EX-99.1 EARNREL 2 nmrxerdetail092004.htm NUMEREX CORP EARNINGS RELEASE Numerex Corp Earnings Release

Investor Relations Contact:
Alan B. Catherall 770-485-2527


PRESS RELEASE
FOR IMMEDIATE RELEASE

NUMEREX REPORTS THIRD QUARTER 2004 RESULTS

ATLANTA, November 9, 2004 - Numerex Corp. (NASDAQ: NMRX), today announced net losses of $340 thousand for the third quarter of 2004 and net loss of $1.8 million year-to-date. These results compare to net income of $1.0 million and a net loss of $1.0 million for the comparable periods of 2003, which included a gain of $1.7 million arising from the sale of Data1Source LLC in September 2003. Fully diluted losses per share were $(.03) for the quarter and $(.17) year-to-date. This compares to fully diluted earnings per share of $.09 and fully diluted losses per share of $(.09) for the comparable periods of 2003. Net sales were $6.2 million for the quarter and $16.7 million year-to-date, compared to $5.5 million and $14.9 million for the comparable periods of 2003. Please see attached financial statements for more details.
 
"The third quarter 2004 continued the sound growth that we have seen from our wireless data products and services," said Stratton Nicolaides, chairman and CEO of Numerex. Mr. Nicolaides stated that, "After eliminating revenues of $378 thousand associated with Data1Source, LLC, wireless data revenues increased over 28% compared to the third quarter last year and almost 6% sequentially. Specifically, the results for the quarter included another strong performance from Uplink Security with regard to both product sales and recurring service revenue. In fact, Uplink recurring service revenues have grown sequentially in twenty-one of the last twenty-two quarters. The third quarter of 2004 also saw the transition of MobileGuardian distribution to Southwest Dealer Services. This had the benefits of reduced selling costs with no loss in sales performance."

Mr. Nicolaides continued, "The recent quarters have also been very active with regard to research and development. Two weeks ago, we issued a number of press releases related to further development of the Cellemetry network. They included:

·   Announcing CellemetryXG, our next generation network platform designed to meet our customer demands in both digital and analog environments with Xpert customer service and support
·   Announcing a joint development agreement with Wavecom SA to deliver multi-mode digital radios with new features that increase our network and solution capabilities; and
·   Announcing the Multi-Mode/Multi-Path network access module designed to provide maximum flexibility for M2M network design and deployment, effectively future proofing our M2M network and solution services.

Our digital multimedia business experienced an even stronger quarter than we reported three months ago. We shipped a substantial amount of video conferencing equipment to two school districts in the third quarter and we have a backlog of video conferencing equipment that still remains to be delivered in the fourth quarter. We remain optimistic about our video conferencing business even though the FCC E-rate program is currently under review, which may create some uncertainty as to the timing of future E-rate awards.

Numerex provided cash from operations of $529 thousand for the third quarter as a result of both diminished operating losses as well as continued working capital efficiencies. Cash balances also increased from the prior quarter despite paying over $300 thousand principal and interest on the $4.5 million term note that we issued in January 2004. Future cash outlays could be lower if the equity conversion feature of the note is available to be exercised."

Mr. Nicolaides concluded that with respect to the fourth quarter of 2004, "we expect that growth in wireless revenues will accelerate and again show sequential growth. Uncertainty created by the FCC review of its E-rate program caused us to lower our initial Q4 revenue guidance. As a result, we estimate that total revenues for the fourth quarter will range between $5.7 and $6.2 million. However, we believe that overall revenue could range higher if the FCC releases awards before the end of November."
 
 
  -continued-   
 




Conference Call and Webcast Information
Numerex will conduct a conference call later today, November 9th, at 11:00 A.M., Eastern Standard Time, accessible by calling 888 243-3996 in the U.S. and Canada, or international by calling 973 935-2403. A live Webcast of the call will also be available via Numerex’s Web site at http://www.nmrx.com, under the Investor Relations section. A replay of the conference call will be available via Numerex’s Web site beginning two hours after the call.

