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Communications Systems, Inc. Reports Fourth Quarter and Full Year 2012 Results

Communications Systems, Inc. Reports Fourth Quarter and Full Year 2012 Results

PR Newswire

MINNETONKA, Minn., March 12, 2013

MINNETONKA, Minn., March 12, 2013 /PRNewswire/ --Communications Systems, Inc.
(NASDAQ: JCS) today reported financial results for its fourth quarter and full
year ended December 31, 2012.

For the three months ended December 31, 2012, the Company had net income of
$92,000 or $0.01 per diluted share, on sales of $25,757,000, compared to a
2011 fourth quarter loss of ($574,000) or ($0.07) per diluted share, on sales
of $25,338,000. For the twelve months ended December 31, 2012, net income was
$2,238,000, or $.26 per diluted share, on sales of $104,250,000. In fiscal
2011, the Company earned $9,798,000 or $1.15 per diluted share, on sales of
$143,775,000.

William G. Schultz, President and CEO commented: "We encountered a difficult
economic environment in 2012, primarily related to lower Federal Government
spending for networking initiatives, which affected both our Transition
Networks and JDL Technologies business units. In addition, year-over-year
comparisons are challenging due to the large one-time project in our
Transition Networks business unit that contributed $32 million in 2011
revenue." Schultz continued, "While we are not satisfied with our overall
2012 performance, we are encouraged by several positive aspects in our
business and by our opportunities in 2013 and beyond.

"In the 2012 fourth quarter, Suttle continued its strong growth by increasing
revenue to $11,863,000, a 25% increase over the 2011 fourth quarter. For the
full year 2012, Suttle grew revenue 13% over 2011 to $45,030,000, buoyed by
resurgence in the housing market, specifically in multi-tenant-dwelling
construction. We also continued to invest in the Suttle business to create
new products, including fiber optic and copper connectivity solutions. While
Suttle's sales outside the United States declined 31% in 2012 compared to
2011, we continue to see strong opportunities in Latin America, South America,
Europe, Middle East and Canada. We have added resources to take advantage of
these opportunities and will continue to invest in these markets in 2013.
Suttle has a strong Telco customer base and is focused on selling new products
to existing customers and expanding its products sales to new customers
globally.

"As mentioned earlier JDL Technologies was affected by lower spending by an
education customer, resulting in 2012 annual revenues of $5,377,000, a 57%
decline from 2011. In the fourth quarter of 2012, JDL Technologies was
selected as one of the partners for a project with the Miami-Dade County
Public School District ("M-DCPS"), the fourth largest public school district
in the United States. This new business will contribute up to $23 million in
revenue to JDL Technologies, most of which will be realized in 2013. As
mentioned in our October 23, 2012 press release, although this project will
contribute to CSI's overall profitability, the M-DCPS project is primarily
hardware; therefore the Company's margins from this project will be
significantly lower than the margins from JDL's historical projects, which
have included a significant value-added service component.

"JDL has begun to expand its education services outside of South Florida, and
in the 2013 first quarter, it was awarded a project for DeSoto Public Schools
in Central Florida worth roughly $400,000. In addition to growing in the
education market, JDL Technologies continues to expand the customer base for
its managed services, virtualization and migration-to-the-cloud products and
services, and is focused on offering these services to small- and medium-sized
businesses in the healthcare and commercial markets.

"During the fourth quarter of 2012, Transition Networks introduced a new
Network Interface Device and its Converge™ Enterprise Management Software.
These products further expand Transition Networks' portfolio for the Telco
market providing more functionality and easier management and provisioning for
customers. For the full year 2012, Transition Networks performance declined
due primarily to the large one-time project in 2011. It has also been
negatively affected by the slowdown in Federal Government spending. We
continue to invest in Transition Networks and grow its capabilities to better
serve its Telco, enterprise, industrial, and security and surveillance
markets. Our 2011 Patapsco acquisition has been an important addition to
Transition Networks' capabilities to serve the mobile backhaul and government
markets. The Patapsco integration has enabled us to develop new products that
combine these two companies' technologies to penetrate our existing market and
expand into new markets. In January 2013, Transition Networks also received
the Carrier Ethernet 2.0 from the Metro Ethernet Forum for one of its new
products. This product and certification will allow easier deployment of
Carrier Ethernet services and enable Transition Networks to expand in this
market. Despite its 2012 decline, we believe Transition Networks is well
positioned to continue growing over the long term.

