Powerwave Technologies Reports Second Quarter Results
SANTA ANA, Calif. - Jul. 30, 2009 -
Powerwave Technologies, Inc. (NASDAQ: PWAV), a global supplier of end-to-end wireless solutions for wireless communications networks, today reported preliminary results for its second quarter ended June 28, 2009.
Net sales in the second quarter of fiscal 2009 were $136.1 million, compared with $245.6 million in the second quarter of fiscal 2008. Powerwave also reported second quarter GAAP net income of $6.3 million, which includes non-cash intangible asset amortization charges of $0.8 million and $0.2 million of restructuring charges. For the second quarter of 2009, the net income equates to basic and diluted earnings per share of 5 cents. This compares with a net loss of $10.2 million, or a loss per share of 8 cents in the prior year period. For the second quarter of fiscal 2009, excluding the intangible asset amortization and restructuring charges and an $8.7 million gain associated with the repurchase of outstanding debt, on a pro forma basis, Powerwave would have reported a net loss of $1.7 million, or basic loss per share of 1 cent.
For the first six months of fiscal 2009, total revenue was $285.9 million compared with $471.9 million for the first six months of fiscal 2008. Powerwave reported total net income for the first six months of 2009 of $4.2 million, or basic and diluted earnings per share of 3 cents, compared with a net loss of $24.5 million, or a basic loss per share of 19 cents for the first six months of fiscal 2008. The results for the first six months of 2009 include a total of $4.8 million of restructuring and impairment charges and intangible asset amortization, and the results for the first six months of 2008 included $29.2 million of such expenses.
“We experienced the continuing effects of the global economic recession during the second quarter,” stated Ronald Buschur, president and chief executive officer of Powerwave Technologies. “While global macro economic issues have significantly impacted our business, we remain focused on maintaining our cost reduction efforts, which showed continued progress during the quarter with improved gross margins, reduced operating expenses and a reduction in our long-term debt. As we look ahead, we continue to believe that Powerwave is in a good position to capture the long-term growth opportunities that we believe remain in the wireless infrastructure marketplace,” he said.
Summary of Significant Items Impacting the Second Quarter
During the second quarter of 2009, we incurred total restructuring charges of $0.2 million, which primarily included severance charges related to personnel reductions as well as site closure expenses related to the closure of selected facilities. The Company also incurred approximately $0.8 million of intangible asset amortization from previous acquisitions.
During the second quarter of 2009, the Company repurchased a total of $20 million par value of its 1.875% Convertible Subordinated Notes due November 2024, resulting in a gain of $8.7 million.
The following is a brief summary of the significant items impacting the comparability of per share amounts for the three months ended June 28, 2009 and June 29, 2008. To calculate the per share impact of these significant items, an underlying effective tax rate of zero percent was used for both periods and the fully diluted shares outstanding for each respective period were used.
Three Months Ended (unaudited)
|
Summary of Significant Items Impacting Results |
June 28, 2009 |
June 29, 2008 |
|
Intangible asset amortization |
($0.01) |
($0.07) |
|
Restructuring charges |
-- |
($0.05) |
|
Non-cash SFAS 123R compensation charge |
($0.01) |
($0.01) |
|
Gain on repurchase of long-term debt |
$0.06 |
-- |
|
Total per share impact |
($0.04) |
($0.13) |
In addition, below is a brief summary of significant items impacting the comparability of the gross margin percentage for the second quarter of 2009 on a GAAP and pro forma basis.
Three Months Ended (unaudited)
|
|
March 29, 2009 |
March 30, 2008 |
|
GAAP reported gross margin % |
26.4% |
20% |
|
Intangible asset amortization |
0.4% |
2.6% |
|
Restructuring charges |
0.0% |
2.1% |
|
Pro Forma gross margin % |
26.8% |
24.7% |
Second Quarter 2009 Revenue Summary
In the second quarter of 2009, total Americas revenue was $41.9 million or approximately 31 percent of revenue, compared with $83.1 million or approximately 34 percent of revenue in the second quarter of 2008. Total sales to customers based in Asia accounted for approximately 36 percent of revenue or $48.7 million in the second quarter of 2009, compared with approximately 30 percent of revenue or $72.8 million in the second quarter of 2008. Total Europe, Africa and Middle East revenue in the second quarter of 2009 was $45.5 million or approximately 33 percent of revenue, compared with $89.7 million or approximately 36 percent of revenue in the second quarter of 2008.
Sales of products within the antenna systems group totaled $31.7 million or 23 percent of total revenue, sales of products in the base station systems group totaled $96.4 million or 71 percent of revenue and revenue from the coverage systems group totaled $8.0 million or 6 percent of revenue in the second quarter of 2009.
