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8-K - WPCS INTERNATIONAL INCORPORATED FORM 8-K - AYRO, Inc.form8k.htm
Exhibit 99.1
 
 
PRESS RELEASE SOURCE: WPCS International Incorporated
 

WPCS Reports FY2012 First Quarter Financial Results


EXTON, PA - (Marketwire – September 14, 2011) - WPCS International Incorporated (NASDAQ: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fiscal year 2012 first quarter ended July 31, 2011. For the first quarter, WPCS reported revenue of $25.4 million compared to $17.8 million in the preceding quarter ended April 30, 2011, which represents an increase of approximately 43%. The Company generated revenue of $28.9 million for the same period a year ago.

In the first quarter, WPCS generated EBITDA of approximately $753,000 compared to an EBITDA loss of $5.1 million in the preceding quarter ended April 30, 2011. The Company generated $238,000 in EBITDA for the same period a year ago. EBITDA is defined as earnings before interest, taxes, acquisition-related contingent earn-out costs, one-time charges related to seeking strategic alternatives including the possible sale of the company and depreciation and amortization.

WPCS reported a net loss of approximately $35,000 or $0.00 per diluted share, which includes the one-time charges of $64,000 associated with seeking strategic alternatives including the possible sale of the company. This compares to a net loss of $376,000 or $0.05 per diluted share for the same period a year ago.

Andrew Hidalgo, CEO of WPCS, commented, “We are pleased to announce that we achieved profitable EBITDA results for the quarter. This marks what we believe is the beginning of our turnaround from a difficult prior year. The first quarter was very encouraging. We experienced solid revenue growth over the preceding quarter while maintaining a healthy backlog and bid list. Our balance sheet remains strong with $4.1 million in cash and $15.2 million in working capital. Our net tangible asset value is $22.6 million or $3.25 per diluted share. We are very excited about the opportunities in our current fiscal year and we look forward to achieving profitable quarters ahead.”

As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 888-299-4099 for calls within the U.S. or 302-709-8337 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH16503. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the call will be available for a period of five days by dialing 402-220-2946 and entering 16503 # as the program identification number.
 
About WPCS International Incorporated:

WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit www.wpcs.com

Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward looking statements involve risks and uncertainties and are subject to change at any time.  The company’s actual results could differ materially from expected results.  In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward looking statements.
 

 
CONTACT:

WPCS International Incorporated
610-903-0400 x101
ir@wpcs.com


 
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This press release includes financial measures that are not in accordance with GAAP, consisting of EBITDA and net tangible asset value. Management uses EBITDA to evaluate the Company's operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons. Management uses net tangible asset value to evaluate the strength of the Company’s balance sheet.  WPCS believes that these measures are useful to investors because they enhance investors' ability to review the Company's business from the same perspective as our management and to facilitate comparisons of this period's results with prior periods.  Non-GAAP measures are used by some investors when assessing the ongoing operating and financial performance of our Company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of the additional information should not be considered a substitute for net income (loss) or net income (loss) per diluted share prepared in accordance with GAAP. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. Pursuant to the requirements of Regulation G, WPCS has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
 
 
 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
 
   
Three Months Ended
 
   
July 31,
 
   
2011
   
2010
 
             
REVENUE
  $ 25,419,503     $ 28,852,498  
                 
COSTS AND EXPENSES:
               
Cost of revenue
    19,573,186       22,697,975  
Selling, general and administrative expenses
    5,156,522       5,916,327  
Depreciation and amortization
    604,832       734,615  
Change in fair value of acquisition-related contingent consideration
    43,068       63,052  
                 
      25,377,608       29,411,969  
                 
OPERATING INCOME (LOSS)
    41,895       (559,471 )
                 
OTHER EXPENSE (INCOME):
               
Interest expense
    95,932       54,635  
Interest income
    (8,476 )     (10,069 )
                 
LOSS BEFORE INCOME TAX BENEFIT
    (45,561 )     (604,037 )
                 
Income tax benefit
    (26,340 )     (238,379 )
                 
CONSOLIDATED NET LOSS
    (19,221 )     (365,658 )
                 
Net income attributable to noncontrolling interest
    15,456       10,293  
                 
NET LOSS ATTRIBUTABLE TO WPCS
  $ (34,677 )   $ (375,951 )
                 
Basic net loss per common share attributable to WPCS
  $ (0.00 )   $ (0.05 )
                 
Diluted net loss per common share attributable to WPCS
  $ (0.00 )   $ (0.05 )
                 
Basic weighted average number of common shares outstanding
    6,954,766       6,954,766  
                 
Diluted weighted average number of common shares outstanding
    6,954,766       6,954,766  
 
