Breaking News

Tweet TWEET

WPCS Reports 1st Quarter FY2013 Results

WPCS Reports 1st Quarter FY2013 Results 
EXTON, PA -- (Marketwire) -- 09/14/12 --  WPCS International
Incorporated (NASDAQ: WPCS), a leader in design-build engineering
services for communications infrastructure, today announced financial
results for the fiscal year 2013 first quarter ended July 31, 2012.
In the first quarter, the WPCS domestic and international operation
centers generated EBITDA of approximately $695,000 compared to an
EBITDA loss of $7.1 million in preceding quarter ended April 30,
2012. These same operation centers generated EBITDA of $2.0 million
for the same period in the prior year.  
WPCS reported net income of approximately $994,000 or $0.14 per
diluted shared which includes income from discontinued operations of
approximately $1.7 million, or $0.24 per diluted share related to the
asset sales of the Hartford and Lakewood Operations. This compares to
a net loss of approximately $35,000 or $0.01 per diluted share for
the same period a year ago, which includes a loss from discontinued
operations of approximately $189,000, or $0.03 per diluted share. For
the first quarter, WPCS reported revenue of $13.4 million compared to
$18.6 million for the same period in the prior year. Although the
company has recently announced many new contract awards, the start of
these projects are scheduled for later in the year, therefore these
project delays caused the reported revenue to be lower than planned.
However, the delayed project revenue is expected to be recognized in
the quarters ahead. 
Andrew Hidalgo, CEO of WPCS, commented, "I am pleased to report a
substantial improvement in financial performance quarter over
quarter. For the first quarter, our operation centers generated
$695,000 in EBITDA on revenue of $13.4 million. Even our Trenton
Operations, which is coming off a difficult year of losses, generated
positive EBITDA of $208,000 in the first quarter. The projects that
generated the losses are behind us. We have strengthened the balance
sheet and income statement. Our challenge continues to be cash flow.
The current debt facility of $2 million with Sovereign Bank is not
sufficient to meet our future operating requirements. We need to
replace this debt facility as a priority. If we are able to obtain an
adequate debt facility, we believe we will be in a better position
for growth and increased shareholder value."  
As a reminder, there will be an investor conference call at 5:00 pm
ET today. To participate on the conference call, please dial
800-875-3456 for calls within the U.S. or 302-607-2001 for calls from
international locations. Upon reaching the operator, verbally
transmit the participant code VH25585. When the overview concludes,
your questions can be asked by pressing *1 and your questions can be
removed from the queue by pressing the number sign. Replays of the
call will be available for a period of five days by dialing
800-355-2355 and entering 25585 as the program identification number. 
About WPCS International Incorporated: 
WPCS is a design-build engineering company that focuses on the
implementation requirements of communications infrastructure. The
company provides its engineering capabilities including wireless
communication, specialty construction and electrical power to the
public services, healthcare, energy and corporate enterprise markets
worldwide. For more information, please visit www.wpcs.com  
Statements about the company's future expectations, including future
revenue and earnings and all other statements in this press release,
other than historical facts, are "forward looking" statements and are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements
involve risks and uncertainties and are subject to change at any
time. The company's actual results could differ materially from
expected results. In reflecting subsequent events or circumstances,
the company undertakes no obligation to update forward looking
statements. 
The press release references a financial measure, EBITDA that is not
in accordance with GAAP. WPCS defines EBITDA in the traditional sense
of earnings before interest, income taxes, depreciation and
amortization but in addition, WPCS has incurred one-time charges
(credits) for the (gain) loss from discontinued operations and the
strategic alternatives effort as well as non-cash charges from
deferred tax asset valuation allowances, acquisition related earn-out
costs and goodwill impairments. These charges are also excluded from
the EBITDA calculation so that the company can provide a more
meaningful perspective on the results for the continuing operations.
The company uses EBITDA to evaluate its operating and financial
performance in light of business objectives, for planning purposes,
when publicly providing our business outlook and to facilitate
period-to-period comparisons. The company believes that this measure
is useful to investors because it enhances investors' ability to
review the Company's business from the same perspective as our
management and to facilitate comparisons of this period's results
with prior periods. Non-GAAP measures are used by some investors when
assessing the ongoing operating and financial performance of the
company. These financial measures are not in accordance with GAAP and
may differ from non-GAAP methods of accounting and reporting used by
other companies. The presentation of the additional information
should not be considered a substitute for net income (loss) or net
income (loss) per diluted share prepared in accordance with GAAP. The
primary material limitations associated with the use of non-GAAP
measures as compared to the most directly comparable GAAP financial
measures are (i) they may not be comparable to similarly titled
measures used by other companies in our industry, and (ii) they
exclude financial information that some may consider important in
evaluating our performance. Pursuant to the Requirements of
Regulation G, WPCS has included a reconciliation of EBITDA to the
most directly comparable GAAP financial measure.  


