Numerex Reports Second Quarter 2014 Financial Results

Numerex Reports Second Quarter 2014 Financial Results

2^nd Quarter 2014 Comparisons to 2^nd Quarter 2013

  *Total Net Revenues up 31% to $22.6 million
  *Subscription and Support revenues up 29% to $16.2 million
  *Embedded devices and hardware revenues up 35% to $6.4 million
  *Gross Profit increases 61% to $10.7 million, reflecting a 47% margin

ATLANTA, Aug. 6, 2014 (GLOBE NEWSWIRE) -- Numerex Corp (Nasdaq:NMRX), a
leading provider of interactive and on-demand machine-to-machine (M2M)
solutions enabling the Internet of Things (IoT), today announced financial
results for its second quarter ended June 30, 2014.

"The Company markedly advanced its M2M strategy in the second quarter and
first half of the year, the result of strong demand of its new M2M solutions
and the acquisition of new product and service lines," stated Stratton
Nicolaides, CEO and chairman of Numerex. "These vertically-focused solutions
continue to attract new customers in security, supply chain, and asset
monitoring and tracking. Our recently acquired offender monitoring business is
performing well and is the cornerstone of our 'people tracking' initiative,
which includes mobile worker, personal emergency response, and child safety
programs. Overall, our vertical market focus is centered on the delivery of
high-value solutions that typically yield a higher contribution margin and
increase average revenue per unit. As a result, the Company expects the
momentum created year-to-date coupled with a robust opportunity funnel and
sales pipeline will produce incrementally favorable results in the second half
of the year."

Additional Financial Comparisons

2^nd Quarter Year-over-Year Compared to Q2 of 2013

  oGross Margin on subscriptions and support revenues was 61.3% compared to
    54.6%;
  oGAAP income from continuing operations, net of income taxes was $0.2
    million;
  oAdjusted EBITDA increased 161% to $3.0 million
  oAdjusted EBITDA margin doubled to 13.2% from 6.6%

6 month Year-to-Date 2014 Compared to 6 month Year-to-Date in 2013

  *Gross Margin on subscriptions and support revenues was 61.3% compared to
    55.4%;
  *GAAP income from continuing operations, net of income taxes was $1.4
    million, up 215%
  *Adjusted EBITDA increased 92% to $5.8 million;
  *Adjusted EBITDA margin was 13.3% compared to 8.9%, up 49%

Mr. Nicolaides continued, "We expect a sequential improvement in total
revenues and service and support revenues. Consequently, we reiterate our
subscription and support revenue growth guidance of 30% to 34%. We added over
121,000 net subscriptions during the second quarter and expect continued
substantial net growth in our subscription base throughout the year. That
being said, our strategic focus on high-value subscriptions is expected to
generate a substantial increase in contribution per subscription, which we
believe is a more relevant measure of the performance of our business. As a
result, we are raising our adjusted EBITDA growth guidance to 40% to 45% over
the full year 2013 and are no longer providing subscription growth guidance."

Financial Metrics

                                  ThreeMonths Ended  SixMonths Ended
                                  June 30,            June 30,
Non-GAAP Measures*               2014     2013     2014     2013
                                                                
Adjusted EBITDA ($ in millions)  $3.0      $1.1     $5.8     $3.0
Adjusted EBITDA as a percent of   13.2%      6.6%       13.3%      8.9%
total revenue
Adjusted EBITDA per diluted       $0.16     $0.06    $0.30    $0.16
share
Net new subscriptions (units)    121,000   139,000   176,000   287,000
Total subscriptions (units)      2,385,000 2,000,000 2,385,000 2,000,000
______________                                                 
* Refer to the section of this press release entitled "Non-GAAP (Adjusted)
Financial Measures" for a discussion of
these non-GAAP items and a reconciliation to the most comparable GAAP
measure.
                                                                
GAAP Measures                                                  
                                                                
Subscription and support revenues $16.2    $12.5    $30.1    $24.5
($ in millions)
Gross margin --- subscription and 61.3%      54.6%      61.3%      55.4%
support revenues
Income from continuing
operations, net of incometaxes($ $0.2     $0.4      $1.4     $0.4
in millions)
Diluted EPS from continuing       $0.01    $0.02    $0.07    $0.02
operations

