Nuvo Network Management Inc.
TSX VENTURE : NVO

Nuvo Network Management Inc.

November 30, 2006 16:19 ET

NUVO Reports Profitable Results for Fiscal 2006

Record $1.8 million EBITDA for the year

OTTAWA, ONTARIO--(CCNMatthews - Nov. 30, 2006) - NUVO Network Management Inc., (TSX VENTURE:NVO), a leading managed services provider of solutions that MAXimize IT® availability and performance, today announced results from operations for its fiscal year and fourth quarter ended September 30, 2006.



Highlights -- Q4

- Revenue was $4.2 million, up from $4.0 million last year.

- Earnings before interest, taxes, depreciation and amortization
(EBITDA) was a record $546,181 compared to a loss of $1,269,203 last
year

- Net income was $161,502 compared to a loss of $1,844,422 last year

- Gross margin was 43%, up from 29% last year

- Signed $6.3 million of new contracts and renewals

Highlights -- Fiscal year 2006

- Revenue was $16.5 million for both fiscal 2006 and 2005

- EBITDA was a record $1.8 million compared to a loss of $1.3 million
last year

- Net income was $71,709 compared to a loss of $3.2 million last year

- Gross margin was 39%, up from 36% last year

- Signed $22 million of new contracts and renewals

- Awarded a contract by a leading North American media company to
manage over 2,000 servers

- Awarded a 5 year contract with a major Canadian hospital

- Won a contract to manage 8,000 IP phones for a major financial
institution


"We are pleased with our fiscal 2006 performance. We returned to profitability and generated record earnings before interest, taxes, depreciation and amortization ("EBITDA"). Our new contract bookings were strong. Cash increased to $1.8 million from $1.4 million last year and our debt decreased to $1.3 million from $2.6 million last year" said Phil Weaver, NUVO's President and CEO. "We begin our fiscal year 2007 on solid financial footing."

"It was also a positive year for us from a technology perspective as we completed our first release of MAXadvantage. MAXadvantage is a cutting-edge web-based systems management application that integrates monitoring, performance reports, ticketing, contact and change management with intelligent business dashboards to make IT infrastructure highly visible to the customer from a business and technical point of view. As well, we completed major upgrades to our Nebula software that improves our capabilities in the areas of performance management, scalability, and systems monitoring. We completed ISO 9001:2000 certification of our software development and product development processes which reflects very positively on our commitment to quality and the maturity of our approach to the software business."

"Partners continue to be a strength and focus of ours. During the year we further strengthened our relationship with IBM and completed a strategic alliance that will increase our exposure to the Canadian mid-market."

Q4 Financial Results

Fourth quarter revenues were $4,225,042 compared with revenues of $4,039,952 in the same period a year ago. Fourth quarter IT infrastructure management revenues were $3,663,940 compared to IT infrastructure management revenues of $3,319,056 in the fourth quarter of fiscal 2005. Maintenance, software, support and equipment revenues for the fourth quarter were $561,102 compared to $720,896 last year.

Gross margins for the fourth quarter of fiscal 2006 were 43% compared with 29% in the fourth quarter of fiscal 2005.

Operating expenses in the fourth quarter of fiscal 2006 were $1,631,250, compared to $2,874,720, in the fourth quarter of fiscal 2005.

EBITDA (earnings before interest, taxes, depreciation, and amortization) for the fourth quarter of fiscal 2006 was $546,181 compared to a loss of $1,269,203 in fiscal 2005.

Net income in the fourth quarter was $161,502 compared to a net loss of $1,844,422 last year.

Fiscal 2006 Financial Results

Total revenues for the fiscal year ended September 30, 2006, were $16,456,885, compared to revenues of $16,482,355 in fiscal 2005. IT infrastructure management revenues in fiscal 2006 were $13,984,542, compared to IT infrastructure management revenues of $13,556,978 in fiscal 2005. Maintenance, software, support and equipment revenues in fiscal 2006 were $2,472,343, compared maintenance, software, support and equipment revenues of $2,925,377 in fiscal 2005.

Gross margin in fiscal year 2006 was 39% compared to 36% in fiscal 2005.

Operating expenses in fiscal 2006 were $6,247,307, compared to operating expenses of $8,922,029 in fiscal 2005.

EBITDA for fiscal 2006 was $1,787,900 compared to a loss of $1,224,005 in fiscal 2005.