"We are proud of our 2012 progress implementing our new Enterprise Resource
Planning (ERP) system, which will significantly strengthen our long-term
performance by standardizing all CSI business units on a common platform. The
ERP system will bring efficiencies in the cycle from product concept to
product development to bringing products to market; it will enable us to lower
manufacturing costs and better manage our supply chain; and it will give us
many tools to provide improved customer service. Although implementing this
new ERP system has been a significant investment, we expect to achieve
substantial dividends in improved execution and enhanced service to our
customers. Our first business unit will start operating on this new system in
the second quarter of 2013 and all business units will be converted by the end
of the second quarter 2014.

Mr. Schultz closed: "CSI's strategy is focused on growing our current
customers with continued investment to offer new products and services. We
will also invest to enter new markets, particularly outside the US, and make
investments in technology that will make us more competitive. These
investments are vital for our long term growth and we are excited by the
opportunities in each of our business units."

Further Information

Further information regarding the Company's results and related matters will
be provided in the Company's Form 10-K report for the year ended December 31,
2012, which will be filed on March 15, 2013.

Cautionary Statement
From time to time, in reports filed with the Securities and Exchange
Commission, in press releases, and in other communications to shareholders or
the investing public, the Communications Systems Inc. may make forward-looking
statements concerning possible or anticipated future financial performance,
business activities or plans which are typically preceded by the words
"believes," "expects," "anticipates," "intends" or similar expressions. For
these forward-looking statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in federal securities
laws. Shareholders and the investing public should understand that these
forward-looking statements are subject to risks and uncertainties, including
those disclosed in our periodic filings with the SEC, which could cause actual
performance, activities or plans after the date the statements are made to
differ significantly from those indicated in the forward-looking statements
when made.

About Communications Systems
Communications Systems, Inc. provides physical connectivity infrastructure and
services for global deployments of broadband networks. Focusing on innovative,
cost-effective solutions, CSI provides customers the ability to deliver,
manage, and optimize their broadband network services and architecture. From
the integration of fiber optics in any application and environment to
efficient home voice and data deployments to optimization of data and
application access, CSI provides the tools for maximum utilization of the
network from the edge to the user. With partners and customers in over 50
countries, CSI has built a reputation as a reliable global innovator focusing
on quality and customer service.



CSI CONSOLIDATED SUMMARY OF EARNINGS
Selected Income Statement Data
                    Unaudited                     Unaudited
                    Three Months   Three Months   Twelve         Twelve
                    Ended          Ended          Months Ended   Months Ended
                    December 31,   December 31,   December 31,   December 31,
                    2012           2011           2012           2011
Sales             $ 25,756,788   $ 25,337,994   $ 104,249,654  $ 143,775,051
Gross margin        10,132,508     10,555,783     41,496,891     58,895,127
Operating           201,362        (363,062)      3,396,118      17,514,920
income
Income before       195,211        (380,064)      3,397,680      17,619,990
income taxes
Income taxes        103,250        194,213        1,159,566      7,822,124
Net income        $ 91,961       $ (574,277)    $ 2,238,114    $ 9,797,866
Basic net
income per        $ 0.01         $ (0.07)       $ 0.26         $ 1.16
share
Diluted net
income per        $ 0.01         $ (0.07)       $ 0.26         $ 1.15
share
Cash dividends    $ 0.16         $ 0.15         $ 0.64         $ 0.60
per share
Average basic
shares              8,517,212      8,465,823      8,508,497      8,448,612
outstanding
Average
dilutive shares     8,490,086      8,521,183      8,519,021      8,495,873
outstanding
                    Selected
                    Balance
                    Sheet Data
                    
                    Unaudited
                    December 31,   December 31,
                    2012           2011
Total assets      $ 112,534,645  $ 116,658,916
Cash , cash
equivalents and     35,947,647     46,034,821
investments
Property, plant
and equipment,      14,474,913     14,019,019
net
Long-term           3,297,808      3,740,710
liabilities
Stockholders'       93,995,393     97,530,560
equity



SOURCE Communications Systems, Inc.

Website: http://www.commsystems.com
Contact: William G. Schultz, or David T. McGraw, both at +1-952-996-1674
 
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