Additional Q2 Financial Information and Year-over-year comparisons to Q2 of
2013

Total GAAP operating expenses were $11.0 million compared to $8.6 million:

  *Sales and marketing expenses were $3.1 million compared to $2.3 million.
    The increase was due to recent acquisitions and the addition of sales and
    marketing personnel to drive and support growth.
  *General and administrative expenses were $4.2 million as compared to $3.8
    million. Current quarter G&A expense includes $0.9 million of acquisition
    related costs.
  *Engineering and development costs increased to $2.1 million from $1.3
    million due to recent acquisitions and to support new product and project
    initiatives.
  *Operating expenses include depreciation and amortization charges of $1.6
    million compared to $1.3 million.

Quarterly Conference Call

Numerex will discuss its quarterly results via teleconference today at 4:30
p.m. Eastern Time. Please dial (877) 303-9240 or, if outside the U.S. and
Canada, (760) 666-3571 to access the conference call at least five minutes
prior to 4:30 p.m. Eastern Time start time. A live webcast of the call will
also be available at www.numerex.com under the Investor Relations section. The
audio replay will be posted two hours after the end of the call on the
Company's website or by dialing (855) 859-2056 or (404) 537-3406 if outside
the US and Canada and entering the conference ID 76790493. The replay will be
available for the next 10 days.

About Numerex

Numerex Corp. (Nasdaq:NMRX) is a leading provider of interactive and on-demand
machine-to-machine (M2M) enterprise solutions enabling the Internet of Things
(IoT). The Company provides its technology and services through its integrated
M2M horizontal platforms which are generally sold on a subscription basis. The
Company offers Numerex DNA® that may include hardware and smart Devices,
cellular and satellite Network services, and software Applications that are
delivered through Numerex FAST® (Foundation Application Software Technology).
The Company also provides business services to enable the development of
efficient, reliable, and secure solutions while accelerating deployment.
Numerex is ISO 27001 information security-certified, highlighting the
Company's focus on M2M data security, service reliability and around-the-clock
support of its customers' M2M solutions. For additional information, please
visit www.numerex.com.

This press release contains, and other statements may contain, forward-looking
statements with respect to Numerex future financial or business performance,
conditions or strategies and other financial and business matters, including
expectations regarding growth trends and activities. Forward-looking
statements are typically identified by words or phrases such as "believe,"
"expect," "anticipate," "intend," "estimate," "assume," "strategy," "plan,"
"outlook," "outcome," "continue," "remain," "trend," and variations of such
words and similar expressions, or future or conditional verbs such as "will,"
"would," "should," "could," "may," or similar expressions. Numerex cautions
that these forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time. These forward-looking
statements speak only as of the date of this press release, and Numerex
assumes no duty to update forward-looking statements. Actual results could
differ materially from those anticipated in these forward-looking statements
and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ
materially from forward-looking statements or historical performance: the
risks and uncertainties related to our ability to successfully integrate the
operations, products and employees of Omnilink; the effect of the merger on
relationships with customers, vendors and lenders; our inability to capture
greater recurring subscription revenues; our ability to efficiently utilize
cloud computing to expand our services; the risks that a substantial portion
of revenues derived from contracts may be terminated at any time; the risks
that our strategic suppliers and/ or wireless network operators materially
change or disrupt the flow of products or services; variations in quarterly
operating results; delays in the development, introduction, integration and
marketing of new products and services; customer acceptance of services;
economic conditions resulting in decreased demand for our products and
services; the risk that our strategic alliances, partnerships and/or wireless
network operators will not yield substantial revenues; changes in financial
and capital markets and the inability to raise growth capital on favorable
terms, if at all; the inability to attain revenue and earnings growth; changes
in interest rates; inflation; the introduction, withdrawal, success and timing
of business initiatives and strategies; competitive conditions; the inability
to realize revenue enhancements; disruption in key supplier relationships
and/or related services; and extent and timing of technological changes.

