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Sangoma Reports Q4 and Annual Results for Fiscal 2011Company Continues Consistent Sales Trend with Third Straight Quarter of Revenue Growth: Q4 Sales Increased 29% Above Q1 (October 27, 2011)
MARKHAM, ONTARIO -- (Marketwire) -- 10/28/11 -- Sangoma Technologies Corporation (TSX VENTURE:STC), a leading provider of hardware and software components that enable or enhance IP Communications Systems for both voice and data, today announced highlights of its audited financial results for the quarter and year ended June 30, 2011.
Sales for the fourth quarter of fiscal 2011 ended June 30, 2011 were $3.25 million, up 4% from $3.12 million during the Corporation's immediately preceding third quarter of fiscal 2011. This is the third quarter of consistent revenue growth this year, delivering a 29% increase in revenue since the Corporation's first quarter of $2.51 million in fiscal 2011.
When measured in the primary source currency of United States dollars, to exclude the effect of foreign exchange on revenue, sales in the fourth quarter were the highest level of revenue ever for Sangoma. This is an increase of 6% from both third quarter sales this year and from the same fourth quarter last year, and is the Corporation's second straight quarter of record revenue when measured in US dollars. Although Sangoma's financial statements are reported in Canadian dollars, management believes that additional information such as this may assist readers in gaining a deeper understanding of the Corporation's business fundamentals.
Annual revenue for fiscal 2011 was $11.86 million, a decrease of 5% from fiscal 2010, attributable to the Company's weak revenue in its first quarter this year.
---------------------------------------------------------------------------- Q3 Q4 Q4 FY2011 FY2011 Change FY2010 Change FY2011 FY2010 Change Sales $ 3.25m $3.12m 4% $3.29m -1% $11.86m $12.51m -5% Gross Profit $ 2.44m $2.27m 7% $2.33m 5% $ 8.84m $ 9.25m -4% Operating Expense $ 2.10m $1.81m 16% $1.54m 36% $ 7.49m $ 6.26m 20% Income before taxes and one-time, non-cash items $ 0.34m $0.46m -26% $0.79m -57% $ 1.35m $ 2.99m -55% Accelerated amortization of patents $ 1.35m - - $ 1.35m - Impairment of Goodwill $ 3.85m - - $ 3.85m - Net (loss) income before provision for taxes $ -4.86m $0.46m -1157% $0.79m -715% $-3.85m $ 2.99m -229% Net (loss) income $ -4.41m $0.35m -1360% $1.30m -470% $-3.67m $ 2.65m -238% Net (loss) earnings per share (fully diluted) $ -0.146 $0.011 -1427% $0.043 -440% $-0.121 $ 0.088 -238% EBITDA $ 0.96m $0.97m -1% $1.34m -28% $ 3.41m $ 4.48m -24% ----------------------------------------------------------------------------
Gross margins for the quarter were 75%, 2% above the Corporation's immediately preceding third quarter of fiscal 2011, and 4% above that of the quarter ended June 30, 2010.
Operating expense for the quarter ended June 30, 2011, excluding any one-time, non-cash expenses, was $2.10 million. This is 16% higher than those of fiscal third quarter ended March 31, 2011, mainly due to the increase in development cost amortization following the ramp up in spending late in fiscal 2010 and to increased sales and marketing investment for the expected benefit of higher sales in future quarters. When compared to the fourth quarter of fiscal 2010, this is 36% higher, due primarily to a large $0.51 million swing in foreign exchange expenses, from a gain of $0.31 million last year to a loss of $0.20 million this year. For the fiscal year 2011, operating expenses excluding any one-time, non-cash expenses were $7.49 million, up by 20% from $6.26 million last year, driven primarily by the increase in development cost amortization following the ramp up in spending late in fiscal 2010, the increased sales and marketing investment, and higher foreign exchange costs.
EBITDA for the quarter ended June 30, 2011 was $0.96 million, down slightly from the $0.97 million last quarter, and 28% below the same quarter one year ago. For the fiscal year 2011 EBITDA was $3.41m, 24% lower than the $4.48m in Fiscal 2010.
Income before taxes and before one-time, non-cash expenses was $0.34 million for the fiscal fourth quarter, compared to $0.46 million in the immediately preceding quarter and $0.79 million in the same quarter last year.
In addition to the positive operating results described above, the Corporation also took two 'non-cash', one-time adjustments during the fourth quarter of fiscal 2011. First, in accordance with GAAP, Sangoma carries out an impairment test each year during the fourth quarter. During this year's test, the goodwill was shown to be impaired by $3.85 million, and so this impairment was taken as a one-time charge to the Corporation's fourth quarter earnings. Secondly, during the fourth quarter, Sangoma was notified that a patent application which had been part of the Paraxip acquisition, had been rejected by the US Patent Office. The Corporation accordingly decided to accelerate the amortization of the remaining $1.35 million remaining in book value of this intangible asset. Accelerating this amortization required restatement of a future tax liability on the Corporation's prior year's balance sheet, and this change does not materially affect earnings in fiscal 2010. Further, neither of these charges affected cash generated by the business in any way during fiscal 2011. In fact, during fiscal 2011 Sangoma increased its cash balance by $1.04 million, 20% more than the cash generated in fiscal 2010. On June 30, 2011 Sangoma had working capital of $12.46 million, as compared to $10.92 million on June 30, 2010. Working capital on June 30, 2011 included $8.78 million in cash and equivalents.
The resulting net loss for the fiscal fourth quarter after these one-time, non-cash items was therefore $4.81 million ($0.146 per share fully diluted) compared to net income of $0.35 million ($0.011 per share fully diluted) in the immediately preceding quarter, and $1.30 million ($0.043 per share fully diluted) for the quarter ended June 30, 2010.
President and CEO, Bill Wignall, and CFO, David Moore will host a conference call on Friday October 28, 2011 at 11am Eastern Standard Time to discuss the quarterly and annual results. The dial-in number for the call is 1-800-319-4610 (International 1-604-638-5340). Investors are requested to dial in 5 to 10 minutes before the scheduled start time and ask to join the Sangoma call.
About Sangoma Technologies Corporation
Sangoma is a leading provider of hardware and software components that enable or enhance IP Communications Systems for both telecom and datacom applications.
Sangoma's data boards, voice boards, gateways and connectivity software are used in leading PBX, IVR, contact center and data-communication applications worldwide. The product line includes both hardware and software components that offer a comprehensive toolset for deploying cost-effective, powerful, and flexible communication solutions.
Founded in 1984, Sangoma Technologies Corporation is publicly traded on the TSX Venture Exchange (TSX VENTURE:STC). Additional information on Sangoma can be found at: www.sangoma.com.
Cautionary Statement Regarding Forward Looking Statements
This press release contains forward-looking statements, including statements regarding the future success of our business, development strategies and future opportunities.
Forward-looking statements include, but are not limited to, statements concerning estimates of expected expenditures, statements relating to expected future production and cash flows, and other statements which are not historical facts. When used in this document, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions indicate forward-looking statements.
Although Sangoma believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date that the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in forward-looking statements. Sangoma undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by law.
Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in the management's discussion and analysis include, but are not limited to changes in exchange rate between the Canadian Dollar and other currencies, changes in technology, changes in the business climate, changes in the regulatory environment, the decline in the importance of the PSTN and new competitive pressures. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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