to $2.8 million in the comparable period a year ago, representing 6.6% and 12.8% of revenue respectively, as reported under IFRS.  When the $0.4 million after-tax effect of foreign exchange is eliminated, "adjusted" net income shows an increase from the year ago period, to $2.3 million from $1.8 million, or 7.9% and 8.1% of revenue respectively.

Second quarter basic earnings per share were $0.15 compared to $0.23 for the same quarter last year while fully diluted earnings per share were $0.15 compared to $0.22 for the same quarter last year, as reported under IFRS.  On an "adjusted" basis with the effect of foreign exchange removed, second quarter basic and diluted "adjusted" earnings per share were $0.18 compared to $0.14 for the same quarter last year.

The Company added 125 new customers in the quarter.

Management Change

Mr. Clive Dias, Chief Operating Officer and Vice-President Operations, resigned from the Company during Q2-F12.  "Clive made a major contribution to RuggedCom's success and we wish him all the best in his future endeavors." said Marzio Pozzuoli, President and Chief Executive Officer.  Mr. Don Simpson has joined RuggedCom to replace Mr. Dias as the Company's Vice-President Operations.  Mr. Simpson has over 25 years' experience in the electronics industry in both product development and advanced manufacturing services.   Prior to joining RuggedCom, Mr. Simpson served as Senior Vice-President of Operations for SMTC, a mid-tier Electronic Manufacturing Services (EMS) company where he managed the worldwide operations.

Conference Call and Webcast
Management will host a conference call at 8:30 a.m. (ET) on Thursday, November 10, 2011.  Listeners may attend the conference call by dialing 647-427-7450 or 1-888-231-8191. The live audio webcast can be accessed at RuggedCom's web site at www.RuggedCom.com.  The webcast will also be archived on the site.  A taped rebroadcast will be available to listeners following the call until 11:59 PM (ET) on November 17, 2011. To access the rebroadcast, please call 416-849-0833 or 1-855-859-2056 and enter passcode 16341040#.

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 September 30, 2011 and September 30, 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.

 

RuggedCom Inc.


Second Quarter 2012 Consolidated Interim Financial Statements and Results of Operations
(Unaudited)

RuggedCom Inc.
Consolidated Interim Balance Sheets
(In thousands of US dollars)
(Unaudited)

     
  September 30 2011
$
March 31 2011
$
Assets    
Current assets    
Cash and cash equivalents (note 6) 39,045 38,106
Trade receivables (note 7) 18,893 18,265
Inventories (note 8) 16,324 14,509
Prepaid expenses 2,540 2,184
  76,802 73,064
Non-current assets    
Prepaid expenses 255 272
Deferred income taxes 682 676
Property and equipment (note 9(a)) 10,831 10,299
Intangible assets (note 9(b)) 9,420 10,311
Goodwill 3,133 3,133
  24,321 24,691
Total assets 101,123 97,755
Liabilities    
Current liabilities    
Trade and other payables (note 10) 7,364 7,835
Income taxes payable 1,094 1,299
Provisions (note 11) 993 921
Other liabilities (note 12) 306 351
Total current liabilities 9,757 10,406
     
Non-current liabilities    
Provisions (note 11) 577 697
Other liabilities (note 12) 2,863 3,221
Total non-current liabilities 3,440 3,918
Total liabilities 13,197 14,324
Equity    
Share capital 50,591 49,574
Contributed surplus 5,468 5,147
Retained earnings 31,867 28,710
Total equity 87,926 83,431
Total liabilities and equity 101,123 97,755
     
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 ended September 30 Six months ended September 30
  2011 2010 2011 2010
  $ $ $ $
       
Revenues 28,624 21,692 55,186 41,682
Cost of sales 12,098 8,833 23,389 17,085
Gross profit 16,526 12,859 31,797 24,597
         
Operating expenses        
Sales and marketing 6,134 4,326 12,022 8,638
Research and product development 3,830 3,197 7,477 6,101
General and administrative 3,853 1,630 6,994 5,834
  13,817 9,153 26,493 20,573
Income from operations 2,709 3,706 5,304 4,024
         
Finance income (expenses), net        
Interest income 22 56 58 95
Interest expense (34) (4) (58) (30)
Other finance income (expenses) 385 (239) 170 (144)
Finance income (expenses), net 373 (187) 170 (79)
         
Income before income taxes 3,082 3,519 5,474 3,945
Income tax expense 1,196 747 2,317 1,928
Net income and comprehensive income for the period 1,886 2,772 3,157 2,017
         
         
         
Income per common share (note 16)        
Basic 0.15 0.23 0.26 0.17
Diluted 0.15 0.22 0.25 0.16
         
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 capital      
 

Number

Amount
                    $

Contributed
surplus

$
Retained
earnings
$
Total
equity
$
Balance at April 1, 2010 12,144,458 48,963 3,695 20,033 72,691
Comprehensive income for the period   - - 2,017 2,017
Employee stock options exercised 14,217 116 (39) - 77
Stock option expense for the period   - 890 - 890
Balance at September 30, 2010 12,158,675 49,079 4,546 22,050 75,675
           
Balance at April 1, 2011 12,241,495 49,574 5,147 28,710 83,431
Comprehensive income for the period   - - 3,157 3,157
Employee stock options exercised 141,127 1,017 (336) - 681
Stock option expense for the period   - 657 - 657
Balance at September 30, 2011 12,382,622 50,591 5,468 31,867 87,926

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 ended September 30 Six months ended September 30
  2011
$
2010
$
2011
$
2010
$
Cash and cash equivalents provided by (used in)        
Operating activities        
Net income for the period 1,886 2,772 3,157 2,017
Items not affecting cash        
  Amortization and depreciation 1,442 1,234 2,740 2,440
  Unrealized finance (gain) loss  (385) 239 (170) 144
  Stock-based compensation 311 444 657 890
  Gain on disposal of property and equipment (58) - (58) -
  Deferred income tax expense 36 43 (6) 286
Net change in non-cash working capital (note 18(a)) 452 (2,046) (3,662) (2,381)
  Cash provided by operating activities 3,684 2,686 2,658 3,396
         
Investing activities        
Purchase of property and equipment (992) (306) (2,060) (1,135)
Proceeds from disposal of property and equipment 88 - 88 20
Purchase of intangibles (116) (135) (428) (359)
  Cash used in investing activities (1,020) (441) (2,400) (1,474)
         
Financing activities        
Common shares issued for options exercised 112 21 681 77
  Cash provided by financing activities 112 21 681 77
         
Increase in cash and cash equivalents during the period 2,776 2,266 939 1,999
         
Cash and cash equivalents - Beginning of period 36,269 32,878 38,106 33,145
Cash and cash equivalents - End of period 39,045 35,144 39,045 35,144
         
Supplemental disclosure (note 18(b))        

The accompanying notes form an integral part of these consolidated interim financial statements.

 

 

SOURCE RuggedCom Inc.

For further information:

Roy Dalton
Chief Financial Officer
RuggedCom Inc.
Tel:   905-856-5288
Email:  Investor@RuggedCom.com

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RuggedCom Inc.

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