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Press release from Marketwire

DragonWave Inc. Announces First Quarter Fiscal Year 2012 Results

Wednesday, July 06, 2011

DragonWave Inc. Announces First Quarter Fiscal Year 2012 Results16:12 EDT Wednesday, July 06, 2011OTTAWA, CANADA--(Marketwire - July 6, 2011) - 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 its first quarter of fiscal year 2012, ended May 31, 2011. All figures are reported in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.Revenue for the first quarter of fiscal year 2012 was $11.0 million, compared with $48.7 million in the first quarter of fiscal year 2011 and $15.1 million in the fourth quarter of fiscal year 2011. Revenue from customers within North America was $8.2 million, compared with $42.9 million in the first quarter of the prior fiscal year. DragonWave had two customers who generated more than 10% of revenue in the first quarter of fiscal year 2012.Net loss in the first quarter of fiscal year 2012 was $9.9 million or ($0.28) per diluted share, compared with net income of $9.7 million or $0.26 per diluted share in the first quarter of fiscal year 2011. Gross margin for the first quarter was 42.0%, compared with 43.6% in the first quarter of the prior fiscal year."We are engaged in numerous promising opportunities in markets throughout the world, including North America, Latin America, Europe and Asia and we remain positive about our prospects. While we cannot be certain about the exact timing for each opportunity, we maintain our view that a number of them have the potential to be landed during the second-half of this fiscal year," said DragonWave President and CEO Peter Allen. Cash, cash equivalents, restricted cash, and short-term investments totaled $79.9 million at the end of the first quarter of fiscal year 2012, compared to $89.7 million at the end of the fourth quarter of fiscal year 2011, and $115.8 million at the end of the first quarter of fiscal year 2011.Revenue Outlook for Q2 FY2012DragonWave expects revenue for the second quarter of fiscal year 2012 to be in the range of $12 million to $15 million.Webcast and Conference Call Details The DragonWave management team will discuss the results on a conference call and webcast beginning at 8:30 a.m. Eastern Time, tomorrow, July 7, 2011.Toll-free North America Dial-in: 877-312-9202International Dial-in: 408-774-4000The live webcast and presentation slides will be available at: http://investor.dragonwaveinc.com/events.cfm. An archive of the webcast will be available at the same link. About DragonWaveDragonWave® 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® is a registered trademark of DragonWave Inc.Forward-Looking StatementsCertain statements in this release, including the estimate of the revenue range for the second quarter of fiscal year 2012 provided above, 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 such estimates include DragonWave's expectations regarding: the network deployment plans of its existing and new customers, and the volume and timing of orders, shipments and revenue recognition. Readers are cautioned not to place undue reliance on such 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 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 4, 2011 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, and include the following: DragonWave relies on a small number of customers for a large percentage of its revenue and DragonWave's future growth depends on the success of its customer diversification efforts. DragonWave's growth is dependent on the development and growth of the market for high-capacity wireless communications services. Network deployment plans by DragonWave's existing and potential customers are capital intensive and the timing of such deployments is affected by such customers' access to capital. DragonWave faces intense competition from several competitors and if it does not compete effectively with these competitors, its revenues may not grow and could decline. DragonWave also faces competition from indirect competitors. DragonWave relies on its suppliers to supply components for its products and the Company is exposed to the risk that these suppliers will not be able to supply components on a timely basis, or at all. DragonWave may conduct acquisitions of products and businesses. There are risks associated with such acquisitions. DragonWave's success depends on its ability to develop new products and enhance existing products. If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected. DragonWave's quarterly revenue and operating results can be difficult to predict and can fluctuate substantially. DragonWave has a lengthy and variable sales cycle. 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. 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 SHEETSExpressed in US $000's except share and per share amounts(unaudited)As atAs atMay 31,February 28,20112011AssetsCurrent AssetsCash and cash equivalents63,64177,819Restricted cash146714Short term investments16,14511,181Trade receivables9,59811,579Inventory32,01428,204Other current assets5,7685,306Future income tax asset538553127,850135,356Long Term AssetsProperty and equipment7,1807,560Future income tax asset813808Intangible assets14,65614,929Goodwill11,92711,92734,57635,224Total Assets162,426170,580LiabilitiesCurrent LiabilitiesAccounts payable and accrued liabilities16,52515,967Deferred revenue1,9101,453Contingent royalty644622Contingent consideration14,85314,62233,93232,664Long Term LiabilitiesContingent royalty3,1123,290Other long term liabilities1,4791,9994,5915,289CommitmentsShareholders' equityCapital stock171,832171,570Contributed surplus3,0502,642Deficit(41,857)(31,967)Accumulated other comprehensive loss(9,623)(9,618)Total shareholder's equity123,402132,627Non-controlling interests501-Total Equity123,903132,627Total Liabilities and Equity162,426170,580Shares issued & outstanding35,471,67735,421,893CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)Expressed in US $000's except share and per share amounts(unaudited)Three months endedMay 3120112010REVENUE11,04948,726Cost of sales6,40527,495Gross profit4,64421,231EXPENSESResearch and development6,5974,631Selling and marketing4,0804,128General and administrative3,6322,561Government assistance(350)-13,95911,320Income (loss) before amortization of intangible assets and other items(9,315)9,911Amortization of intangible assets(587)(82)Accretion expense(276)-Interest income8432Investment gain (loss)39(49)Foreign exchange gain120117Income (loss) before income taxes(9,935)9,929Income tax expense9231Net Income (loss)(9,944)9,698Net Loss Attributable to Non-Controlling Interest54—Net Income (Loss) applicable to shareholders(9,890)9,698Foreign currency translation differences for foreign operations5—Net and Comprehensive Income (Loss) applicable to shareholders(9,895)9,698Income (loss) per shareBasic(0.28)0.26Diluted(0.28)0.26Weighted Average Shares OutstandingBasic35,429,04936,916,893Diluted35,429,04937,930,704CONSOLIDATED STATEMENTS OF CASH FLOWSExpressed in US $000's(unaudited)Three months endedMay 3120112010Operating ActivitiesNet Income (Loss)(9,944)9,698Items not affecting cashAmortization of property and equipment829631Amortization of intangible assets58782Accretion expense276—Non cash royalty amortization(201)—Stock-based compensation492287Unrealized foreign exchange loss116Non cash future income tax expense9231Inventory impairment (recovery)57(57)Unrealized loss (gain) on short term investments(39)49Accrued interest on short term investments(1)(7)(7,934)10,930Changes in non-cash working capital items(1,284)(5,265)(9,218)5,665Investing ActivitiesAcquisition of property and equipment(449)(2,150)Acquisition of intangible assets(314)(75)Purchase of short term investments(22,432)(45,308)Maturity of short term investments17,5088,074(5,687)(39,459)Financing ActivitiesShare repurchase—(1,054)Equity contribution by non-controlling interest in DW-HFCL555—Issuance of common shares net of issuance costs178147733(907)Effect of foreign exchange on cash and cash equivalents(6)(16)Net decrease in cash and cash equivalents(14,178)(34,717)Cash and cash equivalents at beginning of period77,819105,276Cash and cash equivalents at end of period63,64170,559Cash paid during the period for interest——FOR FURTHER INFORMATION PLEASE CONTACT: John LawlorInvestor Contact:VP, Investor RelationsDragonWave Inc.jlawlor@dragonwaveinc.com613-599-9991 ext 2252ORNadine KittleMedia Contact:Marketing CommunicationsDragonWave Inc.nkittle@dragonwaveinc.com613-599-9991 ext 2262