EX-99.1 2 a2228717zex-99_1.htm EXHIBIT 99.1

Exhibit 99.1

 

GRAPHIC

 

DragonWave Reports Fourth Quarter and Full Fiscal Year 2016 Results

 

OTTAWA, CANADA — May 18, 2016 — DragonWave Inc. (TSX:DWI; NASDAQ:DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the fourth quarter and full fiscal year ended February 29, 2016. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

 

Revenue for the fourth quarter of fiscal year 2016 was $12.0 million, compared with $21.0 million in the third quarter of fiscal year 2016. Revenue for the fiscal year 2016 was $86.3 million, compared to $157.8 million in the previous year. Revenue from the Nokia channel in the fiscal year decreased from $84.3 million in the previous fiscal year, to $37.6 million. This was mainly attributable to the announcement and completion of the merger of Nokia and Alcatel during 2015.

 

Gross profit when adjusted for non-cash inventory provision was 22.3% in the fourth quarter of fiscal year 2016, as compared to 24.5% in the third quarter of fiscal year 2016.

 

See “Non-GAAP Financial Measures” below for a reconciliation of gross profit adjusted for inventory provision to the most directly comparable measure calculated in accordance with GAAP and presented in DragonWave’s financial statements.

 

Operating expenses excluding restructuring charges were reduced from $8.7 million in the previous quarter to $7.6 million in the fourth quarter.

 

Net loss attributable to shareholders in the fourth quarter of fiscal year 2016 was ($9.1) million or ($3.02) per basic and diluted share. This compares to a net loss attributable to shareholders of ($6.2) million or ($2.07) per basic and diluted share in the third quarter of fiscal year 2016.

 

“The end of our relationship with Nokia for forward product has required a restructuring of our operations which is underway. Our confidence about significant near term projects within our existing North American customer base, the expanded opportunity created by Harmony Enhanced Multi Channel and adjusting our geographic focus towards higher margin areas are all important components of this restructuring strategy.” said DragonWave President and CEO, Peter Allen.

 

Cash and cash equivalents totaled $4.3 million at the end of the fourth quarter of fiscal year 2016, compared to $7.8 million at the end of the third quarter of fiscal year 2016. The decrease in cash and cash equivalents of $3.5 million included debt repayments of $4.5 million during the quarter.

 


 

Webcast and Conference Call Details:

 

The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on May 19, 2016.

 

The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm

 

An archive of the webcast will be available at the same link.

 

Conference call dial-in numbers:

 

Toll-free North America Dial-in: (877) 312-9202

 

International Dial-in: (408) 774-4000

 

About DragonWave

 

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks.  DragonWave’s carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably.  The principal application of DragonWave’s products is wireless network backhaul, including a range of products ideally suited to support the emergence of underlying small cell networks.  Additional solutions include leased line replacement, last mile fiber extension and enterprise networks.  DragonWave’s corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America.  For more information, visit http://www.dragonwaveinc.com.

 

DragonWave®, Horizon® and Avenue® are registered trademarks of DragonWave Inc.

 

Non-GAAP Financial Measures

 

This press release contains certain information that is not consistent with financial measures prescribed under GAAP. We break out “Gross profit before inventory provisions” as this measure allows management to evaluate our operational performance and compare to prior periods more effectively. “Gross profit before inventory provisions” does not have any standardized meaning prescribed by GAAP, it is therefore unlikely to be comparable to similar measures presented by other issuers and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We believe that it is useful to compare gross profit results without the impact of inventory provisions, since our inventory provisions generally relate to technical obsolescence and excess due to market changes. We believe this non-GAAP measure also provides investors with a better ability to understand our operational performance. We calculate “Gross profit before inventory provisions” consistently over each fiscal period.

 

The most directly comparable GAAP measure presented in our consolidated financial statements for the three and twelve months ended February 29, 2016 to “Gross profit before inventory provisions” is “Gross profit”.

 


 

Forward-Looking Statements

 

Certain statements in this release constitute forward-looking statements or forward-looking information as defined by applicable securities laws. Forward-looking statements include statements as to DragonWave’s forward opportunities and the potential benefits of, and demand for: DragonWave’s products; DragonWave’s strategy and ability to execute on that strategy; and the outcome of DragonWave’s restructuring efforts. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of DragonWave’s products compared to competitive offerings in the industry, and our ongoing efforts to manage our cash flows.

