Mitel Reports Second Quarter Fiscal 2013 Financial Results

Mitel Reports Second Quarter Fiscal 2013 Financial Results

Record Gross Margin of 56.2% in the Second Quarter

OTTAWA, Nov. 29, 2012 (GLOBE NEWSWIRE) -- Mitel® (Nasdaq:MITL) (TSX:MNW), a
leading provider of cloud and premises-based unified communications and
collaboration (UCC) solutions, today announced financial results for the
second quarter of fiscal 2013 ended October 31, 2012. All financial results
are in U.S. dollars.

"In the second quarter we exceeded our guidance across all metrics and
achieved record overall gross margin of 56.2%, despite a challenging
macroeconomic environment," said Richard McBee, Chief Executive Officer,
Mitel. "We saw solid revenue growth of 5% sequentially in our business which
was attributable to our disciplined execution across the entire company,
continued improvements on our channel-focused sales model and product
leadership in virtualization and cloud offerings."

Fiscal Second Quarter 2013 Financial Highlights

  oAdjusted EBITDA from continuing operations for the second quarter of
    fiscal 2013 was $24.1 million or 16.6%, up from $21.4 million or 13.8%
    from the prior year quarter.
  oNon-GAAP net income from continuing operations for the second quarter of
    fiscal 2013 was $14.2 million, or $0.25 per share, up from $12.6 million,
    or $0.23 per share, in the same period last year.
  oNet loss from continuing operations for the second quarter of fiscal 2013
    was $1.6 million, or $0.03 per share, diluted, compared to a net loss from
    continuing operations of $1.7 million, or $0.03 per share, diluted, in the
    same period last year.
  oRevenue from continuing operations for the second quarter of fiscal 2013
    was $145.5 million, compared to $154.6 million for the second quarter of
    fiscal 2012.
  oGross margins from continuing operations were 56.2%, up from 53.0% in the
    second quarter of fiscal 2012.
  oCash and cash equivalents as of October 31, 2012 were $87.4 million.
  oOperating cash flows for the second quarter of fiscal 2013 were $16.7
    million.
  oIn August 2012, in response to macroeconomic concerns, we implemented a
    restructuring plan that included the termination of approximately 200
    employees as well as the closure of excess facilities. We recorded a
    charge of $9.3 million in the second quarter of fiscal 2013 relating to
    these actions.

"We are pleased with our operating results this quarter, which was driven by
solid execution of our business model and our ability to expand our gross
margins and proactively manage our cost structure despite the challenging
macroeconomic environment," said Steve Spooner, Chief Financial Officer,
Mitel. "While we continue to remain cautious in our forecast, our results this
quarter reinforce our confidence in our business model."

Given that the company has previously announced the proposed sale of
DataNet/CommSource, the results of the business unit are presented as
discontinued operations, and prior period amounts have been adjusted
accordingly.

Please refer to the GAAP to non-GAAP reconciliation tables in this release and
a discussion of the use of non-GAAP measures under the heading, "Non-GAAP
Financial Measurements" below.

Business Unit Results

  oMitel Communications Solutions revenues for the second quarter of fiscal
    2013 were $122.0 million, compared to $129.4 million for the second
    quarter of fiscal 2012. Operating margin improved by 3% year over year
    primarily as a result of record gross margin in the business unit.

  oMitel NetSolutions revenues for the second quarter of fiscal 2013 grew 2%
    to $20.9 million from the same quarter of 2012. Operating margin was
    consistent with the prior year's quarter.

Business Highlights

  *More than 100% year-over-year growth in Mitel cloud customer base
    including service provider customers enabled by Mitel cloud solutions,
    customers deploying Mitel solutions in private clouds, and end-customers
    deploying Mitel AnyWare.
    
  *Several enhancements to Mitel's cloud offerings including the Mitel
    AnyWare Cloud Communications Service with advanced contact center
    functionality, multi-vendor CRM integration, and cloud-based video
    telepresence and collaboration.
    
  *Continued strengthening of Mitel strategic channel development including:

   --A new distribution agreement with Tech Data Corporation, one of the
  world's largest wholesale distributors of technology products, further
  strengthening Mitel's position in the U.S.

   -- Addition of virtualization specialist Entisys Solutions as a strategic
  Mitel Channel Partner, expanding the reach of Mitel's UCC solutions to
  customers in California.

Business Outlook

Mitel has set the following financial performance guidance for the third
quarter of fiscal year 2013 ending January 31, 2013.

  oRevenue from continuing operations is expected to be in the range of $141
    to $146 million.
  oGross margin percentage from continuing operations is expected to be in
    the range of 55.0 to 56.0 percent.
  oNon-GAAP operating expenses as a percentage of revenue from continuing
    operations are expected to be in the range of 43.0 to 44.0 percent.
    Non-GAAP operating expenses means SG&A and R&D expenses excluding
    estimated amortization of $5.6 million for acquisition-related intangible
    assets and estimated stock-based compensation expense of $1.1 million.

