OTTAWA, CANADA--(Marketwired - July 13, 2016) - DragonWave Inc. DWIDRWI a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the first quarter of fiscal year 2017. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
Revenue for the first quarter of fiscal year 2017 was $12.5 million, compared with $12.0 million in the fourth quarter of fiscal year 2016. Revenue from the Nokia channel represented 38% in the first quarter of this fiscal year, versus 47% in the fourth quarter of the prior fiscal year.
Gross profit before inventory provisions was 31.0% in the first quarter of fiscal year 2017, compared to 22.3% in the fourth quarter of fiscal year 2016. There were no inventory provisions taken in the first quarter of fiscal year 2017, while there was a $3.2 million inventory provision taken in the fourth quarter of fiscal year 2016.
See "Non-GAAP Financial Measures" below for the most directly comparable measure to gross profit before inventory provisions when calculated in accordance with GAAP and presented in DragonWave's financial statements.
Operating expenses were reduced by $0.3 million from $7.6 million in the fourth quarter of fiscal year 2016 to $7.3 million in the first quarter of the current fiscal year.
Net loss attributable to shareholders in the first quarter of fiscal year 2017 was ($4.1) million or ($1.23) per basic and diluted share. This compares to a net loss attributable to shareholders of ($9.1) million or ($3.02) per basic and diluted share in the fourth quarter of fiscal year 2016.
"Growth in our direct channel revenue and margin reflect the first results from the implementation of our renewal strategy to introduce new products and focus on higher margin regions." said DragonWave President & CEO, Peter Allen. "We continue to expect near term projects within our existing customer base to add to our North American foundation."
Cash and cash equivalents totaled $4.0 million at the end of the first quarter of fiscal year 2017, compared to $4.3 million at the end of the fourth quarter of fiscal year 2016.
Webcast and Conference Call Details:
The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on July 14, 2016.
The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm
An archive of the webcast will be available at the same link.
Conference call dial-in numbers:
Toll-free North America Dial-in: (877) 312-9202
International Dial-in: (408) 774-4000
CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share amounts
(Unaudited)
As at As at
May 31, February 29,
2016 2016
--------------------------------
Assets
Current Assets
Cash and cash equivalents 3,951 4,277
Trade receivables 15,000 18,986
Inventory 23,312 22,702
Other current assets 2,184 2,777
--------------------------------
44,447 48,742
Long Term Assets
Property and equipment 3,402 3,702
Intangible assets 569 623
--------------------------------
3,971 4,325
Total Assets 48,418 53,067
--------------------------------
--------------------------------
Liabilities
Current Liabilities
Debt facility 18,867 22,152
Accounts payable and accrued liabilities 23,120 23,832
Deferred revenue 1,404 1,944
Deferred tax liability 267 294
Warrant liability 122 117
--------------------------------
43,780 48,339
Long Term Liabilities
Deferred revenue 464 498
Warrant liability 929 3
--------------------------------
1,393 501
Commitments
Shareholders' equity
Capital stock 223,969 221,128
Contributed surplus 9,450 9,235
Deficit (222,325) (218,225)
Accumulated other comprehensive loss (9,618) (9,618)
--------------------------------
Total Shareholders' equity 1,476 2,520
Non-controlling interests 1,769 1,707
--------------------------------
Total Equity 3,245 4,227
Total Liabilities and Equity 48,418 53,067
--------------------------------
--------------------------------
Shares issued & outstanding 3,620,567 3,020,069
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Expressed in US $000's except share and per share amounts
(Unaudited)
Three months ended
--------------------------------
May 31, May 31,
2016 2015
--------------------------------
REVENUE
Hardware and other 8,622 23,564
Services 3,923 2,776
--------------------------------
12,545 26,340
--------------------------------
COST OF SALES
Hardware and other 6,719 18,750
Services 1,934 1,746
Inventory provision - 295
--------------------------------
8,653 20,791
--------------------------------
Gross profit 3,892 5,549
--------------------------------
EXPENSES
Research and development 2,109 4,233
Selling and marketing 2,021 3,244
General and administrative 3,131 3,486
--------------------------------
7,261 10,963
--------------------------------
Loss before other items (3,369) (5,414)
Amortization of intangible assets (90) (183)
Accretion expense (35) (71)
Interest expense (382) (531)
Warrant issuance expenses (92) -
Fair value adjustment - warrant liability 244 522
Foreign exchange loss (152) (80)
--------------------------------
Loss before income taxes (3,876) (5,757)
Income tax expense 162 67
--------------------------------
Net loss and comprehensive loss (4,038) (5,824)
Net income attributable to non-controlling
interest (62) (130)
--------------------------------
Net loss and comprehensive loss attributable
to shareholders (4,100) (5,954)
Net loss and comprehensive loss per share
Basic and diluted (1.23) (1.98)
Weighted average shares outstanding
Basic and diluted 3,346,378 3,011,941
About DragonWave
DragonWave(R) is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul, including a range of products ideally suited to support the emergence of underlying small cell networks. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters are located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.
DragonWave(R), Horizon(R) and Avenue(R) are registered trademarks of DragonWave Inc.
Non-GAAP Financial Measures
This press release contains certain information that is not consistent with financial measures prescribed under GAAP. We break out "Gross profit before inventory provisions" as this measure allows management to evaluate our operational performance and compare to prior periods more effectively. "Gross profit before inventory provisions" does not have any standardized meaning prescribed by GAAP, it is therefore unlikely to be comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare gross profit results without the impact of inventory provisions, since our inventory provisions generally relate to technical obsolescence and excess due to market changes. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. We calculate "Gross profit before inventory provisions" consistently over each fiscal period.
The most directly comparable GAAP measure presented in our consolidated financial statements for the three months ended May 31, 2016 to "Gross profit before inventory provisions" is "Gross profit".
Forward-Looking Statements
Certain statements in this release constitute forward-looking statements or forward-looking information as defined by applicable securities laws. Forward-looking statements include statements as to DragonWave's forward opportunities and the potential benefits of, and demand for: DragonWave's products; DragonWave's strategy and ability to execute on that strategy; and the outcome of DragonWave's restructuring efforts. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of DragonWave's products compared to competitive offerings in the industry, and our ongoing efforts to manage our cash flows.
Forward-looking statements are provided to help external stakeholders understand DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements. DragonWave's actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements, as a result of the risks identified above as well as other risks identified in our publicly filed documents. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated July 13, 2016 and in the Company's Annual Information Form and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Contact:
Peter Allen
President & CEO
DragonWave Inc.
investor@dragonwaveinc.com
+1-613-599-9991 ext 2222
Media Contact:
Nadine Kittle
Marketing Communications
DragonWave Inc.
nkittle@dragonwaveinc.com
+1-613-599-9991 ext 2262
Media Contact:
Becky Obbema
Interprose Public Relations (for DragonWave)
Becky.Obbema@interprosepr.com
Tel: +1-408-778-2024
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