 
 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


   
July 31,
   
April 30,
 
ASSETS
 
2011
   
2011
 
   
(Unaudited)
       
CURRENT ASSETS:
           
             
Cash and cash equivalents
  $ 4,063,322     $ 4,879,106  
Accounts receivable, net of allowance of $1,631,985 and $1,662,168 at
               
     July 31, 2011 and April 30, 2011, respectively
    25,777,082       22,474,024  
Costs and estimated earnings in excess of billings on uncompleted contracts
    4,546,270       4,669,012  
Inventory
    1,606,385       1,972,905  
Prepaid expenses and other current assets
    1,592,500       1,413,151  
Prepaid income taxes
    214,897       173,700  
Income taxes receivable
    1,185,000       1,166,225  
Deferred tax assets
    2,642,598       2,621,329  
Total current assets
    41,628,054       39,369,452  
                 
PROPERTY AND EQUIPMENT, net
    5,909,461       6,035,353  
                 
OTHER INTANGIBLE ASSETS, net
    742,897       803,171  
                 
GOODWILL
    2,038,978       2,044,856  
                 
DEFERRED TAX ASSETS
    2,674,841       2,675,511  
                 
OTHER ASSETS
    134,145       134,654  
                 
Total assets
  $ 53,128,376     $ 51,062,997  
 
 
 
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WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

LIABILITIES AND EQUITY
 
July 31,
   
April 30,
 
   
2011
   
2011
 
   
(Unaudited)
       
CURRENT LIABILITIES:
           
             
Current portion of loans payable
  $ 97,299     $ 35,724  
Borrowings under line of credit
    5,560,977       7,000,000  
Current portion of capital lease obligations
    48,175       54,496  
Accounts payable and accrued expenses
    13,599,932       10,249,503  
Billings in excess of costs and estimated earnings on uncompleted contracts
    2,168,352       2,039,117  
Deferred revenue
    809,169       792,414  
Due joint venture partner
    3,134,583       3,415,641  
Acquisition-related contingent consideration
    1,049,011       1,008,200  
Total current liabilities
    26,467,498       24,595,095  
                 
Loans payable, net of current portion
    211,677       10,554  
Capital lease obligations, net of current portion
    5,432       15,465  
Total liabilities
    26,684,607       24,621,114  
                 
                 
COMMITMENTS AND CONTINGENCIES
               
                 
EQUITY:
               
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued
    -       -  
Common stock - $0.0001 par value, 25,000,000 shares authorized, 6,954,766
               
     shares issued and outstanding at July 31, 2011 and April 30, 2011
    695       695  
Additional paid-in capital
    50,453,914       50,433,626  
Accumulated deficit
    (26,630,508 )     (26,595,831 )
Accumulated other comprehensive income on foreign currency translation, net of
               
   tax effects of $191,979 and $185,060 at July 31, 2011 and April 30, 2011, respectively
    1,560,411       1,564,965  
                 
Total WPCS shareholders' equity
    25,384,512       25,403,455  
                 
Noncontrolling interest
    1,059,257       1,038,428  
                 
Total equity
    26,443,769       26,441,883  
                 
Total liabilities and equity
  $ 53,128,376     $ 51,062,997  
 
 
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Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

(1) Reconciliation of Non-GAAP EBITDA:
 
     
Three Months Ended
 
     
July 31,
 
     
2011
   
2010
 
               
NET LOSS ATTRIBUTABLE TO WPCS, GAAP
  $ (34,677 )   $ (375,951 )
                   
Plus:
                 
 
Net income attributable to noncontrolling interest
    15,456       10,293  
 
Income tax benefit
    (26,340 )     (238,379 )
 
Interest expense
    95,932       54,635  
 
Interest income
    (8,476 )     (10,069 )
 
Change in fair value of acquisition-related contingent consideration
    43,068       63,052  
 
One time strategic costs
    63,670       -  
 
Depreciation and amortization
    604,832       734,615  
                   
Consolidated EBITDA, Non-GAAP
  $ 753,465     $ 238,196  
 
 
             (2) Reconciliation of Non-GAAP Net Tangible Asset Value:
 
   
July 31,
   
April 30,
 
   
2011
   
2011
 
             
Total WPCS shareholders' equity
  $ 25,384,512     $ 25,403,455  
Less:
               
Goodwill
    2,038,978       2,044,856  
Other Intangible Assets, net
    742,897       803,171  
                 
Net tangible asset value
  $ 22,602,637     $ 22,555,428  
                 
Diluted weighted average number of common shares outstanding
    6,954,766       6,954,766  
                 
Net tangible asset value per common share attributable to WPCS
  $ 3.25     $ 3.24  
 
 
 
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