SOURCE: WPCS

WPCS

September 14, 2012 16:01 ET

WPCS Reports 1st Quarter FY2013 Results

EXTON, PA--(Marketwire - Sep 14, 2012) - WPCS International Incorporated (NASDAQ: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fiscal year 2013 first quarter ended July 31, 2012. In the first quarter, the WPCS domestic and international operation centers generated EBITDA of approximately $695,000 compared to an EBITDA loss of $7.1 million in preceding quarter ended April 30, 2012. These same operation centers generated EBITDA of $2.0 million for the same period in the prior year. 

WPCS reported net income of approximately $994,000 or $0.14 per diluted shared which includes income from discontinued operations of approximately $1.7 million, or $0.24 per diluted share related to the asset sales of the Hartford and Lakewood Operations. This compares to a net loss of approximately $35,000 or $0.01 per diluted share for the same period a year ago, which includes a loss from discontinued operations of approximately $189,000, or $0.03 per diluted share. For the first quarter, WPCS reported revenue of $13.4 million compared to $18.6 million for the same period in the prior year. Although the company has recently announced many new contract awards, the start of these projects are scheduled for later in the year, therefore these project delays caused the reported revenue to be lower than planned. However, the delayed project revenue is expected to be recognized in the quarters ahead.

Andrew Hidalgo, CEO of WPCS, commented, "I am pleased to report a substantial improvement in financial performance quarter over quarter. For the first quarter, our operation centers generated $695,000 in EBITDA on revenue of $13.4 million. Even our Trenton Operations, which is coming off a difficult year of losses, generated positive EBITDA of $208,000 in the first quarter. The projects that generated the losses are behind us. We have strengthened the balance sheet and income statement. Our challenge continues to be cash flow. The current debt facility of $2 million with Sovereign Bank is not sufficient to meet our future operating requirements. We need to replace this debt facility as a priority. If we are able to obtain an adequate debt facility, we believe we will be in a better position for growth and increased shareholder value." 

As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 800-875-3456 for calls within the U.S. or 302-607-2001 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH25585. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the call will be available for a period of five days by dialing 800-355-2355 and entering 25585 as the program identification number.

About WPCS International Incorporated:

WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit www.wpcs.com

Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and are subject to change at any time. The company's actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward looking statements.

The press release references a financial measure, EBITDA that is not in accordance with GAAP. WPCS defines EBITDA in the traditional sense of earnings before interest, income taxes, depreciation and amortization but in addition, WPCS has incurred one-time charges (credits) for the (gain) loss from discontinued operations and the strategic alternatives effort as well as non-cash charges from deferred tax asset valuation allowances, acquisition related earn-out costs and goodwill impairments. These charges are also excluded from the EBITDA calculation so that the company can provide a more meaningful perspective on the results for the continuing operations. The company uses EBITDA to evaluate its operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons. The company believes that this measure is useful to investors because it enhances investors' ability to review the Company's business from the same perspective as our management and to facilitate comparisons of this period's results with prior periods. Non-GAAP measures are used by some investors when assessing the ongoing operating and financial performance of the company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of the additional information should not be considered a substitute for net income (loss) or net income (loss) per diluted share prepared in accordance with GAAP. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. Pursuant to the Requirements of Regulation G, WPCS has included a reconciliation of EBITDA to the most directly comparable GAAP financial measure.

   
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)  
   
    Three Months Ended  
    July 31,  
    2012     2011  
          (Note 1)  
                 
REVENUE   $ 13,444,417     $ 18,616,091  
                 
COSTS AND EXPENSES:                
  Cost of revenue     10,514,076       14,207,243  
  Selling, general and administrative expenses     3,010,966       3,257,938  
  Depreciation and amortization     361,714       439,173  
  Change in fair value of acquisition-related contingent consideration     -       43,068  
                 
      13,886,756       17,947,422  
                 
OPERATING (LOSS) INCOME     (442,339 )     668,669  
                 
OTHER EXPENSE (INCOME):                
  Interest expense     125,115       95,793  
  Interest income     (9,798 )     (8,476 )
                 
(Loss) income from continuing operations before income tax provision     (557,656 )     581,352  
                 
Income tax provision     134,529       411,888  
                 
(LOSS) INCOME FROM CONTINUING OPERATIONS     (692,185 )     169,464  
                 
Discontinued operations:                
  Loss from operations of discontinued operations, net of tax of $54,164 and ($438,228), respectively     (639,292 )     (188,685 )
  Gain from disposal     2,324,631       -  
  Income (loss) from discontinued operations, net of tax     1,685,339       (188,685 )
                 
CONSOLIDATED NET INCOME (LOSS)     993,154       (19,221 )
                 
Net (loss) income attributable to noncontrolling interest     (547 )     15,456  
                 
NET INCOME (LOSS) ATTRIBUTABLE TO WPCS   $ 993,701     $ (34,677 )
                 
Basic and diluted net income (loss) per common share attributable to WPCS:                
  (Loss) income from continuing operations attributable to WPCS   $ (0.10 )   $ 0.02  
  Income (loss) from discontinued operations attributable to WPCS   $ 0.24     $ (0.03 )
  Basic and diluted net income (loss) per common share attributable to WPCS   $ 0.14     $ (0.01 )
                 
Basic weighted average number of common shares outstanding     6,954,766       6,954,766  
Diluted weighted average number of common shares outstanding     6,954,766       6,964,211  
                 
 (1) The prior year financial statements contain certain reclassifications to present discontinued operations.
 
