OTTAWA, Feb. 25 /PRNewswire-FirstCall/ - March Networks(TM) (TSX:MN), a leading provider of innovative video and data applications used for security surveillance, monitoring, analysis and business optimization, today announced financial results for the third quarter and nine months ended January 31, 2009 . All figures in Canadian dollars and in accordance with Canadian GAAP unless otherwise specified.
The Company's third quarter fiscal 2009 revenue was
The Company recorded non-GAAP operating earnings of
The Company incurred a net loss in the third quarter of fiscal 2009 of
"Q3 results demonstrate continued progress towards achieving the Company's FY2009 strategic objectives in a challenging economic environment as evidenced by on-going revenue growth and diversification, a second consecutive quarter of positive operating earnings and strong positive cash flow" said Peter Strom , President and CEO.
Third Quarter 2009 Financial Highlights - Revenue up 12% from the same quarter a year ago. - Operating earnings up $3.8 million from third quarter of last year. - Generated $5.5 million in cash flow from operating activities. - Third quarter net loss improved by $1.8 million or $0.11 per share from last year."The Company's investments over the past year and half have positioned the Company for growth with new products and an expanded market presence", said Ken Taylor , CFO of March Networks. "The Company's recent restructuring activity has reduced operating expenses to a level that will allow the Company to profit from these investments while mitigating the risks associated with an uncertain economic environment."
Business Outlook
The Company is maintaining its original fiscal 2009 annual revenue and earnings guidance that were first published on June 11, 2008 and last published in the Company's second quarter fiscal 2009 results released on November 26th, 2008 .
The Company's revenue expectations for the fiscal year ending April 30, 2009 are in the range of
The Company's expectations of operating earnings for fiscal 2009 are in the range of
The Company will discuss the results on a conference call and webcast on Thursday, February 26, 2009 at 8:30 a.m. EST ( 1:30 p.m. GMT ). The conference call may be accessed by dialing 1-800-594-3615 ( North America ) or 00 800 2288 3501 ( Europe ).
The conference call webcast can be accessed at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2550680.
A replay of the conference call will be available from February 26, 2009 at 10:30 a.m. EST until March 5, 2009 at 11:59 p.m. EST . The replay can be accessed at 1-877-289-8525 or 416-640-1917. The passcode for the replay is 21297369#.
About March Networks
March Networks(TM) (TSX:MN) is a leading provider of intelligent IP video and business analysis applications that enable organizations to reduce losses, mitigate risks and improve security and operational efficiency. The Company's advanced software suite includes enterprise-class video management, powerful analytics and comprehensive managed and professional services. Our software and systems are used by leading financial institutions, retailers, transportation authorities and other organizations in more than 50 countries. For more information, please visit www.marchnetworks.com.
Certain statements included in this release constitute forward-looking statements, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend" and similar expressions to the extent they relate to the Company or its management. The forward-looking statements are not historical facts but reflect the Company's current assumptions and expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current assumptions and expectations.
