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Fiscal 2011 Net Income Before Non-Cash Items Up 51% Over the Prior Year
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Company Declares a 10% Increase in the Regular Quarterly Dividend to $0.11 Per Share
- Recurring Service Revenue Grows 13% Year-Over-Year and Represents 62% of Total Revenue
CHICAGO, Nov. 10, 2011 (GLOBE NEWSWIRE) -- Telular Corporation (Nasdaq:WRLS), a global leader in connecting businesses and machines over wireless networks, today announced financial results for the fourth quarter and fiscal year ended September 30, 2011. Telular reported fourth quarter 2011 revenue of $13.1 million and fiscal year 2011 revenue of $50.5 million. Pre-tax income for the fourth quarter of 2011 was $2.1 million, up 45% from the prior year period. Pre-tax income for fiscal year 2011 increased to $6.4 million, up 72% from fiscal year 2010.
Net income before non-cash items was $2.8 million for the fourth quarter and $9.6 million for the full year, a 38% and 51% year-over-year increase, respectively, and above guidance of $9.5 million for the full year. 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, at the end of this press release.
Positively, one year after Telular first announced its regular dividend, the Company's Board of Directors has approved an increase in the quarterly dividend, to $0.11 per share, payable November 29, 2011, to shareholders of record as of the close of business on November 22, 2011. The Company ended fiscal year 2011 with $12.6 million of cash on the balance sheet; up from $10.0 million at the end of last quarter.
In the fourth quarter and fiscal year 2011, total recurring service revenue from both the Telguard and TankLink lines of business increased 13% in both the fourth quarter and for the full year, to $8.1 million and $31.2 million, respectively.
"A majority of our revenue is recurring, as we continue to grow service revenues, thereby providing great stability to our earnings," said Joe Beatty, president and chief executive officer of Telular Corporation. "Moreover, the contribution from our TankLink service revenues is evidence that we can successfully add new M2M revenue streams while continuing our trend of profitable growth," Beatty added.
Total Telguard revenues increased to $10.6 million during the fourth quarter and grew to $40.9 million for the fiscal year 2011. Telular sold 25,500 Telguard units in the fourth quarter bringing the total for the Telguard units sold in the full year to 90,200. Telular also activated 25,500 new Telguard subscribers in the fourth quarter and 87,500 in the full year 2011, bringing the total Telguard subscriber base to 563,500. Telguard average revenue per unit, or ARPU, increased 6% over the prior year period to $4.24 in the fourth quarter of 2011.
TankLink reported total sales of $1.8 million in the fourth quarter and $6.4 million for fiscal year 2011. TankLink's service revenues increased 5% sequentially to $943,000 in the fourth quarter, and increased to $3.1 million for fiscal year 2011. The Company ended fiscal year 2011 with 22,600 billable tanks generating an ARPU of $13.48 per month. The Company sold approximately 1,400 tank monitoring units in the fourth quarter bringing the total tank monitoring units sold to 6,400 in 2011. The tank monitoring units resulted in TankLink product revenues of $882,000 in the fourth quarter and $3.3 million for the full year.
"We are pleased with our fourth quarter results, which highlight the strong growth trends we have experienced throughout 2011," said Beatty. "During the quarter, we grew service revenues, up 13% year-over-year, as well as delivered Telguard unit sales that exceeded the high end of our unit guidance. Importantly, on the one year anniversary of when we first declared an initial quarterly dividend, we are reinforcing our commitment to shareholders by increasing our regular dividend payment by 10% this quarter," Beatty concluded.
"In 2011, we executed on our strategy of driving growth in our Telguard and TankLink businesses and remained focused on profitability - exceeding our guidance for net income before non-cash items," added Jonathan Charak, chief financial officer of Telular Corporation. "We have succeeded in delivering higher service margins in 2011 as a result of our more profitable customer mix and an improved cellular service agreement with our primary carrier. Looking into 2012, we plan to make targeted investments in new sales and service personnel as well as product promotions, designed both to drive growth in recurring service revenue and to enhance customer satisfaction capabilities. Despite a combined investment of $1.5 million for these initiatives, we are targeting net income before non-cash items to increase to $11.0 million to $12.0 million for the fiscal year 2012. Further, we are increasing our expectation of quarterly Telguard unit sales to 20,000 - 30,000, throughout fiscal 2012."
