Numerex Reports First Quarter 2011 Financial Results

ATLANTA, April 28, 2011 /PRNewswire/ -- Numerex Corp (NASDAQ: NMRX), a leading provider of business services, technology, and products for the worldwide machine-to-machine (M2M) market, today announced financial results for its first quarter ended March 31, 2011.

"Numerex is poised to benefit from the commercialization of key projects, recently forged alliances with M2M industry leaders, and new product launches," stated Stratton Nicolaides, chairperson and CEO of Numerex. "We continue to invest in our Business Solutions client programs with new hires and state-of-the-art infrastructure required to meet anticipated demand from wireless operators and global enterprise groups. We believe that our focus on scaling our M2M service platforms will allow us to pursue additional growth opportunities and result in improved operating leverage."

Key metrics for the first quarter 2011 include:

The Company's Financial Highlights include:

• Increased subscriptions by 25% to 1,224,000 at the end of the first quarter of 2011, compared to 977,000 recorded at the end of the first quarter of 2010.  During the quarter ended March 31, 2011, the Company added 53,000 net subscriptions, as compared to 40,000 net subscriptions added in the first quarter of 2010.
• Reported consolidated revenue of $13.8 million compared to $13.0 million in the first quarter of 2010.  During the quarter ended March 31, 2011, the Company reported service revenues of $9.2 million and hardware revenues of $4.6 million compared to $8.2 million in service revenues and $4.8 million in hardware revenues, respectively, during the same period in 2010.
• Consolidated gross margin for the three months ended March 31, 2011 was 44.2% compared to 44.2% during the same period in 2010.
• GAAP earnings from operations were $270,000 compared to $45,000 in the first quarter of 2010. The increase was due to an improved revenue mix of higher-margin service revenues that were partially offset by the growth in sales and marketing expenses. GAAP net earnings for the three months ended March 31, 2011 were $230,000 compared to a loss of $31,000 during the same period in 2010.
• Ended the first quarter of 2011 with cash and cash equivalents of $4.1 million compared to $10.3 million at December 31, 2010.  The decrease in cash and cash equivalents was primarily due to a litigation settlement of $5.5 million, which included a repurchase of 320,833 shares at $9.04 per share.
• On April 25, 2011, announced an increase to the Company's credit facility from $5 million to $10 million and the filing of a $30 million universal shelf registration statement.  No amounts are currently outstanding under the credit facility.  

The Company's Operational Highlights include:

• Announced a co-marketing agreement with Tekelec, the mobile broadband solutions company, to deliver intelligent M2M solutions to global service providers. The solutions combine Numerex's M2M service platforms; embedded and integrated devices; and M2M service expertise, with Tekelec's M2M service enablement solution, including Subscriber Data Management, Policy and Session Management, Mobile Messaging, and Performance Intelligence Center.
• Numerex and Enfora, a subsidiary of Novatel Wireless, announced an agreement to enable Intelligent Global Pooling Systems (iGPS Company, LLC) to provide global monitoring of its innovative all-plastic pallets with embedded RFID tags through the use of the Numerex WorldPass global network service.
• Renewed its contract with the QinetiQ group, in which the Company plays a pivotal role, to provide continuing support to FEMA's disaster relief operations.
• Announced collaboration with Cinterion that will combine Cinterion's portfolio of wireless modules with the Company's network and application technology to provide a full range of integrated M2M services.

Quarterly Conference Call

Numerex will discuss its quarterly results via teleconference today at 9:00 a.m. Eastern Time. Please dial (866) 337-6663 or if outside the U.S. and Canada, (904) 520-5771 to access the conference call at least five minutes prior to the 9:00 a.m. ET start time. A live webcast and replay of the call will also be available at http://www.numerex.com under the Investor Relations section.  An audio replay will be available via the Numerex web site beginning two hours after the call end.  

About Numerex

Numerex Corp (NASDAQ:NMRX) is a leading provider of business services, technology, and products used in the development and support of machine-to-machine (M2M) solutions for the enterprise and government markets worldwide. The Company offers Numerex DNA® that includes hardware and smart Devices, cellular and satellite Network services, and software Applications that are delivered through Numerex FAST™ (Foundation Application Software Technology). Customers typically subscribe to device management, network, and application services through hosted platforms. Business services enable the development of efficient, reliable, and secure solutions while simplifying and speeding up deployment through streamlined processes and comprehensive integration services. Numerex is ISO 27001 information security-certified. "Machines Trust Us®" represents the Company's focus on M2M data security, service reliability, and round-the-clock support of its customers' M2M solutions. For additional information, please visit www.numerex.com.

This press release contains, and other statements may contain, forward-looking statements with respect to Numerex future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding growth trends and activities. 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: our inability to reposition our platform to capture greater recurring service revenues; the risks that a substantial portion of revenues derived from government contracts may be terminated by the government at any time; variations in quarterly operating results; delays in the development, introduction, integration and marketing of new services; customer acceptance of services; economic conditions resulting in decreased demand for our products and services; the risk that our strategic alliances and partnerships will not yield substantial revenues; changes in financial and capital markets, and the inability to raise growth capital; the inability to attain revenue and earnings growth; changes in interest rates; inflation; the introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the inability to realize revenue enhancements; disruption in key supplier relationships and/or related services; and extent and timing of technological changes. Numerex SEC reports identify additional factors that can affect forward-looking statement.

Reconciliation of Non-GAAP net income

The following table reconciles non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP). These non-GAAP financials use net earnings before non-cash items and litigation related fees as an additional measure of our operating performance.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primary financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP.  Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial measures provide meaningful supplemental information about our operating results, primarily because they exclude non-cash items and litigation related expenses that we do not believe are indicative of the ongoing operating performance of our business. Although these items should properly be considered in our GAAP financial measures, we believe they should be excluded when evaluating our current operating performance.  

The following table reconciles the specific items excluded from GAAP in the calculation of non-GAAP net income for the periods indicated below:  

Numerex Corp. Contact:
Alan Catherall
770 485-2527

Investor Relations Contact:
Seth Potter
646 277-1230

SOURCE Numerex Corp