Assumptions made in preparing the forward-looking statements and financial guidance contained in this release include, but are not limited to, the following:
- Under stable economic conditions the market for the Company's products will grow by greater than 10% annually, however market growth will be impaired in the current depressed economic environment. - The Company's revenue concentration with any end user customer will not exceed 10% in fiscal 2009. - The Company will develop and deliver new products on time in order to satisfy the demands of current and potential customers. - The Company will have adequate component supply to meet customer demand. - The Company's gross margin as a percentage of revenue in fiscal 2009 will improve relative to fiscal 2008. - The Company will lower its operating cost structure as a percentage of revenue relative to fiscal 2008. - The Company's restructuring efforts to address deteriorating economic conditions will achieve expected cost reductions without significantly impacting the Company's business. - The prevailing exchange rate for US dollars and Euros to Canadian dollars will be US$1.00=CDN$1.20 and Euro 1=CDN$1.50. - The Company will continue to demonstrate its potential to generate sufficient profits in future fiscal years to realize the value of its future tax assets. Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following: - The Company's ability to forecast revenue and profitability is significantly impaired by the depressed global economic situation which has introduced delays in the sales process; increased pricing pressure and a higher potential for cancellation or loss of opportunities in the sales pipeline. - The impact of the depressed global economy and other factors may result in financial difficulty for key suppliers that would impact the Company's ability to meet demand and cost reduction targets. - Weaker than expected success versus competitors in new customer and vertical market opportunities and/or loss of existing customers to competitors. - Revenue shortfalls due to delays in securing new customer opportunities and the lack of long term purchase commitments from customers. - Higher than targeted product costs and/or higher than expected declines in market pricing for the Company's products. - Product issues that result in increased costs to the Company and/or lost revenue opportunities. - Delays in product development programs for new products and new product features which lead to cost overruns and /or missed customer opportunities. - Changes in the mix of revenues between fixed and mobile transportation solutions. - Shifts in value of the Canadian dollar relative to billing currencies. Additional risks are discussed herein and under "Risk Factors" in the Company's Annual Information Form available online at www.sedar.com. * MARCH NETWORKS and the MARCH NETWORKS logo are trademarks of March Networks Corporation. All other trademarks are the property of their respective owners. March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------------------------------------------- (Canadian dollars, amounts in thousands, except share and per-share data) (Unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------------------------------------------------------- January 31, January 31, January 31, January 31, 2009 2008 2009 2008 REVENUE $ 23,581 $ 21,099 $ 79,661 $ 73,358 ------------------------------------------------------------------------- COST OF REVENUE 11,814 12,189 42,740 40,033 ------------------------------------------------------------------------- CONTRACT LOSSES AND RETROFIT - - 1,187 2,439 ------------------------------------------------------------------------- GROSS MARGIN 11,767 8,910 35,734 30,886 ------------------------------------------------------------------------- EXPENSES: ------------------------------------------------------------------------- Selling, marketing and support 5,205 3,952 15,122 11,923 ------------------------------------------------------------------------- Research and development 2,447 4,570 9,999 11,239 ------------------------------------------------------------------------- General and administrative 3,561 3,633 10,227 11,027 ------------------------------------------------------------------------- Stock based compensation 299 704 1,062 2,314 ------------------------------------------------------------------------- Amortization of acquired intangible assets 1,021 137 2,880 411 ------------------------------------------------------------------------- Restructuring costs 1,246 - 2,665 - ------------------------------------------------------------------------- Total expenses 13,779 12,996 41,955 36,914 ------------------------------------------------------------------------- LOSS BEFORE UNDERNOTED ITEMS (2,012) (4,086) (6,221) (6,028) ------------------------------------------------------------------------- Interest and other income, net 273 1,148 977 3,148 ------------------------------------------------------------------------- LOSS BEFORE INCOME TAXES (1,739) (2,938) (5,244) (2,880) ------------------------------------------------------------------------- Current income tax expense (49) 4 (56) 26 ------------------------------------------------------------------------- Future income tax expense (429) 157 (458) 485 ------------------------------------------------------------------------- NET LOSS $ (1,261) $ (3,099) $ (4,730) $ (3,391) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share: ------------------------------------------------------------------------- Basic $ (0.07) $ (0.18) $ (0.27) $ (0.20) ------------------------------------------------------------------------- Diluted $ (0.07) $ (0.18) $ (0.27) $ (0.20) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Shares used in per-share calculation: ------------------------------------------------------------------------- Basic 17,188,221 17,021,047 17,581,538 16,948,366 ------------------------------------------------------------------------- Diluted 17,188,221 17,021,047 17,581,538 16,948,366 ------------------------------------------------------------------------- ------------------------------------------------------------------------- March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS ------------------------------------------------------------------------- (Canadian dollars, amounts in thousands) (Unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- January 