MITEC TELECOM REPORTS IMPROVED RESULTS FOR Q2 FISCAL 2011
MONTREAL, Dec. 14 /CNW Telbec/ - Mitec Telecom Inc. ("Mitec") (TSX: MTM), a leading designer and manufacturer of mobile wireless, fixed wireless, broadcast and satellite components, today announced its results for the second quarter of fiscal 2011, the three-month period ended October 31, 2010.
Revenue was $7.0 million for the quarter and Mitec recorded a net loss of $711,000, or $nil per share. These improved results compare to sales of $7.2 million and a net loss of $1.8 million or $0.01 per share in the second quarter of fiscal 2010. It is notable that although second quarter revenues remained at the same levels, net income improved by over 2.5 times in fiscal 2011 compared with fiscal 2010.
EBITDA from operating activities (earnings before interest, income taxes, depreciation and amortization), improved to negative $319,000 during the period, compared with negative $1.4 million during the second quarter of fiscal 2010, more than a fourfold improvement.
"The results generated for this quarter are clear evidence that Mitec's product lines are now generating the sustainable profit margins that we have been working towards since they were launched", said Dan Piergentili, Mitec's President and CEO. Consolidated gross margin improved to 26 percent during the quarter - an improvement of 120 percent for the period - compared with 11 percent in the same quarter in fiscal 2010.
"Mitec's Satcom gross margins were 36 percent for this quarter as a result of the success we have generated through our recently launched product lines and our ability to differentiate them in the marketplace. Having reached these levels is a significant event for Mitec and we expect to make up for the shortfall in legacy revenue we experienced from the traction we continue to gain from our VSAT MTX product line as well as our military division, Keragis, which delivered 42 percent gross margins this quarter", Piergentili commented.
Mitec's Telecom revenue improved by almost 75 percent during the quarter, to $3.5 million compared with $2 million in the same quarter in fiscal 2010.
"Even through gross margins, at 15 percent, were much higher than in previous quarters, we continue to explore ways to ensure that Mitec can streamline its operations and increase these margins even further", said Piergentili.
About Mitec Telecom Inc.
Mitec is a leading designer and provider of radio frequency (RF) products for the telecommunications and satellite communications industries, as well as a variety of other sectors. Mitec sells its products worldwide to network providers for incorporation into high-performing wireless networks used in voice and data/internet communications. Headquartered in Montreal, Canada, Mitec also operates facilities in California and China. Mitec is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at www.mitectelecom.com.
Due to confidentiality provisions, Mitec is generally not able to disclose the names of its major customers or the financial data related to sales transactions. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for Mitec's products, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in Mitec's public filings with the appropriate securities regulatory authorities.
MITEC TELECOM INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars) As at As at
October 31, 2010 April 30, 2010
-------------------------------------------------------------------------
$ $
Unaudited Audited
ASSETS
Current
Cash 908 1,886
Short-term investments 182 181
Trade receivables 6,946 5,732
Other receivables 151 288
Income tax recoverable 38 380
Inventories 6,007 5,447
Prepaid expenses and other assets 320 493
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Total current assets 14,552 14,407
Property, plant and equipment 4,345 4,510
Intangible assets 1,590 1,762
Investments 25 25
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20,512 20,704
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Credit facility 1,229 733
Accounts payable and accrued liabilities 6,561 6,061
Current portion of the long-term debt 1,882 -
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Total current liabilities 9,672 6,794
Long-term debt - 1,157
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Total liabilities 9,672 7,951
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Shareholders' equity
Common shares 132,142 132,142
Warrants - 1,152
Equity component of convertible debentures 788 768
Contributed surplus 12,018 10,802
Deficit (133,480) (131,427)
Accumulated other comprehensive loss (628) (684)
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Total shareholders' equity 10,840 12,753
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20,512 20,704
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MITEC TELECOM INC.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(In thousands of Canadian dollars, except per share data and number of
shares)
Unaudited
For the three months ended For the six months ended
October 31, October 31,
2010 2009 2010 2009
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$ $ $ $
Sales 7,024 7,198 12,795 13,905
Cost of sales 5,229 6,381 10,191 12,053
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Gross profit 1,795 817 2,604 1,852
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Expenses
Research and
development 720 683 1,434 1,751
Selling and
administrative 1,543 1,796 2,894 3,222
Financial expenses 209 222 397 376
Foreign exchange
(gain) loss 3 (8) (131) 403
Gain on disposal and
impairment of
property, plan and
equipment - (50) (1) (25)
Stock-based
compensation 31 50 64 109
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2,506 2,693 4,657 5,836
