- Company Reports Adjusted Net Income before Non-Cash Items of $ 3.0 million
- Guidance for Fiscal 2011 Net Income before Non-Cash Items Increases to $9.0 - $9.5 million
- Total Revenue Increases 17% Year-Over-Year to $12.8 million
- Company Declares Regular Quarterly Dividend of $0.10 Per Share
CHICAGO, July 28, 2011 (GLOBE NEWSWIRE) -- Telular Corporation (Nasdaq:WRLS), a global leader in connecting businesses and machines over wireless networks, today announced financial results for the third fiscal quarter ended June 30, 2011. In the third quarter 2011, Telular reported revenue of $12.8 million and pre-tax income of $2.3 million.
Third quarter 2011 net income before non-cash items was $3.0 million, a 70% year-over-year increase. Net income before non-cash items is a non-GAAP measure that adds back depreciation, amortization, stock-based compensation expense, and non-cash deferred tax provision to net income. For further information, see the reconciliation of this measure to net income in accordance with GAAP, on the last page of this press release.
As part of the Company's current dividend policy, Telular also declared a quarterly dividend of $0.10 per share on its common stock, payable August 22, 2011, to shareholders of record as of the close of business on August 15, 2011. During the third quarter, the Company paid shareholders a dividend totaling $1.5 million and ended the quarter with $10.0 million of cash on the balance sheet.
In the third quarter of 2011, total recurring service revenue from both the Telguard and TankLink lines of business increased 13% over the prior year period to $8.0 million. Total Telguard revenues were $10.5 million and during the quarter, Telular sold 24,300 Telguard units and activated 22,400 new Telguard subscribers. As expected, the total number of Telguard subscribers decreased sequentially to 556,300 while average revenue per unit, or ARPU, increased sequentially to $4.20 from $4.08. As stated last quarter, while we are experiencing a modest decrease in our total subscriber base due to a continuing account reconciliation project of a large customer, we are also achieving higher ARPU because of our more profitable subscriber mix.
Total TankLink sales in the third quarter were $1.8 million and TankLink service revenues increased 12% sequentially to $898,000 from $805,000. The quarter ended with 21,200 billable tanks generating an ARPU of $13.78, up 10% from $12.53 on a sequential basis. The Company sold approximately 1,500 tank monitoring units, which generated TankLink product revenues of $897,000.
"We had a strong third quarter of 2011 as we continued to accelerate our Telguard sales and substantially improved revenues from our TankLink business," commented Joe Beatty, president and chief executive officer of Telular Corporation. "Telguard unit sales are tracking at the high end of our sales guidance and we are pleased about the continued growth and margin expansion in our TankLink business. We demonstrated our commitment to delivering shareholder value by issuing our regular quarterly dividend while still growing cash on hand to over $10 million," concluded Mr. Beatty.
"Our recurring service revenue base continues to grow; up 13% this quarter over last year, which gives us strong visibility into our business," added Jonathan Charak, chief financial officer of Telular Corporation. "Importantly, we increased service margins 650 basis points over last year as a result of an improvement in service costs as well as a more profitable mix in our customer base. Looking forward, we are raising our guidance for fiscal 2011 net income before non-cash items to $9.0 - $9.5 million."
Investor Conference Call
Telular's quarterly conference call will be held today at 4:30 p.m. ET. To participate on the teleconference from the United States and Canada dial 877-941-9205 (International dial 480-629-9692). A replay of the call will be available from July 28, 2011 beginning at 6:30 p.m. ET (5:30 p.m. CT) through July 30, 2011 ending at 11:59 p.m. ET (10:59 p.m. CT) by dialing 800-406-7325 (enter pass code 4455881#) or internationally at: 303-590-3030 (enter pass code 4455881#). The replay will also be available via webcast from the Company's corporate website at http://www.telular.com.
About Telular
Telular Corporation provides remote monitoring solutions for business and residential customers, enabling security systems and industrial applications to exchange actionable information, typically through the use of wireless technology. With over 20 years of experience in the wireless industry, Telular Corporation has developed solutions to deliver remote access for voice and data without significant network investment or disruption. Headquartered in Chicago, Telular Corporation has additional offices in Atlanta and Miami. For more information, please visit www.telular.com.
