DragonWave Inc.
TSX : DWI
NASDAQ : DRWI

DragonWave Inc.

January 13, 2016 17:00 ET

DragonWave Reports Third Quarter Fiscal Year 2016 Results

OTTAWA, CANADA--(Marketwired - Jan. 13, 2016) - 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 third 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 third quarter of fiscal year 2016 was $21.0 million, compared with $26.9 million in the second quarter of fiscal year 2016 and $47.3 million in the third quarter of the fiscal year 2015. Revenue from the Nokia channel represented 40% of revenue in the third quarter of this fiscal year, versus 50% in third quarter of fiscal year 2015.

Gross profit in the third quarter of fiscal year 2016 was 23.5%, compared with 14.8% in the second quarter of fiscal year 2016 and 16.3% in the third quarter of fiscal year 2015.

Operating expenses excluding restructuring charges were reduced from $10.5M in the previous quarter to $8.7M in the third quarter.

Net loss attributable to shareholders in the third quarter of fiscal year 2016 was ($6.2) million or ($0.08) per basic and diluted share, which included restructuring charges of $1.4M. This compares to a net loss attributable to shareholders of ($21.0) million or ($0.28) per basic and diluted share in the second quarter of fiscal year 2016 and ($3.8) million or ($0.05) per basic and diluted share in the third quarter of fiscal year 2015.

"We made important improvements this quarter by increasing our gross margins and reducing operating expenses. We have begun to realign the organization to address customer opportunities on a direct basis in light of the changes in our Nokia channel." said DragonWave President and CEO, Peter Allen.

Cash and cash equivalents totaled $7.8 million at the end of the third quarter of fiscal year 2016, compared to $13.1 million at the end of the second 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 January 14, 2016.

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. 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.

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 January 13, 2016 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.

CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share amounts
(Unaudited)
As at As at
November 30, February 28,
2015 2015
Assets
Current Assets
Cash and cash equivalents7,784 23,692
Trade receivables27,566 48,626
Inventory25,403 24,294
Other current assets3,611 5,834
Deferred tax asset25 61
64,389 102,507
Long Term Assets
Property and equipment4,148 4,322
Deferred tax asset- 1,485
Deferred financing cost- 18
Intangible assets704 794
Goodwill- 11,927
4,852 18,546
Total Assets69,241 121,053
Liabilities
Current Liabilities
Debt facility26,652 -
Accounts payable and accrued liabilities26,118 40,163
Deferred revenue2,024 830
Capital lease obligation211 514
Warrant liability47 -
55,052 41,507
Long Term Liabilities
Debt facility- 32,400
Other long term liabilities888 1,139
Warrant liability4 1,239
892 34,778
Shareholders' equity
Capital stock221,126 220,952
Contributed surplus9,024 8,388
Deficit(209,094)(175,921)
Accumulated other comprehensive loss(9,618)(9,618)
Total Shareholders' equity11,438 43,801
Non-controlling interests1,859 967
Total Equity13,297 44,768
Total Liabilities and Equity69,241 121,053
Shares issued & outstanding75,487,649 75,290,818
CONSOLIDATED STATEMENTS OF OPERATIONS
Expressed in US $000's except share and per share amounts
(Unaudited)
Three months ended Nine months ended
November 30, November 30, November 30, November 30,
2015 2014 2015 2014
REVENUE20,997 47,320 74,254 114,024
Cost of sales16,063 39,602 59,786 94,527
Gross profit4,934 7,718 14,468 19,497
EXPENSES
Research and development2,873 4,827 10,981 14,386
Selling and marketing2,418 3,557 8,714 10,230
General and administrative3,398 3,808 10,487 11,797
8,689 12,192 30,182 36,413
Loss before other items(3,755)(4,474)(15,714)(16,916)
Goodwill impairment- - (11,927)-
Restructuring costs(1,419)- (1,419)-
Amortization of intangible assets(149)(333)(481)(981)
Accretion expense(36)(69)(168)(109)
Interest expense(499)(301)(1,590)(1,105)
Warrant issuance expenses- - - (221)
Gain on change in estimate- 200 - 301
Gain on sale of fixed assets- 18 - 18
Fair value adjustment - warrant liability293 1,880 1,188 1,028
Foreign exchange (loss) gain270 145 (24)519
Loss before income taxes(5,295)(2,934)(30,135)(17,466)
Income tax expense459 502 2,146 1,047
Net Loss(5,754)(3,436)(32,281)(18,513)
Net Income Attributable to Non-Controlling Interest(493)(320)(892)(739)
Net Loss attributable to shareholders(6,247)(3,756)(33,173)(19,252)
Net loss per share
Basic(0.08)(0.05)(0.44)(0.29)
Diluted(0.08)(0.05)(0.44)(0.29)
Weighted Average Shares Outstanding
Basic75,450,850 75,254,452 75,341,034 65,738,695
Diluted75,450,850 75,254,452 75,341,034 65,738,695

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