© 2014 Numerex Corp. All rights reserved. Numerex, the Numerex logo and all
other marks contained herein are trademarks of Numerex Corp. and/or
Numerex-affiliated companies. All other marks contained herein are the
property of their respective owners.



NUMEREX CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

                                       Three Months Ended Six Months Ended
                                       June 30,           June 30,
                                       2014     2013      2014      2013
Net sales:                                                        
Subscription and support revenues       $16,216 $12,543  $ 30,101 $24,450
Embedded devices and hardware           6,362   4,728    13,249   9,258
Total net sales                         22,578  17,271   43,350   33,708
Cost of sales, exclusive of a portion
of depreciation and amortization shown                            
below:
Subscription and support revenues       6,278   5,694    11,636   10,909
Embedded devices and hardware           5,578   4,911    11,152   9,227
Gross profit                            10,722  6,666    20,562   13,572
Gross margin                            47.5%    38.6%     47.4%     40.3%
Operating expenses:                                               
Sales and marketing                     3,084   2,328    6,037    4,271
General and administrative              4,180   3,789    7,778    6,654
Engineering and development             2,086   1,269    3,365    2,309
Depreciation and amortization           1,624   1,263    2,973    2,276
Operating (loss) income               (252)   (1,983)  409      (1,938)
Interest expense                      232     55       286      145
Other (income) expense, net           (40)    4        (1,174)  (4)
(Loss) income from continuing          (444)   (2,042)  1,297    (2,079)
operations before income taxes
Income tax benefit                    (670)   (2,454)  (75)     (2,514)
Income from continuing operations, net 226     412      1,372    435
of income taxes
Loss from discontinued operations, net (436)   (1,424)  (492)    (1,436)
of income taxes
Net (loss) income                     $(210)  $(1,012) $880     $(1,001)
                                                                 
Basic earnings per share:                                       
Income from continuing operations     $0.01   $0.02    $0.07    $0.02
Loss from discontinued operations     (0.02)  (0.07)   (0.02)   (0.08)
Net (loss) income                     $(0.01) $(0.05)  $0.05    $(0.06)
                                                                 
Diluted earnings per share:                                     
Incomefrom continuing operations     $0.01   $0.02    $0.07    $0.02
Loss from discontinued operations     (0.02)  (0.07)   (0.02)   (0.07)
Net (loss) income                     $(0.01) $(0.05)  $0.05    $(0.05)
                                                                 
Weighted average shares outstanding                              
used in computing earnings per share:
Basic                                 18,889  18,411   18,871   18,004
Diluted                               19,198  18,950   19,249   18,613



NUMEREX CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                      June 30,   December 31,
                                                      2014       2013
ASSETS                                                           
CURRENT ASSETS                                                   
Cash and cash equivalents                              $ 16,403  $ 25,603
Accounts receivable, less allowance for doubtful       10,376    9,385
accounts of $1,092 and $674
Financing receivables, current                         1,371     1,223
Inventory, net of reserve for obsolescence             8,433     8,315
Prepaid expenses and other current assets              1,915     1,833
Deferred tax assets, current                           2,742     2,742
Assets of discontinued operations                      --       840
TOTAL CURRENT ASSETS                                   41,240    49,941
                                                                
Financing receivables, less current portion            3,115     3,029
Property and equipment, net of accumulated             4,603     3,125
depreciation and amortization of $2,696 and $1,879
Software, net of accumulated amortization of $5,048    6,218     6,381
and $3,706
Other intangibles, net of accumulated amortization of  19,859    5,617
$14,102 and $13,189
Goodwill                                               48,381    26,941
Deferred tax assets, less current portion              2,948     3,958
Other assets                                           2,209     2,298
TOTAL ASSETS                                           $128,573 $101,290
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                             
CURRENT LIABILITIES                                              
Accounts payable                                       $9,254   $9,953
Accrued expenses and other current liabilities         3,497     2,004
Deferred revenues                                      2,177     1,894
Current portion of long-term debt                      3,446     633
Obligations under capital leases                       311       306
Liabilities of discontinued operations                 --       207
TOTAL CURRENT LIABILITIES                              18,685    14,997
                                                                
