RuggedCom reports 21% revenue growth for fiscal 2010
(All dollar amounts are in US dollars)
Highlights for the Full Fiscal Year:
- 23% increase in Purchase Orders over prior year
- 21% increase in Revenues over prior year
- 12% increase in Gross Margin dollars over prior year
- 66% decrease in Net Income over prior year
- Added 415 new customers during the fiscal year
Highlights from the Quarter:
- 10% increase in Purchase Orders year over year
- 11% increase in Revenues year over year
- 3% increase in Gross Margin year over year
- 68% decrease in Net Income year over year
- Added 91 new customers during the quarter
CONCORD, ON, May 26 /CNW/ - RuggedCom Inc. ("RuggedCom") (TSX:RCM), a leading provider of rugged communications networking solutions designed for mission-critical applications in harsh environments, today announced its financial results for the fourth quarter and full fiscal year ended March 31, 2010.
"We are pleased to report our eighth consecutive record year for both revenues and orders. While we achieved our 20th consecutive quarter of profitability, net income for the year was affected by our investments for future growth which included new operating facilities, new product platforms and the acquisition of WiNetworks," said Marzio Pozzuoli, President and Chief Executive Officer.
Fourth Quarter and Full Year Results
Total revenue for the quarter was $19.4 million which represented an 11% increase from the comparable period a year ago. Revenue growth was primarily driven by increased sales in the transportation and industrial markets. Revenues in the transportation market increased 62% to $3.3 million, a new company record for that sector and comprised 17% of the Company's total revenue versus 12% for the same quarter last year.
For the full year, revenue grew to $72.7 million, an increase of 21% over fiscal 2009 marking the company's eighth consecutive record year of revenue growth.
Customer purchase orders totaled $18.3 million for the quarter, representing an increase of 10% over the same quarter last year.
For the full year, the Company booked $75.9 million in orders, the company's eighth consecutive record year, resulting in a 23% increase over the $61.8 million booked in fiscal 2009.
Gross margin for the quarter was $11.4 million, an increase of 3% over the comparable period last year. On a percentage of revenue basis, fourth quarter gross margin was 58.6%, a decrease of 4.8 percentage points from a gross margin of 63.4% for the same period last year and a decrease of 1.4 percentage points from the gross margin percentage of 60.0% for the third quarter of fiscal 2010. For Q4-F10, gross margins were favourably influenced by decreased manufacturing overhead costs and relatively lower price discounting, but these effects were offset somewhat by the effects of product/sector mix and to a lesser extent, a slight strengthening of the Canadian dollar versus the U.S. dollar. Gross margins are generally unaffected by movements in the Canadian to US dollar exchange rate, however during periods of high exchange rate volatility, gross margins are impacted by exchange rate translations.
Gross margins were $42.7 million for the full year, a 12% increase over the comparable period last year. On a percentage of revenue basis, fiscal 2010 gross margin was 58.7%, 4.4 points lower than the 63.1% recorded for fiscal 2009. Continual strengthening of the Canadian dollar versus the US dollar throughout fiscal 2010 contributed to this decline in addition to higher price discounting, the result of increased competitive pricing pressure.
Fourth quarter net income was $1.1 million, representing RuggedCom's 20th consecutive quarter of profitability. This represents a decrease of 68% from net income of $3.4 million in the fourth quarter last year. Net income for Q4-F10 was impacted by a combination of:
- the inclusion of WiNetworks' resultant loss of $1.0 million for the
period, which included expenditures of $1.0 million of research and
development investment, before investment tax credits of $0.2
million;
- a negative foreign exchange impact of $0.5 million due to a
strengthening Canadian dollar relative to the US dollar;
- increased amortization expense as a result of the leasehold
improvements and other capital expenditures made this fiscal year in
combination with the amortization of intangible assets acquired in
the WiNetworks purchase;
- falling interest rates contributing to the decrease in earnings for
the current quarter, as the Company incurred interest expense of
$11,000 versus net interest income of $142,000 in the year ago
period; and
- increased operating expenditures in research and development, sales
and marketing, and general administration to support the growth of
our core business.
