DragonWave Inc.

DragonWave Inc.

October 14, 2015 17:01 ET

DragonWave Reports Second Quarter Fiscal Year 2016 Results

OTTAWA, CANADA--(Marketwired - Oct. 14, 2015) - 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 second quarter of fiscal year 2016. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

Revenue for the second quarter of fiscal year 2016 was $26.9 million, compared with $26.3 million in the first quarter of fiscal year 2016 and $37.9 million in the second quarter of the fiscal year 2015. Revenue from the Nokia channel represented 37% of revenue in the first quarter of this fiscal year, versus 52% in the first quarter of fiscal year 2016 and 60% in second quarter of fiscal year 2015.

Gross profit in the second quarter of fiscal year 2016 was 14.8%, compared with 21.1% in the first quarter of fiscal year 2015 and 15.5% in the second quarter of fiscal year 2015.

Net loss attributable to shareholders in the second quarter of fiscal year 2016 was ($21.0) million or ($0.28) per basic and diluted share. The second quarter loss included a one-time, non-cash impairment of goodwill and deferred tax assets of $13.4 million. This compares to a net loss attributable to shareholders of ($6.0) million or ($0.08) per basic and diluted share in the first quarter of fiscal year 2016 and ($8.9) million or ($0.14) per basic and diluted share in the second quarter of fiscal year 2015.

"It has been a difficult quarter, but we are pleased that we have been able to resolve the product issues on our new Harmony Enhanced product and believe this will be a world class product going forward." said DragonWave President and CEO, Peter Allen.

Cash and cash equivalents totaled $13.1 million at the end of the second quarter of fiscal year 2016, compared to $18.9 million at the end of the first quarter of fiscal year 2016.

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 15, 2015.

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®, Horizon® and Avenue® are registered trademarks of DragonWave Inc.

Forward-Looking Statements

Certain statements in this release constitute forward-looking statements or forward-looking information as defined by applicable securities laws. Forward-looking statements include statements as to DragonWave's forward opportunities and the potential benefits of, and demand for, DragonWave's products, as well as our expectations regarding Q3 and full year FY2016 revenues. 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. Our guidance on Q3 revenue is subject to assumptions, including the timing of orders from our principal channel partner.

Forward-looking statements are provided to help external stakeholders understand DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. 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, as a result of the risks identified above as well as other risks identified in our publicly filed documents. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated October 14, 2015 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. 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.

Expressed in US $000's except share amounts
As at As at
August 31, February 28,
2015 2015
Current Assets
Cash and cash equivalents13,075 23,692
Trade receivables37,290 48,626
Inventory27,202 24,294
Other current assets5,306 5,834
Deferred tax asset61 61
82,934 102,507
Long Term Assets
Property and equipment4,603 4,322
Deferred tax asset- 1,485
Deferred financing cost- 18
Intangible assets790 794
Goodwill- 11,927
5,393 18,546
Total Assets88,327 121,053
Current Liabilities
Debt facility32,802 -
Accounts payable and accrued liabilities31,193 40,163
Deferred revenue2,587 830
Capital lease obligation360 514
66,942 41,507
Long Term Liabilities
Debt facility- 32,400
Other long term liabilities2,269 1,139
Warrant liability344 1,239
2,613 34,778
Shareholders' equity
Capital stock221,118 220,952
Contributed surplus8,753 8,388
Accumulated other comprehensive loss(9,618)(9,618)
Total Shareholders' equity17,406 43,801
Non-controlling interests1,366 967
Total Equity18,772 44,768
Total Liabilities and Equity88,327 121,053
Shares issued & outstanding75,433,905 75,290,818
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,
2015 2014 2015 2014
REVENUE26,917 37,933 53,257 66,704
Cost of sales22,932 32,040 43,723 54,925
Gross profit3,985 5,893 9,534 11,779
Research and development3,875 4,859 8,108 9,559
Selling and marketing3,052 3,308 6,296 6,673
General and administrative3,603 3,998 7,089 7,989
10,530 12,165 21,493 24,221
Loss before other items(6,545)(6,272)(11,959)(12,442)
Goodwill impairment(11,927)- (11,927)-
Amortization of intangible assets(149)(339)(332)(648)
Accretion expense(61)- (132)(40)
Interest expense(560)(379)(1,091)(804)
Warrant issuance expenses- (221)- (221)
Gain on change in estimate- - - 101
Fair value adjustment - warrant liability373 (1,002)895 (852)
Foreign exchange (loss) gain(214)253 (294)374
Loss before income taxes(19,083)(7,960)(24,840)(14,532)
Income tax expense1,620 450 1,687 545
Net Loss(20,703)(8,410)(26,527)(15,077)
Net Income Attributable to Non-Controlling Interest(269)(454)(399)(419)
Net Loss attributable to shareholders(20,972)(8,864)(26,926)(15,496)
Net loss per share
Weighted Average Shares Outstanding
Basic75,372,314 63,894,060 75,335,426 61,056,200
Diluted75,372,314 63,894,060 75,335,426 61,056,200

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