RNS Number:9541U
March Networks Corporation
01 December 2005
For Immediate Release: 1 December 2005
March Networks Confirms Outstanding Second Quarter Fiscal 2006 Financial Results
* Q2 Revenue: CDN $19.8 million (79% increase year over year; 33%
increase quarter over quarter)
* Q2 Net Earnings: CDN $5.1 million
* Q2 Diluted Earnings Per Share: CDN $0.30
OTTAWA, Ontario, November 30, 2005 -- March Networks(TM) (TSX:MN; AIM:MNW - all
figures in Canadian dollars and in accordance with Canadian GAAP), a leading
provider of Internet Protocol (IP)-based digital video surveillance solutions,
today announced financial results for the second quarter of fiscal year 2006,
ended October 31, 2005, that significantly exceeded the Company's expectations,
and confirmed the preliminary financial results that were announced on November
3, 2005.
Revenue for the second quarter of fiscal 2006 was $19.8 million, compared with
$11.1 million for the second quarter of fiscal 2005, an increase of 79 percent,
and compared with $14.9 million for the first quarter of fiscal 2006, an
increase of 33 percent.
Net earnings for the second quarter of fiscal 2006 were $5.1 million or $0.30
per share on a diluted basis, compared with net earnings of $1.5 million or
$0.14 per share for the second quarter of fiscal 2005, and compared with $2.8
million or $0.17 per share for the first quarter of fiscal 2006.
Revenue for the first six months of fiscal 2006 was $34.7 million, which
compares with $16.8 million for the same period in fiscal 2006, an increase of
106 percent.
Year to date net earnings for fiscal 2005 were $7.9 million or $0.47 per share
on a diluted basis, compared with net earnings of $1.2 million or $0.11 per
share for the first six months of fiscal 2005.
Peter Strom, President and CEO of March Networks stated, "We are pleased with
our Q2 results and are encouraged by the gains that we are making across all
targeted verticals," said Peter Strom, president and CEO of March Networks. "Our
continued focus on delivering innovative solutions and providing excellent
customer service continues to be a competitive advantage for March Networks."
Q2 Financial Highlights
* Achieved ninth consecutive quarter of double-digit sequential revenue
growth and fifth consecutive quarter of profitability.
* Record number of units shipped in the quarter (4,892) representing an
increase of 138% over the second quarter of fiscal 2005. Installed base is now
close to 21,500 units.
* Fourth consecutive quarter of net cash generation from operations. Net
cash generated from operations $5.0 million for the first six months of fiscal
2006, compared with net cash consumed of $1.8 million in the first six months of
fiscal 2005.
* Inventory turns improved to 10.8 in the first six months of fiscal
2006 compared with 4.5 times in fiscal 2005.
Company CFO, Ken Taylor stated, " The Company entered fiscal 2006 with a
strategy to increase revenue and profitability by at least 50% over fiscal 2005.
Revenue growth in the first six months of 106% has significantly exceeded our
expectations and we have produced exceptional net earnings which already exceed
annual net earnings for fiscal 2005 by 32%."
Business Outlook
March Networks maintains its focus on long-term growth objectives and provides
only full year guidance. Given that the Company has exceeded its growth
expectations in the first six months of fiscal 2006 and in recognition of its
assessment of prospects for the next two quarters, the Company is revising its
fiscal 2006 annual guidance as follows.
* March Networks is revising revenue expectations for the fiscal year
ending April 30, 2006 to a revised range of $72 million to $76 million as
compared to the guidance given in June 2005 of $62 million to $68 million.
* Net earnings for the year ending April 30, 2006 are now expected to be
in the range of $14 million to $16 million, as compared to the initial guidance
of $8.5 million to $10 million.
March Networks' management will discuss the full results and business outlook on
a conference call and Webcast to be held on December 1, 2005 at 8:30 a.m EST (1:
30 p.m. BST). The conference call may be accessed at 1-800-814-4941 (North
America) or 00 800 0000 2288 (Europe). The Webcast may be accessed at http://
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1202740. A replay of the
conference call may be accessed at 1-877-289-8525 until December 8, 2005. The
pass code for the replay is 2113195#.
