WPCS Reports FY2010 Third Quarter Financial Results
EXTON, Pa., March 17 /PRNewswire-FirstCall/ -- WPCS International Incorporated (Nasdaq: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the third quarter of fiscal year 2010 ended January 31, 2010. For the third quarter, WPCS reported revenue of $27.0 million compared to $25.3 million for the same period a year ago. WPCS reported net income of $71,000 or $0.01 per diluted share for the third quarter compared to $178,000 or $0.03 per diluted share for the same period a year ago. Year to date through the nine months ended January 31, 2010 WPCS reported revenue of $76.6 million compared to $82.4 million for the same period a year ago. For the nine month period, the reported net income was $843,000 or $0.12 per diluted share compared to net income of $1.4 million or $0.19 per diluted share for the same period a year ago.
Andrew Hidalgo, CEO of WPCS, commented, "The third quarter results were below our expectations from an earnings perspective. The primary reason behind the lower than expected earnings was a delay in bid to backlog conversion and a project cost overrun. However, there is positive news to report. At the end of the third quarter, the company reported a backlog of $49 million which is an increase of 75% over the previous quarter. WPCS also has a bid list of $186 million. The backlog increase gives us the opportunity to improve earnings in the quarters ahead. In fact, the $38 million of new projects we have announced in the first two months of calendar year 2010 is more than we announced in the first seven months of calendar year 2009. Due to the delay in converting bids to backlog, WPCS is revising its estimates for the fiscal year ending April 30, 2010. We project our revenue will be in the range of $102 million to $106 million, our net income in the range of $1.2 million to $1.4 million and $0.17 to $0.20 in earnings per diluted share. WPCS continues to maintain a healthy balance sheet with $4 million in cash, $20.9 million in working capital and $5.6 million in credit line borrowings. Our credit line borrowing to working capital ratio remains favorably low at 27%. The $2 million paid towards The Pride Group acquisition contributed to a lower cash position in the third quarter. We are also pleased to announce that Bank of America has approved the renewal of our $15 million credit facility for another three years. In summary, through these challenging economic times, WPCS has continued to deliver profitable results but we are committed to improving earnings. We believe the recent growth in backlog is a positive sign of better quarters ahead."
As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 888-299-4099 for calls within the U.S. and 302-709-8337 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH58841. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the conference call will be available for a period of five days by dialing 402-220-2946 and using 58841 # as the pass code.
About WPCS International Incorporated:
WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit www.wpcs.com
Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and are subject to change at any time. The company's actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward looking statements.
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
2010 2009 2010 2009
---- ---- ---- ----
REVENUE $26,972,380 $25,323,422 $76,557,723 $82,358,634
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of revenue 20,561,172 18,369,219 55,471,468 59,975,397
Selling, general
and administrative
expenses 5,660,707 5,904,094 17,800,852 17,787,254
Depreciation and
amortization 662,705 614,699 1,970,848 1,954,880
------- ------- --------- ---------
Total costs and
expenses 26,884,584 24,888,012 75,243,168 79,717,531
---------- ---------- ---------- ----------
OPERATING INCOME 87,796 435,410 1,314,555 2,641,103
OTHER EXPENSE (INCOME):
Interest expense 53,294 85,480 193,931 333,764
Interest income (5,821) (3,042) (9,352) (51,155)
------ ------ ------ -------
INCOME BEFORE INCOME
TAX PROVISION 40,323 352,972 1,129,976 2,358,494
Income tax (benefit)
provision (12,253) 101,036 480,434 845,240
------- ------- ------- -------
NET INCOME 52,576 251,936 649,542 1,513,254
Less: Net (loss) income
attributable to
noncontrolling
interest (18,250) 73,840 (192,988) 135,037
------- ------ -------- -------
NET INCOME ATTRIBUTABLE
TO WPCS $70,826 $178,096 $842,530 $1,378,217
======= ======== ======== ==========
Basic net income
per common share
attributable to
WPCS $0.01 $0.03 $0.12 $0.19
===== ===== ===== =====
Diluted net income
per common share
attributable to
WPCS $0.01 $0.03 $0.12 $0.19
===== ===== ===== =====
Basic weighted
average number of
common shares
outstanding 6,944,032 7,077,249 6,942,855 7,193,138
========= ========= ========= =========
Diluted weighted
average number of
common shares
outstanding 6,968,587 7,077,249 6,966,054 7,213,744
========= ========= ========= =========
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, April 30,
ASSETS 2010 2009
----------- ---------
(Unaudited) (Note 1)
CURRENT ASSETS:
Cash and cash equivalents $3,973,653 $6,396,810
Accounts receivable, net of
allowance of $96,051 and $155,458
at January 31, 2010 and April 30,
2009, respectively 27,539,260 25,662,784
Costs and estimated earnings in
excess of billings on uncompleted
contracts 6,176,827 5,229,043
Inventory 2,973,199 2,481,383
Prepaid expenses and
other current assets 1,470,810 1,674,952
Prepaid income taxes 306,933 295,683
Deferred tax assets 299,481 70,413
------- -------
Total current assets 42,740,163 41,811,068
PROPERTY AND EQUIPMENT, net 6,521,029 6,668,032
OTHER INTANGIBLE ASSETS, net 2,204,955 1,983,879
GOODWILL 34,914,822 32,549,186
OTHER ASSETS 132,589 132,948
------- -------
Total assets $86,513,558 $83,145,113
=========== ===========
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
January 31, April 30,
LIABILITIES AND EQUITY 2010 2009
---- ----
(Unaudited) (Note 1)
CURRENT LIABILITIES:
Current portion of loans
payable $89,401 $89,210
Borrowings under line of
credit 5,626,056 5,626,056
Current portion of capital
lease obligations 88,317 96,001
Accounts payable and
accrued expenses 9,076,906 8,997,296
Billings in excess of
costs and estimated
earnings on uncompleted
contracts 2,334,186 2,511,220
Deferred revenue 646,403 507,650
Due to shareholders 3,947,559 2,951,008
---------- ----------
Total current
liabilities 21,808,828 20,778,441
Due to shareholders, net
of current portion 803,722 -
Loans payable, net of
current portion 38,654 71,634
Capital lease obligations,
net of current portion 87,508 151,425
Deferred tax liabilities 1,737,619 1,467,971
---------- ----------
Total liabilities 24,476,331 22,469,471
---------- ----------
COMMITMENTS AND
CONTINGENCIES
EQUITY:
Preferred stock -$0.0001
par value, 5,000,000
shares authorized, none
issued - -
Common stock -$0.0001 par
value, 25,000,000 shares
authorized, 6,948,516 and
6,942,266 shares issued
and outstanding at
January 31, 2010 and
April 30, 2009,
respectively 700 694
Additional paid-in
capital 50,301,320 50,175,479
Retained earnings 10,223,719 9,381,189
Accumulated other
comprehensive income
(loss) on foreign
currency translation 352,956 (321,798)
------- --------
Total WPCS
shareholders'
equity 60,878,695 59,235,564
Noncontrolling
interest 1,158,532 1,440,078
--------- ---------
Total equity 62,037,227 60,675,642
Total liabilities
and equity $86,513,558 $83,145,113
=========== ===========
Note 1. Certain reclassifications have been made to prior period
financial statements to conform to current presentation.
CONTACT:
WPCS International Incorporated
610-903-0400 x101
[email protected]
SOURCE WPCS International Incorporated
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