DDS Wireless Reports 3rd Qtr. Revenues of $9.5 million, EBITDAS(1) of $0.2 million & Declares Cash Dividend of $0.02 per Share
(firmenpresse) - RICHMOND, BRITISH COLUMBIA -- (Marketwire) -- 11/07/12 --
DDS Wireless International Inc. (TSX: DD), a world leader in providing wireless data solutions for fleet management for more than 25 years, today reported financial results for the three and nine months ended September 30, 2012 and announced that the Company's Board of Directors has approved a cash dividend on the Company's common shares ("Shares"). All financial information is expressed in Canadian ("CDN") dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as otherwise noted.
"I am disappointed that our revenue in the third quarter was lower than that of the second quarter," stated Vari Ghai, CEO of DDS Wireless. "Slower demand in Europe, primarily due to the conclusion of the upgrade cycle, continues to characterize sales in our Taxi business unit in the third quarter of 2012, with enterprise solutions revenues lower than that of the record third quarter of 2011. We have introduced an extensive product suite this year; enhancements to the V800™, the V5000™, our white label mobile booking applications, and the Connectivity Box with our tablet enabled enterprise solution. It will take some time for the North American market to absorb these offerings and continue their upgrade cycle. This, together with the continued strength of the Canadian dollar in relation to both the US dollar and the Euro in the third quarter, and deal flow timing, all contributed to more modest revenues of $9.5 million and a loss of $0.4 million for the quarter."
Mr. Ghai continued, "I am pleased with the continued growth from our Transit unit which arose not only from the significant contracts signed with MTA New York City Transit ('NYC Transit') late last year, but also from new contracts with large para-transit operators in the US and increasing sales of MDTs through our partners from a rising adoption of our hardware in the transit market."
Third Quarter 2012 Financial Results
Revenue declined 24% or $3.0 million compared to the three months ended September 30, 2011 and decreased by 10% compared to the immediately preceding quarter.
The largest driver of the reduction in revenue was in the Taxi unit with lower revenue of $4.4 million compared to the three months ended September 30, 2011, resulting from lower enterprise solutions deliveries in Europe, enhanced volume rebates for a large customer, and lower small hardware orders. Increases in revenue from both the Transit and New Markets units from enterprise solutions and MDT sales served to offset decreases seen, in part, in the Taxi unit.
The decrease in total revenue from the immediately preceding quarter arose from lower revenue in both the Taxi and the Transit units, offset by an increase in New Markets revenues of $0.1 million from higher adoption of the new financed MDT purchase offering.
Gross margin decreased by $2.1 million or 34% to $4.1 million from the same quarter last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in the Taxi unit and lower margins earned on transaction based revenues in the Taxi unit. The gross margin yield in the quarter was 43% compared to 49% in the same quarter last year and 39% in the immediately preceding quarter.
The decrease in the gross margin of $2.1 million, offset by favourable combined variances of $0.2 million in operating expenses, finance expense (including the effects of foreign exchange) and tax expense in the period, led to a decrease in earnings of $1.9 million compared to the same period in the prior year.
The strength of the Canadian dollar has an impact on both our revenue and gross margin, but also generated a significant foreign exchange loss on translation for the quarter of $0.5 million and contributed to the net loss experienced in the quarter. EBITDAS(1) was $0.2 million or 2% of revenue and net loss for the quarter was $0.4 million or $0.03 per share.
Year-to-Date 2012 Financial Results
Revenue declined 14% or $4.5 million compared to the nine months ended September 30, 2011. Revenue in the Taxi unit decreased by $6.9 million compared to the nine months ended September 30, 2011 due to lower enterprise solutions deliveries and lower small hardware orders, offset in part by higher SaaS orders associated with TaxiBook™ sales in North America and higher transaction based revenues in Finland. The decline in Taxi unit revenue was offset by increases seen in the Transit unit, largely a result of its NYC Transit projects and other large para-transit projects generated in the second and third quarters of the year, and increases in the New Markets unit as a result of additional deliveries of its eFleet SaaS solution.
Gross margin decreased by $4.1 million or 26% to $11.5 million from the same period last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in the Taxi business unit. Margin from enterprise solutions is sensitive to lower revenues, hence the decrease in lower revenues in the year to date is a significant driver on the lower margin earned. This has translated to a lower yield at 40% compared to 47% in the prior year.
The decrease in the gross margin of $4.1 million, offset by combined favourable variances in operating expenses, foreign exchange and taxes in the period, led to a decrease in earnings of $2.5 million compared to the same period in the prior year. EBITDAS(1) was $0.5 million or 2% of revenue and net loss was $0.7 million or $0.05 per share.
Outlook
Revenues for the fiscal year will be significantly below that of last year despite our typical seasonal strength in the fourth quarter and continued demand for our product offerings. This arose from a number of factors. The European upgrade cycle of the past two years has drawn to a close with most of our marquee client base on the V9000™. The continued strength of the Canadian dollar in relation to both the US dollar and the Euro for the year to date has had a further dampening effect on worldwide revenue. We have also experienced, particularly in the third quarter, some impact from the slowing of deal flow and the postponement of project delivery and therefore revenue into 2013.
Dividend
The cash dividend, in the amount of $0.02 per Share, will be paid on or about January 15, 2013 to holders of record of the Company's Common Shares as of the close of business on December 28, 2012. The Company expects to declare dividends on its Shares quarterly; however, the declaration of any future dividends, as well as the distribution date and amount of any future dividends, will be determined by the Board of Directors of the Company immediately prior to each such declaration. Unless the Company indicates otherwise, the Company's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).
Conference Call
The Company will host a conference call at 12:00 pm Eastern Time today to discuss the financial results. Please call 416-340-2218 / 866-226-1793 to participate in the call. A replay of this conference call will be available through November 15, 2012 by dialing 905-694-9451 / 800-408-3053 and entering access code 5737272.
Non-IFRS Measures
The following and preceding discussion of financial results includes reference to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-IFRS financial measure which the Company defines as Earnings before interest, taxes, amortization, and share-based compensation. 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 table attached to this press release for a reconciliation of non-IFRS measures to reported financial results.
Cautionary Note Regarding 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.
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 three businesses dedicated for Taxi, Transit and New Markets such as Limousines, Airport Shuttles and Work Fleets. The Company supports its customers worldwide through its offices in Canada, Finland, Singapore, Sweden, U.K. and U.S.A.
SEE ATTACHED SUMMARY FINANCIAL STATEMENTS AND THE RECONCILIATION OF NON-GAAP MEASURES
Contacts:
DDS Wireless International Inc.
Investor Relations
(604) 241-1441
DDS Wireless International Inc.
Caroline J. Dunn
Chief Financial Officer
(604) 214-7206
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Datum: 07.11.2012 - 07:00 Uhr
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