RuggedCom reports 26% revenue growth and record booked orders for Q1 fiscal 2010



    
    (All dollar amounts are in US dollars)

    Highlights from the Quarter:
    -   40% increase in Purchase Orders year over year
    -   26% increase in Revenue year over year
    -   15% increase in Gross Margin year over year
    -   49% decrease in Net Income year over year
    -   Added 105 new customers, up 13% year over year
    

    WOODBRIDGE, ON, Aug. 5 /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 first quarter of fiscal 2010, ended June 30, 2009.
    "We achieved another record quarter for booked orders which is indicative
of the strength of our key target markets, however revenues lagged orders
mainly due to timing. Gross and net profit margins were impacted by a number
of factors including competitive pricing pressure, a weakening US dollar and
higher expenditures on research and development," said Marzio Pozzuoli,
President and Chief Executive Officer.

    First Quarter Results

    Total revenue for the quarter was $16.0 million, representing an increase
of 26% from the comparable quarter a year ago. Revenue growth was primarily
driven by increased sales in the electric power market, which comprised 65% of
the Company's total revenue, and which grew 24% over the same quarter last
year.
    The Company booked record customer purchase orders totaling $18.1 million
for the quarter, representing an increase of 40% over the same quarter last
year.
    Gross margin for the quarter was $9.1 million, an increase of 15% over
the comparable period last year. On a percentage of revenue basis, first
quarter gross margin was 56.7%, a decrease of 5.0 percentage points over a
gross margin of 61.7% for the same period last year. The decrease was due to
competitive pricing pressure as well as a significant strengthening of the
Canadian dollar against the US dollar during Q1-F10, which had a negative
effect on margins, as inventory purchased when the Canadian dollar was
relatively weaker, was later sold generating US dollar revenue which was
translated at rates of exchange reflecting a stronger Canadian dollar. The
majority of the Company's revenues and cost of goods sold are US dollar
denominated and therefore 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.
    First quarter net income was $0.9 million, representing the Company's
17th consecutive quarter of profitability. This represents a decrease of 49%
from net income of $1.7 million in the first quarter last year. The decrease
was mainly due to a combination of reduced gross margin percentage as
described earlier, a significant increase in research and development
expenditures and foreign exchange losses. The Company also recorded a
provision for income taxes of $0.6 million with an effective tax rate of
38.8%. This compares to $1.0 million income tax expense in the same period
last year with an effective tax rate of 36.9%.
    First quarter basic earnings per share were $0.07 compared to $0.15 for
the same quarter last year while fully diluted earnings per share were $0.07
compared to $0.14 for the same quarter last year.
    The Company added 105 new customers in the quarter, an increase of 13%
over the same quarter last year.

    
    Conference Call and Webcast
    ---------------------------
    
    Management will host a conference call at 8:30 a.m. (ET) on Thursday,
August 6, 2009. Listeners may attend the conference call by dialing
416-644-3421 or 1-800-732-0232. 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 August 13, 2009. To access the rebroadcast, please
call 416-640-1917 or 1-877-289-8525 and enter passcode 21310484 followed by
the number sign.

    
    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 period ended June 30, 2008 and June 30, 2009 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 INTERIM FINANCIAL STATEMENTS
                       1st Quarter ended June 30, 2009



                               RuggedCom Inc.
                         CONSOLIDATED BALANCE SHEETS
                   (in thousands of United States dollars)


                                                    June 30,   March  31,
                                                       2009         2009
                                                 (unaudited)    (audited)
                                                              $            $
                                                              -            -

    Assets
    Current
    Cash and cash equivalents (note 4)                   47,105       45,099
    Accounts receivable (note 5)                          8,829        9,780
    Prepaid expenses and other                            1,490        1,025
    Inventories (note 6)                                  5,000        4,555
    Income taxes recoverable                              2,098            -
    Future income taxes                                     298          283
                                                -----------------------------
                                                         64,820       60,742
    Future income taxes                                     221          246
    Property and equipment                                2,438        2,662
    Other assets (note 3)                                 1,891          580
                                                -----------------------------
                                                         69,370       64,230
                                                -----------------------------
                                                -----------------------------

    Liabilities
    Current
    Accounts payable and accrued liabilities              5,487        5,793
    Current portion of warranty                             533          482
    Income taxes payable                                      -        2,268
    Current portion of deferred income                      154           50
    Current portion of obligations under
     capital lease                                          101          126
                                                -----------------------------
                                                          6,275        8,719
                                                -----------------------------
    Warranty                                                396          347
    Deferred income                                          23           21
    Obligations under capital lease                          41           48
    Leasehold inducements                                   107            6
                                                -----------------------------
                                                            567          422
                                                -----------------------------
                                                          6,842        9,141
                                                -----------------------------
    Shareholders' Equity
    Capital stock (note 7)                               48,645       46,820
    Contributed surplus (note 8)                          1,718        1,559

    Accumulated other comprehensive loss
     (note 9)                                            (4,382)      (8,952)
    Retained earnings                                    16,547       15,662
                                                -----------------------------
                                                         12,165        6,710
                                                -----------------------------
                                                         62,528       55,089
                                                -----------------------------
                                                         69,370       64,230
                                                -----------------------------
                                                -----------------------------

    Contingent liabilities (note 10)

    See accompanying notes to consolidated interim financial statements.



