Posts quarterly and annual revenue of $10.1 million and $50.8 million, respectively
Completes operating expense cuts for annual savings of over 20% in 2010 compared to 2009
Establishes subsidiary in China and initiates research and development partnerships
SAN DIEGO, March 23, 2010 (GLOBE NEWSWIRE) -- Axesstel (OTCBB:AXST), a leading provider of fixed wireless voice and broadband data products, reported results for its fourth quarter and year ended December 31, 2009.
Axesstel reported that revenues for the fourth quarter of 2009 were $10.1 million, and that net loss for the period was $4.8 million, or $0.21 per share. For the year ended December 31, 2009, the company reported revenue of $50.8 million and a net loss of $10.1 million, or $0.43 per share.
Clark Hickock, CEO of Axesstel, stated, "In 2009, our core markets were significantly impacted by the global economic recession and disruption in the financial markets. Weak consumer demand slowed orders, and the tight credit markets caused telecommunications operators to delay rollout of new infrastructure. This decline was particularly evident in Venezuela, our largest market from 2006 to 2008, where our sales dropped $35.1 million year-over-year, decreasing from $44.4 million in 2008 to $9.3 million in 2009. However, the slow down affected most markets we serve; overall demand decreased and average selling price per product dropped significantly in 2009 as larger competitors made aggressive price cuts to retain or win market share."
"While we are disappointed with our fourth quarter and year-end results, we have taken a number of steps that are designed to make us more competitive in 2010 and beyond. We have reduced our operating expenses and restructured our product development processes. We sold our Korean research and development subsidiary during the fourth quarter, but retained our core engineering design team. We opened a wholly owned subsidiary in China and have established research and development partnerships with manufacturers in that region. Through these relationships, we have re-engineered eight of our desktop phone products and are completing the re-engineering on five of our data products. These products will provide the same features and functions as our current products, at substantial discounts to our current prices."
"In summary, our corporate initiatives and their intended impact on operations in 2010 include:
- Commercially launching our re-engineered, lower cost lines of phones and modems;
- Expanding sales of broadband modems for tier 1, 2 and 3 carriers in North America;
- Expanding sales of 3G data and VoIP gateways in Europe; and
- Realizing approximately $4 million of annualized operating expense savings in 2010, representing a reduction of over 20% compared to 2009."
Hickock concluded, "We recognize we face financial challenges. We incurred a significant loss in 2009 and now have a working capital deficit. However, with streamlined operations, if gross margins return to the low twenties, we are targeting profitability at approximately $60 million of annual revenue. Also, we have created a new cost effective model for product development that we believe will drive demand in 2010. From a product and competitive standpoint, we feel very good about our position."
Financial Results
Revenues for the fourth quarter of 2009 were $10.1 million, compared to revenues of $15.0 million in the third quarter of 2009. Data products contributed 63 percent of revenues and voice products 37 percent in the fourth quarter of 2009, compared to data products with 70 percent and voice products with 30 percent in the third quarter of 2009. Gross profit for the fourth quarter of 2009 was $264,000, after a write down for obsolete inventory of $1.5 million, compared to gross margin of $3.0 million, in the third quarter of 2009. In the fourth quarter of 2009, the company also wrote off $385,000 of bad debt, which was included in operating expenses. Fourth quarter 2009 net loss, including the write downs, was $4.8 million, or $0.21 per share, compared to a net loss of $909,000, or $0.04 per share, for the third quarter 2009.
For the year ended December 31, 2009, the company reported revenue of $50.8 million, compared to $109.6 million for 2008. After obsolete inventory and bad debt write-offs of $3.1 million, 2009 net loss was $10.1 million, or $0.43 per share, compared to 2008 net income of $1.4 million, or $0.06 per diluted share.
Pat Gray, CFO, stated, "2009 was a difficult year. We experienced significantly lower product demand due to the economic slowdown, and that contributed to an additional $3.1 million loss related to obsolete inventory and bad debt. Another impact of the weak demand was an accelerated decline in average selling prices for products. In response, we have restructured every aspect of the company's cost structure. We have decreased our costs of goods sold and operating expenses through our new development partnerships in China. On this basis, any economic rebound that drives growth in our overall revenues would be expected to result in improved profitability. We entered 2010 with backlog of $16 million and expect the majority of that backlog to be delivered in the first quarter."
As of December 31, 2009, the cash and cash equivalents balance was $602,000, compared to $1.7 million as of December 31, 2008. The company continues to fund its working capital needs through financing of accounts receivable backed by credit insurance or letters of credit. The company ended the year with $4.5 million in receivables based financing. Working capital at December 31, 2009 was a deficit of $7.6 million.
"As a result of our working capital deficit, we do not currently have capital reserves to overcome significant additional operating losses. In the short term, our goal is to correct our working capital shortfall through increased operating profits and debt financings," said Gray. "At the same time, we are exploring and will continue to evaluate various strategic and financing options to improve our financial position."
CTIA International Wireless 2010
This week the company will demonstrate its high performance "Verizon Wireless Network Ready" MV440 Wi-Fi broadband gateway and TX240G fixed wireless voice terminal with AGPS/E911 service designed for wireline replacement and exhibit its diverse product line of broadband modems, 3G and VoIP gateways, fixed wireless phones and terminals, and machine to machine alarm devices based in 2G and 3G GSM and CDMA technologies at the CTIA International Wireless 2010 on March 23-25 at Booth 3723.
Conference Call
Axesstel will host a conference call at 8:00 a.m. PT (11:00 a.m. ET) today, March 23, 2010 to discuss its fourth quarter and year end 2009 results. Participating in the call will be Clark Hickock, chief executive officer, and Patrick Gray, chief financial officer.
