Nuvo Network Management Inc.
TSX VENTURE : NVO

Nuvo Network Management Inc.

November 29, 2007 16:16 ET

NUVO Reports Profitable Results for Fiscal 2007

Record EBITDA, Net Income and Revenue

OTTAWA, ONTARIO--(Marketwire - Nov. 29, 2007) - 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, 2007.

Highlights - Fiscal year 2007

- Revenue was $16.6 million in fiscal 2007 up from $16.5 million in fiscal 2006

- EBITDA was a record $2.1 million compared to $1.8 million last year

- Net income was a record $922,850, which included $600,000 of future tax recovery, compared to $71,709 last year

- Gross margin was 41%, up from 39% last year

- Signed $19 million of new contracts and renewals


Highlights - Q4

- Revenue was $4.1 million compared to $4.2 million a year ago

- Earnings before interest and other expense, taxes, depreciation and amortization (EBITDA) was $486,602 compared to $546,181 last year

- Net income was $641,298, which included $600,000 of future tax recovery, compared to $161,502 last year

- Gross margin was 41%, compared to 43% last year

- Signed $3.1 million of new contracts and renewals

- Won a new contract with a large US based customer worth $2.6 million over a 60 month term to manage its network and 7,500 IP phones

- Fortune 100 customer expands its server management contract by 37%

"We are pleased with our fiscal 2007 performance. In spite of a weakened US dollar, we generated record earnings before interest and other expense, taxes, depreciation and amortization ("EBITDA"). Our new contract bookings continue to be strong. Cash increased to $1.9 million from $1.8 million last year and our debt decreased to $1.1 million from $1.3 million last year" said Phil Weaver, NUVO's President and CEO. "We begin fiscal year 2008 on solid financial and operational footing."

"From a product perspective, we are showing traction and market acceptance of our Maxadvantage solution. Our partner channel strategy, introduced a few years ago continues to produce results for the company."

"During the quarter the Canadian dollar relative to the US dollar strengthened from an average of $1.10 in the third quarter of this year to an average of $1.04 in the fourth quarter of this year", said Carl Smith, NUVO's Chief Financial Officer. "Sequentially, this had a negative impact on revenue of $150,000 and a positive impact on costs of $50,000. It also resulted in realized and unrealized foreign exchange losses of $48,000. Despite the total negative impact sequentially of $148,000, we maintained profitable operations and have now recorded seven consecutive quarters of net income."

Q4 Financial Results

Fourth quarter revenues were $4,062,661compared with revenues of $4,225,042 in the same period a year ago. Fourth quarter IT infrastructure management revenues were $3,443,292 compared to IT infrastructure management revenues of $3,663,940 in the fourth quarter of fiscal 2006. Maintenance, software, support and equipment revenues for the fourth quarter were $619,369 compared to $561,102 last year.

Gross margins for the fourth quarter of fiscal 2007 were 41% compared with 43% in the fourth quarter of fiscal 2006.

Operating expenses in the fourth quarter of fiscal 2007 were $1,565,311, compared to $1,631,250, in the fourth quarter of fiscal 2006.

Earnings before interest and other expense (foreign exchange), taxes, depreciation, and amortization (EBITDA) for the fourth quarter of fiscal 2007 was $486,602 compared to $546,181 in fiscal 2006.

Net income in the fourth quarter was $641,298, which included $600,000 of future tax recovery, compared to $161,502 last year.

Fiscal 2007 Financial Results

Total revenues for the fiscal year ended September 30, 2007, were $16,582,746, compared to revenues of $16,456,885 in fiscal 2006. IT infrastructure management revenues in fiscal 2007 were $14,375,816, compared to IT infrastructure management revenues of $13,984,542 in fiscal 2006. Maintenance, software, support and equipment revenues in fiscal 2007 were $2,206,930, compared to maintenance, software, support and equipment revenues of $2,472,343 in fiscal 2006.

Gross margin in fiscal year 2007 was 41% compared to 39% in fiscal 2006.

Operating expenses in fiscal 2007 were $6,331,307, compared to operating expenses of $6,247,307 in fiscal 2006.

EBITDA for fiscal 2007 was $2,074,710 compared to $1,787,900 in fiscal 2006.

Net income for the twelve months ended September 30, 2007 was $922,850, which included $600,000 of future tax recovery, compared to $71,709 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 software, 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. www.nuvo.com.

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 (www.nuvo.com) in the Investor Relations section, SEDAR, and annual and interim reports.




Consolidated Statements of Operations

Periods Ended September 30, 2007 and 2006

Three Months Ended Years Ended
------------------------------------------------------
Sept 30, Sept 30, Sept 30, Sept 30,
(in Canadian 2007 2006 2007 2006
Dollars) (unaudited) (audited) (unaudited) (audited)
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Revenues
IT Infrastructure
Management $3,443,292 $3,663,940 $14,375,816 $13,984,542
Maintenance,
Support & Equipment 619,369 561,102 2,206,930 2,472,343
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4,062,661 4,225,042 16,582,746 16,456,885
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Costs of revenues
IT Infrastructure
Management 2,004,692 2,095,060 8,335,461 8,486,727
Maintenance,
Support & Equipment 403,109 331,076 1,384,468 1,541,524
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2,407,801 2,426,136 9,719,929 10,028,251
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Gross margin 1,654,860 1,798,906 6,862,817 6,428,634
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Selling and
marketing 646,159 643,512 2,537,024 2,509,778

General and
administration 516,288 622,557 2,180,225 2,156,208

Research and
development 294,899 237,356 1,113,021 937,212

Amortization of
Intangibles 85,128 109,825 389,951 563,109

Stock-based
compensation 22,837 18,000 111,086 81,000
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1,565,311 1,631,250 6,331,307 6,247,307
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Operating income 89,549 167,250 531,510 181,327

Interest and other
expense (48,251) (6,154) (208,660) (109,618)
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Income before taxes 41,298 161,502 322,850 71,709
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Future income tax
recovery 600,000 - 600,000 -
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Net income $641,298 $161,502 $922,850 $71,709
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Basic earnings per
common share $0.02 $0.01 $0.03 $0.00

Diluted earnings per
common share $0.02 $0.01 $0.03 $0.00



CONSOLIDATED BALANCE SHEETS
As at September 30, 2007 and 2006

2007 2006
--------------------------------------------------------------------------
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Unaudited Audited
--------------------------------------------------------------------------
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ASSETS
Current
Cash and cash equivalents $1,884,758 $1,760,919
Accounts receivable 2,568,605 2,179,970
Tax credits receivable 406,085 406,085
Work in process 97,095 443,884
Future income taxes 300,000 -
Prepaid expenses and other assets 639,774 880,233
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5,896,317 5,671,091

Other assets 292,521 265,591
Future income taxes 300,000 -
Property and equipment 2,975,582 2,989,783
Purchased intangibles 1,046,360 1,436,311
Goodwill 9,917,938 9,917,938
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$20,428,718 $20,280,714
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LIABILITIES

Current
Accounts payable and accrued liabilities $1,982,122 $2,627,313
Deferred revenue 1,011,713 1,028,936
Current portion of long-term obligations 664,355 851,603
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3,658,190 4,507,852

Long-term obligations 437,359 473,629
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4,095,549 4,981,481
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SHAREHOLDERS' EQUITY
Share capital 24,509,042 24,397,956
Deficit (8,175,873) (9,098,723)
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16,333,169 15,299,233
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$20,428,718 $20,280,714
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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