Long-term debt, less current portion                   21,721    475
Obligations under capital lease, less current portion  --       148
Other liabilities                                      1,802     1,693
TOTAL LIABILITIES                                      42,208    17,313
                                                                
COMMITMENTS AND CONTINGENCIES                                    
                                                                
SHAREHOLDERS' EQUITY                                             
Preferred stock, no par value; authorized 3,000; none  --       --
issued
Class A common stock, no par value; 30,000 authorized;           
20,223 and 20,069 issued; 18,939 and 18,828            --       --
outstanding
Class B common stock, no par value; authorized 5,000;  --       --
none issued
Additional paid-in capital                             97,396    95,777
Treasury stock, at cost, 1,284 and 1,241 shares        (5,352)   (5,238)
Accumulated other comprehensive loss                   (21)      (24)
Accumulated deficit                                    (5,658)   (6,538)
TOTAL SHAREHOLDERS' EQUITY                             86,365    83,977
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $128,573 $101,290
                                                                

                        NUMEREX CORP AND SUBSIDIARIES
                    NON-GAAP (ADJUSTED) FINANCIAL MEASURES

In addition to providing financial measurements based on accounting principles
generally accepted in the United States of America (GAAP), we have provided
EBITDA, Adjusted EBITDA and Adjusted EBITDA per diluted share, financial
measures that are not prepared in accordance with GAAP (non-GAAP). The most
directly comparable GAAP equivalent to EBITDA and Adjusted EBITDA is income
from continuing operations, net of income taxes. The most directly comparable
GAAP equivalent to EBITDA and Adjusted EBITDA per diluted share is diluted
earnings per share from continuing operations.

  *EBITDA is income from continuing operations, net of income taxes, plus
    depreciation and amortization, interest and other non-operating expenses
    and income tax expense. Any other non-operating income, net of income
    taxes is subtracted from income from continuing operations, net of income
    taxes.
  *Adjusted EBITDA is EBITDA less non-cash equity-based compensation and
    infrequent or unusual items further described below.
  *EBITDA and Adjusted EBITDA per diluted share is EBITDA and Adjusted EBITDA
    divided by weighted average diluted shares outstanding.

Reconciliations of our non-GAAP financial measures to the most directly
comparable financial measure are provided below. We believe that presentation
of these non-GAAP financial measures provides useful information to investors
regarding our results of operations.

We believe that excluding depreciation and amortization of property, equipment
and intangible assets to calculate EBITDA and Adjusted EBITDA provides
supplemental information and an alternative presentation that is useful to
investors' understanding of our core operating results and trends. Not only
are depreciation and amortization expenses based on historical costs of assets
that may have little bearing on present or future replacement costs, but also
they are based on our estimates of remaining useful lives.

Similarly, we believe that excluding the effects of equity-based compensation
from non-GAAP financial measures provides supplemental information and an
alternative presentation useful to investors' understanding of our core
operating results and trends. Investors have indicated that they consider
financial measures of our results of operations excluding equity-based
compensation as important supplemental information useful to their
understanding of our historical results and estimating our future results.

We also believe that, in excluding the effects of equity-based compensation,
our non-GAAP financial measures provide investors with transparency into what
management uses to measure and forecast our results of operations, to compare
on a consistent basis our results of operations for the current period to that
of prior periods and to compare our results of operations on a more consistent
basis against that of other companies, in making financial and operating
decisions and to establish certain management compensation.

Equity-based compensation is an important part of total compensation,
especially from the perspective of employees. We believe, however, that
supplementing GAAP income from continuing operations by providing income from
continuing operations, excluding the effect of equity-based compensation in
all periods, is useful to investors because it enables additional and more
meaningful period-to-period comparisons.

Adjusted EBITDA also excludes infrequent or unusual items. For the three and
six month periods ended June 30, 2014, infrequent or unusual items include
acquisition-related costs while the three and six months ended June 30, 2013
include temporarily higher carrier fees and acquisition-related costs. We
believe that these are costs that we will not incur on a regular basis, and
consequently, we do not consider these charges as a component of ongoing
operations.

