Numerex Reports Fourth Quarter and Full Year 2011 Financial Results

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Numerex Reports Fourth Quarter and Full Year 2011 Financial Results

25% Q4 Growth Drives M2M Subscription Base To 1.44 Million, Generating 19% increase in Q4 recurring revenues

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 fourth quarter and full year ended December 31, 2011.

Numerex solidified its position as a leader in the M2M industry with a strong performance in the fourth quarter and for the full year 2011,” stated Stratton Nicolaides, chairperson and CEO of Numerex.

“Currently, we host nearly 1.5 million subscriptions, servicing and supporting over 50 vertical and sub-vertical markets, on our integrated cloud-based horizontal platforms. The Company’s subscription base grew 25% in the fourth quarter compared to Q4 of 2010, reflecting increased activity in several markets.”

Accordingly, we have upwardly revised our subscription growth estimates to the 25% to 30% range for the full year 2012, as a result of the momentum created in the fourth quarter and robust activity experienced so far this year. We continue to reinforce our position as a leading Global M2M Managed Solutions Provider as we deliver ‘M2M as a Service.’

The fourth quarter registered a strong finish as evidenced by the solid growth in our M2M subscription base and 19% increase in recurring revenues compared to the fourth quarter of 2010,” continued Mr. Nicolaides.  
The Company anticipates strong operating leverage during 2012, due to the combination of the expected 18% to 23% growth in recurring revenues and continued cost controls resulting in improved profitability. Full year results for 2011 reflect a 25% decline in hardware revenues and related loss of margin contribution as well as $1.2 million in product-related charges that are not expected to re-occur in 2012.

Financial metrics for the fourth quarter of 2011 include:

($ millions, except per share and subscription data)

Three Months Ended Twelve Months Ended
December 31 December 31
2011 2010 2011 2010
M2M recurring revenue 10.4 8.7 38.6 33.4
M2M embedded device and hardware revenue 4.5 5.9 18.6 23.3
Gross margin 46.0% 44.5% 44.9% 44.1%
GAAP net earnings/(loss) 0.7 (1.4) 1.9 (0.3)
Earnings per share (EPS) 0.05 (0.09) 0.12 (0.03)
Non-GAAP net earnings before non-cash &

exceptional items

2.1 2.0 6.5 7.0
New subscriptions 93,000 69,000 268,000 234,000
Total subscriptions 1,438,000 1,171,000 1,438,000 1,171,000

The Company’s Fourth Quarter Financial Highlights:

  • During the quarter ended December 31, 2011, the Company added 93,000 subscriptions, as compared to 80,000 subscriptions added in the third quarter 2011 and the 69,000 subscriptions added in the fourth quarter of 2010.
  • Reported M2M revenues of $14.9 million in the fourth quarter of 2011, compared to $14.7 million both in the third quarter 2011 and in the fourth quarter of 2010.  During the quarter ended December 31, 2011, the Company reported M2M recurring revenues of $10.4 million, as compared $9.8 million in the third quarter 2011 and $8.7 million during the fourth quarter of 2010, which computes to growth rates of 7% and 19% respectively.
  • Consolidated gross margin for the three months ended December 31, 2011 was 46.0% compared to 45.4% in the third quarter 2011 and 44.5% during the fourth quarter in 2010.
  • GAAP net earnings for the three months ended December 31, 2011 were $692,000 compared to $592,000 in the third quarter 2011 and a net loss of $1.4 million during the fourth quarter of 2010.
  • GAAP net earnings adjusting for the impact of non-cash stock option compensation expenses for the three months ended December 31, 2011 were $1.1 million compared to $1.0 million in the third quarter 2011 and a net loss of $1.2 million during the fourth quarter of 2010.
  • Non-GAAP net earnings before non-cash charges and litigation related legal fees was $2.1 million during the fourth quarter of 2011 compared to $1.9 million for the third quarter 2011 and $2.0 million for the three months ended December 31, 2010. A reconciliation of this measure to GAAP results has been provided in the financial table below and further discussion of this measure as compared to GAAP is included elsewhere in the press release.

The Company’s Fiscal Year 2011 Financial Highlights:

  • Added 268,000 new subscriptions in 2011 compared to 234,000 new subscriptions in 2010.  173,000 of the 268,000 annual additions took place in the second half of 2011. Subscriptions grew by 23% to 1,438,000 recorded at the end of 2011 compared to 1,171,000 recorded at the end of 2010.
  • Reported M2M revenues of $57.2 million in the full year of 2011, compared to $56.7 million in 2010.  During the year ended December 31, 2011, the Company reported M2M recurring revenues of $38.6 million, an increase of 16% from $33.4 million during 2010.
  • Consolidated gross margin for the year ended December 31, 2011 was 44.9% compared to 44.1% during the 2010.
  • GAAP net earnings for the full year ended December 31, 2011 were $1.9 million compared to a loss of $381,000 in 2010. 2011 reflects $1.2 in product related charges that are not expected to reoccur in 2012.
  • GAAP net earnings adjusting for the impact of non-cash stock option compensation expenses were $3.1 million for the year ended December 31, 2011 compared to $557,000 in 2010.
  • Non-GAAP net earnings before non-cash charges and litigation related legal fees were $6.5 million during the full year of 2011 compared to $7.0 million during 2010. A reconciliation of this measure to GAAP results has been provided in the financial table below.
  • Numerex ended 2011 with cash and cash equivalents of $9.5 million and long-term debt of $4.5 million.

The Company’s Operational Highlights Include:

  • Launched Numerex FAST 3.0, the company’s cloud-based M2M platform that includes the following three service delivery options, which can be accessed independently or as a fully integrated solution: Network as a Service (NaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).
  • Announced a new satellite-based asset monitoring solution, which enables value added resellers to provide secure, configurable asset visibility to their customers seeking to monitor liquid tanks and doors.
  • Announced the issuance of two new U.S. patents, further solidifying the company’s M2M innovation leadership.  One patent enables a digital/analog management system for wireless customer premise equipment and the other patent enables more efficient messaging over a data network.
  • Received the 2011 North America Competitive Strategy Leadership award in the M2M communications market from Frost & Sullivan.
  • Awarded, along with QinetiQ North America, renewal of the Federal Emergency Management Agency (FEMA) contract for asset tracking services.
  • Led various M2M standardization activities, including organizing the international M2M conference at Georgia Institute of Technology in Atlanta, Georgia. In addition, the Company’s Chief Technology Officer was named chairman of the Global Standards Collaboration M2M Standardization Task Force.
  • Won two Gold Value Chain Awards from Connected World magazine and recognized in the list of their 100 most innovative M2M technology and connected device providers.

Mr. Nicolaides concluded, “Throughout the year, we introduced new products, forged promising alliances in growing markets, and drove global M2M standardization while being recognized with prestigious awards for our leadership and innovation. As the third party M2M solution experts, we continue to leverage our infrastructure to deliver creative and successful solutions to a broad range of customers.”

About Numerex
Numerex Corp (NASDAQ: NMRX) is a leading provider of machine-to-machine (M2M) business services, technology, and products used in the development and support of 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). For additional information, please visit www.numerex.com.
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