DDS Wireless Reports 2nd Qtr. Revenues of $10.6 Million, EBITDAS(1) of $0.7 Million & Declares Cash Dividend of $0.02 Per Share

Marketwired

RICHMOND, BRITISH COLUMBIA--(Marketwire - Aug. 14, 2012) - DDS Wireless International Inc. (DD.TO) -

Second Quarter 2012 Year-to-Date 2012

Revenue of $10.6 million Revenue of $19.3 million

Net income of $0.2 million, or $0.01 Net loss of ($0.3) million, or

per share ($0.02) per share

EBITDAS(1) of $0.7 million, or $0.05 EBITDAS(1) of $0.3 million, or

per share $0.02 per share

DDS Wireless International Inc., a world leader in providing wireless data solutions for fleet management for more than 20 years, today reported financial results for the three and six months ended June 30, 2012 and announced that the Company's Board of Directors has approved a cash dividend on the Company's common shares ("Shares"). All financial information is expressed in Canadian ("CDN") dollars and has been prepared in accordance with International Financial Reporting Standards ("IFRS"), except as otherwise noted.

"The second quarter of fiscal 2012 showed marked improvement from the first quarter of 2012 in terms of revenue and profitability with revenues of $10.6 million and net income of $0.2 million," stated Vari Ghai, CEO of DDS Wireless.

"Slower demand in Europe continues to characterize sales in the Taxi business unit, with enterprise solutions revenues lower than that of 2011. However, our Transit business unit shows growth due to the significant contracts we signed with MTA New York City Transit ("NYC Transit") late last year and increasing sales of MDT's through our partners from a rising adoption of our hardware in the transit market," continued Mr. Ghai.

(1) Non-IFRS measure. Defined as earnings before interest, taxes, amortization and share-based compensation. Please refer to the reconciliation of reported financial results to Non-IFRS measures attached to this press release.

"We remain particularly pleased with the continued growth in subscriptions for our SaaS offerings to the North American small and mid-size taxi, limousine and work fleets, both currently underserved markets. TaxiBook(TM) subscriptions in North America continued to increase apace with growth of 54% in the year to date. eFleet, our SaaS offering to the limousine and work fleet markets, also met a milestone of 1,000 subscriptions."

Second Quarter 2012 Financial Results

Revenue declined 5% or $0.6 million compared to the three months ended June 30, 2011 and increased by 22% compared to the immediately preceding quarter. Revenues are lower compared to the same period last year due to lower revenues from the Taxi business unit (a decrease of $1.8 million), arising from declines in European enterprise solutions revenue, offset in part by growth through the unit's TaxiBook(TM) subscriptions. The Transit unit experienced an increase of $1.0 million in revenue from its continued activities under its NYC Transit project and through the additional sale of mobile data terminals ("MDT") to our partners.

The increase in revenue from the immediately preceding quarter of $1.8 million was the result of $0.8 million from higher TaxiBook(TM) and eFleet subscriptions (including the related MDT sales), some increases in Taxi and Transit enterprise solutions delivery and the above noted increase in the sale of MDT units in the Transit unit ($0.4 million).

Gross margin decreased by $1.1 million or 20% to $4.1 million from the same quarter last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in both the Transit and Taxi business units. The gross margin yield in the quarter was 39% compared to 46% in the same quarter last year and 38% in the immediately preceding quarter.

The decrease in the gross margin of $1.1 million, offset by combined favourable variances of $0.8 million in operating expenses and tax recoveries in the period, led to a decrease in net income of $0.3 million compared to the same period in the prior year. EBITDAS(1) was $0.7 million or 6% of revenue and net income was $0.2 million or $0.01 per share.

Year-to-Date 2012 Financial Results

Revenue declined 7% or $1.5 million compared to the six months ended June 30, 2011 arising from lower revenues from the Taxi business unit of $2.6 million; a result of declines in enterprise solutions, offset by growth in its worldwide TaxiBook(TM) sales and transaction based revenues. The decline in Taxi revenues was offset, in part, by increases in Transit revenue (through increases in enterprise solutions and MDT sales) and New Markets.

Gross margin decreased by $2.1 million or 22% to $7.5 million from the same period last year due to a combination of both lower revenues and lower average margins earned on enterprise solutions projects in both the Transit and Taxi business units, resulting from changing sales mix as well as the NYC Transit project continuing to be in a lower margin phase of the project.

The decrease in the gross margin of $2.1 million, offset by combined favourable variances in operating expenses, foreign exchange and tax recoveries in the period, led to a decrease in net income of $0.6 million compared to the same period in the prior year. EBITDAS(1) was $0.3 million or 2% of revenue and net loss was $0.3 million or $0.02 per share.

(1) Non-IFRS measure. Defined as earnings before interest, taxes, amortization and share-based compensation. Please refer to the reconciliation of reported financial results to Non-IFRS measures attached to this press release.

