1st Quarter Results
September 01 2005 - 3:35AM
UK Regulatory
RNS Number:6878Q
March Networks Corporation
01 September 2005
FOR IMMEDIATE RELEASE:
March Networks Reports Year over Year Revenue Increase of More than 150%
Eighth consecutive quarter of double-digit growth
* Q1 Revenue: CDN $14.9 million (157% increase year over year; 10%
increase quarter over quarter)
* Q1 Net Earnings: CDN $2.8 million
* Q1 Diluted Earnings Per Share: CDN $0.17
OTTAWA, Ontario, August 31, 2005 -- March Networks Corporation (TSX: MN; AIM:
MNW), a leading provider of IP-based digital video surveillance solutions, today
reported its first quarter results for the period ended July 31, 2005.
Revenue for the first quarter of fiscal 2006 was $14.9 million, compared with
$5.8 million for the first quarter of fiscal 2005, an increase of 157 percent,
and compared with $13.5 million for the fourth quarter of fiscal 2005, an
increase of 10 percent.
Net earnings for the first quarter of fiscal 2006 were $2.8 million or $0.17 per
share on a diluted basis, compared with a net loss of $303,000 or $0.03 for the
first quarter of fiscal 2005, and compared with $2.5 million or $0.20 per share
for the fourth quarter of fiscal 2005. The Company's diluted weighted average
common shares outstanding rose by more than 3.8 million in the first quarter as
compared to the fourth quarter of fiscal 2005 as a result of the common shares
issued in connection with the Company's initial public offering (IPO) in April
2005 (5,000,000 shares) and May 2005 (443,860 shares) and the dilutive effect of
an increasing number of vested stock options and warrants with exercise prices
below the prevailing average market price in the quarter for the Company's
shares.
Q1 Operational Highlights
* Successful launch of Managed Video Network Services.
* Further success in banking vertical market through new customer wins
including Wachovia Bank of Charlotte, NC and other large banks in North
America and Latin America.
* Launch of relationship with Wabtec Corporation to address new market
opportunities in the transportation sector while leveraging March Networks
intellectual property investments.
Peter Strom, President and CEO of March Networks stated, "We are very pleased to
be coming off the IPO with another record quarter in revenue and profitability.
The Company is demonstrating strong organic growth through our existing customer
base and we continue to successfully add new enterprise accounts on a quarterly
basis."
Q1 Financial Highlights
* Achieved eighth consecutive quarter of double-digit sequential revenue
growth.
* Record number of units shipped in the quarter (3,077) representing an
increase of 150% over the first quarter of fiscal 2005. Installed base is
now in excess of 16,600 units.
* Fourth consecutive quarter of net cash generation from operations with
net cash generated from operations of $1.8 million for the first quarter of
fiscal 2006, compared with net cash consumed of $457,000 in the first
quarter of fiscal 2005.
* $5.0 million was raised from 443,860 common shares issued in May 2005 in
order to satisfy the underwriters' over-allotment option from the IPO.
* Days Sales Outstanding (DSO) in accounts receivable at the end of the
first quarter of fiscal 2006 improved to 42 days compared with 59 days at
the end of the fourth quarter of fiscal 2005.
* Inventory turns improved to 8.6 in the first quarter of fiscal 2006
compared with 4.5 in the fourth quarter of fiscal 2005.
Company CFO, Ken Taylor stated, " We are pleased with the financial performance
and operational improvements that are demonstrated by our first quarter
financial results. Our eighth consecutive quarter of double-digit sequential
revenue growth and net earnings in the quarter of $2.8 million reflect a
continuation of the momentum that was generated last fiscal year and put the
Company on pace to achieving our annual guidance.
Annual Guidance
March Networks maintains its focus on long-term growth objectives and will
provide guidance on the year only. The Company is maintaining the guidance given
on June 10, 2005.
* Revenue for the year ending April 30, 2006 is expected 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 Q1 FY'06 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
Thursday, September 1, 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=1202520. A replay of the
conference call will be available from 10:30 a.m. EDT until Thursday, September
8, 2005 by phoning 1-877-289-8525, passcode 21133136#.
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
Annual Information Form, which is available on SEDAR, at www.sedar.com.
About March Networks
March Networks(TM) (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 ISO 9001:2000 certified company is actively
engaged in developing next-generation video applications to take advantage of
expanding broadband networks. For more information, please visit
www.marchnetworks.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
March Networks Corporation
Ken Taylor, Chief Financial Officer
(613) 591-8181
e-mail: ktaylor@marchnetworks.com
Anil Dilawri, Director Investor and Public Relations
(613) 591-8181
e-mail: adilawri@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
July 31, July 31,
2005 2004
REVENUE $14,876 $ 5,782
COST OF REVENUE 6,771 2,788
GROSS MARGIN 8,105 2,994
EXPENSES:
Selling, marketing and support 2,232 1,457
Research and development 1,371 973
General and administrative 1,807 872
Stock based compensation 152 -
Total expenses 5,562 3,302
EARNINGS (LOSS) BEFORE UNDERNOTED 2,543 (308)
ITEMS
Interest and other income, net 292 5
NET EARNINGS (LOSS) $2,835 $ (303)
Net earnings (loss) per share:
Basic $ 0.18 $ (0.03)
Diluted $ 0.17 $ (0.03)
Shares used in per-share calculation:
Basic 15,555,023 10,313,472
Diluted 16,865,101 10,313,472
March Networks Corporation
CONSOLIDATED BALANCE SHEETS (CDN $)
(In thousands)
July 31, 2005 April 30, 2005
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,567 $ 7,435
Short-term investments 61,766 56,400
Accounts receivable 6,893 6,865
Inventories 3,159 4,497
Prepaid expenses and other current assets 609 166
Total current assets 78,994 75,363
Capital assets 311 294
Other assets 61 147
TOTAL ASSETS $ 79,366 $ 75,804
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,404 $5,901
Accrued liabilities 2,343 3,983
Deferred revenue 909 2,403
Total liabilities 7,656 12,287
Shareholders' equity 71,710 63,517
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 79,366 $ 75,804
March Networks Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (CDN $)
(In thousands)
(Unaudited)
Three Months Ended
July 31, July 31,
2005 2004
Cash flows from operating activities:
Net earnings (loss) $2,835 $ (303)
Items not affecting cash:
Amortization of capital assets 34 18
Stock based compensation 152 -
Change in non-cash operating working capital
items:
Accounts receivable (28) (30)
Inventories 1,338 (355)
Prepaid expenses and other current assets (442) (80)
Accounts payable 411 137
Accrued liabilities (968) 225
Deferred revenue (1,494) (69)
Net cash generated (consumed) by operating
activities 1,838 (457)
Cash flows from investing activities:
Purchases of short-term investments (5,366) -
Purchase of capital assets (50) (15)
Long-term receivable 86 258
Net cash (consumed) generated by investing
activities (5,330) 243
Cash flows from financing activities:
Issuance (redemption) of common shares 2,624 (59)
Issuance of warrants - 273
Net cash generated by financing activities 2,624 214
Net decrease in cash and cash equivalents (868) -
Cash and cash equivalents, beginning of
period 7,435 2,432
Cash and cash equivalents, end of period $6,567 $2,432
This information is provided by RNS
The company news service from the London Stock Exchange
END
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