31, April 30, 2009 2008 ------------------------------------------------------------------------- ASSETS ------------------------------------------------------------------------- Current assets: Cash $ 8,790 $ 4,187 ------------------------------------------------------------------------- Short-term investments 37,854 59,209 ------------------------------------------------------------------------- Restricted cash - 2,410 ------------------------------------------------------------------------- Accounts receivable 18,095 15,432 ------------------------------------------------------------------------- Inventories 25,258 22,220 ------------------------------------------------------------------------- Prepaid expenses and other current assets 3,504 2,982 ------------------------------------------------------------------------- Future tax assets 5,168 4,556 ------------------------------------------------------------------------- Total current assets 98,669 110,996 ------------------------------------------------------------------------- Capital assets 6,451 2,492 ------------------------------------------------------------------------- Intangible assets 13,504 16,377 ------------------------------------------------------------------------- Future tax assets 21,665 21,081 ------------------------------------------------------------------------- Goodwill 22,283 22,048 ------------------------------------------------------------------------- TOTAL ASSETS $ 162,572 $ 172,994 ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------------------------------------------- Current liabilities: ------------------------------------------------------------------------- Accounts payable $ 11,643 $ 11,576 ------------------------------------------------------------------------- Accrued liabilities 9,025 10,236 ------------------------------------------------------------------------- Refundable royalty advance - 2,410 ------------------------------------------------------------------------- Deferred revenue 4,819 3,329 ------------------------------------------------------------------------- Deferred leasehold inducement 132 - ------------------------------------------------------------------------- Income taxes payable 421 422 ------------------------------------------------------------------------- Total current liabilities 26,040 27,973 ------------------------------------------------------------------------- Deferred revenue 8,335 9,048 ------------------------------------------------------------------------- Deferred leasehold inducement 1,134 - ------------------------------------------------------------------------- Long term compensation 504 451 ------------------------------------------------------------------------- Future tax liabilities 3,571 4,362 ------------------------------------------------------------------------- Total liabilities 39,584 41,834 ------------------------------------------------------------------------- Shareholders' equity 122,988 131,160 ------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 162,572 $ 172,994 ------------------------------------------------------------------------- ------------------------------------------------------------------------- March Networks Corporation ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------------------------------------------- (Canadian dollars, amounts in thousands) (Unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------------------------------------------------------- January 31, January 31, January 31, January 31, 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash flows from operating activities: ------------------------------------------------------------------------- Net loss $ (1,261) $ (3,099) $ (4,730) $ (3,391) ------------------------------------------------------------------------- Items not affecting cash: ------------------------------------------------------------------------- Amortization of capital assets 437 345 1,526 1,003 ------------------------------------------------------------------------- Amortization of acquired intangible assets 1,021 137 2,880 411 ------------------------------------------------------------------------- Stock based compensation 299 704 1,062 2,314 ------------------------------------------------------------------------- Unrealized foreign exchange (gain)/loss (131) 234 529 (381) ------------------------------------------------------------------------- Future income taxes and non-refundable investment tax credits (634) (93) (671) (236) ------------------------------------------------------------------------- Net change in non-cash items 5,778 2,731 (8,311) 12,094 ------------------------------------------------------------------------- Net cash generated (consumed) by operating activities 5,509 959 (7,715) 11,814 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from investing activities: ------------------------------------------------------------------------- Redemption (purchase) of short-term investments (2,268) (904) 21,356 (10,717) ------------------------------------------------------------------------- Purchase of capital assets (652) (117) (4,098) (494) ------------------------------------------------------------------------- Acquisition of business - - (699) - ------------------------------------------------------------------------- Net cash generated (consumed) by investing activities (2,920) (1,021) 16,559 (11,211) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows from financing activities: Issuance (repurchase) of share capital, net - 46 (4,574) 173 ------------------------------------------------------------------------- Net cash generated (consumed) by financing activities - 46 (4,574) 173 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net increase in cash 2,589 (16) 4,270 776 ------------------------------------------------------------------------- Foreign exchange gain (loss) on foreign cash held (64) (101) 333 (86) ------------------------------------------------------------------------- Cash, beginning of period 6,265 4,131 4,187 3,526 ------------------------------------------------------------------------- Cash, end of period $ 8,790 $ 4,216 $ 8,790 $ 4,216 ------------------------------------------------------------------------- -------------------------------------------------------------------------SOURCE MARCH NETWORKS CORPORATION
