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| 8-K - FORM 8-K - TELULAR CORP | telular_8k-050312.htm |
| EX-99.2 - EXHIBIT 99.2 - TELULAR CORP | ex99-2.htm |
Exhibit 99.1
May 3, 2012
Telular Corporation Reports Second Quarter 2012 Results
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Event Monitoring M2M Revenue Increases 17% Over Prior Year Period
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SkyBitz Acquisition Closes; Reiterate Guidance of $16.0 - $17.0 Million of Adjusted EBITDA for FY 2012
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Company Delivers Adjusted EBITDA of $3.9 Million
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Company Declares Regular Quarterly Dividend of $0.11 Per Share
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CHICAGO, IL USA—Telular Corporation (NASDAQ: WRLS), a global leader in helping businesses use wireless networks for remote monitoring and tracking, today announced financial results for the second fiscal quarter of 2012 ended March 31, 2012. In the second quarter of 2012, Telular reported revenue of $19.8 million, including $11.4 million from recurring services, and pre-tax income of $1.9 million.
Second quarter 2012 Adjusted EBITDA, a non-GAAP financial measure, was $3.9 million. For further information, see the reconciliation of these measures to net income in accordance with GAAP, on the last page of this press release.
Total revenue from the Telguard and TankLink lines of business, representing all of the M2M revenue within the Event Monitoring Segment, increased 17% over the prior year period to $13.5 million.
Total Telguard revenue was up 16% year-over-year to $11.6 million. During the quarter, Telular sold approximately 30,900 Telguard units and activated over 30,200 new Telguard subscribers. The total number of Telguard subscribers increased sequentially to 589,100 while average revenue per unit, or ARPU, increased sequentially to $4.32 for the quarter.
Total TankLink revenue increased 21% over the prior year period to $1.8 million, including service revenue of $965,000.
In the Asset Tracking segment, the Company recognized two months of revenue from the SkyBitz acquisition (closed February 1, 2012). SkyBitz revenue was $5.9 million, including product revenue of $3.0 million and recurring service revenue of $2.9 million.
Adjusted EBITDA for Event Monitoring and Asset Tracking was $4.4 million and $0.5 million respectively, excluding corporate expenses of $1.0 million.
For both segments combined, Telular ended the period with over 798,000 billable units realizing an ARPU of $5.46. The average selling price, or ASP, for the 40,500 monitoring and tracking hardware units sold during the period was $186.
“We are pleased with our second quarter financial results, delivering solid year-over-year revenue growth in our Telguard and TankLink businesses while successfully assimilating the acquisition of SkyBitz into the Telular family,” commented Joe Beatty, president and chief executive officer of Telular Corporation. “We are excited about our accelerated growth as we continue to build upon our stream of high-margin, recurring service revenue and deliver strong profitability,” concluded Mr. Beatty.
“Our second quarter results were in-line with our expectations as we continue to report strong financial results and have solid visibility into our business,” added Jonathan Charak, chief financial officer of Telular Corporation. “This quarter, we successfully closed on the acquisition of SkyBitz, and the subsequent positive contributions from this new line of business fully support our initial assessment of this transaction as accretive. Looking at the remainder of the year, we are reiterating our guidance for fiscal year 2012 Adjusted EBITDA of $16.0- $17.0 million, as well as our expectation to sell 25,000 to 35,000 Telguard units each quarter. We are optimistic about our long-term growth and profitability as we continue to grow our service revenue and scale the business.”
Telular declared a quarterly dividend of $0.11 per share on its common stock, payable May 22, 2012, to shareholders of record as of the close of business on May 15, 2012. During the second quarter, the Company paid shareholders a dividend totaling $1.8 million and ended the quarter with $10.1 million of cash on the balance sheet.
The Company today also announced that its Board of Directors has appointed General John W. Handy to serve as an Independent Director effective May 1, 2012 until the next election. Among many accomplishments in his distinguished military career, General Handy was the Commander of the United States Transportation Command (USTRANSCOM) and Air Mobility Command. USTRANSCOM is the single largest logistics provider for air, land and sea transportation for the Department of Defense.
