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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| TSXV:CDN | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
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DDS Wireless International Inc. (TSX:DD) -
First Quarter 2014
Revenue of $8.6 million
Net profit of $1.4 million or $0.10 per share
EBITDAS(1) of $1.6 million, or $0.12 per share
DDS Wireless International Inc., a world leader in providing wireless data
solutions for fleet management for more than 26 years, today reported financial
results for the three months and fiscal year to date ended March 31, 2014.
All financial information is expressed in Canadian ("CDN") dollars and has been
prepared in accordance with International Financial Reporting Standards
("IFRS"), except as otherwise noted.
Due to the seasonal nature of our business, the first quarter of each year is
typically a slower quarter. Despite the challenges that our first quarter
normally brings, revenues were in line with expectations at $8.6 million and
recurring revenue was 75% of revenue in the quarter. The adjusted gross margin
yield was 51% which is an improvement of five percent from the first quarter of
2013.
As at March 31, 2014, the Company held $11.6 million in cash and short-term
investments, consistent with the December 31, 2013 balances.
First Quarter Financial Results
Revenue is consistent with the three months ended March 31, 2013 and experienced
a typical seasonal drop from the fourth quarter of 2013. Recurring revenue was
75% of revenue compared to 70% for the first quarter of 2013 and 70% for the
full fiscal year of 2013.
Revenue in the Taxi business unit decreased by $0.5 million compared to the
three months ended March 31, 2013 due to lower project ($0.6 million) and
maintenance ($0.1 million) revenues offset by a slight uptick in SaaS revenue
($0.2 million). Revenue for the first quarter in Transit was $0.5 million higher
due to higher project and maintenance revenues.
(1) Non-IFRS measure. Defined as earnings before interest, taxes,
amortization, and share-based compensation. Please refer to the
reconciliation of reported financial results to Non-IFRS measures attached
to this press release.
Gross margin increased by $0.8 million or 24% to $4.3 million from the same
quarter last year. The biggest contribution to the increase in overall margin
yield arose in the Transit unit, largely as a result of the higher margin earned
on the Transit unit projects, hardware orders and other project upgrades.
Furthermore, there was no amortization of intangible assets affecting our gross
margin in 2014 as intangible assets related to acquisition in prior years were
fully amortized in 2013. The intangible amortization expense affecting gross
margin in the first quarter of 2013 was $0.4 million.
The gross margin growth of $0.8 million was offset by higher operating expenses
of $0.2 million. This led directly to an increase in earnings from operations of
$0.6 million compared to the same period in the prior year. This, in combination
with net finance income of $1.4 million, resulted in profit before tax of $1.4
million, an increase of $1.0 million from the first quarter of 2013. The
favourable net finance income in the first quarter arose largely from a gain on
the revaluation of marketable securities held as an investment ($0.9 million) in
combination with foreign exchange gains of $0.4 million.
EBITDAS(1) for the quarter was $1.6 million or 19% of revenues. Compared to an
EBITDAS(1) of $0.9 million or 11% of revenues in the first quarter of 2013, this
represents a variance of $0.7 million. In 2013 we made a strategic investment in
a public company, and that investment contributed $0.9 million to EBITDAS and
earnings.
Subsequent to March 31, 2014, the Company announced on May 1, 2014 that it
entered into a proposed Going-Private Transaction. Please refer to our press
release dated May 1, 2014 for further details. As a result of this announcement
the Company has suspended payment of dividends.
Non-IFRS Measures
The following and preceding discussion of financial results includes reference
to EBITDAS and Adjusted Gross Margin. EBITDAS is a non-IFRS financial measure
which the Company defines as Earnings before interest, taxes, amortization, and
share-based compensation. The measure is provided as a proxy for the cash
earnings of the business as net income for the Company includes a significant
amount of non-cash amortization expense primarily related to acquisitions
completed in prior years. Adjusted Gross Margin excludes amortization expense
and share-based compensation expenses. The measure is provided as gross margin
includes significant amortization expense related to acquired intangibles which
management believes may affect the comparability of gross margin. Please refer
to the table attached to this press release for a reconciliation of non-IFRS
measures to reported financial results.