                               RuggedCom Inc.
          CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
    (in thousands of United States dollars, except per share information)
                                 (unaudited)


                                                    3 month      3 month
                                                     period       period
                                                      ended        ended
                                                    June 30,     June 30,
                                                       2009         2008
                                                              $            $
                                                              -            -


    Revenue                                              16,017       12,751
    Cost of goods sold                                    6,940        4,883
                                                -----------------------------
    Gross margin                                          9,077        7,868
                                                -----------------------------
    Operating expenses
    Research and development -- net of
     investment tax credits of $187 (2008
     - $95)                                               1,838        1,111
    Sales and marketing                                   2,978        2,564
    General and administrative                            1,953        1,459
    Loss on foreign exchange                                531          192
    Amortization                                            393          259
                                                -----------------------------
                                                          7,693        5,585
                                                -----------------------------
    Operating income                                      1,384        2,283
    Net interest income                                      63          446
                                                -----------------------------
    Income before income taxes                            1,447        2,729
                                                -----------------------------
    Income taxes (note 15)
    Current                                                 505        1,005
    Future                                                   57            1
                                                -----------------------------
                                                            562        1,006
                                                -----------------------------
    Net income for the period                               885        1,723
    Retained earning -- Beginning of period              15,662        3,334
                                                -----------------------------
    Retained earnings -- End of period                   16,547        5,057
                                                -----------------------------
                                                -----------------------------

    Net earnings per share (note 11)
    Basic                                          $       0.07 $      0.15
    Diluted                                        $       0.07 $      0.14

    Basic weighted average number of common
     shares outstanding                              11,896,306   11,719,623

    Diluted weighted average number of common
     shares outstanding                              12,623,918   12,280,710

    See accompanying notes to consolidated interim financial statements.



                               RuggedCom Inc.
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                  (in thousands of United States dollars )
                                 (unaudited)


                                                    3 month      3 month
                                                     period       period
                                                      ended        ended
                                                    June 30,     June 30,
                                                       2009         2008
                                                              $            $
                                                              -            -


    Net income for the period                               885        1,723
    Foreign currency translation gain (note 9)            4,570          331
                                                -----------------------------
    Comprehensive income                                  5,455        2,054
                                                -----------------------------
                                                -----------------------------

    See accompanying notes to consolidated interim financial statements.



                               RuggedCom Inc.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (in thousands of United States dollars)
                                 (unaudited)

                                                    3 month      3 month
                                                     period       period
                                                      ended        ended
                                                    June 30,     June 30,
                                                       2009         2008
                                                              $            $
                                                              -            -

    Cash provided by (used in)
    Operating activities
    Net income for the period                               885        1,723
    Non-cash items
      Amortization of property and equipment                302          244
      Amortization of other assets                           91           15
      Future income taxes                                    57            1
      Stock based compensation                              278          172
      Warranty                                               29          102
      Leasehold inducements                                  99           (8)
      Net change in non-cash working capital
       (note 14a)                                        (3,899)      (1,183)
                                                -----------------------------

                                                         (2,158)       1,066
                                                -----------------------------

    Investing activities
    Additions to property and equipment                    (553)        (413)
    Additions to other assets                              (652)         (87)
                                                -----------------------------

                                                         (1,205)        (500)
                                                -----------------------------

    Financing activities
    Repayment of obligations under capital
     lease                                                  (46)         (70)
    Issuance of common shares                             1,706           57
                                                -----------------------------

                                                          1,660          (13)
                                                -----------------------------

    Effect of exchange rates on cash                      3,709           47
                                                -----------------------------

    Increase in cash and cash equivalents
     during the period                                    2,006          600
    Cash and cash equivalents -- Beginning of
     period                                              45,099        8,037
                                                -----------------------------
    Cash and cash equivalents -- End of period
     (note 14b)                                          47,105        8,637
                                                -----------------------------
                                                -----------------------------

    Supplemental disclosures

    Interest paid                                  $          6 $         16
    Income taxes paid                              $      4,854 $        653

    





For further information:

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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