DragonWave Inc.
TSX : DWI
NASDAQ : DRWI

DragonWave Inc.

May 14, 2014 17:01 ET

DragonWave Inc. Reports Fourth Quarter and Full Fiscal Year 2014 Results

OTTAWA, CANADA--(Marketwired - May 14, 2014) - 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, 2014. 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 2014 was $17.9 million, compared with $22.2 million in the third quarter of this fiscal year and $28.3 million in the fourth quarter of the prior fiscal year. Revenue from the Nokia channel (formerly called Nokia Solutions and Networks) represented 68% of revenue in the fourth quarter of this fiscal year, versus 51% in the third quarter of this fiscal year and 61% in fourth quarter of the prior fiscal year.

Gross margin for the fourth quarter of fiscal year 2014 was 14.5%, compared with 11.1% in the third quarter of this fiscal year and 5.3% in the fourth quarter of fiscal year 2013.

Net loss applicable to shareholders in the fourth quarter of fiscal year 2014 was $11.6 million or ($0.20) per basic and diluted share. This compares to a net loss applicable to shareholders of $5.5 million or ($0.12) per basic and diluted share in the third quarter of this fiscal year and a net loss applicable to shareholders of $27.2 million or ($0.71) per basic and diluted share in the fourth quarter of fiscal year 2013.

"We are deep into the first quarter of fiscal year 2015, and we see an inflection in demand which allows me to anticipate Q1 revenue growth of approximately 50% over Q4 fiscal year 2014." said DragonWave President and CEO Peter Allen. "I am pleased that there are contributions to this growth from both the Nokia channel and our direct business, and the funnel for both is improving."

Cash and cash equivalents totaled $19.0 million at the end of the fourth quarter of fiscal year 2014, compared to $23.5 million at the end of the third quarter, and $23.0 million at the end of the fourth quarter of fiscal year 2013.

Revenue for the full fiscal year 2014 was $90.0 million, compared with $123.9 million for the prior fiscal year. Net loss applicable to shareholders for the full fiscal year 2014 was $34.2 million or ($0.83) per basic and diluted share, compared with a net loss applicable to shareholders of $54.7 million or ($1.46) per basic and diluted share in the prior fiscal year.

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 15, 2014.

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 Dial-in: (877) 312-9202

International Dial-in: (408) 774-4000

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, including a range of products ideally suited to support the emergence of underlying small cell networks. 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 constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include statements as to DragonWave's growth opportunities and the potential benefits of, and demand for, DragonWave's products, as well as our expectations regarding Q1 FY2015 revenues and the funnel for both direct sales and the Nokia channel. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of DragonWave's products compared to competitive offerings in the industry, the timing of orders and deliveries, revenues and expenses, and constraints in the supply chain. Readers are cautioned not to place undue reliance on such statements. DragonWave's actual results, performance, achievements and developments 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 the public documents filed by DragonWave with U.S. and Canadian securities regulatory authorities. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

Forward-looking 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. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated May 14, 2014 and in the Company's Annual Information Form 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.

CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share amounts
As at As at
February 28, February 28,
2014 2013
Assets
Current Assets
Cash and cash equivalents18,992 22,959
Trade receivables17,408 35,452
Inventory30,416 32,722
Other current assets5,909 6,077
Contingent receivable- 13,843
Deferred tax asset69 69
72,794 111,122
Long Term Assets
Property and equipment3,168 7,444
Deferred tax asset1,536 1,581
Deferred financing cost60 149
Intangible assets1,635 2,771
Goodwill11,927 11,927
18,326 23,872
Total Assets91,120 134,994
Liabilities
Current Liabilities
Accounts payable and accrued liabilities29,964 56,962
Debt facility- 15,000
Deferred revenue984 1,163
Capital lease obligation1,795 3,251
Contingent liabilities- 255
32,743 76,631
Long Term Liabilities
Debt facility15,000 -
Capital lease obligation- 1,451
Warrant liability1,360 -
Other long term liabilities574 783
Contingent liabilities- 519
16,934 2,753
Shareholders' equity
Capital stock198,593 179,429
Contributed surplus7,118 6,047
Deficit(154,505)(120,197)
Accumulated other comprehensive loss(9,682)(9,685)
Total Shareholders' equity41,524 55,594
Non-controlling interests(81)16
Total Equity41,443 55,610
Total Liabilities and Equity91,120 134,994
Shares issued & outstanding58,008,746 38,048,297
CONSOLIDATED STATEMENTS OF OPERATIONS
Expressed in US $000's except share and per share amounts
Three months Year Ended
February 28, February 28, February 28, February 28,
2014 2013 2014 2013
REVENUE17,857 28,294 90,011 123,877
Cost of sales15,268 26,807 79,348 104,376
Gross profit2,589 1,487 10,663 19,501
EXPENSES
Research and development4,863 7,713 19,948 34,020
Selling and marketing3,165 4,138 13,201 16,088
General and administrative3,762 6,600 17,087 26,601
11,790 18,451 50,236 76,709
Loss before amortization of intangible assets and other items(9,201)(16,964)(39,573)(57,208)
Amortization of intangible assets(404)(845)(1,900)(3,748)
Accretion expense(48)(56)(222)(124)
Restructuring expense- (448)- (2,085)
Interest expense(440)(451)(1,750)(1,662)
Impairment of intangible assets- (5,388)- (13,812)
Warrant issuance expenses- - (662)-
Gain/(loss) on change in estimate(553)- 2,759 6,958
Gain on contract amendment- - 5,702 -
Gain on purchase of business- - - 19,397
Fair value adjustment - warrant liability(352)- 3,235 -
Loss on sale of assets- (2,827)- (2,827)
Foreign exchange (loss) gain(311)145 (1,530)23
Loss before income taxes(11,309)(26,834)(33,941)(55,088)
Income tax expense (recovery)128 428 398 (81)
Net Loss(11,437)(27,262)(34,339)(55,007)
Net Loss Attributable to Non-Controlling Interest(162)81 97 258
Net Loss applicable to shareholders(11,599)(27,181)(34,242)(54,749)
Net loss per share
Basic and Diluted(0.20)(0.71)(0.83)(1.46)
Weighted Average Shares Outstanding
Basic and Diluted57,062,936 38,043,594 41,438,383 37,495,818

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