EX-99.1 2 a2232302zex-99_1.htm EX-99.1

Exhibit 99.1

 

 

DragonWave Reports Fourth Quarter and Full Fiscal Year 2017 Results

 

OTTAWA, CANADA — May 26, 2017 — DragonWave Inc. (TSX:DRWI; 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 28, 2017. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

 

Revenue for the full fiscal year was $43.9 million. Revenue for the fourth quarter of fiscal year 2017 was $8.0 million, compared with $10.2 million in the third quarter of fiscal year 2017.

 

Gross profit before inventory provision for the full fiscal year was 29.1%. Gross profit before inventory provisions was 22.3% in the fourth quarter of fiscal year 2017, compared to 28.3% in the third quarter of fiscal year 2017. There was a $0.4 million inventory provision taken in the fourth quarter of fiscal year 2017, while there was a $0.2 million inventory provision taken in the third quarter of fiscal year 2017.

 

See “Non-GAAP Financial Measures” below for the most directly comparable measure to gross profit before inventory provisions when calculated in accordance with GAAP and presented in DragonWave’s financial statements.

 

Operating expenses during fiscal year 2017 were $27.9 million, a decrease of $9.9 million compared to the previous fiscal year. Operating expenses in Q4 decreased to $6.7 million from $7.0 million in the third quarter of fiscal year 2017.

 

Net loss attributable to shareholders in the fourth quarter of fiscal year 2017 was ($3.9) million or ($0.60) per basic and diluted share. This compares to a net loss attributable to shareholders of ($4.6) million or ($0.80) per basic and diluted share in the third quarter of fiscal year 2017.

 

“Our results in Q4 reflect the difficult operating conditions. Earlier this year we communicated that we had made a restructuring proposal to our credit facility partners to reduce operating expenses and address working capital.” said DragonWave President & CEO, Peter Allen. “In co-operation with our secured lenders we have engaged Alvarez & Marsal Canada ULC to assist us with the identification and assessment of strategic alternatives in relation to short term liquidity requirements.”

 

Cash and cash equivalents totaled $4.1 million at the end of the fourth quarter of fiscal year 2017, compared to $4.5 million at the end of the third quarter of fiscal year 2017.

 


 

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 29, 2017.

 

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 are 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® is a registered trademark 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 28, 2017 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 restructuring efforts, efforts to reduce operating expenses and address working capital, and identification and assessment of strategic alternatives in relation to short term liquidity requirements. These statements are subject to certain assumptions, risks and uncertainties, including DragonWave’s ongoing efforts to manage cash flows and liquidity.

 

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 26, 2017 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:

Media Contact:

Patrick Houston

Nadine Kittle

CFO

Marketing Communications

DragonWave Inc.

DragonWave Inc.

investor@dragonwaveinc.com

nkittle@dragonwaveinc.com

Tel: +1-613-599-9991 ext 2278

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

 

 

CONSOLIDATED BALANCE SHEETS

Expressed in US $000’s except share amounts

 

 

 

 

As at

 

As at

 

 

 

February 28,

 

February 29,

 

 

 

2017

 

2016

 

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

 

4,073

 

4,277

 

Trade receivables

 

11,876

 

18,986

 

Inventory

 

21,415

 

22,702

 

Other current assets

 

1,791

 

2,777

 

 

 

39,155

 

48,742

 

Long-term Assets

 

 

 

 

 

Property and equipment

 

2,517

 

3,702

 

Intangible assets

 

336

 

623

 

 

 

2,853

 

4,325

 

 

 

 

 

 

 

Total Assets

 

42,008

 

53,067

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Debt facility

 

17,030

 

22,152

 

Accounts payable and accrued liabilities

 

25,206

 

23,832

 

Deferred revenue

 

539

 

1,944

 

Deferred tax liability

 

148

 

294

 

Warrant liability

 

—

 

117

 

 

 

42,923

 

48,339

 

 

 

 

 

 

 

Long-term Liabilities

 

 

 

 

 

Deferred revenue

 

435

 

498

 

Warrant liability

 

1,090

 

3

 

 

 

1,525

 

501

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity (Deficiency)

 

 

 

 

 

Capital stock

 

229,995

 

221,128

 

Contributed surplus

 

10,503

 

9,235

 

Deficit

 

(234,113

)

(218,225

)

Accumulated other comprehensive loss

 

(9,618

)

(9,618

)

Total Shareholders’ Equity (Deficiency)

 

(3,233

)

2,520

 

 

 

 

 

 

 

Non-controlling interest

 

793

 

1,707

 

Total Equity (Deficiency)

 

(2,440

)

4,227

 

 

 

 

 

 

 

Total Liabilities and Equity (Deficiency)

 

42,008

 

53,067

 

 

 

 

 

 

 

Shares issued and outstanding

 

7,305,219

 

3,020,069

 

 


 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

 

 

 

Three months ended

 

Twelve months ended

 

 

 

February 28,

 

February 29,

 

February 28,

 

February 29,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

Hardware and other

 

6,847

 

8,601

 

32,742

 

70,491

 

Services

 

1,105

 

3,440

 

11,174

 

15,804

 

 

 

7,952

 

12,041

 

43,916

 

86,295

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

 

 

 

 

 

 

 

Hardware and other

 

5,549

 

7,794

 

25,672

 

58,991

 

Services

 

633

 

1,563

 

5,477

 

8,917

 

Inventory provision

 

367

 

3,181

 

953

 

4,416

 

 

 

6,549

 

12,538

 

32,102

 

72,324

 

Gross profit

 

1,403

 

(497

)

11,814

 

13,971

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Research and development

 

1,798

 

2,425

 

7,825

 

13,406

 

Selling and marketing

 

1,637

 

1,858

 

7,363

 

10,572

 

General and administrative

 

3,283

 

3,311

 

12,734

 

13,798

 

 

 

6,718

 

7,594

 

27,922

 

37,776

 

 

 

 

 

 

 

 

 

 

 

Loss before other items

 

(5,315

)

(8,091

)

(16,108

)

(23,805

)

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

—

 

—

 

—

 

(11,927

)

Restructuring costs

 

—

 

(130

)

—

 

(1,549

)

Amortization of deferred financing cost

 

(442

)

—

 

(442

)

—

 

Amortization of intangible assets

 

(87

)

(96

)

(369

)

(577

)

Accretion expense

 

(1

)

(37

)

(102

)

(205

)

Interest expense

 

(382

)

(424

)

(1,464

)

(2,014

)

Warrant issuance expenses

 

—

 

—

 

(561

)

—

 

Change in fair value of warrant liability

 

2,470

 

(69

)

4,242

 

1,119

 

Foreign exchange loss

 

(31

)

(307

)

(110

)

(331

)

Loss before income taxes

 

(3,788

)

(9,154

)

(14,914

)

(39,289

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

137

 

129

 

783

 

2,275

 

Net loss and comprehensive loss

 

(3,925

)

(9,283

)

(15,697

)

(41,564

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interest

 

66

 

152

 

(191

)

(740

)

Net loss and comprehensive loss attributable to shareholders

 

(3,859

)

(9,131

)

(15,888

)

(42,304

)

 

 

 

 

 

 

 

 

 

 

Net loss and comprehensive loss per share

 

 

 

 

 

 

 

 

 

Basic and diluted

 

(0.60

)

(3.02

)

(3.26

)

(14.01

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic and diluted

 

6,396,309

 

3,019,712

 

4,879,738

 

3,019,259