 

Forward-looking statements are provided to help external stakeholders understand DragonWave’s expectations as of the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements. DragonWave’s actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements, as a result of the risks identified above as well as other risks identified in our publicly filed documents. Material risks and uncertainties relating to our business are described under the heading “Risks and Uncertainties” in the MD&A dated May 18, 2016 and in the Company’s Annual Information Form and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

 

Investor Contact:

Peter Allen

President & CEO

DragonWave Inc.

investor@dragonwaveinc.com

Tel: +1-613-599-9991 ext 2222

Media Contact:

Nadine Kittle

Marketing Communications

DragonWave Inc.

nkittle@dragonwaveinc.com

Tel: +1-613-599-9991 ext 2262

Media Contact:

Becky Obbema

Interprose Public Relations

(for DragonWave) Becky.Obbema@interprosepr.com

Tel: +1-408-778-2024

 

 

CONSOLIDATED BALANCE SHEETS

Expressed in US $000’s except share amounts

 

 

 

As at

 

As at

 

 

 

February 29,

 

February 28,

 

 

 

2016

 

2015

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

4,277

 

23,692

 

Trade receivables

 

18,986

 

48,626

 

Inventory

 

22,702

 

24,294

 

Other current assets

 

2,777

 

5,895

 

 

 

48,742

 

102,507

 

Long Term Assets

 

 

 

 

 

Property and equipment

 

3,702

 

4,322

 

Deferred tax asset

 

—

 

1,485

 

Deferred financing cost

 

—

 

18

 

Intangible assets

 

623

 

794

 

Goodwill

 

—

 

11,927

 

 

 

4,325

 

18,546

 

 

 

 

 

 

 

Total Assets

 

53,067

 

121,053

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Debt facility

 

22,152

 

—

 

Accounts payable and accrued liabilities

 

23,557

 

40,677

 

Deferred revenue

 

1,944

 

830

 

Deferred tax liability

 

294

 

—

 

Warrant liability

 

117

 

—

 

 

 

48,064

 

41,507

 

 

 

 

 

 

 

Long Term Liabilities

 

 

 

 

 

Debt facility

 

—

 

32,400

 

Other long term liabilities

 

773

 

1,139

 

Warrant liability

 

3

 

1,239

 

 

 

776

 

34,778

 

 

 

 

 

 

 

Commitments

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Capital stock

 

221,128

 

220,952

 

Contributed surplus

 

9,235

 

8,388

 

Deficit

 

(218,225

)

(175,921

)

Accumulated other comprehensive loss

 

(9,618

)

(9,618

)

Total Shareholders’ equity

 

2,520

 

43,801

 

 

 

 

 

 

 

Non-controlling interests

 

1,707

 

967

 

Total Equity

 

4,227

 

44,768

 

 

 

 

 

 

 

Total Liabilities and Equity

 

53,067

 

121,053

 

 

 

 

 

 

 

Shares issued & outstanding

 

3,020,069

 

3,011,632

 

 


 

CONSOLIDATED STATEMENTS OF OPERATIONS

Expressed in US $000’s except share and per share amounts

 

 

 

Three months ended

 

Twelve months ended

 

 

 

February 29,

 

February 28,

 

February 29,

 

February 28,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

Hardware and other

 

8,601

 

41,654

 

71,393

 

150,432

 

Services

 

3,440

 

2,088

 

14,902

 

7,334

 

 

 

12,041

 

43,742

 

86,295

 

157,766

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

 

 

 

 

 

 

 

Hardware and other

 

7,794

 

32,923

 

58,991

 

123,950

 

Services

 

1,563

 

1,135

 

8,917

 

3,051

 

Inventory provision

 

3,181

 

1,187

 

4,416

 

2,771

 

 

 

12,538

 

35,245

 

72,324

 

129,772

 

Gross profit

 

(497

)

8,497

 

13,971

 

27,994

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Research and development

 

2,425

 

4,271

 

13,406

 

18,657

 

Selling and marketing

 

1,858

 

3,745

 

10,572

 

13,975

 

General and administrative

 

3,311

 

3,288

 

13,798

 

15,085

 

 

 

7,594

 

11,304

 

37,776

 

47,717

 

 

 

 

 

 

 

 

 

 

 

Loss before other items

 

(8,091

)

(2,807

)

(23,805

)

(19,723

)

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

—

 

—

 

(11,927

)

—

 

Restructuring costs

 

(130

)

—

 

(1,549

)

—

 

Amortization of intangible assets

 

(96

)

(207

)

(577

)

(1,188

)

Accretion expense

 

(37

)

(59

)

(205

)

(168

)

Interest expense

 

(424

)

(452

)

(2,014

)

(1,557

)

Warrant issuance expenses

 

—

 

—

 

—

 

(221

)

Gain on change in estimate

 

—

 

(234

)

—

 

67

 

Gain on sale of fixed assets

 

—

 

—

 

—

 

18

 

Fair value adjustment - warrant liability

 

(69

)

979

 

1,119

 

2,007

 

Foreign exchange (loss) gain

 

(307

)

327

 

(331

)

846

 

Loss before income taxes

 

(9,154

)

(2,453

)

(39,289

)

(19,919

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

129

 

(330

)

2,275

 

717

 

Net loss and comprehensive loss

 

(9,283

)

(2,123

)

(41,564

)

(20,636

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

152

 

(145

)

(740

)

(884

)

Net loss and comprehensive loss attributable to shareholders

 

(9,131

)

(2,268

)

(42,304

)

(21,520

)

 

 

 

 

 

 

 

 

 

 

Net loss and comprehensive loss per share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

(3.02

)

(0.75

)

(14.01

)

(7.90

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic and diluted

 

3,019,712

 

3,011,065

 

3,019,259

 

2,724,467