Conference Call Information

Mitel will host an investor conference call and live webcast today at 5:00
p.m. EST (2:00 p.m. PST) to discuss its financial results for the second
quarter ended October 31, 2012. To access the conference call, dial
866-321-6651. Callers outside the U.S. and Canada should dial 416-642-5212. A
replay of the conference call will be available through Tuesday, December 4,
2012. To access the replay, please dial 888-203-1112 and enter pass code
4640975. Callers outside the U.S. and Canada should dial 647-436-0148 and
enter pass code 4640975. The live webcast will be accessible on Mitel's
investor relations website at http://investor.mitel.com/ and will be archived
and available on this site for at least three months.

Non-GAAP Financial Measurements

This press release includes references to non-GAAP financial measures.
Non-GAAP financial measures do not have any standardized meaning and are
therefore unlikely to be comparable to similar measures presented by other
companies. We use these non-GAAP financial measures to assist management and
investors in understanding our past financial performance and prospects for
the future, including changes in our operating results, trends and marketplace
performance, exclusive of unusual events or factors which do not directly
affect what we consider to be our core operating performance. Non-GAAP
measures are among the primary indicators management uses as a basis for our
planning and forecasting of future periods. Investors are cautioned that
non-GAAP financial measures should not be relied upon as a substitute for
financial measures prepared in accordance with generally accepted accounting
principles. Please see the reconciliation of non-GAAP financial measures to
the most directly comparable U.S. GAAP measure attached to this release.

Forward Looking Statements

Some of the statements in this presentation are forward-looking statements (or
forward-looking information) within the meaning of applicable U.S. and
Canadian securities laws. These include statements using the words target,
outlook, may, will, should, could, estimate, continue, expect, intend, plan,
predict, potential, project and anticipate, and similar statements which do
not describe the present or provide information about the past. Actual results
may differ materially from those presented in forward-looking
statements.Material risks that could cause actual results to differ
include:our ability to achieve or sustain profitability in the future;
fluctuations in our quarterly and annual revenues and operating results;
fluctuations in foreign exchange rates; current and ongoing global economic
instability; intense competition; our reliance on channel partners for a
significant component of our sales; our dependence upon a small number of
outside contract manufacturers to manufacture our products; our ability to
successfully implement our restructuring plans; and our ability to implement
and achieve our business strategies successfully.Additional risks are
described under the heading "Risk Factors" in Mitel's Annual Report on Form
10-K.We have made assumptions regarding, among other things:no unforeseen
changes occurring in the competitive landscape that would affect our industry
generally or Mitel in particular; a stable or recovering economic environment;
no significant event occurring outside the ordinary course of our business;
our ability to successfully implement our restructuring plans and stable
foreign exchange and interest rates.Forward-looking information is intended
to help you understand management's current views of our future prospects, and
it may not be appropriate for other purposes.Except as required by law, Mitel
will not necessarily update forward-looking statements.

About Mitel

Mitel® (Nasdaq:MITL) (TSX:MNW) is a global provider of unified communications
and collaboration (UCC) software, solutions and services that enable
organizations to conduct business anywhere, over any medium with the device of
their choice. Through a single cloud-ready software stream, Mitel's Freedom
architecture provides customers in over 100 countries the flexibility and
simplicity needed to support today's dynamic work environment. For more
information, visit www.mitel.com.

Mitel and the Mitel logo are registered trademarks of Mitel Networks
Corporation.

All other trademarks are the property of their respective owners.

The Mitel Networks Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8599

MITL-F

MITEL NETWORKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions of US dollars)
(unaudited)
                                                              
                                                   October 31, April 30,
                                                    2012        2012
                                                              
ASSETS                                                         
Current assets:                                                
Cash and cash equivalents                          $87.4     $78.7
Accounts receivable                                 117.0      129.0
Sales-type lease receivables                        13.9       16.9
Inventories                                         30.2       28.3
Deferred tax asset                                 15.9       12.9
Other current assets                               32.2       33.8
Assets of component held for sale, current          2.2        3.4
                                                              
                                                   298.8      303.0
Non-current portion of sales-type lease receivables 20.6       23.6
Deferred tax asset                                 116.9      117.4
Property and equipment                              29.5       21.5
Identifiable intangible assets                      67.2       78.5
Goodwill                                            132.6      132.6
Other non-current assets                            8.4        8.7
Assets of component held for sale, non-current      1.9        1.9
                                                              
                                                   $675.9    $687.2
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY                           
Current liabilities:                                           
Accounts payable and accrued liabilities           $99.0     $104.3
Current portion of deferred revenue                31.1       33.3
Current portion of long-term debt                  11.2       4.6
                                                              
