OTTAWA, CANADA -- (Marketwired) -- 05/08/13 -- 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 the fourth quarter and full fiscal year ended February 28, 2013. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.
Revenue for the fourth quarter of fiscal year 2013 was $28.3 million, compared with $38.5 million in the third quarter of fiscal year 2013 and $9.2 million in the fourth quarter of fiscal year 2012. Revenue from the Nokia Siemens Networks channel represented 61% of revenue in the fiscal quarter.
Gross margin for the fourth quarter of fiscal year 2013 was 5.3%, compared with 18.6% in the third quarter of fiscal year 2013 and 13% in the fourth quarter of fiscal year 2012. The gross margins in the fourth quarters of fiscal years 2013 and 2012 reflect the inclusion of inventory impairment provisions of $0.8 million and $1.7 million respectively.
"During the fourth quarter, several factors contributed to the low gross margin including the inventory provision, a larger mix of account incentives, and higher than expected manufacturing and logistics costs. While some of these pressures will continue in the short term we expect to return to Q3 FY13 gross margin levels over the next two quarters" said DragonWave CFO Russell Frederick. "Another important step in our integration and cost reduction activities has taken place with the renewed framework with Nokia Siemens Networks that we announced on April 10, 2013. As a result of this announcement and our other actions, our expense base has now been reduced by about 40% since the middle of last year and we expect to see some further reductions over the next couple of quarters", he added.
Net loss applicable to shareholders in the fourth quarter of fiscal year 2013 was $27.3 million or ($0.71) per basic and diluted share. This compares to a net loss applicable to shareholders of $13.9 million or ($0.36) per basic diluted share in the third quarter of fiscal year 2013 and net loss of $13.4 million or ($0.38) per basic and diluted share in the fourth quarter of fiscal year 2012.
"Based on the renewed framework with Nokia Siemens Networks that we announced on April 10, 2013, it is clear that Nokia Siemens Networks is committed to offering customers the best mobile broadband solution possible including the microwave that DragonWave brings to the table. We have strong alignment with Nokia Siemens Networks on the approach to sales push, business model, and incentives for the microwave business as a part of mobile broadband offering. I am convinced that the positive actions taken to reset our operating framework are the right steps to maximize the value of the relationship. We are currently seeing a stronger sales funnel, and increased trial activity over the coming months," said DragonWave President and CEO Peter Allen.
Cash, cash equivalents, restricted cash, and short-term investments totaled $23.0 million at the end of the fourth quarter of fiscal year 2013, compared to $36.8 million at the end of the third quarter of fiscal year 2013, and $53.0 million at the end of the fourth quarter of fiscal year 2012.
Revenue for the full fiscal year 2013 was $123.9 million, compared with $45.7 million for the prior fiscal year. Net loss applicable to shareholders for the full fiscal year 2013 was $54.7 million or ($1.46) per basic and diluted share.
Webcast and Conference Call Details:
The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on May 9, 2013.
The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm. An archive of the webcast will be available at the same link.
Conference call dial-in numbers:
-- Toll-free North America: (866) 393-0571 -- International: (760) 536-8545
U.S. Filings
DragonWave has filed its Form 40-F with the U.S. Securities and Exchange Commission (SEC). A copy of the Form 40-F is available on the DragonWave investor website at http://investor.dragonwaveinc.com/.
DragonWave shareholders may request a printed copy of the complete audited financial statements, free of charge, at http://investor.dragonwaveinc.com/contactus.cfm, or by regular mail at Shareholder Services, DragonWave Inc., 411 Legget Drive, Suite 600, Ottawa, Ontario, K2K 3C9.
About DragonWave
DragonWave® 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® and Horizon® are registered trademarks of DragonWave Inc.
Forward-Looking Statements
Certain statements in this release, including our statements regarding gross margins, targeted expense reductions, and our relationship with and the transactions involving Nokia Siemens Networks 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 forward-looking statements include DragonWave's expectations and plans regarding:
-- The successful implementation of the renewed framework with Nokia
Siemens Networks that was announced on April 10, 2013.
-- Our ability to obtain operating expense reductions through measures
including consolidation and rationalization of the business acquired
from Nokia Siemens Networks, migration to new contract manufacturers,
and optimization of our logistical framework to reduce overhead costs
related to hardware sales.
There are risks associated with these assumptions, including that expected synergies will not materialize; that unexpected costs will be incurred; or that end-customer demand will not meet expectations.
Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated May 8, 2013 and on pages 19-22 of the Company's Annual Information Form, dated May 11, 2012.