About Numerex
Numerex is a communications technology business comprised of operating subsidiaries that utilize existing wireless or cellular, Internet and cable infrastructure thereby enabling network access and information management through the deployment of proprietary software and technology. Numerex facilitates the real-time exchange of information between remote devices, people and business systems. This provides companies the ability to remotely connect, monitor, control and diagnose their field assets. The Company primarily markets and sells products and services in wireless data communications through Cellemetry®, UplinkSM , MobileGuardian®, VendView™, and digital multimedia through PowerPlay™ and IPContact™. These products and services enable customers around the globe to monitor and move information for a variety of applications from home and business security to distance learning. In addition, the Company offers wireline alarm security products and services, as well as telecommunications network operational support systems.

Visit the Numerex Web site for additional information at: www.nmrx.com


This press release contains, and other statements may contain, forward-looking statements with respect to Numerex's future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities in the wireless data and video conferencing business. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "assume," "strategy," "plan," "outlook," "outcome," "continue," "remain," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. Numerex cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and Numerex assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.

The following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the failure to realize improvements on our digital multimedia and networking business; variations in quarterly operating results, delays in the development, introduction and marketing of new wireless products and services; customer acceptance of products and services; economic conditions; changes in financial and capital markets; the inability to attain revenue and earnings growth in our wireless data business; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; future contraction or elimination of FCC-sponsored programs in which Numerex participates; competitive conditions; the inability to realize revenue enhancements; and extent and timing of technological changes. Numerex’s SEC reports identify additional factors that can affect forward-looking statements.

 

 
  -continued-   
 


NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                   
FOR THE THREE MONTH
FOR THE NINE MONTH
PERIOD ENDED SEPTEMBER 30,
PERIOD ENDED SEPTEMBER 30,
  
   
2004
2003
2004
2003
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
 
                   
Net sales:
 
 
      
 
      
Product
 
$
2,852
 
$
2,346
 
$
7,015
 
$
5,556
 
Service
   
3,320
   
3,110
   
9,678
   
9,306
 
Total net sales
   
6,172
   
5,456
   
16,693
   
14,862
 
                           
Cost of product sales (excluding depreciation)
   
2,043
   
1,731
   
5,529
   
4,260
 
Cost of services (excluding depreciation and amortization)
   
1,395
   
1,158
   
3,595
   
3,353
 
Depreciation and amortization
   
87
   
181
   
297
   
534
 
Gross Profit
   
2,647
   
2,386
   
7,272
   
6,715
 
     
42.9
%
  
43.7
%
  
43.6
%
  
45.2
%
                           
Selling, general, and administrative expenses
   
2,186
   
2,210
   
6,914
   
6,827
 
Research and development expenses
   
205
   
261
   
684
   
846
 
Depreciation and amortization
   
411
   
480
   
1,245
   
1,474
 
Operating loss
   
(155
)
  
(565
)
  
(1,571
)
  
(2,432
)
                           
Interest income and (expense), net
   
(163
)
  
(127
)
  
(446
)
  
(278
)
Profit on sale of business
   
-
   
-
   
250
   
-
 
Other income and (expense), net
   
(3
)
  
(5
)
  
(34
)
  
75
 
Gain on sale of business
   
-
   
1,712
   
-
   
1,712
 
Earnings (loss) before taxes
   
(321
)
  
1,015
   
(1,801
)
  
(923
)
                           
Provision for income taxes
   
19
   
23
   
18
   
56
 
Net earnings (loss)
 
$
(340
)
$
992
 
$
(1,819
)
$
(979
)
                           
                           
Basic earnings (loss) per common share
 
$
(0.03
)
$
0.09
 
$
(0.17
)
$
(0.09
)
Diluted earnings (loss) per common share
 
$
(0.03
)
$
0.09
 
$
(0.17
)
$
(0.09
)
Number of shares used in per share calculation
                         
Basic
   
10,799
   
10,787
   
10,795
   
10,983
 
Dilluted
   
10,799
   
10,878
   
10,795
   
10,983
 
 
 

 
  -continued-   
 


NUMEREX CORP.
  