In the second quarter of 2009, Powerwave’s largest customers included Nokia Siemens Networks, which accounted for approximately 39 percent of revenue, and Alcatel-Lucent, which accounted for approximately 15 percent of revenue in the quarter. In terms of customer profile, total OEM sales accounted for approximately 69 percent of total revenue, and total direct and operator sales accounted for approximately 31 percent of revenue.
In terms of transmission standards, 2G and 2.5G standards accounted for approximately 58 percent of total revenue, 3G standards accounted for approximately 36 percent of total revenue and WiMAX accounted for approximately 6 percent of total revenue during the second quarter of 2009.
Equity Compensation Expense
In accordance with SFAS 123R, share-based payments, the results reported herein include approximately $1.3 million of pre-tax compensation expense in the second quarter of 2009, and $2.2 million for the first six months of fiscal 2009, almost all of which is included in operating expenses. This had the effect of reducing the earnings per share in the second quarter of 2009 by 1 cent and reducing the earnings per share in the first six months of 2009 by 2 cents. A similar impact in the second quarter of 2008 increased the loss per share by 1 cent and increased the loss per share in the first six months of 2008 by 2 cents.
Balance Sheet
At June 28, 2009, Powerwave had total cash and cash equivalents of $42.4 million, which includes restricted cash of $2.5 million. Total net inventories were $70.8 million, and net accounts receivable were $164.9 million.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial information as defined by the U.S. Securities and Exchange Commission Regulation G. Pursuant to the requirements of this regulation, a reconciliation of this non-GAAP financial information to our financial statements as prepared under generally accepted accounting principles in the United States (GAAP) is included in this press release. Powerwave’s management believes that the presentation of this non-GAAP financial information is useful to our investors and the investment community since it excludes certain non-cash charges and expenses arising from the acquisitions the company has made, including the amortization of certain intangible assets resulting from the purchase accounting valuation of these acquisitions. Also excluded are restructuring and impairment charges related to the consolidation of our manufacturing and engineering facilities, as well as severance costs, including those related to facility closures. In addition, the gain on the repurchase of a portion of the Company’s outstanding long-term debt has been excluded. Management of Powerwave believes that these items should be excluded when comparing our current operating results with those of prior periods as the restructuring and impairment charges and the repurchase of long-term debt will not impact future operating results, and the amortization of intangible assets and facility impairment charges are all non-cash expenses.
Attached to this news release are preliminary unaudited consolidated financial statements for the second quarter ended June 28, 2009.
Conference Call
Powerwave is providing a simultaneous webcast and live dial-in number of its second quarter fiscal 2009 financial results conference call on Thursday, July 30, 2009 at 2:00 pm Pacific time. To access the audio webcast, select the Investor Relations page at www.powerwave.com and select the Powerwave Technologies Q2 earnings conference call. The call will last for approximately 1 hour. To listen to the live call, please call (617) 224-4324 and enter reservation number 88440464. A replay of the webcast will be available beginning approximately 3 hours after completion of the initial webcast. Additionally, an audio playback of the conference call will be available at approximately 5:00 pm Pacific time on July 30, 2009 through August 6, 2009 by calling (617) 801-6888 and entering reservation number 62197319.
Forward-Looking Statements
The foregoing statements regarding long-term growth opportunities within the wireless communications infrastructure industry and Powerwave’s ability to capitalize on such opportunities are “forward looking statements.” These forward looking statements are based on information available to Powerwave as of the date of this press release and are subject to risks and uncertainties which could cause our actual results to differ materially from those projected or implied. Such potential risks and uncertainties include, but are not limited to, in no particular order: our ability to execute cost cutting initiatives without disrupting operations; delays or cancellations of wireless network capacity expansions and buildouts for both existing 2G and 2.5G networks and new 3G and 4G networks; macroeconomic factors that may negatively influence demand for wireless communications infrastructure and thereby reduce demand for our products; any perceived weakness in our financial position may cause us to lose market share to our competitors; future consolidation of our customers may reduce demand for our products; our ability to achieve manufacturing cost reductions and operating expense reductions; our ability to generate positive cash flow; wireless network operators may decide to not continue to deploy infrastructure equipment in the quantities that we expect; we require continued success in the design of new wireless infrastructure products and such products must be manufacturable and of good quality and reliability; we are not able to increase our prices to cover our exposure to raw material and freight price increases; our dependence on single source suppliers for certain key components used in our products exposes us to potential material shortages; our business requires continued favorable business conditions and growth in the wireless communications market. Powerwave also notes that its reported financial performance and period to period comparisons are not necessarily indicative of the results that may be expected in the future and Powerwave believes that such comparisons cannot be relied upon as indicators of future performance. Powerwave also notes that the market price of its Common Stock has exhibited high levels of volatility and therefore may not be suitable for all investors. More detailed information on these and additional factors which could affect Powerwave’s operating and financial results are described in the Company’s Form 10-K for the fiscal year ended December 28, 2008, and Form 10-Q for the quarterly period ended March 29, 2009, both of which are filed with the Securities and Exchange Commission, and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Powerwave urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. Additionally, Powerwave undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
UNAUDITED - PRELIMINARY
POWERWAVE TECHNOLOGIES, INC.
