RNS Number:4603N
March Networks Corporation
13 June 2005
FOR IMMEDIATE RELEASE: 13 June 2005
March Networks Reports More than 200% Growth in Fourth Quarter and Year End
Results to April 30, 2005
* Q4 Revenue: CDN $13.5 million (219% increase year over year; 10% increase
quarter over quarter)
* Q4 Net Earnings: CDN $2.5 million
* Q4 Diluted Earnings Per Share: CDN $0.20
* Fiscal 2005 Revenue: CDN $42.7 million (262% increase; 2004: $11.8
million)
* Fiscal 2005 Earnings: CDN $6.0 million (2004: loss of $5.7 million)
* Fiscal 2005 Diluted Earnings Per Share: CDN $0.52 (2004: loss of $0.56)
OTTAWA, Ontario, June 10, 2005 -- March Networks Corporation (TSX: MN, AIM:
MNW), a leading provider of IP-based digital video surveillance solutions, today
reported its fourth quarter results for the period ended April 30, 2005. The
first public filing of quarterly results by the Company following its April 27,
2005 initial public offering of shares in Toronto and London, is highlighted by
annual revenue growth of 262 percent.
Revenue for the fourth quarter of fiscal 2005 was $13.5 million, compared with
$4.2 million for the fourth quarter of fiscal 2004, an increase of 219 percent
and, compared with $12.3 million for the third quarter of fiscal 2005, a quarter
over quarter increase of 10 percent.
Net earnings for the fourth quarter of fiscal 2005 were $2.5 million or $0.20
per share on a diluted basis, compared with a net loss of $256,000 or $0.02 from
continuing operations for the fourth quarter of fiscal 2004, and compared with
$2.3 million or $0.22 per share for the third quarter of fiscal 2005. Earnings
per share from the third quarter to the fourth quarter were affected by the
initial public offering of 5,000,000 of the Company's common shares for $60
million in cash in April 2005.
Revenue for fiscal 2005 was $42.7 million, compared with $11.8 million for
fiscal 2004, an increase of 262 percent. The strong annual revenue growth
resulted from the Company securing multiple new enterprise accounts with leading
banks, retailers and transportation authorities. During fiscal 2005, the Company
announced retail sector and banking sector account wins in excess of U.S. $5
million each. The Company also secured major U.S. and international transit
authority wins with San Francisco MUNI and Singapore's SMRT.
Net earnings for fiscal 2005 were $6.0 million or $0.52 per share on a diluted
basis, compared with a net loss from continuing operations of $5.7 million or $
(0.56) per share for fiscal 2004.
Peter Strom, President and CEO of March Networks stated, "This has been an
excellent growth year for March Networks with significant milestones met in
revenue growth, new product acceptance and continuing to successfully work with
our customers in key vertical markets. With the IPO now complete, we are ready
to execute on the next phase of our growth strategy."
Q4 Financial Highlights
* Seventh consecutive quarter of double-digit sequential revenue growth.
* Completion of initial public offering and secondary offering of 5,736,850
March Networks common shares at a price of $12.00 CDN per share. The Company
issued 5,000,000 common shares from treasury in the offering generating
proceeds, net of underwriters' commissions, of $56.4 million. Subsequent to
quarter-end, the Company issued an additional 443,860 shares from treasury
at $12 CDN per share in May, in order to satisfy the underwriters'
over-allotment option, generating additional net proceeds of $5.0 million.
* Third consecutive quarter of net cash generation from operations with net
cash generated from operations of $5.1 million for the fourth quarter of
fiscal 2005, compared with net cash consumed of $1.4 million in the fourth
quarter of fiscal 2004.
* Cash, cash equivalents and short-term investments were $63.8 million at
the end of the fourth quarter of fiscal 2005, compared with $2.4 million at
the end of the fourth quarter of fiscal 2004, and compared with $5.7 million
at the end of the third quarter of fiscal 2005. The significant increase in
cash, cash equivalents and short-term investments resulted largely from the
completion of the Company's IPO.
* Days Sales Outstanding (DSO) in accounts receivable at the end of the
fourth quarter of fiscal 2005 were 59 days, compared with 94 days at the end
of the fourth quarter of fiscal 2004, and 39 days at the end of the third
quarter of fiscal 2005.
* Inventory turns were 4.5 in the fourth quarter of fiscal 2005, compared
with 5.3 in the fourth quarter of fiscal 2004, and 4.7 in the third quarter
of fiscal 2005.
March Networks CFO, Ken Taylor stated, "This fourth quarter caps off a
successful year from a revenue generation and profitability perspective. With
seven consecutive quarters of double-digit sequential revenue growth and a
balance sheet that has been fortified by the floatation on AIM and the TSX, the
Company has strong momentum entering fiscal 2006.
Guidance
March Networks maintains its focus on long-term growth objectives and will
provide guidance on the year only.
* March Networks expects revenue for the year ending April 30, 2006 to be in
the range of $62 million to $68 million.
* Net earnings for the year ending April 30, 2006 are expected to be in the
range of $8.5 million to $10 million.
Analyst Conference Call and Webcast
* The Q4 FY'05 analyst conference call and webcast to discuss March
Networks' results and its guidance for Fiscal 2006 will be held at 8:30 a.m.
EDT on Monday, June 13, 2005. The conference call number is 1-800-814-4941
(Canada); (0) 800-000-2288, or 416-640-4127 (UK and international). The
webcast, with visuals supporting the conference call information will be
available at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=
1151700. A replay of the conference call will be available from 10:30 a.m.
EDT until Monday, June 20, 2005 by phoning 1-877-289-8525, passcode 21126927
#.