The call will be webcast and can be accessed from the "Investor Relations" section of the company's website at http://www.axesstel.com. Alternatively, you may dial the following number ten minutes prior to the scheduled conference call time: 1-877-663-9622. International callers should dial 00-1-973-200-3973. The conference ID/password will be #57423581.
If you are unable to participate in the call at this time, the webcast will be archived on the Axesstel website. In addition, a telephonic replay will be available at 2:00 p.m. ET through Thursday, March 25th at 11:59 p.m. ET. To access the replay, please dial 1-800-642-1687. International callers should dial 00-1-706-645-9291. The pass code will be 57423581.
About Axesstel, Inc.
Axesstel (OTCBB:AXST) is a globally recognized industry leader in the design and development of fixed wireless voice and broadband data products. Axesstel's best in class product portfolio includes broadband modems, 3G and VoIP gateways, machine to machine applications, voice/data terminals, fixed wireless desktop phones and public call office phones for high-speed data and voice calling services. The company delivers innovative fixed wireless solutions to leading telecommunications operators and distributors worldwide. Axesstel is headquartered in San Diego, California. For more information on Axesstel, visit www.axesstel.com.
The Axesstel, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6261
© 2010 Axesstel, Inc. All rights reserved. The Axesstel logo is a trademark of Axesstel, Inc.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above include forward-looking statements relating to market penetration and conditions, product capabilities and the timing of new product introductions which may affect future results and the future viability of Axesstel. Axesstel wishes to caution readers that actual results could differ materially from those suggested by the forward-looking statements due to risks and uncertainties and a number of important risk factors. Those factors include but are not limited to the risk factors noted in Axesstel's filings with the Securities and Exchange Commission, such as to the need for additional working capital; economic and political instability in developing markets served by Axesstel; unforeseen manufacturing difficulties, unanticipated component shortages, competitive pricing pressures and the rapidly changing nature of technology and frequent introductions of new products and enhancements by competitors; the competitive nature of the markets for Axesstel's products; product and customer mix, Axesstel's need to gain market acceptance for its products; dependence on a limited number of large customers; potential intellectual property-related litigation; Axesstel's need to attract and retain skilled personnel; and Axesstel's reliance on its primary contract manufacturer. All forward-looking statements are qualified in their entirety by this cautionary statement, and Axesstel undertakes no obligation to revise or update this press release to reflect events or circumstances occurring after this press release.
Tables to follow
| AXESSTEL, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| For the three months ended | For the years ended | |||
| December 31, 2009 | December 31, 2008 | December 31, 2009 | December 31, 2008 | |
| Revenues | $ 10,125,149 | $ 23,275,325 | $ 50,818,893 | $ 109,592,366 |
| Cost of goods sold | 9,861,177 | 18,105,770 | 42,534,373 | 83,321,217 |
| Gross margin | 263,972 | 5,169,555 | 8,284,520 | 26,271,149 |
| Operating expenses | ||||
| Research and development | 1,000,952 | 1,138,381 | 3,824,884 | 4,797,865 |
| Selling, general and administrative | 3,471,132 | 4,120,452 | 13,267,317 | 18,267,145 |
| Total operating expenses | 4,472,084 | 5,258,833 | 17,092,201 | 23,065,010 |
| Operating income (loss) | (4,208,112) | (89,278) | (8,807,681) | 3,206,139 |
| Other income (expense) | ||||
| Interest expense, net | (328,414) | (102,867) | (1,079,822) | (1,314,929) |
| Other, net | (290,656) | (201,572) | (243,961) | (336,234) |
| Total other income (expense) | (619,070) | (304,439) | (1,323,783) | (1,651,163) |
|
Income (loss) before provision for income taxes |
(4,827,182) | (393,717) | (10,131,464) | 1,554,976 |
| Provision for income taxes | -- | 75,282 | -- | 136,210 |
| Net income (loss) | $ (4,827,182) | $ (468,999) | $ (10,131,464) | $ 1,418,766 |
| Earnings (loss) per share: | ||||
| Basic | $ (0.21) | $ (0.02) | $ (0.43) | $ 0.06 |
| Diluted | $ (0.21) | $ (0.02) | $ (0.43) | $ 0.06 |
| Weighted average shares outstanding: | ||||
| Basic | 23,456,232 | 23,228,982 | 23,352,076 | 23,228,982 |
| Diluted | 23,456,232 | 23,228,982 | 23,352,076 | 23,554,835 |
| AXESSTEL, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||
| (Unaudited) | ||
| ASSETS | ||
| Current assets: | December 31, 2009 | December 31, 2008 |
| Cash and cash equivalents | $ 602,106 | $ 1,662,311 |
| Accounts receivable, net | 10,908,292 | 27,196,264 |
| Inventories, net | 2,925,388 | 1,317,576 |
| Prepayments and other current assets | 773,036 | 2,211,488 |
| Total current assets | 15,208,822 | 32,387,639 |
| Property and equipment, net | 333,521 | 1,000,666 |
| Other assets: | ||
| Licenses, net | 555,139 | 1,164,859 |
| Other, net | 91,857 | 378,321 |
| Total other assets | 646,996 | 1,543,180 |
| Total assets | $ 16,189,339 | $ 34,931,485 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| December 31, 2009 | December 31, 2008 | |
| Current liabilities: | ||
| Accounts payable | $ 12,629,113 | $ 19,323,734 |
| Bank financing | 4,485,318 | 5,391,342 |
| Accrued commissions | 1,911,000 | 3,302,846 |
| Accrued royalties | 1,430,000 | 1,338,000 |
| Accrued warranties | 375,000 | 460,000 |
| Accrued expenses and other current liabilities | 1,980,795 | 2,331,177 |
| Total current liabilities | 22,811,226 | 32,147,099 |