RECORD REVENUES AND ORDERS AS RUGGEDCOM ACCELERATES TOP LINE GROWTH

(All dollar amounts are in US dollars)

Highlights for the Full Fiscal Year:

  • Revenues up 29% to $94.0 million, a ninth consecutive record year
  • Orders up 29% to $98.2 million, a ninth consecutive record year
  • Gross Margin up 31%
  • Net Income up 48%
  • Added 433 new customers

Highlights from the Quarter:

  • Revenues up 38% to $26.7 million, a third consecutive record quarter
  • Orders up 64% to $29.9 million, a fourth consecutive record quarter
  • Gross Margin up 37%
  • Net Income up 41%
  • Added 112 new customers

CONCORD, ON, May 25, 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 fourth quarter and full fiscal year ended March 31, 2011.

"We're extremely pleased with our results as we once again achieved record orders and revenues for the quarter." said Marzio Pozzuoli, President and Chief Executive Officer. "Growth continues to be fueled primarily by the electric power and transportation sectors. We also continue to see strong growth in the APAC and EMEA regions.  Gross margins remain consistently strong, coming in at just under sixty percent for both the quarter and the full fiscal year.  Additionally, continued efforts to control operating costs resulted in bottom line growth of over forty percent compared to the same quarter a year ago."

Fourth Quarter and Full Year Results

Total revenue for the quarter was $26.7 million which represented a 38% increase from the comparable period a year ago.  Revenue growth was driven primarily by increased sales in the electric power and transportation markets.  Revenues in the electric power market increased 65% to $18.8 million, a new company record for that sector and comprised 71% of the Company's total revenue versus 59% for the same quarter last year.

For the full year, revenue grew to $94.0 million, an increase of 29% over fiscal 2010 marking the company's ninth consecutive record year of revenue growth.

Customer purchase orders totaled $29.9 million for the quarter, the fourth consecutive record quarter for the Company, representing an increase of 64% over the same quarter last year.

For the full year, the Company booked $98.2 million in orders, the company's ninth consecutive record year, resulting in a 29% increase over the $75.9 million booked in fiscal 2010.

Gross margin for the quarter was $15.6 million, an increase of 37% over the comparable period last year.  On a percentage of revenue basis, fourth quarter gross margin was 58.4%, a decrease of 0.2 percentage points from a gross margin of 58.6% for the same period last year and a decrease of 0.5 percentage points from the gross margin percentage of 58.9% for the third quarter of fiscal 2011.  For Q4-F11, gross margins were negatively influenced by the strengthening Canadian dollar during the quarter but this was mostly offset by decreased manufacturing overhead costs and product/sector mix. Gross margins are generally unaffected by movements in the Canadian to US dollar exchange rate, however during periods of high exchange rate volatility, gross margins are impacted by exchange rate translations.

Gross margins were $55.8 million for the full year, a 31% increase over the comparable period last year.  On a percentage of revenue basis, fiscal 2011 gross margin was 59.4%, 0.7 percentage points higher than the 58.7% recorded for fiscal 2010.

Fourth quarter net income was $1.6 million, representing 28 consecutive quarters of profitability.  This represents an increase of 41% from net income of $1.1 million in the comparable fourth quarter from a year ago.  Operating expenses for the fourth quarter increased 31% from the same period a year ago as the Company continues to invest increasing amounts in research and development, sales and marketing, and general administration to support the growth of our core business.  Net income for Q4-F11 was impacted by a combination of:

  • the inclusion of WiNetworks' loss of $169,000 for the period, which included expenditures of $0.9 million of research and development investment, before investment tax credits of $0.4 million.  This compares to a WiNetworks' loss of $1.0 million in the year ago period, which included expenditures of $1.0 million of research and development investment, before investment tax credits of $0.2 million;

  • relatively higher sales and marketing expense, including accelerated compensation, which is performance related, to certain of our sales employees.

  • a negative foreign exchange impact of $0.5 million due to a strengthening Canadian dollar relative to the US dollar;

  • increased amortization expense as a result of continued capital expenditures to support the growth of the business, including amortization of intangible assets acquired in the purchase of the assets of Bow Networks.

For the full year, net income was $6.2 million, an increase of 48% from fiscal 2010 net income of $4.2 million.

For Q4-F11, RuggedCom recorded a provision for income taxes of $0.9 million with an effective tax rate of 35.7%.  This compares to $0.1 million income tax expense in the same period last year with an effective tax rate of 9.4%.  The relatively low rate from the prior year was due to certain year end tax planning effected in fiscal year 2010.  For the full year, the company recorded a tax provision with an effective rate of 41.8% compared to an effective rate of 35.8% for the prior fiscal year 2010.

Fourth quarter earnings per basic share were $0.13 compared to $0.09 for the same quarter last year while earnings per diluted share were $0.12 compared to $0.09 for the same quarter last year.  Earnings per basic share for the full year were $0.51 compared to $0.35 for the last fiscal year while earnings per diluted share were $0.50 compared to $0.33 for the last fiscal year.

The Company added 112 new customers in the quarter, an increase of 23% over the same quarter last year; 433 new customers were added during fiscal 2011, an increase of 4% over fiscal 2010.

Management Change
Roy Dalton, Chief Financial Officer, will be retiring at the end of fiscal year 2012. Mr. Dalton has been with the Company since January of 2004 and he has agreed to continue in his role as Chief Financial Officer until May of 2012.  "Roy has played an instrumental role in the growth and success of RuggedCom since joining in 2004.  We'll be initiating a search for Roy's successor in sufficient time and with Roy's participation to ensure a smooth and orderly transition." explained Marzio Pozzuoli.