Net income for the twelve months ended September 30, 2006 was $71,709, compared to a net loss of $3,206,080 in the same period a year ago.

About NUVO

NUVO provides remote management and protection of IT infrastructures for businesses worldwide to maximize the availability of their computing infrastructure. NUVO enables our customers to excel by delivering fully integrated, proactive management services and business data. This provides the critical information needed for effective analysis and decision-making to maximize performance and control costs. NUVO achieves this through certified experts, best-of-class technology, deep integration, highly automated processes, and best practices in a 24x7, resilient infrastructure.

Forward Looking Statements

Certain statements included in this press release are forward-looking and are subject to certain risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that may cause results or events to differ from current expectations include, but are not limited to, those set out on NUVO's website at http://www.nuvo.com/news/fls.html.



Consolidated Statements of Operations
Periods Ended September 30, 2006 and 2005
(in Canadian Dollars)

Three Months Ended Years Ended
------------------------------------------------------------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2006 2005 2006 2005
(unaudited) (unaudited) (unaudited) (audited)
------------------------------------------------------------------------
------------------------------------------------------------------------

Revenues
IT Infrastructure
Management $3,663,940 $3,319,056 $13,984,542 $13,556,978
Maintenance,
Software, Support
& Equipment 561,102 720,896 2,472,343 2,925,377
------------------------------------------------------------------------
4,225,042 4,039,952 16,456,885 16,482,355
------------------------------------------------------------------------
Costs of revenues
IT Infrastructure
Management 2,095,060 2,410,395 8,486,727 8,650,216
Maintenance,
Software, Support
& Equipment 331,076 476,083 1,541,524 1,970,234
------------------------------------------------------------------------
2,426,136 2,886,478 10,028,251 10,620,450
------------------------------------------------------------------------
Gross margin 1,798,906 1,153,474 6,428,634 5,861,905
------------------------------------------------------------------------

Selling and marketing 643,512 782,015 2,509,778 3,284,907
General and
administration 622,557 559,978 2,156,208 2,080,228
Research and
development 237,356 505,853 937,212 1,805,482
Amortization of
Intangibles 109,825 214,605 563,109 858,420
Stock-based
compensation 18,000 (79,800) 81,000 923
Restructuring
provision - 892,069 - 892,069
------------------------------------------------------------------------
1,631,250 2,874,720 6,247,307 8,922,029
------------------------------------------------------------------------
Operating income 167,656 (1,721,246) 181,327 (3,060,124)
Interest and other
income (expense) (6,154) (123,176) (109,618) (145,956)
------------------------------------------------------------------------
Net income $161,502 $(1,844,422) $71,709 $(3,206,080)
------------------------------------------------------------------------
------------------------------------------------------------------------



CONSOLIDATED BALANCE SHEETS

As at September 30, 2006 and 2005

2006 2005
(unaudited) (audited)
------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $1,760,919 $1,408,464
Accounts receivable 2,179,970 1,814,200
Tax credits recoverable 406,085 414,005
Work in process 443,884 66,092
Prepaid expenses and other assets 880,233 1,474,617
------------------------------------------------------------------------
5,671,091 5,177,378
------------------------------------------------------------------------

Other assets 265,591 289,825
Capital assets 2,989,783 3,357,340
Purchased intangibles 1,436,311 1,521,391
Goodwill 9,917,938 9,707,610
------------------------------------------------------------------------
$20,280,714 $20,053,544
------------------------------------------------------------------------
------------------------------------------------------------------------

LIABILITIES
Current
Accounts payable and accrued liabilities $2,627,313 $1,902,590
Deferred revenue 1,028,936 1,100,561
Current portion of long-term obligations 851,603 1,694,033
------------------------------------------------------------------------
4,507,852 4,697,184
Long-term obligations 473,629 889,836
------------------------------------------------------------------------
4,981,481 5,587,020
------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Share capital 24,397,956 23,636,956

Deficit (9,098,723) (9,170,432)
------------------------------------------------------------------------
15,299,233 14,466,524
------------------------------------------------------------------------
$20,280,714 $20,053,544
------------------------------------------------------------------------
------------------------------------------------------------------------


The TSX Venture Exchange has neither approved nor disapproved the content of this press release.

Contact Information

  • Nuvo Network Management Inc.
    Carl Smith
    Chief Financial Officer
    613-726-5036
    it@nuvo.com