|
|
June 28, 2009 |
June 29, 2008 |
June 28, 2009 |
June 29, 2008 |
|
Net Sales |
$136,110 |
$245,642 |
$285,855 |
$471,943 |
|
Cost of Sales: |
|
|
|
|
|
Cost of goods |
99,587 |
185,090 |
214,548 |
357,853 |
|
Intangible asset amortization |
623 |
6,255 |
1,247 |
12,364 |
|
Restructuring and impairment charges |
2 |
5,163 |
1,410 |
10,535 |
|
Total cost of sales |
100,212 |
196,508 |
217,205 |
380,752 |
|
|
|
|
|
|
|
Gross profit |
35,898 |
49,134 |
68,650 |
91,191 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Sales and Marketing |
8,854 |
13,217 |
18,595 |
25,763 |
|
Research and development |
14,592 |
20,789 |
29,740 |
40,460 |
|
General and administrative |
12,752 |
15,973 |
24,851 |
31,070 |
|
Intangible asset amortization |
207 |
2,660 |
534 |
5,257 |
|
Restructuring and impairment charges |
151 |
966 |
1,649 |
1,080 |
|
Total operating expenses |
36,556 |
53,605 |
75,369 |
103,630 |
|
|
|
|
|
|
|
Operating loss |
(658) |
(4,471) |
(6,719) |
(12,439) |
|
|
|
|
|
|
|
Other income (expense), net |
6,288 |
(4,747) |
11,719 |
(10,057) |
|
|
|
|
|
|
|
Income (loss) before income taxes |
5,630 |
(9,218) |
5,000 |
(22,496) |
|
Income tax provision (benefit) |
(718) |
1,006 |
752 |
1,975 |
|
Net income (loss) |
6,348 |
(10,224) |
4,248 |
(24,471) |
|
|
|
|
|
|
|
Net earnings (loss) per share: |
|
|
|
|
|
Basic |
$ 0.05 |
$ (0.08) |
$ 0.03 |
$ (0.19) |
|
Diluted1 |
$ 0.05 |
$ (0.08) |
$ 0.03 |
$ (0.19) |
|
|
|
|
|
|
|
Weighted average common shares used |
|
|
|
|
|
Basic |
131,654 |
131,001 |
131,572 |
130,964 |
|
Diluted |
134,447 |
131,001 |
132,969 |
130,964 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share)
POWERWAVE TECHNOLOGIES, INC.
PERCENTAGE OF NET SALES
|
|
June 28, 2009 |
June 29, 2008 |
June 28, 2009 |
June 29, 2008 |
|
Net Sales |
100.0% |
100.0% |
100.0% |
100.0% |
|
Cost of Sales: |
|
|
|
|
|
Cost of goods |
73.2 |
75.3 |
75.1 |
75.9 |
|
Intangible asset amortization |
0.4 |
2.6 |
0.4 |
2.6 |
|
Restructuring and impairment charges |
0.0 |
2.1 |
0.5 |
2.2 |
|
Total cost of sales |
73.6 |
80.0 |
76.0 |
80.7 |
|
|
|
|
|
|
|
Gross profit |
26.4 |
20.0 |
24.0 |
19.3 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Sales and Marketing |
6.5 |
5.4 |
6.5 |
5.5 |
|
Research and development |
10.7 |
8.4 |
10.4 |
8.6 |
|
General and administrative |
9.4 |
6.5 |
8.7 |
6.6 |
|
Intangible asset amortization |
0.2 |
1.1 |
0.2 |
1.1 |
|
Restructuring and impairment charges |
0.1 |
0.4 |
0.6 |
0.2 |
|
Total operating expenses |
26.9 |
21.8 |
26.4 |
22.0 |
|
|
|
|
|
|
|
Operating loss |
(0.5) |
(1.8) |
(2.4) |
(2.7) |
|
|
|
|
|
|
|
Other income (expense), net |
4.6 |
(2.0) |
4.1 |
(2.1) |
|
|
|
|
|
|
|
Income (loss) before income taxes |
4.1 |
(3.8) |
1.7 |
(4.8) |
|
Income tax provision (benefit) |
(0.6) |
0.4 |
0.2 |
0.4 |
|
Net income (loss) |
4.7% |
(4.2%) |
1.5% |
(5.2%) |
POWERWAVE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF PRO FORMA RESULTS
(In thousands, except per share amounts)
|
|
June 28, 2009 |
Adjustments |
Pro Forma |
June 28, 2009 |
Adjustments |
Pro Forma |
|
Net Sales |
$ 136,110 |
- |
$136,110 |
$ 288,855 |
- |
$ 285,855 |
|
Cost of Sales: |
|
|
|
|
|
|
|
Cost of goods |
99.587 |
- |
99,587 |
214,548 |
- |
214,548 |
|
Intangible asset amortization |
623 |
(623)1 |
- |
1,247 |
(1,247)1 |
- |
|