Conference Call and Webcast
Management will host a conference call at 8:30 a.m. (ET) on Thursday, May 26, 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 June 2, 2011. To access the rebroadcast, please call 416-849-0833 or 1-800-642-1687 and enter passcode 65055178#.

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 audited annual consolidated financial statements for the fiscal years ended March 31, 2011 and March 31, 2010 and management's discussion and analysis of the results of operations and financial condition for the three month and full year periods ended March 31, 2011 and March 31, 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.
CONSOLIDATED FINANCIAL STATEMENTS
Year ended March 31, 2011


RuggedCom Inc.
CONSOLIDATED BALANCE SHEETS
As at March 31, 2011 and 2010
(in thousands of United States dollars)
           
      2011   2010
      $   $
Assets          
Current          
Cash and cash equivalents (note 5 and 16 (e))   38,106   33,140
Accounts receivable (note 6)      18,264   13,494
Prepaid expenses and other (note 7)   2,111   1,825
Inventories (note 8)     14,859   10,497
Income taxes recoverable     -   1,036
Future income taxes (note 14(a))     644   637
      73,984   60,629
Future income taxes (note 14(a))   -   431
Severance pay fund     272   520
Property and equipment (note 9)   11,188   11,372
Goodwill  (note 4)     3,693   1,928
Intangible assets (note 10)     10,975   11,373
      100,112   86,253
Liabilities          
Current          
Accounts payable and accrued liabilities    8,131   7,618
Current portion of warranty liability    696   604
Income taxes payable      1,304   280
Current portion of deferred income     138   99
Current portion of lease costs     26   26
Current portion of obligations under capital leases (note 16(b)) 83   105
      10,378   8,732
Future income tax liability (note 14(a))   201   -
Warranty liability     389   413
Deferred income     224   32
Severance payable     312   558
Obligations under capital leases (note 16(b)) 17   95
Lease costs payable     308   265
      11,829   10,095
Shareholders' Equity          
Capital stock (note 11)     49,511   48,886
Contributed surplus (note 13)     3,844   2,538
Accumulated other comprehensive income (note 12) 8,894   4,887
Retained earnings      26,034   19,847
      34,928   24,734
      88,283   76,158
      100,112   86,253
Commitments (note 16)          
Contingent liabilities (note 17)          
See accompanying notes to consolidated financial statements.      
Approved by the Board of Directors        
           
"Peter Crombie"   "J. Ian Giffen"    
Peter Crombie, Director   J. Ian Giffen, Director    

 

 

RuggedCom Inc.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
For the years ended March 31, 2011 and 2010
(in thousands of United States dollars except per share information)
         
      2011 2010
    $ $
         
Revenue      93,967 72,739
Cost of goods sold      38,171 30,058
         
Gross margin      55,796 42,681
         
Operating expenses        
Research and development      12,599 9,242
Sales and marketing      18,224 14,197
General and administrative      10,216 8,721
Investment tax credits     (2,171) (1,302)
Loss on foreign exchange     1,176 2,351
Amortization      5,363 3,068
         
      45,407 36,277
         
Operating income     10,389 6,404
Net interest income     247 115
         
Income before income taxes      10,636 6,519
         
Provision for (recovery of) income taxes (note 14(b))    
Current      3,811 2,745
Future      638 (411)
         
      4,449 2,334
         
Net income for the year     6,187 4,185
         
Retained earnings — Beginning of year 19,847 15,662
         
Retained earnings — End of year 26,034 19,847
         
Net earnings per common share (note 18)    
Basic       $ 0.51  $ 0.35
Diluted      $ 0.50  $ 0.33
         
Basic weighted average number of common shares outstanding  12,167,740 12,062,547
Diluted weighted average number of common shares outstanding 12,493,120 12,577,790

See accompanying notes to consolidated financial statements.

 

RuggedCom Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
For the years ended March 31, 2011 and 2010
(in thousands of United States dollars except per share information)
         
      2011 2010
    $ $
         
Net income for the year     6,187 4,185
Unrealized foreign currency translation gain (note 12) 4,007 13,839
         
Comprehensive income for the year 10,194 18,024

See accompanying notes to consolidated financial statements. 



RuggedCom Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended March 31, 2011 and 2010
(in thousands of United States dollars except per share information)
         
      2011 2010
    $ $
         
Cash provided by (used in)        
Operating activities        
Net income for the year     6,187 4,185
Non-cash items        
Amortization of property and equipment  3,199 2,191
Amortization of other assets  2,164 877
Future income taxes  638 (411)
Stock-based compensation  1,541 1,175
Warranty liability 25 (136)
Lease costs 26 259
Net change in non-cash working capital (note 15(a))  (5,562) (9,004)
         
      8,218 (864)
         
Investing activities        
Acquisition of subsidiary (note 4(b)) - (8,138)
Acquisition of business assets (note 4(a)) (2,177)  
Additions to property and equipment  (1,955) (8,724)
Additions to other assets  (1,172) (1,370)
         
      (5,304) (18,232)
         
Financing activities        
Repayment of obligations under capital leases (105) (194)
Issuance of common shares  388 1,875
Repayment of loan     - (4,875)
         
      283 (3,194)
         
Effect of exchange rates on cash 1,769 10,331
         
Increase (decrease) in cash and cash equivalents during the year 4,966 (11,959)
Cash and cash equivalents — Beginning of year 33,140 45,099
         
Cash and cash equivalents — End of year (note 15(b)) 38,106 33,140
         

 See accompanying notes to consolidated 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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