Outlook

In 2011 Taxi experienced strong growth in Europe arising from the upgrade cycle of our existing customers. There is now uncertainty in that market given the general economic conditions. The timing of deal flow and foreign exchange trends together with the production scheduling issues of the first quarter have given rise to a slow first half of the year. We are maintaining our guidance of 2012 annual revenues to be at least that of 2011. However, this estimate necessarily incorporates assumptions around currency rates (particularly in our case the US dollar & Euro), general economic conditions and the timing and delivery of certain contracts.

Dividend

The cash dividend, in the amount of $0.02 per Share, will be paid on or about October 15, 2012 to holders of record of Shares as of the close of business on September 28, 2012. The Company expects to declare dividends on its Shares quarterly; however, the declaration of any future dividends, as well as the distribution date and amount of any future dividends, will be determined by the Board of Directors of the Company immediately prior to each such declaration. Unless the Company indicates otherwise, the Company's dividends are designated as eligible dividends for the purposes of the Income Tax Act (Canada).

Conference Call

The Company will host a conference call at 4:30 pm Eastern Time today to discuss the financial results. Please call 416-340-2216 / 866-226-1792 to participate in the call. A replay of this conference call will be available through August 24, 2012 by dialing 905-694-9451 / 800-408-3053 and entering access code 9491576.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-IFRS financial measure which the Company defines as Earnings before interest, taxes, amortization and share-based compensation expenses. The measure is provided as a proxy for the cash earnings of the business as net income for the Company includes a significant amount of non-cash amortization expense primarily related to acquisitions completed in prior years. Adjusted Gross Margin excludes amortization expense and share-based compensation expenses. The measure is provided as gross margin includes significant amortization expense related to acquired intangibles which management believes may affect the comparability of gross margin. Please refer to the table attached to this press release for a reconciliation of non-IFRS measures to reported financial results.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, operations, anticipated financial performance, business prospects and strategies, statements about future market conditions, supply and demand conditions, revenues, gross margins, operating expenses, profits, and other expectations, intentions, and plans contained in this press release that are not historical facts. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and other factors which could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, business risks, changes in market and competition, technological and competitive developments and potential downturns in economic conditions generally. Given these risks and uncertainties DDS Wireless cannot guarantee that any forward looking statements will be realized.

About DDS Wireless International Inc.

DDS Wireless International Inc. is a global leader in providing application software for multiple vertical markets within the transportation industry. The Company specializes in transit routing and scheduling, real-time dispatching, vehicle location and tracking software applications, communications infrastructure as well as in-vehicle wireless devices. DDS Wireless operates four businesses dedicated to transit, taxi, limousines and work truck, and wireless devices and communication infrastructure. The Company supports its customers worldwide through its offices in Canada, Finland, India, Singapore, Sweden, U.K. and U.S.A.

SEE ATTACHED SUMMARY FINANCIAL STATEMENTS AND THE RECONCILIATION OF NON-GAAP MEASURES

DDS WIRELESS INTERNATIONAL INC.    

Consolidated Statements of Operations (Unaudited)

(In thousands of Canadian dollars, except per share amounts)

Three months ended Six months ended

----------------------------------------------------------------------------

----------------------------------------------------------------------------

June 30, June 30,

June 30, 2011 June 30, 2011

2012 (1) 2012 (1)

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Revenue $ 10,562 $ 11,144 $ 19,256 $ 20,728

Cost of sales 6,440 5,963 11,789 11,188

----------------------------------------------------------------------------

Gross margin 4,122 5,181 7,467 9,540

Operating expenses:

Research and development 1,597 1,618 3,095 3,175

Sales and marketing 1,175 1,459 2,361 2,746

General and

administrative 1,289 1,430 2,838 2,856

Other expense - - - 21

----------------------------------------------------------------------------

Total operating expenses 4,061 4,507 8,294 8,798

----------------------------------------------------------------------------

Profit (loss) from operating

activities 61 674 (827) 742

Net finance (income) expense (34) (76) 10 221

----------------------------------------------------------------------------

Income (loss) before income

taxes 95 750 (837) 521

Income tax expense

(recovery)

Current tax expense 113 443 35 702

Deferred tax (recovery) (224) (150) (614) (497)

----------------------------------------------------------------------------

(111) 293 (579) 205

----------------------------------------------------------------------------

Net income (loss) $ 206 $ 457 $ (258) $ 316

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Net income (loss) per common

share - basic and diluted $ 0.01 $ 0.03 $ (0.02) $ 0.02

Weighted average number of

common shares outstanding

(thousands) 13,831 13,791 13,824 13,791

----------------------------------------------------------------------------

----------------------------------------------------------------------------

(1) The Company has restated its tax expense for comparative periods

relating to the calculation of investment tax credits receivable and certain

deferred tax liabilities relating to intangible assets acquired on

acquisition of its MobiSoft OY and StrataGen Systems Inc. subsidiaries in

2007. Refer to both the 2011 annual financial statements and Q2 2012

condensed consolidated interim financial statements for commentary.    

