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
o Adjusted 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.
o Non-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.
o Net 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.
o Revenue 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.
o Gross margins from continuing operations were 56.2%, up from 53.0% in the
second quarter of fiscal 2012.
o Cash and cash equivalents as of October 31, 2012 were $87.4 million.
o Operating cash flows for the second quarter of fiscal 2013 were $16.7
million.
o In 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
o Mitel 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.
o Mitel 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.
o Revenue from continuing operations is expected to be in the range of $141
to $146 million.
o Gross margin percentage from continuing operations is expected to be in
the range of 55.0 to 56.0 percent.
o Non-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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