WiNetworks contributed approximately $0.8 million of revenues in Q4-F10 and resulted in the inclusion of a $1.0 million loss before and after taxes in RuggedCom's consolidated financial results.
For the full year, net income was $4.2 million, a decrease of 66% from fiscal 2009 net income of $12.3 million, due principally to the factors described earlier for Q4-F10.
For Q4-F10, RuggedCom recorded a provision for income taxes of $0.1 million with an effective tax rate of only 9.4% due to year end tax planning. This compares to $1.9 million income tax expense in the same period last year with an effective tax rate of 35.4%. For the full year, the company recorded a tax provision with an effective rate of 35.8% compared to an effective rate of 34.1% for the prior fiscal year 2009.
Fourth quarter earnings per basic share were $0.09 compared to $0.29 for the same quarter last year while earnings per diluted share were $0.09 compared to $0.28 for the same quarter last year. Earnings per basic share for the full year were $0.35 compared to $1.05 for the last fiscal year while earnings per diluted share were $0.33 compared to $1.00 for the last fiscal year.
The Company added 91 new customers in the quarter, a decrease of 13% over the same quarter last year; 415 new customers were added during fiscal 2010, an increase of 6% over fiscal 2009.
Conference Call and Webcast
---------------------------
Management will host a conference call at 8:30 a.m. (ET) on Thursday, May 27, 2010. Listeners may attend the conference call by dialing 647-427-7450 or 1-888-231-8191. The live audio webcast can be accessed at RuggedCom's web site at www.RuggedCom.com. The webcast will also be archived on the site. A taped rebroadcast will be available to listeners following the call until 11:59 PM (ET) on June 3, 2010. To access the rebroadcast, please call 416-849-0833 or 1-800-642-1687 and enter passcode 73229567 No.
About RuggedCom Inc.
--------------------
RuggedCom is a leading provider of rugged communications networking solutions designed for mission-critical applications in harsh environments. RuggedCom's technology solutions include Ethernet switches, network routers, wireless devices, serial servers, media converters, software and professional services. RuggedCom's products are designed for use in harsh environments such as those found in electrical power substations and "Smart Grids", intelligent transportation systems, industrial process control and military applications. For further information, please visit www.RuggedCom.com.
The audited annual consolidated financial statements for the fiscal years ended March 31, 2009 and March 31, 2010 and management's discussion and analysis of the results of operations and financial condition for the three month and full year periods ended March 31, 2009 and March 31, 2010 can be found under the Company's profile at www.sedar.com. They can also be found in the Investor Relations section of the Company's website at www.RuggedCom.com.
RuggedCom Inc.
CONSOLIDATED FINANCIAL STATEMENTS
Year ended March 31, 2010
RuggedCom Inc.
CONSOLIDATED BALANCE SHEETS
As at March 31, 2010 and 2009
(in thousands of United States dollars)
2010 2009
$ $
Assets
Current
Cash and cash equivalents (note 5 and 16 (e)) 33,140 45,099
Accounts receivable (note 6) 13,494 9,780
Prepaid expenses and other (note 7) 1,825 1,025
Inventories (note 8) 10,497 4,555
Income taxes recoverable 1,036 -
Future income taxes (note 14(a)) 637 283
-------------------------
60,629 60,742
Future income taxes (note 14(a)) 431 246
Severance pay fund 520 -
Property and equipment (note 9) 11,372 2,017
Goodwill (note 4) 1,928 -
Intangible assets (note 10) 11,373 1,225
-------------------------
86,253 64,230
-------------------------
-------------------------
Liabilities
Current
Accounts payable and accrued liabilities 7,618 5,793
Current portion of warranty liability 604 482
Income taxes payable 280 2,268
Current portion of deferred income 99 50
Current portion of lease costs 26 -
Current portion of obligations under capital
leases (note 16(b)) 105 126
-------------------------
8,732 8,719
Warranty liability 413 347
Deferred income 32 21
Severance payable 558 -
Obligations under capital leases (note 16(b)) 95 48
Lease costs payable 265 6
-------------------------
10,095 9,141
-------------------------
Shareholders' Equity
Capital stock (note 11) 48,886 46,820
Contributed surplus (note 13) 2,538 1,559
Accumulated other comprehensive income (loss)
(note 12) 4,887 (8,952)
Retained earnings 19,847 15,662
-------------------------
24,734 6,710
-------------------------
76,158 55,089
-------------------------
86,253 64,230
-------------------------
-------------------------
Commitments (note 16)
Contingent liabilities (note 17)
See accompanying notes to consolidated financial statements.