 
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
              CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)              
                                                                            
                                                    Three Months Ended      
                                                         July 31,           
                                                    2012           2011     
                                               -------------  ------------- 
                                                                 (Note 1)   
                                                                            
REVENUE                                        $  13,444,417  $  18,616,091 
                                               -------------  ------------- 
                                                                            
COSTS AND EXPENSES:                                                         
  Cost of revenue                                 10,514,076     14,207,243 
  Selling, general and administrative expenses     3,010,966      3,257,938 
  Depreciation and amortization                      361,714        439,173 
  Change in fair value of acquisition-related                               
   contingent consideration                                -         43,068 
                                               -------------  ------------- 
                                                                            
                                                  13,886,756     17,947,422 
                                               -------------  ------------- 
                                                                            
OPERATING (LOSS) INCOME                             (442,339)       668,669 
                                                                            
OTHER EXPENSE (INCOME):                                                     
  Interest expense                                   125,115         95,793 
  Interest income                                     (9,798)        (8,476)
                                               -------------  ------------- 
                                                                            
(Loss) income from continuing operations                                    
 before income tax provision                        (557,656)       581,352 
                                                                            
Income tax provision                                 134,529        411,888 
                                                                            
                                               -------------  ------------- 
(LOSS) INCOME FROM CONTINUING OPERATIONS            (692,185)       169,464 
                                               -------------  ------------- 
                                                                            
Discontinued operations:                                                    
  Loss from operations of discontinued                                      
   operations, net of tax of $54,164 and                                    
   ($438,228), respectively                         (639,292)      (188,685)
  Gain from disposal                               2,324,631              - 
                                               -------------  ------------- 
  Income (loss) from discontinued operations,                               
   net of tax                                      1,685,339       (188,685)
                                               -------------  ------------- 
                                                                            
CONSOLIDATED NET INCOME (LOSS)                       993,154        (19,221)
                                                                            
Net (loss) income attributable to                                           
 noncontrolling interest                                (547)        15,456 
                                               -------------  ------------- 
                                                                            
NET INCOME (LOSS) ATTRIBUTABLE TO WPCS         $     993,701  $     (34,677)
                                               =============  ============= 
                                                                            
Basic and diluted net income (loss) per common                              
 share attributable to WPCS:                                                
  (Loss) income from continuing operations                                  
   attributable to WPCS                        $       (0.10) $        0.02 
  Income (loss) from discontinued operations                                
   attributable to WPCS                        $        0.24  $       (0.03)
                                               -------------  ------------- 
  Basic and diluted net income (loss) per                                   
   common share attributable to WPCS           $        0.14  $       (0.01)
                                               =============  ============= 
                                                                            
Basic weighted average number of common shares                              
 outstanding                                       6,954,766      6,954,766 
                                               =============  ============= 
Diluted weighted average number of common                                   
 shares outstanding                                6,954,766      6,964,211 
                                               =============  ============= 
                                                                            
 (1) The prior year financial statements contain certain reclassifications  
to present discontinued operations.                                         
                                                                            
                                                                            
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                                                            
                                                    July 31,     April 30,  
                     ASSETS                           2012          2012    
                                                 ------------- -------------
                                                  (Unaudited)               
CURRENT ASSETS:                                                             
                                                                            
  Cash and cash equivalents                      $   1,257,920 $     811,283
  Accounts receivable, net of allowance of                                  
   $1,618,454 and $1,794,729 at July 31, 2012                               
   and April 30, 2012, respectively                 13,776,221    22,343,304
  Costs and estimated earnings in excess of                                 
   billings on uncompleted contracts                 2,310,399     1,340,379
  Inventory                                                  -     1,475,266
  Prepaid expenses and other current assets          2,356,016     2,142,191
  Prepaid income taxes                                  48,586       137,279
  Deferred tax assets                                  396,391       307,550
                                                 ------------- -------------
      Total current assets                          20,145,533    28,557,252
                                                                            
PROPERTY AND EQUIPMENT, net                          3,173,186     4,309,450
                                                                            
OTHER INTANGIBLE ASSETS, net                           354,210       382,852
                                                                            
GOODWILL                                             1,963,321     1,930,826
                                                                            
DEFERRED TAX ASSETS                                    247,362       243,999
                                                                            
OTHER ASSETS                                            69,776       371,020
                                                 ------------- -------------
                                                                            