Forward-Looking Statements
This release contains certain forward-looking information, including
expectations of future business, business plans and capital expenditures. This
information is based on the Company's current expectations and assumptions.
Actual results could differ materially from those anticipated by the Company.
The material factors that could cause actual results to differ materially from
the forward-looking information include the general risks of the high tech and
security industries, the Company's operational risks, including risks relating
to intellectual property infringement claims, the Company's assumptions relating
to revenue, pricing and expenses, the Company's ability to manage the expansion
of its channel partners and growth, increased competition and the Company's
assumptions relating to and risks inherent in the Company's acquisition
strategies. These and other risks are more fully described in the Company's
Supplemented PREP prospectus, which is available on SEDAR, at www.sedar.ca.
About March Networks
March NetworksTM (TSX:MN, AIM:MNW) is a leading provider of IP-based digital
video surveillance solutions. The Company's comprehensive suite of purpose-built
digital video recorders (DVRs) and network management and application software
enables end-users to capture and manage video and transaction data over both
conventional and wireless networks. March Networks' highly scalable DVRs and
software serve the needs of leading banks, retail organizations, and
transportation authorities. The Company is also developing video analytics
software to exploit the emerging market for broadband-based video applications.
FOR FURTHER INFORMATION, PLEASE CONTACT:
March Networks Corporation
Ken Taylor, Chief Financial Officer
(613) 591-8181
e-mail: ktaylor@marchnetworks.com
Sarah Dehler, Media Relations
(613) 591-8181
e-mail: sdehler@marchnetworks.com
Buchanan Communications
Bobby Morse / Jeremy Garcia / James Strong
+44 (0) 20 7466 5000
e-mail: bobbym@buchanan.uk.com
March Networks Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS (CDN $)
(In thousands, except share and per-share amounts)
(Unaudited)
Three Months Ended Fiscal Year Ended
April 30, April 30, April 30, April 30,
2005 2004 2005 2004
REVENUE $13,509 $ 4,230 $42,662 $ 11,788
COST OF REVENUE 6,210 1,402 20,430 5,247
GROSS MARGIN 7,299 2,828 22,232 6,541
EXPENSES:
Selling, marketing 2,491 1,594 7,633 5,277
and support
Research and 1,238 804 4,380 3,420
development
General and 899 694 3,970 3,645
administrative
Stock based 164 - 270 -
compensation
Total expenses 4,792 3,092 16,253 12,342
EARNINGS (LOSS) 2,507 (264) 5,979 (5,801)
BEFORE UNDERNOTED
ITEMS
Interest and other 42 8 44 55
income, net
EARNINGS (LOSS) 2,549 (256) 6,023 (5,746)
BEFORE DISCONTINUED
OPERATIONS
Discontinued - 347 - 1,628
operations
NET EARNINGS (LOSS) 2,549 91 $6,023 $ (4,118)
Basic net earnings (loss) per share:
From continuing $ 0.20 $ (0.02) $ 0.53 $ (0.56)
operations
From discontinued 0.03 0.16
operations
$ 0.20 $ 0.01 $ 0.53 $ (0.40)
Diluted net earnings (loss) per share:
From continuing $ 0.20 $ (0.02) $ 0.52 $ (0.56)
operations
From discontinued 0.03 0.16
operations
$ 0.20 $ 0.01 $ 0.52 $ (0.40)
Shares used in per-share calculation:
Basic 12,828,443 10,316,212 11,318,552 10,318,876
Diluted 13,027,796 10,361,540 11,638,245 10,371,502
March Networks Corporation
CONSOLIDATED BALANCE SHEETS (CDN $)
(In thousands)
(Unaudited)
April 30, April 30,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $ 7,435 $ 2,432
Short-term investments 56,400 -
Accounts receivable 6,865 3,041
Inventories 4,497 997
Prepaid expenses and other current 166 488
assets
Total current assets 75,363 6,958
Capital assets 294 69
Other assets 147 783
TOTAL ASSETS $ 75,804 $ 7,810
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,901 $2,887
Accrued liabilities 3,983 1,077
Deferred revenue 2,403 107
Total liabilities 12,287 4,071
Shareholders' equity 63,517 3,739
TOTAL LIABILITIES AND SHAREHOLDERS' $ 75,804 $ 7,810
EQUITY
March Networks Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (CDN $)
(In thousands)
(Unaudited)
Fiscal Year Ended
April 30, April 30,
2005 2004
Cash flows from operating activities:
Net earnings (loss) $6,023 $ (4,118)
Items not affecting cash:
Amortization of capital assets 79 717
Writedown of other assets 101 -
Stock based compensation 270 -
Non-cash items relating to discontinued - (1,934)
operations
Change in non-cash operating working capital
items:
Accounts receivable (3,824) (359)
Inventories (3,500) (966)
Prepaid expenses and other current assets 322 216
Accounts payable 2,339 442
Accrued liabilities 337 (2,204)
Deferred revenue 2,296 42
Discontinued operations - 1,224
Net cash generated (consumed) by operating 4,443 (6,940)
activities
Cash flows from investing activities:
Purchases of short-term investments (56,400) -
Purchase of capital assets (304) (65)
Long-term receivable 535 -
Proceeds from sale of division - 1,286
Net cash (consumed) generated by investing (56,169) 1,221
activities
Cash flows from financing activities:
Issuance of common shares 56,237 (208)
Issuance of warrants 492 777
Repayment of long-term debt - (332)
Net cash generated by financing activities 56,729 237
Net increase (decrease) in cash and cash 5,003 (5,482)
equivalents
Cash and cash equivalents, beginning of 2,432 7,914
period
Cash and cash equivalents, end of period 7,435 $ 2,432
END
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