(1) Non-IFRS measure. Defined as earnings before interest, taxes,
amortization, and share-based compensation. Please refer to the
reconciliation of reported financial results to Non-IFRS measures attached
to this press release.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements that involve risks and
uncertainties. These forward-looking statements relate to, among other things,
operations, anticipated financial performance, business prospects and
strategies, statements about future market conditions, supply and demand
conditions, revenues, gross margins, operating expenses, profits, the
going-private transaction and other expectations, intentions, and plans
contained in this press release that are not historical facts. Such
forward-looking statements are subject to a number of known and unknown risks,
uncertainties and other factors which could cause actual results or events to
differ materially from those expressed or implied by such forward-looking
statements. These risks and uncertainties include, among other things, business
risks, changes in market and competition, technological and competitive
developments and potential downturns in economic conditions generally. Given
these risks and uncertainties DDS Wireless cannot guarantee that any forward
looking statements will be realized.
About DDS Wireless International Inc.
DDS Wireless International Inc. is a global leader in providing application
software for multiple vertical markets within the transportation industry. The
Company specializes in transit routing and scheduling, real-time dispatching,
vehicle location and tracking software applications, communications
infrastructure as well as in-vehicle wireless devices. DDS Wireless operates
three businesses dedicated for Taxi, Transit and New Markets such as OEM
partners, Limousines, Airport Shuttles and Buses. The Company supports its
customers worldwide through its offices in Canada, Finland, Singapore, Sweden,
U.K. and U.S.A.
SEE ATTACHED SUMMARY FINANCIAL STATEMENTS AND THE RECONCILIATION OF NON-GAAP
MEASURES
DDS WIRELESS INTERNATIONAL INC.
Consolidated Statements of Operations (Unaudited)
(In thousands of Canadian dollars)
---------------------------------------------------------------------------
March 31, March 31,
2014 2013
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Revenue $ 8,559 $ 8,539
Cost of sales 4,262 5,068
---------------------------------------------------------------------------
Gross margin 4,297 3,471
Operating expenses:
Research and development 1,925 1,655
Sales and marketing 878 1,050
General and administrative 1,363 1,282
---------------------------------------------------------------------------
4,166 3,987
---------------------------------------------------------------------------
Earnings from operating activities 131 (516)
Net finance (income) (1,350) (931)
---------------------------------------------------------------------------
Income before income taxes 1,481 415
Income tax expense (recovery)
Current tax expense 107 155
Deferred tax (recovery) 10 (128)
---------------------------------------------------------------------------
117 27
---------------------------------------------------------------------------
Net income $ 1,364 $ 388
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Net income per common share - basic and diluted $ 0.10 $ 0.03
Weighted average number of common shares
outstanding (thousands) 13,597 13,831
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DDS WIRELESS INTERNATIONAL INC.
Consolidated Balance Sheets (Unaudited)
(In thousands of Canadian dollars)
March 31, December 31,
2014 2013
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 7,656 $ 7,290
Trade and other receivables 6,464 5,343
Contract work-in-progress 3,719 5,618
Income taxes receivable 158 153
Inventory 1,948 2,053
Prepaid expenses 629 608
Investments 3,708 2,821
---------------------------------------------------------------------------
Total current assets 24,282 23,886
Plant and equipment 820 849
Long-term receivables 1,025 1,148
Investment tax credit receivable 5,663 5,584
Deferred tax assets 1,550 1,404
Intangible assets 301 321
Goodwill 3,426 3,298
Investments 103 103
---------------------------------------------------------------------------
Total assets $ 37,170 $ 36,593
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Trade payables and accrued liabilities $ 5,115 $ 5,661
Income taxes payable 95 74
Deferred revenue 2,924 3,024
Provisions 47 56
---------------------------------------------------------------------------
Total current liabilities 8,181 8,815
Deferred tax liabilities 1,244 1,115
---------------------------------------------------------------------------
Total current and long-term liabilities 9,425 9,930
---------------------------------------------------------------------------
Shareholders' equity:
Share capital 24,231 24,321
Share-based payments reserve 1,862 1,859
Retained earnings 1,989 909
Accumulated other comprehensive loss (337) (426)
---------------------------------------------------------------------------
Total shareholders' equity 27,745 26,663
---------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 37,170 $ 36,593
---------------------------------------------------------------------------
---------------------------------------------------------------------------
DDS WIRELESS INTERNATIONAL INC.
