Enablence Technologies Inc.

Enablence Technologies Inc.

November 09, 2010 16:45 ET

Enablence Technologies Inc. Announces Results for the Three and Five Months Ended September 30, 2010

OTTAWA, ONTARIO--(Marketwire - Nov. 9, 2010) - Enablence Technologies Inc. ("Enablence" or the "Company") (TSX VENTURE:ENA), a leading supplier of fiber-to-the-home ("FTTH") and bandwidth expansion solutions for triple-play residential and business services and optical components and subsystems for access, metro and long-haul markets, announced today financial results for the three and five months ending September 30, 2010.

The highlights during the quarter include:

  • won a US$12.4 million order in central Asia, expected to ship in the quarter ending December 31, 2010;

  • delivered initial successful results in the gross margin expansion plan, with gross margins improving to 31.7% for the quarter (up from 23.3% in the prior year period);

  • initiated plans to consolidate polymer-based production from Wilmington, Massachusetts into the Fremont, California fabrication facility;

  • appointed David Toews Chief Financial Officer; and

  • restructured existing secured notes, generating net cash of $3.2 million.

On July 25, 2010 the Company changed its year end from April 30 to June 30, 2011. The current fiscal year will cover the 14 months from May 1, 2010 to June 30, 2011. The current fiscal period covers the three and five months ended September 30, 2010, while the prior year comparison is for the three and six months ending October 31, 2009.

Revenues for the three months ending September 30, 2010 ("Current Quarter") increased 89% to $28.1 million from $14.9 million during the three months ended October 31, 2009 ("Prior Year Quarter"). The increase in revenue was driven by the acquisition of Teledata Networks Ltd. ("Teledata") on June 23, 2010 as well as a 39% increase in revenue from the Components and Optical Systems division due to increased customer demand. The net loss for the Current Quarter increased to $8.4 million compared to $6.7m in the Prior Year Quarter, due largely to the increase in amortization of the intangible assets acquired with Teledata. The Company's loss per share for the Current Quarter was $0.02, compared to $0.03 in the Prior Year Quarter.

The following chart highlights the key results:

  Cdn$000's (except per share data)
  3 months ending 5 months ending Sept 30, 2010 6 months ending Oct 31 2009
  Sept 30, 2010 Oct 31, 2009
Revenue $ 28,059   $ 14,883   $ 37,858   $ 27,469  
Operating loss * $ (9,489 ) $ (7,065 ) $ (13,775 ) $ (15,147 )
Net loss $ (8,388 ) $ (6,669 ) $ (12,696 ) $ (13,552 )
EPS – basic and diluted $ (0.02 ) $ (0.03 ) $ (0.04 ) $ (0.05 )
Adjusted EBITDA* $ (3,831 ) $ (3,810 ) $ (6,941 ) $ (9,098 )

* Operating Loss and Adjusted EBITDA are non-GAAP financial measures. Operating loss comprises Net loss excluding the following – interest income and expense, income tax recovery and expense and asset impairment charges and Adjusted EBITDA comprises: Net loss excluding the following – interest income and expense, income tax recovery and expense, depreciation and amortization, asset impairment charges, stock-based compensation expense and restructuring charges. Reconciliations of Operating Loss and Adjusted EBITDA with Net Loss are reported in the Company's MD&A, filed today on SEDAR.com.

Enablence's cash and cash equivalents were $6.1 million at September 30, 2010 as compared to $23.4 million at April 30, 2010. This net decrease of $17.3 million was the result of using $6.7 million in operations, $9.2 million of net cash used in the acquisition of Teledata Networks Ltd., $3.9 million of cash used to pay out Teledata's operating loans and $0.7 million for capital expenditures and other items. The Company generated $3.2 million through replacing an existing $1.9 million secured note, with a $5.1 million secured note.

"We are seeing positive results from our gross margin improvement initiatives, traction with our new acquisition in the systems division, and are growing nicely in our components division. Timing around some of our large projects has resulted in a shift of revenue from the quarter just ended to the next quarter, but our outlook has not changed. Our targets for the 4 quarters ending June 30, 2011 are to achieve revenue between $140-150 million, including $40-45 million in the December quarter and to be Adjusted EBITDA positive for the December quarter and the second half of the year," said Chief Executive Officer, Tim Thorsteinson. 

Targets for revenues and Adjusted EBITDA for the December 2010 quarter and six and twelve months ending June 30, 2011 reflect continuing increases in volumes shipped to customers, higher margins resulting from the Company's gross margin expansion plan and continued contributions from the Teledata business acquired in June 2010, although there can be no assurance these targets will be achieved. In September 2010, the Company received a US$12.4 million order from a major customer. This order is expected to ship in the quarter ending December 2010, and the customer paid a significant deposit on the order in October 2010.

About Enablence Technologies Inc.

Enablence Technologies Inc., (TSX VENTURE:ENA) a publicly traded company headquartered in Ottawa, Canada, designs, manufactures and sells optical components, subsystems and systems to a global customer base.

Enablence's Systems Division has an expanding fiber-to-the-premise (FTTP) product portfolio featuring a variety of architectural options. It enables service providers to evolve their access networks from traditional copper-based networks to advanced optical communications access networks that are based on state-of-the-art IP and Ethernet standards, for triple-play voice, video and data services including HDTV, IP Telephony and ultrafast internet access.

Enablence's Optical Components and Subsystems Division is a global leader in applying Planar Lightwave Circuit ("PLC") technology to integrate multiple components into a single optical chip to reduce footprint and costs. Network and equipment designers around the world turn to Enablence for a variety of components and subsystems for access, metro and long-haul including transceivers, splitters, waveguides, optical channel monitors, multiplexers, ROADMs, switches, tunable dispersion compensators, and photodiodes.

Forward-looking Statements

This press release may contain forward looking statements that are made as of the date hereof and are based on current expectations, forecasts and assumptions which involve risks and uncertainties associated with our business and the economic environment in which the business operates. All such statements are made pursuant to the 'safe harbour' provisions of, and are intended to be forward-looking statements under, applicable Canadian securities legislation. Any statements contained herein that are statements of historical facts may be deemed to be forward-looking statements. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution our readers of this press release not to place undue reliance on our forward looking statements as a number of factors could cause actual results or conditions to differ materially from current expectations. Please refer to the risks set forth in the Company's continuous disclosure documents that can be found on SEDAR www.sedar.com. Enablence does not intend, and disclaims any obligation, except as required by law, to update or revise any forward looking statements whether as a result of new information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Enablence Technologies Inc.
    Tim Thorsteinson
    Chief Executive Officer