Please be advised that some of the information in this release presents the Company's intentions, beliefs, judgments and expectations of the future and are forward-looking statements. Statements regarding expectations, including performance assumptions, estimates relating to future cash flows, levels of demand for our products, dividend amounts and capital requirements, as well as other statements that are not historical facts, are forward-looking statements. For example, the statement "we are raising our guidance for fiscal 2011 net income before non-cash items to $9.0 - $9.5 million" is a forward-looking statement. These statements reflect management's judgments based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer growth and retention, pricing, operating costs and the economic environment. It is important to note that the Company's actual results could differ materially from these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K and Form 10-K/A for the fiscal year ended September 30, 2010. Copies of these filings may be obtained by contacting the Company or the SEC.
| TELULAR CORPORATION | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| AND STATEMENTS OF CASH FLOWS | ||
| (Dollars in thousands, except share data) | ||
| BALANCE SHEETS | ||
| June 30, | September 30, | |
| 2011 | 2010 | |
| (Unaudited) | ||
| ASSETS | ||
| Cash and cash equivalents | $ 10,013 | $ 27,678 |
| Trade receivables, net | 5,989 | 7,056 |
| Inventories, net | 4,137 | 4,821 |
| Deferred taxes | 246 | 336 |
| Prepaid expenses and other current assets | 941 | 290 |
| Total current assets | 21,326 | 40,181 |
| Property and equipment, net | 2,167 | 2,169 |
| Long term deferred taxes | 33,003 | 34,698 |
| Other assets | 11,241 | 4,503 |
| Total assets | $ 67,737 | $ 81,551 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | $ 7,113 | $ 6,135 |
| Long-term liabilities | 749 | 529 |
| Total stockholders' equity | 59,875 | 74,887 |
| Total liabilities and stockholders' equity | $ 67,737 | $ 81,551 |
| Outstanding shares | 15,101,245 | 14,871,889 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Nine Months Ended June 30, | ||
| 2011 | 2010 | |
| (Unaudited) | (Unaudited) | |
| Net cash provided by (used in): | ||
| Operating activities | $ 9,965 | $ 7,415 |
| Investing activities | (8,606) | (582) |
| Financing activities | (19,024) | (142) |
| Net increase (decrease) in cash and cash equivalents | $ (17,665) | $ 6,691 |
| TELULAR CORPORATION | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Dollars in thousands, except share data) | ||||
| Unaudited | ||||
| Three Months Ended June 30, | Nine Months Ended June 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Revenues | ||||
| Net product sales | $ 4,837 | $ 3,948 | $ 14,315 | $ 15,072 |
| Service revenue | 7,987 | 7,054 | 23,091 | 20,308 |
| Total revenue | 12,824 | 11,002 | 37,406 | 35,380 |
| Cost of Sales | ||||
| Net product cost of sales | 3,312 | 3,310 | 10,432 | 12,460 |
| Service cost of sales | 2,543 | 2,704 | 8,416 | 8,101 |
| Total cost of sales | 5,855 | 6,014 | 18,848 | 20,561 |
| Gross margin | 6,969 | 4,988 | 18,558 | 14,819 |
| Operating Expenses | ||||
| Engineering and development expenses | 1,122 | 1,044 | 3,358 | 3,552 |
| Selling and marketing expenses | 1,970 | 1,382 | 5,451 | 4,567 |
| General and administrative expenses | 1,587 | 1,659 | 5,492 | 4,640 |
| Total operating expenses | 4,679 | 4,085 | 14,301 | 12,759 |
| Income from operations | 2,290 | 903 | 4,257 | 2,060 |
| Other income, net | -- | 99 | 131 | 276 |
| Net income before income taxes | 2,290 | 1,002 | 4,388 | 2,336 |
| Provision for income taxes | 255 | 42 | 1,852 | 84 |
| Net income | $ 2,035 | $ 960 | $ 2,536 | $ 2,252 |
| Income per common share: | ||||
| Basic | $ 0.14 | $ 0.06 | $ 0.17 | $ 0.15 |
| Diluted | $ 0.13 | 0.06 | $ 0.16 | 0.15 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 15,072,061 | 14,939,803 | 15,008,214 | 14,937,170 |
| Diluted | 16,017,257 | 15,325,862 | 15,868,051 | 15,351,480 |
Reconciliation of Non-GAAP Measures
We use net income before non-cash items as an additional measure of our operating performance. This measure is not recognized under generally accepted accounting principles. The reconciliation below demonstrates how we calculate this measure from our financial statements.
| Three Months Ended June 30, | Nine Months Ended June 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| (Unaudited) | (Unaudited) | |||
| Net income | $ 2,035 | $ 960 | $ 2,536 | $ 2,252 |
| Non-cash compensation | 335 | 529 | 1,347 | 1,275 |
| Depreciation and amortization | 496 | 293 | 1,290 | 852 |
| Non-cash deferred tax provision | 174 | -- | 1,676 | -- |
| Net income before non-cash items | $ 3,040 | $ 1,782 | $ 6,849 | $ 4,379 |
Net income before non-cash items should be considered in addition to, but not as a substitute for, other measures of performance reported in accordance with accounting principles generally accepted in the United States. While we believe that net income before non-cash items, as defined above, is useful within the context described above, it is in fact incomplete and not a measure that should be used to evaluate the full performance of Telular Corporation. Such evaluation needs to consider all of the complexities associated with our business, including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business and how regulations and other aforementioned items affect the final amounts that are or will be available to shareholders as a return on their investment. Net income determined in accordance with U.S. GAAP is the most complete measure available today to evaluate all elements of our performance.