“We are excited about the Board’s appointment of General Handy to serve as an Independent Director,” said Mr. Beatty. “His deep experience in logistics within the military and his overall leadership skills as a Four Star General will be invaluable to the future growth of our business. On behalf of our other Directors, I welcome General Handy and look forward to working with him.”
Investor Conference Call
Telular’s quarterly conference call will be held today at 4:30 p.m. ET. To participate on the teleconference from the United States and Canada dial 800-762-8779 (International dial 480-629-9818). A replay of the call will be available from May 3, 2012 beginning at 6:30 p.m. ET (5:30 p.m. CT) through May 5, 2012 ending at 11:59 p.m. ET (10:59 p.m. CT) by dialing 800-406-7325 in the United States and entering pass code 4532325# or internationally at 303-590-3030 and entering pass code 4532325#. The replay will also be available via webcast from the Company's corporate website at: www.telular.com under "Investor" and the link "Conference Calls."
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About Telular Corporation
Telular Corporation (NASDAQ: WRLS) provides remote monitoring and asset tracking solutions for business and residential customers, enabling security systems and industrial applications to exchange actionable information wirelessly, typically through cellular and satellite technology. With over 25 years of experience in the wireless industry, Telular Corporation has developed solutions to deliver remote access for voice and data without significant network investment. Headquartered in Chicago, Telular Corporation has additional offices in Atlanta, Washington, D.C., and Miami. For more information, please visit www.telular.com.
Investor Contact:
The Blueshirt Group
Brinlea Johnson
brinlea@blueshirtgroup.com
(212) 331-8424
Media Contact:
Pam Benke
Telular Corporation
pbenke@telular.com
(678) 909-4616
Please be advised that some of the information in this release presents the Company’s intentions, beliefs, judgments and expectations of the future and are forward-looking statements. Statements regarding expectations, including performance assumptions, estimates relating to future cash flows, levels of demand for our products, dividend amounts and capital requirements, as well as other statements that are not historical facts, are forward-looking statements. For example, the statement, “we are reiterating our guidance for fiscal year 2012 Adjusted EBITDA of $16.0- $17.0 million, as well as our expectation to sell 25,000 to 35,000 Telguard units each quarter” is a forward-looking statement. These statements reflect management’s judgments based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer growth and retention, pricing, operating costs and the economic environment. It is important to note that the Company’s actual results could differ materially from these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s report on Form 10-Q for the fiscal quarter ended December 31, 2011. Copies of these filings may be obtained by contacting the Company or the SEC.
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TELULAR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF CASH FLOWS
(Dollars in thousands, except share data)
BALANCE SHEETS
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March 31,
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September 30,
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2012
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2011
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(Unaudited)
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ASSETS
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Cash and cash equivalents
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$ | 10,147 | $ | 12,642 | ||||
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Trade receivables, net
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10,466 | 5,859 | ||||||
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Inventories, net
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4,658 | 3,005 | ||||||
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Deferred taxes
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2,415 | 672 | ||||||
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Prepaid expenses and other current assets
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1,851 | 465 | ||||||
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Total current assets
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29,537 | 22,643 | ||||||
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Property and equipment, net
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3,444 | 2,282 | ||||||
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Long term deferred taxes
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43,091 | 32,268 | ||||||
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Other assets
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46,155 | 11,040 | ||||||
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Total assets
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$ | 122,227 | $ | 68,233 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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$ | 15,287 | $ | 7,128 | ||||
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Long-term liabilities
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36,646 | 678 | ||||||
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Total stockholders' equity
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70,294 | 60,427 | ||||||
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Total liabilities and stockholders' equity
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$ | 122,227 | $ | 68,233 | ||||
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Outstanding shares
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16,531,389 | 15,135,330 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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Six Months Ended March 31,
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2012
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2011
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(Unaudited)
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(Unaudited)
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Net cash provided by (used in):
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Operating activities
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$ | 4,803 | $ | 7,912 | ||||
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Investing activities
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(43,353 | ) | (8,510 | ) | ||||
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Financing activities
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36,055 | (17,638 | ) | |||||
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Net decrease in cash and cash equivalents
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$ | (2,495 | ) | $ | (18,236 | ) | ||
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TELULAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
Unaudited
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Three Months Ended March 31,
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Six Months Ended March 31,
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2012
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2011
