DragonWave Inc.

DragonWave Inc.

October 09, 2013 17:01 ET

DragonWave Inc. Reports Second Quarter Fiscal Year 2014 Results

OTTAWA, CANADA--(Marketwired - Oct. 9, 2013) - 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 second quarter ended August 31, 2013. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.

Revenue for the second quarter of fiscal year 2014 was $25.5 million, compared with $24.5 million in the first quarter of fiscal year 2014 and $44.2 million in the second quarter of fiscal year 2013. Revenue from the Nokia Solutions and Networks ("NSN") channel represented 61% of revenue in the fiscal quarter.

Gross margin for the second quarter of fiscal year 2014 was 11.0%, compared with 11.5% in the first quarter of fiscal year 2014 and 15% in the second quarter of fiscal year 2013.

Highlights to date include:

  • Our balance sheet was strengthened by adding approximately $23.5 million of cash through an equity offering that closed on September 23, 2013.
  • In India we are experiencing strong activity. This includes new orders, an increased pipeline, and we are particularly pleased to be short-listed as a supplier in a large greenfield build.
  • In North America we have received an initial order associated with a new project with a major carrier.
  • We have reduced our operating expenses again in our second quarter. We continue to look for savings in logistics and other areas.

"I am pleased that we are making progress on multiple fronts" said DragonWave President and CEO, Peter Allen.

Net loss applicable to shareholders in the second quarter of fiscal year 2014 was $10.5 million or ($0.28) per basic and diluted share. This compares to a net loss applicable to shareholders of $6.6 million or ($0.17) per basic and diluted share in the first quarter of fiscal year 2014 and net loss of $1.1 million or ($0.03) per basic and diluted share in the second quarter of fiscal year 2013.

Cash, cash equivalents, and restricted cash totaled $9.8 million at the end of the second quarter of fiscal year 2014, compared to $23.4 million at the end of the first quarter of fiscal year 2014. Cash, cash equivalents and restricted cash reported at August 31, 2013 do not include the proceeds of the Company's public offering of units which closed on September 23, 2013.

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 October 10, 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: (877) 312-9202
  • International: (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. 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. 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. 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 October 9, 2013 and in the Company's Annual Information Form dated May 17, 2013 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.

Expressed in US $000's except share and per share amounts
Three months ended Six months ended
August 31, August 31, August 31, August 31,
2013 2012 2013 2012
REVENUE25,453 44,157 49,985 57,131
Cost of sales22,659 37,414 44,371 46,255
Gross profit2,794 6,743 5,614 10,876
Research and development4,783 12,139 10,085 16,538
Selling and marketing3,175 4,357 6,557 8,015
General and administrative4,433 8,513 9,181 13,783
12,391 25,009 25,823 38,336
Income (loss) before amortization of intangible assets and other items(9,597)(18,266)(20,209)(27,460)
Amortization of intangible assets(437)(1,199)(996)(1,741)
Accretion expense(56)(30)(121)(52)
Restructuring expense- - - (798)
Interest income (expense)(380)(740)(918)(711)
Impairment of intangible assets- (1,148)- (4,017)
Gain on change in estimate342 352 342 1,542
Gain on contract amendment- - 5,285 -
Gain on purchase of business- 19,397 - 19,397
Foreign exchange gain (loss)(397)462 (495)(541)
Income (loss) before income taxes(10,525)(1,172)(17,112)(14,381)
Income tax expense (recovery)76 - 168 (572)
Net Income (loss)(10,601)(1,172)(17,280)(13,809)
Net Loss Attributable to Non-Controlling Interest92 50 146 108
Net Income (loss) applicable to shareholders(10,509)(1,122)(17,134)(13,701)
Income (loss) per share
Weighted Average Shares Outstanding
Basic38,112,887 37,992,859 38,086,403 36,962,103
Diluted38,112,887 37,992,859 38,086,403 36,962,103
Expressed in US $000's except share amounts
As at As at
August 31, February 28,
2013 2013
Current Assets
Cash and cash equivalents 8,858 22,959
Restricted cash 968 -
Trade receivables 20,832 35,452
Inventory 32,917 32,722
Other current assets 5,618 6,077
Contingent receivable - 13,843
Deferred tax asset 54 69
69,247 111,122
Long Term Assets
Property and equipment 4,504 7,444
Deferred tax asset 1,568 1,581
Deferred financing cost - 149
Intangible assets 1,975 2,771
Goodwill 11,927 11,927
19,974 23,872
Total Assets 89,221 134,994
Current Liabilities
Accounts payable and accrued liabilities 30,964 56,962
Debt facility 15,000 15,000
Deferred revenue 848 1,163
Capital lease obligation 2,551 3,251
Contingent liabilities 200 255
49,563 76,631
Long Term Liabilities
Capital lease obligation - 1,451
Other long term liabilities 693 783
Contingent liabilities - 519
693 2,753
Shareholders' equity
Capital stock 179,589 179,429
Contributed surplus 6,638 6,047
Deficit (137,331 ) (120,197 )
Accumulated other comprehensive loss (9,743 ) (9,685 )
Total Shareholder's equity 39,153 55,594
Non-controlling interests (188 ) 16
Total Equity 38,965 55,610
Total Liabilities and Equity 89,221 134,994
Shares issued & outstanding 38,123,880 38,048,297

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