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Loss before income
taxes (711) (1,876) (2,053) (3,984)
Income tax recovery - (39) - (78)
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Net loss for the
period (711) (1,837) (2,053) (3,906)
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Net change in the
unrealized gain
(loss) on
translating
financial
statements of
self-sustaining
foreign operations 30 (7) 58 (351)
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Comprehensive loss
for the period (681) (1,844) (1,995) (4,257)
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Basic and diluted
loss per outstanding
common share (0.00) (0.01) (0.01) (0.02)
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Weighted average
number of
outstanding
common shares 220,666,756 220,666,756 220,666,756 220,666,756
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MITEC TELECOM INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of Canadian dollars, except for number of shares)
Unaudited
Equity
component
of
convertible
Common shares Warrants debentures
-------------------------------------------------------------------------
No.(000) $ No.(000) $ $
-------------------------------------------------------------------------
Balance,
April 30,
2009 220,666 132,142 37,829 1,925 14
Issued upon
conversion
of
convertible
debentures - - - - (14)
Issued
under a
convertible
debentures
financing - - - - 758
Expired
warrants - - (14,226) (774) -
Stock-based
compensation - - - - -
Other
comprehensive
loss the
period - - - - -
Net loss for
the period - - - - -
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Balance,
October 31,
2009 220,666 132,142 23,603 1,151 758
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Balance,
April 30,
2010 220,666 132,142 23,603 1,152 768
Issued
under a
convertible
debenture
financing - - - - 20
Expired
warrants - - (23,603) (1,152) -
Stock-based
compensation - - - - -
Other compre-
hensive gain
for the
period - - - - -
Net loss for
the period - - - - -
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Balance,
October 31,
2010 220,666 132,142 - - 788
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Accumulated
other
compre- Share-
Contributed hensive holders'
surplus Deficit loss equity
-------------------------------------------------------------------------
$ $ $ $
-------------------------------------------------------------------------
Balance,
April 30,
2009 9,836 (119,980) (280) 23,657
Issued upon
conversion
of
convertible
debentures 28 - - 14
Issued
under a
convertible
debentures
financing - - - 758
Expired
warrants 774 - - -
Stock-based
compensation 109 - - 109
Other
comprehensive
loss the
period - - (351) (351)
Net loss for
the period - (3,906) - (3,906)
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Balance,
October 31,
2009 10,747 (123,886) (631) 20,281
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Balance,
April 30,
2010 10,802 (131,427) (684) 12,753
Issued
under a
convertible
debenture
financing - - - 20
Expired
warrants 1,152 - - -
Stock-based
compensation 64 - - 64
Other compre-
hensive gain
for the
period - - 56 56
Net loss for
the period - (2,053) - (2,053)
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Balance,
October 31,
2010 12,018 (133,480) (628) 10,840
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MITEC TELECOM INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
Unaudited
For the three months ended For the six months ended
October 31, October 31,
2010 2009 2010 2009
-------------------------------------------------------------------------
$ $ $ $
OPERATING ACTIVITIES
Net loss for the period (711) (1,837) (2,053) (3,906)
Items not affecting cash
Amortization 338 420 616 889
Gain on disposal and
impairment of property,
plant and equipment - (50) (1) (25)
Stock-based compensation 31 50 64 109
Accretion expense 124 105 245 215
Income tax recovery - (39) - (78)
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(218) (1,351) (1,129) (2,796)
Changes in non-cash
working capital balances
related to operating
activities (1,128) (85) (549) 591
-------------------------------------------------------------------------
Cash flows used in
operating activities (1,346) (1,436) (1,678) (2,205)
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INVESTING ACTIVITIES
Additions to property,
plant and equipment (22) (73) (326) (290)
Proceeds on disposal
of property, plant
and equipment - - 37 -
Additions to intangible
assets - - (8) -
Purchases of short-term
investments (182) (181) (363) (181)
Sales of short-term
investments 181 181 362 181
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Cash flows used in
investing activities (23) (73) (298) (290)
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FINANCING ACTIVITIES
Secured debentures issued 500 - 500 -
Credit facility 1,129 - 496 -
Convertible debentures
issued - 1,702 - 1,702
Repayment of credit
facility - (1,400) - (1,400)
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Cash flows used by
financing activities 1,629 302 996 302
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Gain (loss) on foreign
cash held 7 (6) 2 (15)
-------------------------------------------------------------------------
Net increase (decrease)
in cash for the period 267 (1,067) (978) (2,208)
Cash, beginning of the
period 641 3,344 1,886 4,485
-------------------------------------------------------------------------
Cash, end of the period 908 2,277 908 2,277
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For further information: Mr. Jeffrey Mandel, Executive Chairman and Director, Investor and Corporate Relations, [email protected], Tel.: (514) 694-9000; Source: Mitec Telecom Inc.
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