Reconciliation of Non-IFRS Measures
(In thousands of Canadian dollars)
For the three months ended 2014 2013
(CAD in thousands except %) Mar Dec Sep Jun Mar
----------------------------------------------------------------------------
EBITDAS (1)
EBITDAS $ 1,597 $ 677 $ 22 $ 158 $ 890
As % of revenue 19% 7% 0% 2% 10%
Less
Amortization of plant &
equipment, intangibles and
sales related assets 139 346 545 524 528
Share-based compensation 3 3 8 3 (28)
Interest (26) (27) (27) (14) (25)
----------------------------------------------------------------------------
Income (loss) before income
taxes $ 1,481 $ 355 $ (504) $ (355) $ 415
Adjusted Gross Margin(2)
Revenues $ 8,559 $ 9,329 $ 9,385 $ 7,648 $ 8,539
Adjusted gross margin 4,355 4,619 4,724 3,199 3,897
As % of revenue 51% 49% 50% 42% 46%
Less:
Amortization of plant &
equipment 15 21 9 7 8
Share-based compensation - - 1 - (2)
Amortization of sales related
assets 43 47 43 32 33
Amortization of intangibles - 196 400 393 387
----------------------------------------------------------------------------
Gross margin per financial
statements $ 4,297 $ 4,355 $ 4,271 $ 2,767 $ 3,471
As % of revenue 50% 47% 45% 36% 41%
DDS WIRELESS INTERNATIONAL INC.
Reconciliation of Non-IFRS Measures
(In thousands of Canadian dollars)
For the three months ended 2012
(CAD in thousands except %) Dec Sep Jun Mar
------------------------------------------------------------------
EBITDAS (1)
EBITDAS $ 3,249 $ 211 $ 672 $ (354)
As % of revenue 27% 2% 6% (4%)
Less
Amortization of plant &
equipment, intangibles and
sales related assets 546 546 586 550
Share-based compensation 25 2 11 46
Interest (4) (10) (20) (20)
------------------------------------------------------------------
Income (loss) before income
taxes $ 2,682 $ (327) $ 95 $ (930)
Adjusted Gross Margin(2)
Revenues $11,931 $ 9,484 $10,562 $ 8,693
Adjusted gross margin 6,462 4,491 4,595 3,784
As % of revenue 54% 47% 44% 44%
Less:
Amortization of plant &
equipment 6 7 7 7
Share-based compensation 1 1 1 3
Amortization of sales related
assets 34 40 46 49
Amortization of intangibles 397 389 419 382
------------------------------------------------------------------
Gross margin per financial
statements $ 6,024 $ 4,054 $ 4,122 $ 3,343
As % of revenue 50% 43% 39% 38%
(1) Non-IFRS measure. Defined as earnings before interest, taxes, amortization,
and share-based compensation.
(2) Non-IFRS measure. Defined as gross margin before amortization and
share-based compensation.
FOR FURTHER INFORMATION PLEASE CONTACT:
DDS Wireless International Inc.
Investor Relations
(604) 241-1441
Investors@ddswireless.com
DDS Wireless International Inc.
Jim Defer
Interim Chief Financial Officer
(604) 214-7206
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