SUPPLEMENTAL SALES INFORMATION
  
(IN THOUSANDS)
  
         
 
FOR THE THREE MONTH
  
FOR THE NINE MONTH
  
 
PERIOD ENDED SEPTEMBER 30,
  
PERIOD ENDED SEPTEMBER 30,
  
         
 
2004
  
2003
  
2004
  
2003
  
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
Net sales:
                  
Wireless Data Communications
                 
Product
  
$
1,485
 
$
1,229
 
$
4,215
 
$
3,329
 
Service
    
2,150
   
1,964
   
6,283
   
5,903
 
Sub-total
    
3,635
   
3,193
   
10,498
   
9,232
 
Digital Multimedia and Networking
                         
Product
    
1,322
   
944
   
2,461
   
1,843
 
Service
    
1,028
   
898
   
2,890
   
2,749
 
Sub-total
    
2,350
   
1,842
   
5,351
   
4,592
 
Wireline Security
                          
Product
    
45
   
173
   
339
   
384
 
Service
    
142
   
248
   
505
   
654
 
Sub-total
    
187
   
421
   
844
   
1,038
 
Total net sales
                          
Product
    
2,852
   
2,346
   
7,015
   
5,556
 
Service
    
3,320
   
3,110
   
9,678
   
9,306
 
Total net sales
    
6,172
   
5,456
   
16,693
   
14,862
 
 
 

 
  -continued-   
 


NUMEREX CORP.

 

 

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

(IN THOUSANDS)
          
   
SEPTEMBER 30,

 
DECEMBER 31,

 

 

 
2004

 
2003

 

 

 
(UNAUDITED)

 

 

  
ASSETS
          
CURRENT ASSETS
          
Cash and cash equivalents
  
$
1,402
 
$
734
 
Accounts receivable, net
    
4,323
   
3,093
 
Notes Receivable
    
91
   
99
 
Inventory
    
2,078
   
3,461
 
Prepaid expenses and other current assets
    
791
   
700
 
TOTAL CURRENT ASSETS
    
8,685
   
8,087
 
               
PROPERTY AND EQUIPMENT, NET
    
931
   
1,296
 
GOODWILL, NET
    
15,014
   
15,014
 
OTHER INTANGIBLES, NET
    
7,421
   
7,979
 
SOFTWARE, NET
    
604
   
825
 
OTHER ASSETS
    
918
   
769
 
TOTAL ASSETS
  
$
33,573
 
$
33,970
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
              
CURRENT LIABILITIES
              
Accounts payable
  
$
3,418
 
$
2,498
 
Other current liabilities
    
1,311
   
1,487
 
Note payable, current
   
1,429
   
3,500
 
Deferred revenues
    
815
   
775
 
Obligations under capital leases, current portion
    
115
   
282
 
TOTAL CURRENT LIABILITIES
    
7,088
   
8,542
 
               
LONG TERM LIABILITIES
              
Obligations under capital leases and other long term liabilities
    
2
   
62
 
Note Payable
    
2,692
   
-
 
TOTAL LONG TERM LIABILITIES
    
2,694
   
62
 
               
SHAREHOLDERS’ EQUITY
              
Preferred stock - no par value; authorized 3,000,000; none issued
    
-
   
-
 
Class A common stock – no par value; authorized 30,000,000; issued
              
13,191,328 and 13,181,547 shares, respectively
   
36,810
   
36,793
 
Additional paid-in-capital
    
749
   
439
 
Treasury stock, at cost, 2,391,400 shares on September 30, 2004 and
             
December 31, 2003
    
(10,197
)
  
(10,197
)
Class B common stock – no par value; authorized 5,000,000; none issued
    
-
   
-
 
Accumulated other comprehensive income
    
13
   
97
 
Retained earnings
    
(3,584
)
  
(1,766
)
     
23,791
   
25,366
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  
$
33,573
 
$
33,970