EBITDA and Adjusted EBITDA are not measures of liquidity calculated in
accordance with GAAP, and should be viewed as a supplement to – not a
substitute for – results of operations presented on the basis of GAAP. EBITDA
and Adjusted EBITDA do not purport to represent cash flow provided by
operating activities as defined by GAAP. Furthermore, EBITDA and Adjusted
EBITDA are not necessarily comparable to similarly-titled measures reported by
other companies.

We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA per diluted share are
useful to and used by investors and other users of the financial statements in
evaluating our operating performance because it provides them with an
additional tool to compare business performance across periods.

We believe that:

  *EBITDA is widely used by investors to measure a company's operating
    performance without regard to items such as interest expense, income
    taxes, depreciation and amortization, which can vary substantially from
    company-to-company depending upon accounting methods and book value of
    assets, capital structure and the method by which assets were acquired;
    and
  *Investors commonly adjust EBITDA information to eliminate the effect of
    equity-based compensation and other unusual or infrequently occurring
    items which vary widely from company-to-company and impair comparability.

We use EBITDA, Adjusted EBITDA and Adjusted EBITDA per diluted share:

  *as a measure of operating performance to assist in comparing performance
    from period-to-period on a consistent basis
  *as a measure for planning and forecasting overall expectations and for
    evaluating actual results against such expectations; and
  *in communications with the board of directors, analysts and investors
    concerning our financial performance.

Adjusted EBITDA is also a component of our loan covenant calculations.
Although we believe, for the foregoing reasons, that the presentation of
non-GAAP financial measures provides useful supplemental information to
investors regarding our results of operations, the non-GAAP financial measures
should only be considered in addition to, and not as a substitute for, or
superior to, any measure of financial performance prepared in accordance with
GAAP.

Use of non-GAAP financial measures is subject to inherent limitations because
they do not include all the expenses that must be included under GAAP and
because they involve the exercise of judgment of which charges should properly
be excluded from the non-GAAP financial measure. Management accounts for these
limitations by not relying exclusively on non-GAAP financial measures, but
only using such information to supplement GAAP financial measures. The
non-GAAP financial measures may not be the same non-GAAP measures, and may not
be calculated in the same manner, as those used by other companies.

NUMEREX CORP. AND SUBSIDIARIES
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS, NET OF INCOME
TAXES, TO EBITDA AND ADJUSTED EBITDA, INCLUDING PER SHARE AMOUNTS
                                                               
The following table reconciles the specific items excluded from GAAP in the
calculation of EBITDA and Adjusted EBITDA for the periods indicated below (in
thousands, except per share amounts):
                                                                
                             Three Months Ended       Six Months Ended
                             June 30,                 June 30,
                             2014         2013        2014        2013
Income from continuing
operations, net of income     $ 226       $412       $1,372     $435
taxes (GAAP)
Depreciation and amortization 1,762       1,279      3,180      2,326
expense
Interest expense and other
non-operating (income)        192         59         (888)      141
expense, net
Income tax benefit            (670)       (2,454)    (75)       (2,514)
EBITDA (non-GAAP)             1,510       (704)      3,589      388
Equity-based compensation     584         395        1,139      717
expense
Infrequent or unusual items   884         1,452      1,023      1,884
Adjusted EBITDA (non-GAAP)    $ 2,978     $ 1,143    $ 5,751    $ 2,989
                                                               
Income from continuing
operations, net of income     $0.01       $0.02      $0.07      $0.02
taxes, per diluted share
(GAAP)
EBITDA per diluted share      0.08        (0.04)     0.19       0.02
(non-GAAP)
Adjusted EBITDA per diluted   0.16        0.06       0.30       0.16
share (non-GAAP)
                                                               
Weighted average shares
outstanding used in computing 19,198      18,950     19,249     18,613
diluted earnings per share

For the three and six month periods ended June 30, 2014, infrequent or unusual
items include acquisition-related costs while the three and six months ended
June 30, 2013 include temporarily higher carrier fees and acquisition-related
costs.

CONTACT: Numerex Corp. Contact:
         Rick Flynt
         770 615-1387
        
         Investor Relations Contact:
         Seth Potter
         646 277-1230

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