                                                   141.3      142.2
Long-term debt                                     302.5      307.2
Lease recourse liability                            4.6        5.7
Long-term portion of deferred revenue               12.4       12.1
Deferred tax liability                             31.0       35.9
Pension liability                                  69.3       75.2
Other non-current liabilities                       20.4       19.1
                                                              
                                                   581.5      597.4
                                                              
Shareholders' equity                                94.4       89.8
                                                              
                                                   $675.9    $687.2


MITEL NETWORKS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of US dollars, except per share amounts)
(unaudited)
                                                               
                                                               
                           Quarter Ended Quarter Ended Six Months  Six Months
                          October 31,   October 31,   Ended       Ended
                           2012          2011          October 31, October 31,
                                                       2012        2011
                                                               
Revenues                   $145.5      $154.6      $284.0    $303.7
Cost of revenues           63.7         72.6         126.9      143.8
Gross margin               81.8         82.0         157.1      159.9
Expenses:                                                       
Selling, general and       54.4         55.9         112.3      111.4
administrative
Research and development   13.9         14.4         28.4       29.5
Special charges and        9.3          8.4          11.3       13.2
restructuring costs
Loss on litigation         0.4          0.5          1.1        1.0
settlement
                          78.0         79.2         153.1      155.1
Operating income from      3.8          2.8          4.0        4.8
continuing operations
Interest expense           (4.6)        (4.6)        (9.3)      (9.4)
Other expense, net         0.6          (0.2)        0.6        (0.6)
Loss from continuing
operations, before income  (0.2)        (2.0)        (4.7)      (5.2)
taxes
Current income tax         (3.7)        0.6          (6.2)      (0.9)
recovery (expense)
Deferred income tax        2.3          (0.3)        7.4        1.1
recovery (expense)
Loss from continuing       (1.6)        (1.7)        (3.5)      (5.0)
operations
Net income (loss) from     (0.3)        0.5          (0.5)      1.0
discontinued operations
Net loss                   $(1.9)      $(1.2)      $(4.0)    $(4.0)
                                                               
Net income (loss) per                                           
common share - Basic
From continuing operations $(0.03)     $(0.03)     $(0.06)   $(0.09)
From discontinued          $(0.01)     $0.01       $(0.01)   $0.02
operations
Net loss per common share  $(0.04)     $(0.02)     $(0.07)   $(0.07)
- Basic
                                                               
Net income (loss) per                                           
common share - Diluted
From continuing operations $(0.03)     $(0.03)     $(0.06)   $(0.09)
From discontinued          $(0.01)     $0.01       $(0.01)   $0.02
operations
Net loss per common share  $(0.04)     $(0.02)     $(0.07)   $(0.07)
- Diluted
                                                               
Weighted-average number of common shares                         
outstanding (in millions):
Basic                      53.7         53.6         53.6       53.4
Diluted                    53.7         53.6         53.6       53.4


MITEL NETWORKS CORPORATION
Cash flow information
(in millions of US dollars)
(unaudited)
                                                               
                           Quarter Ended Quarter Ended Six Months  Six Months
                          October 31,   October 31,   Ended       Ended
                           2012          2011          October 31, October 31,
                                                       2012        2011
                                                               
                                                               
Cash provided by (used                                          
in):
Net cash provided by       $16.7       $3.8        $20.1     $16.2
operating activities
Net cash used in investing (4.4)        (3.9)        (7.9)      (6.5)
activities
Net cash used in financing (3.0)        (1.8)        (3.3)      (13.9)
activities
Effect of exchange rate    0.6          (0.5)        (0.2)      (0.8)
changes on cash balances
                                                               
Net increase (decrease) in 9.9          (2.4)        8.7        (5.0)
cash and cash equivalents
                                                               
Cash and cash equivalents, 77.5         71.3         78.7       73.9
beginning of period
                                                               
Cash and cash equivalents, $87.4       $68.9       $87.4     $68.9
end of period
                                                               
                                                               
                                                               
                                                               
Additional information on                                       
capital expenditures:
Capital expenditures       4.7          3.9          8.2        6.5
acquired with cash
Capital expenditures
financed through capital   3.5          0.6          5.4        0.7
leases
                                                               
Total capital expenditures $8.2        $4.5        $13.6     $7.2


MITEL NETWORKS CORPORATION
Reconciliation of Net Loss to Non-GAAP Net Income
(in millions of US dollars, except per share amounts)
(unaudited)
                                                               
                            Quarter Ended  Quarter     Six Months  Six Months
                           October 31,    Ended       Ended       Ended
                            2012           October 31, October 31, October 31,
                                           2011        2012        2011
                                                               
