DDS Wireless Delivers 19% Revenue Growth and $1.5 million in EBITDAS ($0.11 per share) in Q2 2011
(firmenpresse) - RICHMOND, BRITISH COLUMBIA -- (Marketwire) -- 08/04/11 -- DDS Wireless International Inc. (TSX: DD), a world leader in providing wireless data solutions for fleet management for more than 20 years, today reported financial results for the three and six months ended June 30, 2011. All financial information is expressed in Canadian ("CDN") dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), applicable to the preparation of interim financial statements, except as otherwise noted.
"I am pleased to report year-over-year revenue growth of 19% in the second quarter of 2011," stated Vari Ghai, CEO of DDS Wireless. "Our reported revenues of $11.1 million for the quarter represent a record level of Q2 revenues for DDS Wireless. We also delivered positive EBITDAS of $1.5 million for the quarter while making significant investments in sales and marketing to drive continued growth." Mr. Ghai added, "I am also pleased to note that Q2 2011 is our 13th consecutive quarter of year-over-year quarterly growth. This is a testament to the strong growth trend in our business.
"Our significant backlog of new enterprise solutions contracts from prior quarters was the primary driver of revenue growth and we continued our strong trend of new contract wins in the second quarter with $8 million in new awards, exceeding the $6 million announced in Q1 2011. These included a $5.3 million contract to upgrade TAXA 4x35 of Copenhagen to the Company's latest generation technologies. We are very excited about our strong backlog which was significantly bolstered by the new contracts secured in the first half of 2011. This strong contract backlog along with our recurring revenues provides a high degree of confidence that we will see continued strong growth in the second half of 2011."
Q2 2011 Operational Highlights
Non-GAAP Measures
The following and preceding discussion of financial results includes reference to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-GAAP financial measure which the Company defines as Earnings before interest, taxes, depreciation, amortization and share-based compensation expenses. The measure is provided as a proxy for the cash earnings of the business as net income for the Company includes a significant amount of non-cash amortization expense primarily related to acquisitions completed in prior years. Adjusted Gross Margin excludes amortization expense and share-based compensation expenses. The measure is provided as gross margin includes significant amortization expense related to acquired intangibles which management believes may affect the comparability of gross margin. Please refer to the Company's Management Discussion and Analysis for the three and six months ended June 30, 2011 for a reconciliation of non-GAAP measures to reported financial results.
Summary Financial Results for the Three Months Ended June 30, 2011
The financial results discussed in this press release have been prepared in accordance with IFRS standards applicable to the preparation of interim financial information as required for all publicly traded companies in Canada in 2011. Readers should note that comparative figures in this press release and the Company's financial statements and MD&A have been restated to reflect IFRS. Only in certain cases has discussion been provided in this press release about the changes resulting from changeover to IFRS. Please refer to the Company's consolidated interim financial statements for the three and six months ended June 30, 2011 for a detailed explanation of the changeover to IFRS.
Revenues for the three months ended June 30, 2011 were $11.1 million, an increase of $1.8 million or 19% over the same period in the prior year. The increase over the same period in the prior year is primarily attributed to growth in non-recurring enterprise solutions revenues and sales order revenues in the Taxi business unit.
Of the Company's $11.1 million in revenues for the period, 37% were denominated in US dollars (47% for the three months ended June 30, 2010) and 51% were denominated in Euros (36% for the three months ended June 30, 2010). The increase in the proportion of Euro denominated revenues is attributable to a significant increase in deliveries and deployments under enterprise solutions contracts in the Company's European taxi business.
Revenues from markets outside of Canada accounted for 92% of total revenues for the three months ended June 30, 2011 compared to 88% in the same period in the prior year.
On transition to IFRS, amortization relating to certain intangible assets has been reclassified to cost of sales, resulting in a material decrease in gross margins from previously reported results. Gross margin percentage for the three months ended June 30, 2011 increased to 46% compared to 44% for the three months ended June 30, 2010. The increase in gross margin percentage over the same period in the prior year is primarily attributable to increased margins earned on non-recurring enterprise solutions revenues, primarily in the Company's European taxi business. On transition to IFRS, amortization relating to certain intangible assets has been reclassified to cost of sales, resulting in a decrease in gross margins from previously reported results. Adjusted gross margin percentage (a non-GAAP measure as defined above) for the three months ended June 30, 2011 was 51%, consistent with the adjusted gross margin for the three months ended June 30, 2010.