Restructuring and impairment charges |
2 |
(2) 2 |
- |
1,410 |
(1,410)2 |
- |
|
Total cost of sales |
100,212 |
(625) |
99,587 |
217,205 |
(2,657) |
214,548 |
|
|
|
|
|
|
|
|
|
Gross profit |
35,898 |
625 |
36,523 |
68,650 |
2,657 |
71,307 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and Marketing |
8,854 |
- |
8,854 |
18,595 |
- |
18,595 |
|
Research and development |
14,592 |
- |
14,592 |
29,740 |
- |
29,740 |
|
General and administrative |
12,752 |
- |
12,752 |
24,851 |
- |
24,851 |
|
Intangible asset amortization |
207 |
(207)1 |
- |
534 |
(534)1 |
- |
|
Restructuring and impairment charges |
151 |
(151)2 |
- |
1,649 |
(1,649)2 |
- |
|
Total operating expenses |
36,556 |
(358) |
36,198 |
75,369 |
(2,183) |
73,186 |
|
|
|
|
|
|
|
|
|
Operating loss |
(658) |
983 |
(325) |
(6,719) |
4,840 |
(1,879) |
|
|
|
|
|
|
|
|
|
Other income (expense), net |
6,288 |
(8,670)3 |
(2,383) |
11,719 |
(12,693)3 |
(974) |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
5,630 |
(7,687) |
(2057) |
5,000 |
(7,853) |
(2,853) |
|
Income tax provision (benefit) |
(718) |
4094 |
(309) |
752 |
(1,180)4 |
428 |
|
Net income (loss) |
6,348 |
(8,096) |
(1,748) |
4,248 |
(6,673) |
(2,425) |
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share: |
|
|
|
|
|
|
|
Basic |
$ 0.05 |
|
$ (0.01) |
$ 0.03 |
|
$ (0.02) |
|
Diluted5 |
$ 0.05 |
|
$ (0.01) |
$ 0.03 |
|
$ (0.02) |
|
Weighted average common shares used in computing per share amounts: |
|
|
|
|
|
|
|
Basic |
131,654 |
|
131,654 |
131,572 |
|
131,572 |
|
Diluted |
134,447 |
|
134,447 |
132,969 |
|
132,969 |
POWERWAVE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
June 28, 2009 |
December 28, 2008 |
|
ASSETS: |
|
|
|
Cash and cash equivalents |
$ 39,842 |
$46,906 |
|
Restricted cash |
2,524 |
3,433 |
|
Accounts receivable,net |
164,939 |
213,871 |
|
Inventories,net |
70,808 |
81,098 |
|
Property,plant and equipment,net |
91,622 |
98,616 |
|
Other assets |
40,590 |
43,972 |
|
Total assets |
$ 410,325 |
$ 487,896 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|
|
|
Accounts payable |
$ 98,106 |
$ 139,267 |
|
Short-term debt |
- |
- |
|
Long-term debt |
280,887 |
306,321 |
|
Accrued expenses and other liabilities |
41,564 |
57,837 |
|
Total shareholders' equity |
(10,232) |
(15,079) |
|
Total liabilities and shareholders' equity |
$ 410,325 |
$ 487,896 |
About Powerwave Technologies
A global leader in end-to-end wireless coverage and capacity solutions, Powerwave Technologies, Inc. offers cutting edge wireless infrastructure to address the demands of enterprise and commercial customers. Powerwave offers a comprehensive suite of solutions, including Antennas, Base Station Solutions and Coverage Solutions. Powerwave’s product line supports all wireless network protocols and frequencies including Next Generation Networks in 4G technology such as WiMAX and LTE. Powerwave solutions, products and services also help wireless operators and OEMs reduce capital and operating expenses, speed rollout of services, improve coverage and capacity, and reduce environmental impact. For more information, visit us at http://www.powerwave.com/. Powerwave, Powerwave Technologies and the Powerwave logo are registered trademarks of Powerwave Technologies, Inc.
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