      Total assets                               $  25,953,388 $  35,795,399
                                                 ============= =============
                                                                            
                                                                            
                                                                            
              WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES              
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                                                            
             LIABILITIES AND EQUITY                July 31,      April 30,  
                                                     2012          2012     
                                                 ------------  ------------ 
                                                  (Unaudited)               
CURRENT LIABILITIES:                                                        
                                                                            
  Current portion of loans payable               $     44,124  $    143,514 
  Borrowings under line of credit                           -     4,964,140 
  Current portion of capital lease obligations          5,432        15,465 
  Accounts payable and accrued expenses            11,128,316    16,669,621 
  Billings in excess of costs and estimated                                 
   earnings on uncompleted contracts                2,448,516     3,594,193 
  Deferred revenue                                    631,716       790,270 
  Due joint venture partner                         3,412,434     3,314,708 
  Other payable                                       793,927             - 
  Income taxes payable                                268,816       194,963 
                                                 ------------  ------------ 
      Total current liabilities                    18,733,281    29,686,874 
                                                                            
Loans payable, net of current portion                  56,414       223,561 
                                                 ------------  ------------ 
      Total liabilities                            18,789,695    29,910,435 
                                                 ------------  ------------ 
                                                                            
                                                                            
COMMITMENTS AND CONTINGENCIES                                               
                                                                            
EQUITY: WPCS EQUITY:                                                        
  Preferred stock - $0.0001 par value, 5,000,000                            
   shares authorized, none issued                           -             - 
  Common stock - $0.0001 par value, 25,000,000                              
   shares authorized, 6,954,766 shares issued                               
   and outstanding at July 31, 2012 and April                               
   30, 2012                                               695           695 
  Additional paid-in capital                       50,739,430    50,477,543 
  Accumulated deficit                             (46,149,961)  (47,143,662)
  Accumulated other comprehensive income on                                 
   foreign currency translation                     1,471,089     1,433,066 
                                                 ------------  ------------ 
                                                                            
      Total WPCS equity                             6,061,253     4,767,642 
                                                                            
      Noncontrolling interest                       1,102,440     1,117,322 
                                                 ------------  ------------ 
                                                                            
      Total equity                                  7,163,693     5,884,964 
                                                 ------------  ------------ 
                                                                            
      Total liabilities and equity               $ 25,953,388  $ 35,795,399 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)           
                                                                            
    (1) Reconciliation of Non-GAAP EBITDA:                                  
                                             Three Months Ended             
                                ------------------------------------------- 
                                   July 31,       July 31,      April 30,   
                                     2012           2011           2012     
                                -------------  -------------  ------------- 
                                                                            
NET INCOME (LOSS) ATTRIBUTABLE                                              
 TO WPCS, GAAP                  $     993,701  $     (34,677) $  (8,528,827)
                                                                            
Plus:                                                                       
    Net income (loss)                                                       
     attributable to                                                        
     noncontrolling interest             (547)        15,456       (118,400)
    Loss from discontinued                                                  
     operations, net of tax           639,292        188,685        442,903 
    (Gain) loss from disposal                                               
     of discontinued operations    (2,324,631)             -          5,100 
    Income tax provision                                                    
     (benefits)                       134,529        411,888       (458,442)
    Interest expense                  125,115         95,793        270,059 
    Interest income                    (9,798)        (8,476)             - 
    Change in fair value of                                                 
     acquisition-related                                                    
     contingent consideration               -         43,068              - 
    One time strategic costs                -         63,670         13,402 
    Goodwill and intangible                                                 
     assets impairment                      -              -         20,167 
    Depreciation and                                                        
     amortization                     361,714        439,173        439,128 
                                                                            
                                -------------  -------------  ------------- 
Consolidated EBITDA, Non-GAAP         (80,625)     1,214,580     (7,914,910)
                                -------------  -------------  ------------- 
Plus:                                                                       
    Corporate operating                                                     
     expenses                         775,743        736,855        817,985 
                                                                            
                                -------------  -------------  ------------- 
EBITDA of Continuing Operation                                              
 Centers, Non-GAAP              $     695,118  $   1,951,435  $  (7,096,925)
                                =============  =============  ============= 

  
CONTACT:  
WPCS International Incorporated
610-903-0400 x101
ir@wpcs.com 
 
 
Press spacebar to pause and continue. Press esc to stop.