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 480-629-9835). A replay of the call will be available from November 10, 2011 beginning at 6:30 p.m. ET (5:30 p.m. CT) through November 12, 2011 ending at 11:59 p.m. ET (10:59 p.m. CT) by dialing 800-406-7325 (enter pass code 4480199#) or internationally at: 303-590-3030 (enter pass code 4480199#). 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 targeting net income before non-cash items to increase to $11.0 million to $12.0 million for the fiscal year 2012" and "we are increasing our expectation of quarterly Telguard unit sales to 20,000 - 30,000, throughout fiscal 2012" are forward-looking statements. 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 | ||
|
September 30, 2011 |
September 30, 2010 |
|
| (Unaudited) | ||
| ASSETS | ||
| Cash and cash equivalents | $ 12,642 | $ 27,678 |
| Trade receivables, net | 5,859 | 7,056 |
| Inventories, net | 3,005 | 4,821 |
| Deferred taxes | 672 | 336 |
| Prepaid expenses and other current assets | 465 | 290 |
| Total current assets | 22,643 | 40,181 |
| Property and equipment, net | 2,282 | 2,169 |
| Long term deferred taxes | 32,268 | 34,698 |
| Other assets | 11,040 | 4,503 |
| Total assets | $ 68,233 | $ 81,551 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | $ 7,128 | $ 6,135 |
| Long-term liabilities | 678 | 529 |
| Total stockholders' equity | 60,427 | 74,887 |
| Total liabilities and stockholders' equity | $ 68,233 | $ 81,551 |
| Outstanding shares | 15,135,330 | 14,871,889 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Twelve Months Ended September 30, | ||
| 2011 | 2010 | |
| (Unaudited) | (Unaudited) | |
| Net cash provided by (used in): | ||
| Operating activities | $ 14,442 | $ 10,883 |
| Investing activities | (9,034) | (857) |
| Financing activities | (20,444) | (252) |
| Net increase (decrease) in cash and cash equivalents | $ (15,036) | $ 9,774 |
| TELULAR CORPORATION | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Dollars in thousands, except share data) | ||||
| Unaudited | ||||
| Three Months Ended September 30, | Twelve Months Ended September 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| Revenues | ||||
| Net product sales | $ 5,022 | $ 4,823 | $ 19,337 | $ 19,895 |
| Service revenue | 8,070 | 7,151 | 31,161 | 27,459 |
| Total revenue | 13,092 | 11,974 | 50,498 | 47,354 |
| Cost of Sales | ||||
| Net product cost of sales | 4,141 | 3,953 | 14,573 | 16,413 |
| Service cost of sales | 2,357 | 2,863 | 10,773 | 10,964 |
| Total cost of sales | 6,498 | 6,816 | 25,346 | 27,377 |
| Gross margin | 6,594 | 5,158 | 25,152 | 19,977 |
| Operating Expenses | ||||
| Engineering and development expenses | 1,222 | 1,010 | 4,580 | 4,562 |
| Selling and marketing expenses | 1,720 | 1,368 | 7,171 | 5,935 |
| General and administrative expenses | 1,564 | 1,479 | 7,056 | 6,119 |
| Total operating expenses | 4,506 | 3,857 | 18,807 | 16,616 |
| Income from operations | 2,088 | 1,301 | 6,345 | 3,361 |
| Other income, net | (30) | 118 | 101 | 394 |
| Net income before income taxes | 2,058 | 1,419 | 6,446 | 3,755 |
| Provision for income taxes | 440 | (34,450) | 2,292 | (34,366) |
| Net income | $ 1,618 | $ 35,869 | $ 4,154 | $ 38,121 |
| Income per common share: | ||||
| Basic | $ 0.11 | $ 2.41 | $ 0.28 | $ 2.55 |
| Diluted | $ 0.10 | $ 2.35 | $ 0.26 | $ 2.49 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 15,115,351 | 14,893,427 | 15,035,218 | 14,926,145 |
| Diluted | 16,066,238 | 15,272,315 | 15,906,030 | 15,320,011 |
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 September 30, | Twelve Months Ended September 30, | |||
| 2011 | 2010 | 2011 | 2010 | |
| (Unaudited) | (Unaudited) | |||
| Net income | $ 1,618 | $ 35,869 | $ 4,154 | $ 38,121 |
| Non-cash compensation | 329 | 336 | 1,676 | 1,611 |
| Depreciation and amortization | 497 | 296 | 1,787 | 1,148 |
| Non-cash deferred tax provision | 318 | (34,505) | 1,994 | (34,505) |
| Net income before non-cash items | $ 2,762 | $ 1,996 | $ 9,611 | $ 6,375 |
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.