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2012
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2011
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Revenues
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M2M hardware sales
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$ | 7,986 | $ | 3,729 | $ | 13,017 | $ | 7,361 | ||||||||
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M2M service revenue
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11,418 | 7,784 | 19,704 | 15,104 | ||||||||||||
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Subtotal M2M
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19,404 | 11,513 | 32,721 | 22,465 | ||||||||||||
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Other product sales
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390 | 979 | 778 | 2,117 | ||||||||||||
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Total revenue
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19,794 | 12,492 | 33,499 | 24,582 | ||||||||||||
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Cost of Sales
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M2M hardware cost of sales
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5,879 | 2,515 | 9,112 | 5,107 | ||||||||||||
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M2M service cost of sales
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3,155 | 3,037 | 5,465 | 5,873 | ||||||||||||
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Subtotal M2M
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9,034 | 5,552 | 14,577 | 10,980 | ||||||||||||
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Other product cost of sales
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334 | 940 | 982 | 2,013 | ||||||||||||
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Total cost of sales
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9,368 | 6,492 | 15,559 | 12,993 | ||||||||||||
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Gross margin
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10,426 | 6,000 | 17,940 | 11,589 | ||||||||||||
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Operating Expenses
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Engineering and development expenses
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2,030 | 1,042 | 3,317 | 2,236 | ||||||||||||
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Selling and marketing expenses
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2,699 | 1,683 | 4,484 | 3,481 | ||||||||||||
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General and administrative expenses
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3,644 | 1,819 | 5,518 | 3,905 | ||||||||||||
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Total operating expenses
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8,373 | 4,544 | 13,319 | 9,622 | ||||||||||||
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Income from operations
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2,053 | 1,456 | 4,621 | 1,967 | ||||||||||||
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Other income (expense), net
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(154 | ) | 10 | (154 | ) | 131 | ||||||||||
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Net income before income taxes
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1,899 | 1,466 | 4,467 | 2,098 | ||||||||||||
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Provision for income taxes
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727 | 1,355 | 1,671 | 1,597 | ||||||||||||
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Net income
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$ | 1,172 | $ | 111 | $ | 2,796 | $ | 501 | ||||||||
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Income per common share:
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Basic
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$ | 0.07 | $ | 0.01 | $ | 0.18 | $ | 0.03 | ||||||||
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Diluted
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$ | 0.07 | $ | 0.01 | $ | 0.17 | $ | 0.03 | ||||||||
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Weighted average number of common shares outstanding:
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Basic
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16,044,418 | 15,030,397 | 15,600,956 | 14,976,290 | ||||||||||||
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Diluted
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17,088,771 | 15,994,650 | 16,603,771 | 15,818,086 | ||||||||||||
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Reconciliation of Non-GAAP Measures
We use adjusted EBITDA as an additional measure of our operating performance. This measure is not recognized under generally accepted accounting principles. The reconciliation below demonstrates how we calculate this measure from our financial statements.
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Three Months Ended March 31,
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Six Months Ended March 31,
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2012
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2011
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2012
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2011
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(Unaudited)
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(Unaudited)
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Net income
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$ | 1,172 | $ | 111 | $ | 2,796 | $ | 501 | ||||||||
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Non-cash compensation
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366 | 327 | 739 | 1,012 | ||||||||||||
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Depreciation and amortization
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1,513 | 487 | 2,009 | 794 | ||||||||||||
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Net interest expense (income)
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155 | (10 | ) | 153 | (131 | ) | ||||||||||
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Income tax provision
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727 | 1,355 | 1,671 | 1,597 | ||||||||||||
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Adjusted EBITDA
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$ | 3,933 | $ | 2,270 | $ | 7,368 | $ | 3,773 | ||||||||
Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of performance reported in accordance with accounting principles generally accepted in the United States. While we believe that Adjusted EBITDA, as defined above, is useful within the context described above, it is in fact incomplete and not a measure that should be used to evaluate the full performance of Telular Corporation. Such evaluation needs to consider all of the complexities associated with our business, including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business and how regulations and other aforementioned items affect the final amounts that are or will be available to shareholders as a return on their investment. Net income determined in accordance with U.S. GAAP is the most complete measure available today to evaluate all elements of our performance.
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