On transition to IFRS, a portion of amortization of plant and equipment, amortization of intangibles and share-based compensation has been reclassified to operating expenses as set out in the table above. Total operating expenses for the three months ended June 30, 2011 were $4.5 million, an increase of $0.6 million over the prior year comparable period. The increase over the prior year comparable period is primarily related to the addition of sales and marketing personnel, sales and marketing program expenditures, and an increase in bad debts experienced during the period.
Profit from Operating Activities
Profit from operating activities for the three months ended June 30, 2011 was $0.7 million, compared to $0.3 million for the same period in the prior year. The increase in profit from operating activities is attributable to an increase in gross margins as a result of increased revenue and improved percentage gross margins, which exceeded an increase in operating expenditures.
Income Tax
Income tax expense for the three months ended June 30, 2011 was $0.4 million compared to tax expense of nil for the three months ended June 30, 2010. The increase in tax expense for the period in 2011 is a result of increases in deferred tax expense arising from taxable income in Canada.
EBITDAS
EBITDAS (defined as earnings before interest, tax, depreciation, amortization and stock compensation expense - a non-GAAP measure) was $1.5 million for the three months ended June 30, 2011 compared to EBITDAS of $1.6 million for the same period in the prior year. Although profit from operating activities increased in the quarter, the Company experienced a decrease in EBITDAS (compared to the second quarter of 2010) due to the impact of a $0.5 million foreign exchange gain in the result for the second quarter of 2010.
Net Income (Loss)
Net income for the three months ended June 30, 2011 was $0.4 million or $0.03 per share (basic and diluted) compared to net income of $0.8 million or $0.06 per share (basic and diluted) reported for the three months ended June 30, 2010.
Financial Position as at June 30, 2011
The Company has line of credit facilities totaling $4.2 million. At June 30, 2011, the Company had no balance drawn on its credit facilities and $3.9 million in cash. This compares to $4.2 million in cash and no balance drawn on its lines of credit at December 31, 2010, and $2.0 million in cash and no balance drawn on its lines of credit at June 30, 2010. As at the date of this release, the Company was not drawn on its line of credit.
The Company's net working capital increased to $11.5 million at June 30, 2011 from $9.7 million at December 31, 2010.
As at June 30, 2011 the Company had 13,791,621 shares outstanding compared to 13,789,746 at December 31, 2010. The increase in number of shares outstanding from December 31, 2010 is the result of exercise of stock options by employees.
Outlook
Based on our current backlog and outlook for 2011, we are maintaining our guidance for growth in revenues to greater than $45 million for the year ending December 31, 2011. Actual revenues may vary significantly from guidance given prevailing economic conditions, foreign exchange and other factors.
Conference Call
The Company will host a conference call at 12:00 PM Eastern time today to discuss the financial results. Please call 416-695-6617 / 800-396-7098 to participate in the call. A replay of this conference call will be available through August 11, 2011, by dialing 905-694-9451 / 800-408-3053 and entering access code 6014050.
About DDS Wireless International Inc.
DDS Wireless International Inc. is a global leader in providing application software for multiple vertical markets within the transportation industry. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates four businesses dedicated to transit, taxi, limousines and work truck, and wireless devices and communication infrastructure. The Company supports its customers worldwide through its offices in Canada, Finland, India, Singapore, Sweden, U.K. and U.S.A.
Forward-Looking Statements
This press release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, operations, anticipated financial performance, business prospects and strategies, statements about future market conditions, supply and demand conditions, revenues, gross margins, operating expenses, profits, and other expectations, intentions, and plans contained in this press release that are not historical facts. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, business risks, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Given these risks and uncertainties DDS Wireless cannot guarantee that any forward looking statements will be realized.
Contacts:
DDS Wireless International Inc.
Investor Relations Representative
(604) 214-7275
DDS Wireless International Inc.
Jim Zadra, CA
Chief Financial Officer
(604) 241-1441
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Datum: 04.08.2011 - 06:00 Uhr
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