Net loss from continuing    $(1.6)       $(1.7)    $(3.5)    $(5.0)
operations
Income tax expense          1.4           (0.3)      (1.2)      (0.2)
(recovery)
Net loss from continuing
operations, before income   (0.2)         (2.0)      (4.7)      (5.2)
taxes
                                                               
Adjustments:                                                    
Foreign exchange loss       (0.1)         0.4        0.1        1.0
(gain)
Special charges and         9.3           8.4        11.3       13.2
restructuring costs
Stock-based compensation    1.1           1.4        2.2        2.7
Loss on litigation          0.4           0.5        1.1        1.0
settlement
Amortization of
acquisition-related         5.6           5.6        11.2       11.2
intangibles assets
Non-GAAP net income from
continuing operations,      16.1          14.3       21.2       23.9
before income taxes
Non-GAAP tax expense^(1)    (1.9)         (1.7)      (2.5)      (2.8)
Non-GAAP net income from    14.2          12.6       18.7       21.1
continuing operations
Non-GAAP net income (loss)
from discontinued           (0.4)         0.7        (0.8)      1.4
operations
Non-GAAP net income         $13.8        $13.3     $17.9     $22.5
                                                               
Non-GAAP net income per share, diluted:                          
Non-GAAP net income per
common share from           $0.25        $0.23     $0.33     $0.38
continuing operations
Non-GAAP net income (loss)
per common share from       $(0.01)      $0.01     $(0.02)   $0.02
discontinued operations
Non-GAAP net income per     $0.24        $0.24     $0.31     $0.40
common share
Weighted-average number of
common shares outstanding   56.2          56.1       56.2       56.0
(in millions):
                                                               
                                                               
(1) Non-GAAP tax expense is based on an estimated effective tax rate of 12.0%.


MITEL NETWORKS CORPORATION
Reconciliation of Net Loss to Adjusted EBITDA
(in millions of US dollars)
(unaudited)
                                                               
                         Quarter Ended  Quarter Ended  Six Months  Six Months
                        October 31,    October 31,    Ended       Ended
                         2012           2011           October 31, October 31,
                                                       2012        2011
                                                               
                                                               
Net loss                 $(1.9)       $(1.2)       $(4.0)    $(4.0)
Net loss (income) from   0.3           (0.5)         0.5        (1.0)
discontinued operations
Net loss from continuing (1.6)         (1.7)         (3.5)      (5.0)
operations
Adjustments:                                                    
Interest expense         4.6           4.6           9.3        9.4
Income tax expense       1.4           (0.3)         (1.2)      (0.2)
(recovery)
Amortization and         9.0           8.1           17.6       16.5
depreciation
Foreign exchange loss    (0.1)         0.4           0.1        1.0
(gain)
Special charges and      9.3           8.4           11.3       13.2
restructuring costs
Stock-based compensation 1.1           1.4           2.2        2.7
Loss on litigation       0.4           0.5           1.1        1.0
settlement
                                                               
Adjusted EBITDA from     24.1          21.4          36.9       38.6
continuing operations
                                                               
Adjusted EBITDA from
discontinued             (0.5)         0.8           (0.9)      1.6
operations^(1)
                                                               
Adjusted EBITDA          $23.6        $22.2        $36.0     $40.2
                                                               
(1)The reconciliation from net income (loss) from discontinued operations to
Adjusted EBITDA from discontinued operations consists of income tax expense
(recovery) of $(0.2), $0.3, ($0.4) and $0.6 for the periods presented,
respectively.


MITEL NETWORKS CORPORATION
Segmented Information
(in millions of US dollars)
(unaudited)
                                                              
                       Quarter Ended  Quarter Ended  Six Months   Six Months
                      October 31,    October 31,    Ended        Ended
                       2012           2011           October 31,  October 31,
                                                     2012         2011
                                                              
                                                              
                                                              
Revenues                                                       
Mitel Communications   $122.0       $129.4       $236.5     $253.8
Solutions
NetSolutions           20.9          20.4          41.6        40.4
Other^(1)              2.6           4.8           5.9         9.5
Total revenues         $145.5       $154.6       $284.0     $303.7
                                                              
Segment income                                                 
Mitel Communications   $29.3        $27.4        $50.3      $51.2
Solutions
NetSolutions           4.9           4.8           9.5         9.3
Other^(1)              0.5           1.1           1.0         2.4
Total segment income   $34.7        $33.3        $60.8      $62.9
                                                              
(1) The operations of the DataNet and CommSource are recorded as discontinued
operations and therefore are excluded from the periods presented.

CONTACT: Amy MacLeod (media)
         613-592-2122 x71245
         amy_macleod@mitel.com
        
         Malcolm Brown (industry analysts)
         613-592-2122 x71246
         malcolm_brown@mitel.com
        
         Cynthia Hiponia (investor relations)
         613-592-2122 x71997
         investorrelations@mitel.com

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