 
 
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    July 31,   April 30,
ASSETS   2012   2012
    (Unaudited)    
CURRENT ASSETS:            
             
  Cash and cash equivalents   $ 1,257,920   $ 811,283
  Accounts receivable, net of allowance of $1,618,454 and $1,794,729 at July 31, 2012 and April 30, 2012, respectively    
13,776,221
   
22,343,304
  Costs and estimated earnings in excess of billings on uncompleted contracts     2,310,399     1,340,379
  Inventory     -     1,475,266
  Prepaid expenses and other current assets     2,356,016     2,142,191
  Prepaid income taxes     48,586     137,279
  Deferred tax assets     396,391     307,550
      Total current assets     20,145,533     28,557,252
             
PROPERTY AND EQUIPMENT, net     3,173,186     4,309,450
             
OTHER INTANGIBLE ASSETS, net     354,210     382,852
             
GOODWILL     1,963,321     1,930,826
             
DEFERRED TAX ASSETS     247,362     243,999
             
OTHER ASSETS     69,776     371,020
             
      Total assets   $ 25,953,388   $ 35,795,399
             
             
             
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
LIABILITIES AND EQUITY   July 31,     April 30,  
    2012     2012  
    (Unaudited)        
CURRENT LIABILITIES:                
                 
  Current portion of loans payable   $ 44,124     $ 143,514  
  Borrowings under line of credit     -       4,964,140  
  Current portion of capital lease obligations     5,432       15,465  
  Accounts payable and accrued expenses     11,128,316       16,669,621  
  Billings in excess of costs and estimated earnings on uncompleted contracts     2,448,516       3,594,193  
  Deferred revenue     631,716       790,270  
  Due joint venture partner     3,412,434       3,314,708  
  Other payable     793,927       -  
  Income taxes payable     268,816       194,963  
      Total current liabilities     18,733,281       29,686,874  
                 
Loans payable, net of current portion     56,414       223,561  
      Total liabilities     18,789,695       29,910,435  
                 
                 
COMMITMENTS AND CONTINGENCIES                
                 
EQUITY: WPCS EQUITY:                
  Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued     -       -  
  Common stock - $0.0001 par value, 25,000,000 shares authorized, 6,954,766 shares issued and outstanding at July 31, 2012 and April 30, 2012    
695
     
695
 
  Additional paid-in capital     50,739,430       50,477,543  
  Accumulated deficit     (46,149,961 )     (47,143,662 )
  Accumulated other comprehensive income on foreign currency translation     1,471,089       1,433,066  
                   
      Total WPCS equity     6,061,253       4,767,642  
                       
      Noncontrolling interest     1,102,440       1,117,322  
                       
      Total equity     7,163,693       5,884,964  
                       
      Total liabilities and equity   $ 25,953,388     $ 35,795,399  
                 
                 
                 
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)  
   
    (1) Reconciliation of Non-GAAP EBITDA:    
    Three Months Ended  
    July 31,     July 31,     April 30,  
    2012     2011     2012  
                         
NET INCOME (LOSS) ATTRIBUTABLE TO WPCS, GAAP   $ 993,701     $ (34,677 )   $ (8,528,827 )
                         
Plus:                        
    Net income (loss) attributable to noncontrolling interest     (547 )     15,456       (118,400 )
    Loss from discontinued operations, net of tax     639,292       188,685       442,903  
    (Gain) loss from disposal of discontinued operations     (2,324,631 )     -       5,100  
    Income tax provision (benefits)     134,529       411,888       (458,442 )
    Interest expense     125,115       95,793       270,059  
    Interest income     (9,798 )     (8,476 )     -  
    Change in fair value of acquisition-related contingent consideration     -       43,068       -  
    One time strategic costs     -       63,670       13,402  
    Goodwill and intangible assets impairment     -       -       20,167  
    Depreciation and amortization     361,714       439,173       439,128  
                         
Consolidated EBITDA, Non-GAAP     (80,625 )     1,214,580       (7,914,910 )
Plus:                        
    Corporate operating expenses     775,743       736,855       817,985  
                         
EBITDA of Continuing Operation Centers, Non-GAAP   $ 695,118     $ 1,951,435     $ (7,096,925 )
                         

Contact Information

  • CONTACT:

    WPCS International Incorporated
    610-903-0400 x101
    Email Contact