DDS WIRELESS INTERNATIONAL INC.    

Consolidated Balance Sheets (Unaudited)

(In thousands of Canadian dollars)

June 30, December 31,

2012 2011

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Assets

Current assets:

Cash and cash equivalents $ 6,375 $ 6,778

Trade and other receivables 4,730 7,145

Contract work-in-progress 6,487 5,468

Income taxes receivable 338 59

Inventory 2,472 2,718

Prepaid expenses 735 494

Investments 1,651 1,053

----------------------------------------------------------------------------

Total current assets 22,788 23,715

Plant and equipment 940 1,022

Long-term receivables 1,173 740

Investment tax credit receivable 5,246 3,276

Deferred tax assets 876 2,326

Intangible assets 2,544 3,341

Goodwill 2,939 2,992

Investments 103 103

----------------------------------------------------------------------------

Total assets $ 36,609 $ 37,515

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Liabilities and shareholders' equity

Current liabilities:

Trade payables and accrued liabilities $ 6,909 $ 6,392

Income taxes payable 98 79

Deferred revenue 1,794 2,103

Provisions 92 135

----------------------------------------------------------------------------

Total current liabilities 8,893 8,709

Deferred tax liabilities 1,401 1,722

----------------------------------------------------------------------------

Total current and long-term liabilities 10,294 10,431

----------------------------------------------------------------------------

Shareholders' equity:

Share capital 24,686 24,611

Share-based payments reserve 1,864 1,816

Retained earnings 644 1,455

Accumulated other comprehensive loss (879) (798)

----------------------------------------------------------------------------

Total shareholders' equity 26,315 27,084

----------------------------------------------------------------------------

Total liabilities and shareholders' equity $ 36,609 $ 37,515

----------------------------------------------------------------------------

----------------------------------------------------------------------------

DDS WIRELESS INTERNATIONAL INC.    

Reconciliation of Non-IFRS Measures

(In thousands of Canadian dollars)

For the three months

ended

(CAD in thousands 2012 2011

except %) Jun Mar Dec Sep Jun Mar

----------------------------------------------------------------------------

EBITDAS (1)

EBITDAS $ 672 $(354) $1,759 $3,036 $1,464 $ 490

As % of revenue 6% (4%) 14% 24% 13% 5%

Amortization of plant

& equipment (107) (119) (106) (95) (84) (89)

Amortization of

intangibles (433) (382) (427) (437) (438) (433)

Amortization of sales

related assets (46) (49) (45) (51) (81) (100)

Share-based

compensation (11) (46) (87) (59) (111) (97)

Interest 20 20 45 (1) - (1)

----------------------------------------------------------------------------

Income (loss) before

income taxes $ 95 $(930) $1,139 $2,393 $750 $(230)

Adjusted Gross Margin

(2)

Revenues $10,562 $8,693 $12,455 $12,508 $11,144 $9,584

Adjusted gross margin 4,595 3,784 6,437 6,605 5,716 4,902

Less:

Amortization of plant

& equipment 7 7 38 - - -

Share-based

compensation 1 3 (66) 22 36 31

Amortization of sales

related assets 46 49 45 51 81 101

Amortization of

intangibles 419 382 415 417 418 411

----------------------------------------------------------------------------

Gross margin per

financial statements $4,122 $3,343 $6,005 $6,115 $5,181 $4,359

DDS WIRELESS INTERNATIONAL INC.    

Reconciliation of Non-IFRS Measures

(In thousands of Canadian dollars)

For the three months

ended

(CAD in thousands 2010

except %) Dec Sep Jun

-------------------------------------------------

EBITDAS (1)

EBITDAS $2,312 $1,034 $1,594

As % of revenue 17% 11% 17%

Amortization of plant

& equipment (94) (111) (130)

Amortization of

intangibles (459) (461) (433)

Amortization of sales

related assets (295) (244) (191)

Share-based

compensation (82) (113) (72)

Interest (14) (6) (13)

-------------------------------------------------

Income (loss) before

income taxes $1,368 $99 $755

Adjusted Gross Margin

(2)

Revenues $13,326 $9,723 $9,383

Adjusted gross margin 7,062 5,321 4,817

Less:

Amortization of plant

& equipment - - -

Share-based

compensation 28 35 20

Amortization of sales

related assets 295 244 191

Amortization of

intangibles 440 441 433

-------------------------------------------------

Gross margin per

financial statements $6,299 $4,601 $4,173

(1) Non-IFRS measure. Defined as earnings before interest, taxes,

amortization and share-based compensation.

(2) Non-IFRS measure. Defined as gross margin before amortization, and

share-based compensation.    

Contact:
Investor Relations
DDS Wireless International Inc.
(604) 241-1441
Investors@ddswireless.com

Caroline J. Dunn
DDS Wireless International Inc.
Chief Financial Officer
(604) 214-7206
www.ddswireless.com

Rates

View Comments (0)