Readers are cautioned not to place undue reliance on forward-looking 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, in addition to those detailed above, 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 11, 2012 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.
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 except share amounts
As at As at
February 28, February 29,
2013 2012
--------------------------------
Assets
Current Assets
Cash and cash equivalents 22,959 52,798
Restricted cash - 177
Trade receivables 35,452 9,850
Inventory 32,722 27,043
Other current assets 6,077 5,501
Contingent receivable 13,843 -
Deferred tax asset 69 69
--------------------------------
111,122 95,438
Long Term Assets
Property and equipment 7,444 5,184
Deferred tax asset 1,581 1,308
Deferred financing cost 149 -
Intangible assets 2,771 6,264
Goodwill 11,927 11,927
--------------------------------
23,872 24,683
Total Assets 134,994 120,121
--------------------------------
--------------------------------
Liabilities
Current Liabilities
Accounts payable and accrued liabilities 56,962 12,720
Debt facility 15,000 -
Deferred revenue 1,163 725
Capital lease obligation 3,251 -
Contingent liabilities 255 372
Contingent consideration - 1,884
--------------------------------
76,631 15,701
Long Term Liabilities
Capital lease obligation 1,451 -
Other long term liabilities 783 1,063
Contingent liabilities 519 1,292
--------------------------------
2,753 2,355
Commitments
Shareholders' equity
Capital stock 179,429 172,264
Contributed surplus 6,047 4,606
Deficit (120,197) (65,448)
Accumulated other comprehensive loss (9,685) (9,658)
--------------------------------
Total Shareholders' equity 55,594 101,764
Non-controlling interests 16 301
--------------------------------
Total Equity 55,610 102,065
Total Liabilities and Shareholders' equity 134,994 120,121
--------------------------------
--------------------------------
Shares issued & outstanding 38,048,297 35,586,206
CONSOLIDATED STATEMENTS OF OPERATIONS
Expressed in US $000's and per share amounts
Three months ended Year ended
------------------------------------------------
February February February February
28, 29, 28, 29,
2013 2012 2013 2012
------------------------------------------------
REVENUE 28,294 9,150 123,877 45,656
Cost of sales 26,807 8,006 104,376 29,255
------------------------------------------------
Gross profit 1,487 1,144 19,501 16,401
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EXPENSES
Research and development 7,713 5,400 34,020 22,898
Selling and marketing 4,138 3,585 16,088 15,307
General and administrative 6,600 4,735 26,601 17,653
Government assistance - - - (902)
------------------------------------------------
18,451 13,720 76,709 54,956
------------------------------------------------
Income (loss) before
amortization of intangible
assets and other items (16,964) (12,576) (57,208) (38,555)
Amortization of intangible
assets (845) (373) (3,748) (1,986)
Accretion expense (56) (38) (124) (650)
Restructuring expense (448) - (2,085) -
Interest income (expense)
(net) (451) 39 (1,662) 393
Investment gain (loss) - 46 - 67
Impairment of intangible
assets (5,388) - (13,812) (8,315)
Gain on change in estimate - 623 6,958 15,146
Gain on purchase of
business - - 19,397 -
Loss on sale of assets (2,827) - (2,827) -
Foreign exchange gain
(loss) 145 218 23 100
------------------------------------------------
Income (loss) before income
taxes (26,834) (12,061) (55,088) (33,800)
Income tax expense
(recovery) 428 1,354 (81) (104)
------------------------------------------------
Net Income (loss) (27,262) (13,415) (55,007) (33,696)
Net Loss Attributable to
Non-Controlling Interest 81 47 258 215
------------------------------------------------
Net Income (loss) applicable
to shareholders (27,181) (13,368) (54,749) (33,481)
Income (loss) per share
Basic (0.71) (0.38) (1.46) (0.94)
Diluted (0.71) (0.38) (1.46) (0.94)
Weighted Average Shares
Outstanding
Basic 38,043,594 35,573,810 37,495,818 35,506,689
Diluted 38,043,594 35,573,810 37,495,818 35,506,689
Contacts:
Media Contacts
Nadine Kittle
Marketing Communications
DragonWave Inc.
nkittle@dragonwaveinc.com
613-599-9991 ext. 2262
Russell Frederick
CFO
DragonWave Inc.
rfrederick@dragonwaveinc.com
613-599-9991 ext. 2253
Becky Obbema
Interprose Public Relations
(for DragonWave)
Becky.Obbema@interprosepr.com
(408) 778-2024