Approved by the Board of Directors
"Peter Crombie" "J. Ian Giffen"
----------------------- -----------------------
Peter Crombie, Director J. Ian Giffen, Director
RuggedCom Inc.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
For the years ended March 31, 2010 and 2009
(in thousands of United States dollars except per share information)
2010 2009
$ $
- -
Revenue 72,739 60,373
Cost of goods sold 30,058 22,268
-------------------------
Gross margin 42,681 38,105
-------------------------
Operating expenses
Research and development 9,242 4,967
Sales and marketing 14,197 10,765
General and administrative 8,721 5,561
Investment tax credits (1,302) (1,048)
Loss (gain) on foreign exchange 2,351 (742)
Amortization 3,068 1,166
-------------------------
36,277 20,669
-------------------------
Operating income 6,404 17,436
Net interest income 115 1,273
-------------------------
Income before income taxes 6,519 18,709
-------------------------
Provision for income taxes (note 14(b))
Current 2,745 5,827
Future (411) 554
-------------------------
2,334 6,381
-------------------------
Net income for the year 4,185 12,328
Retained earnings - Beginning of year 15,662 3,334
-------------------------
Retained earnings - End of year 19,847 15,662
-------------------------
-------------------------
Net earnings per common share (note 18)
Basic $ 0.35 $ 1.05
Diluted $ 0.33 $ 1.00
Basic weighted average number
of common shares 12,062,547 11,771,439
Diluted weighted average number
of common shares 12,577,790 12,326,514
See accompanying notes to consolidated financial statements.
RuggedCom Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended March 31, 2010 and 2009
(in thousands of United States dollars )
2010 2009
$ $
- -
Net income for the year 4,185 12,328
Unrealized foreign currency translation gain
(loss) (note 12) 13,839 (10,970)
-------------------------
Comprehensive income for the year 18,024 1,358
-------------------------
-------------------------
See accompanying notes to consolidated financial statements.
RuggedCom Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended March 31, 2010 and 2009
(in thousands of United States dollars)
2010 2009
$ $
- -
Cash provided by (used in)
Operating activities
Net income for the year 4,185 12,328
Non-cash items
Amortization of property and equipment 2,191 1,097
Amortization of other assets 877 69
Future income taxes (411) 554
Stock-based compensation 1,175 1,082
Warranty liability (136) (8)
Lease costs 259 (29)
Net change in non-cash working capital
(note 15(a)) (9,004) (574)
-------------------------
(864) 14,519
-------------------------
Investing activities
Acquisition of subsidiary (note 4) (8,138) -
Disposal of short-term investments - 34,787
Additions to property and equipment (8,724) (1,486)
Additions to other assets (1,370) (1,203)
-------------------------
(18,232) 32,098
-------------------------
Financing activities
Repayment of obligations under capital leases (194) (247)
Issuance of common shares 1,875 228
Repayment of loan (note 4) (4,875) -
-------------------------
(3,194) (19)
-------------------------
Effect of exchange rates on cash 10,331 (9,536)
-------------------------
Increase (decrease) in cash and cash equivalents
during the year (11,959) 37,062
Cash and cash equivalents - Beginning of year 45,099 8,037
-------------------------
Cash and cash equivalents - End of year
(note 15(b)) 33,140 45,099
-------------------------
-------------------------
See accompanying notes to consolidated financial statements.
For further information: Roy Dalton, Chief Financial Officer, RuggedCom Inc., Tel: (905) 856-5288, Email: [email protected]
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