For further information, please contact:
March Networks Corporation
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
About March Networks
March NetworksTM (TSX:MN; AIM:MNW) is a leading provider of innovative IP-based
video applications used for security surveillance and monitoring. Our software
and hardware solutions allow businesses to increase operational efficiencies,
address risk, and manage assets with an integrated set of video-based
intelligence tools that support enhanced decision-making. Today the ISO 9001:
2000 certified company serves the needs of leading banks, retail organizations
and transportation authorities in more than 40 countries throughout the world.
For more information, please visit www.marchnetworks.com.
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.
*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 (CDN $)
(In thousands, except share and per-share amounts)
(Unaudited)
Three Months Ended Six Months Ended
October 31, October 31, October 31, October 31,
2005 2004 2005 2004
REVENUE $19,849 $11,059 $34,725 $ 16,841
COST OF REVENUE 8,442 5,206 15,213 7,994
GROSS MARGIN 11,407 5,853 19,512 8,847
EXPENSES:
Selling, marketing and support 2,670 1,586 4,902 3,044
Research and development 1,621 1,032 2,992 2,005
General and administrative 2,187 1,689 3,994 2,560
Stock based compensation 199 64 351 64
Total expenses 6,677 4,371 12,239 7,673
EARNINGS BEFORE
UNDERNOTED ITEMS 4,730 1,482 7,273 1,174
Interest and other income, net 384 - 676 5
NET EARNINGS 5,114 1,482 $7,949 $ 1,179
Net earnings per share:
Basic $ 0.32 $ 0.14 $ 0.51 $ 0.11
Diluted $0.30 0.14 $ 0.47 0.11
Shares used in per-share calculation:
Basic 15,792,300 10,310,389 15,638,115 10,311,958
Diluted 17,111,978 10,370,589 16,827,989 10,368,412
March Networks Corporation
CONSOLIDATED BALANCE SHEETS (CDN $)
(In millions)
(Unaudited)
October 31, April 30,
2005 2005
ASSETS
Current assets:
Cash and cash equivalents $ 3,097 $ 7,435
Short-term investments 68,145 56,400
Accounts receivable 12,545 6,865
Inventories 2,808 4,497
Prepaid expenses and other current assets 1,155 166
Total current assets 87,750 75,363
Capital assets 568 294
Other assets 61 147
TOTAL ASSETS $ 88,379 $ 75,804
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,353 $5,901
Accrued liabilities 2,675 3,983
Deferred revenue 1,204 2,403
Total liabilities 11,232 12,287
Shareholders' equity 77,147 63,517
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 88,379 $ 75,804
March Networks Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (CDN $)
(In millions)
(Unaudited)
Six Months Ended
October 31, October 31,
2005 2004
Cash flows from operating activities:
Net earnings $7,949 $ 1,179
Items not affecting cash:
Amortization of capital assets 121 36
Stock based compensation 351 64
Write down of other assets - 100
Change in non-cash operating working capital items:
Accounts receivable (5,680) (6,726)
Inventories 1,689 (2,150)
Prepaid expenses and other current assets (989) 76
Accounts payable 3,361 3,352
Accrued liabilities (636) 621
Deferred revenue (1,199) 1,654
Net cash generated (consumed) by operating activities 4,967 (1,794)
Cash flows from investing activities:
Purchases of short-term investments (11,745) -
Purchase of capital assets (394) (55)
Long-term receivable 86 -
Proceeds from sale of division - 279
Net cash (consumed) generated by investing activities (12,053) 224
Cash flows from financing activities:
Issuance of share capital, net 2,748 (113)
Issuance of warrants - 513
Net cash generated by financing activities 2,748 400
Net increase (decrease) in cash and cash equivalents (4,338) (1,170)
Cash and cash equivalents, beginning of period 7,435 2,432
Cash and cash equivalents, end of period 3,097 $ 1,262
This information is provided by RNS
The company news service from the London Stock Exchange
END
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