SOURCE: WPCS

WPCS

September 14, 2011 16:01 ET

WPCS Reports FY2012 First Quarter Financial Results

EXTON, PA--(Marketwire - Sep 14, 2011) - WPCS International Incorporated (NASDAQ: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fiscal year 2012 first quarter ended July 31, 2011. For the first quarter, WPCS reported revenue of $25.4 million compared to $17.8 million in the preceding quarter ended April 30, 2011, which represents an increase of approximately 43%. The Company generated revenue of $28.9 million for the same period a year ago.

In the first quarter, WPCS generated EBITDA of approximately $753,000 compared to an EBITDA loss of $5.1 million in the preceding quarter ended April 30, 2011. The Company generated $238,000 in EBITDA for the same period a year ago. EBITDA is defined as earnings before interest, taxes, acquisition-related contingent earn-out costs, one-time charges related to seeking strategic alternatives including the possible sale of the company and depreciation and amortization.

WPCS reported a net loss of approximately $35,000 or $0.00 per diluted share, which includes the one-time charges of $64,000 associated with seeking strategic alternatives including the possible sale of the company. This compares to a net loss of $376,000 or $0.05 per diluted share for the same period a year ago.

Andrew Hidalgo, CEO of WPCS, commented, "We are pleased to announce that we achieved profitable EBITDA results for the quarter. This marks what we believe is the beginning of our turnaround from a difficult prior year. The first quarter was very encouraging. We experienced solid revenue growth over the preceding quarter while maintaining a healthy backlog and bid list. Our balance sheet remains strong with $4.1 million in cash and $15.2 million in working capital. Our net tangible asset value is $22.6 million or $3.25 per diluted share. We are very excited about the opportunities in our current fiscal year and we look forward to achieving profitable quarters ahead."

As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 888-299-4099 for calls within the U.S. or 302-709-8337 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH16503. 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 402-220-2946 and entering 16503 # 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.

This press release includes financial measures that are not in accordance with GAAP, consisting of EBITDA and net tangible asset value. Management uses EBITDA to evaluate the Company's 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. Management uses net tangible asset value to evaluate the strength of the Company's balance sheet. WPCS believes that these measures are useful to investors because they enhance 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 our 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 or loss or net income or 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 the non-GAAP financial measures to the most directly comparable GAAP financial measures.

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
July 31,
2011 2010
REVENUE $ 25,419,503 $ 28,852,498
COSTS AND EXPENSES:
Cost of revenue 19,573,186 22,697,975
Selling, general and administrative expenses 5,156,522 5,916,327
Depreciation and amortization 604,832 734,615
Change in fair value of acquisition-related contingent consideration 43,068 63,052
25,377,608 29,411,969
OPERATING INCOME (LOSS) 41,895 (559,471 )
OTHER EXPENSE (INCOME):
Interest expense 95,932 54,635
Interest income (8,476 ) (10,069 )
LOSS BEFORE INCOME TAX BENEFIT (45,561 ) (604,037 )
Income tax benefit (26,340 ) (238,379 )
CONSOLIDATED NET LOSS (19,221 ) (365,658 )
Net income attributable to noncontrolling interest 15,456 10,293
NET LOSS ATTRIBUTABLE TO WPCS $ (34,677 ) (375,951 )
Basic net loss per common share attributable to WPCS $ (0.00 ) $ (0.05 )
Diluted net loss per common share attributable to WPCS $ (0.00 ) $ (0.05 )
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 6,954,766
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
July 31, April 30,
ASSETS 2011 2011
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 4,063,322 $ 4,879,106
Accounts receivable, net of allowance of $1,631,985 and $1,662,168 at July 31, 2011 and April 30, 2011, respectively 25,777,082 22,474,024
Costs and estimated earnings in excess of billings on uncompleted contracts 4,546,270 4,669,012
Inventory 1,606,385 1,972,905
Prepaid expenses and other current assets 1,592,500 1,413,151
Prepaid income taxes 214,897 173,700
Income taxes receivable 1,185,000 1,166,225
Deferred tax assets 2,642,598 2,621,329
Total current assets 41,628,054 39,369,452
PROPERTY AND EQUIPMENT, net 5,909,461 6,035,353
OTHER INTANGIBLE ASSETS, net 742,897 803,171
GOODWILL 2,038,978 2,044,856
DEFERRED TAX ASSETS 2,674,841 2,675,511
OTHER ASSETS 134,145 134,654
Total assets $ 53,128,376 $ 51,062,997
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND EQUITY July 31, April 30,
2011 2011
(Unaudited)
CURRENT LIABILITIES:
Current portion of loans payable $ 97,299 $ 35,724
Borrowings under line of credit 5,560,977 7,000,000
Current portion of capital lease obligations 48,175 54,496
Accounts payable and accrued expenses 13,599,932 10,249,503
Billings in excess of costs and estimated earnings on uncompleted contracts 2,168,352 2,039,117
Deferred revenue 809,169 792,414
Due joint venture partner 3,134,583 3,415,641
Acquisition-related contingent consideration 1,049,011 1,008,200
Total current liabilities 26,467,498 24,595,095
Loans payable, net of current portion 211,677 10,554
Capital lease obligations, net of current portion 5,432 15,465
Total liabilities 26,684,607 24,621,114
COMMITMENTS AND CONTINGENCIES
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, 2011 and April 30, 2011 695 695
Additional paid-in capital 50,453,914 50,433,626
Accumulated deficit (26,630,508 ) (26,595,831 )
Accumulated other comprehensive income on foreign currency translation, net of tax effects of $191,979 and $185,060 at July 31, 2011 and April 30, 2011, respectively 1,560,411 1,564,965
Total WPCS shareholders' equity 25,384,512 25,403,455
Non-controlling interest 1,059,257 1,038,428
Total equity 26,443,769 26,441,883
Total liabilities and equity $ 53,128,376 $ 51,062,997

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

(1) Reconciliation of Non-GAAP EBITDA:

Three Months Ended
July 31,
2011 2010
NET LOSS ATTRIBUTABLE TO WPCS, GAAP $ (34,677 ) $ (375,951 )
Plus:
Net income attributable to non-controlling interest 15,456 10,293
Income tax benefit (26,340 ) (238,379 )
Interest expense 95,932 54,635
Interest income (8,476 ) (10,069 )
Change in fair value of acquisition-related contingent consideration 43,068 63,052
One time strategic costs 63,670 -
Depreciation and amortization 604,832 734,615
Consolidated EBITDA, Non-GAAP $ 753,465 $ 238,196

(2) Reconciliation of Non-GAAP Net Tangible Asset Value:

July 31, April 30,
2011 2011
Total WPCS shareholders' equity $ 25,384,512 $ 25,403,455
Less:
Goodwill 2,038,978 2,044,856
Other Intangible Assets, net 742,897 803,171
Net tangible asset value $ 22,602,637 $ 22,555,428
Diluted weighted average number of common shares outstanding 6,954,766 6,954,766
Net tangible asset value per common share attributable to WPCS $ 3.25 $ 3.24

Contact Information

  • CONTACT:

    WPCS International Incorporated
    610-903-0400 x101
    Email Contact