Novatel Wireless Fourth Quarter and Full Year 2011 Preliminary Financial Results

Novatel Wireless Fourth Quarter and Full Year 2011 Preliminary Financial Results

Novatel Wireless, Inc. (NASDAQ: NVTL), a leading provider of intelligent wireless solutions, today reported preliminary financial results for the fourth quarter and full year ended Dec. 31, 2011.

  • Full-year Revenue up 19 Percent
  • 4Q Non-GAAP EPS of 5 Cents vs. Breakeven in Prior Year
  • 4Q Non-GAAP Gross Margin of 24.5% vs. 19.9% in Prior Year
  • 4Q Adjusted EBITDA of $3.7 Million vs. $2.6 Million in Prior Year

Peter Leparulo, Chairman and CEO of Novatel Wireless, said:

“For the 2011 full year, we achieved revenue growth of 19 percent.”

And after a disappointing first quarter due to delayed product launches, we generated three consecutive quarters of improvements, on a non-GAAP basis, in gross margins, net income, and adjusted EBITDA. Over these last three quarters, we generated adjusted EBITDA of $10.2 million, ending the year with cash and marketable securities of $88.8 million and no debt.

We continue to see strong market demand for our family of MiFi® intelligent mobile hotspots. Our MiFi products are leading the rapid evolution of mobile broadband data, and we expect to significantly advance the MiFi product family in 2012.

In our M2M segment, which we established at the end of 2010 with the acquisition of Enfora, we are aggressively bringing CDMA and 3G capabilities into our portfolio – including high-end integrated solutions and M2M embedded solutions. These advances will allow us to address a wide range of vertical markets, such as transportation, security, healthcare, and energy management, with a complete portfolio of asset-management and embedded solutions.

4Q 20114Q 20103Q 2011
Revenue$ 109.8M$ 119.3M$ 113.3M
GAAP Net Income (Loss)$    (3.4M)$    (0.9M)$     4.5M
GAAP EPS (Loss)$    (0.11)$    (0.03)$     0.14
Non-GAAP Net Income $     1.5M$     0.0M$     0.0M
Non-GAAP EPS $     0.05$     0.00$     0.00
FY 2011FY 2010
GAAP Net Income (Loss)$(24.9M)$ (33.5M)
GAAP EPS (Loss)$(0.78)$  (1.06)
Non-GAAP Net Income (Loss)$(17.2M)$ (10.9M)
Non-GAAP EPS (Loss)$(0.54)$  (0.35)

Fourth Quarter Operating Results
Fourth quarter revenue of $109.8 million was within our guidance range of $105 to $120 million.

Revenues by major product category were as follows:

Revenue by Product Category4Q 2011 4Q 2010*3Q 2011
Mobile Broadband Devices

Embedded Solutions

Asset Management Solutions & Services

$  93.9M

$    7.8M

$    8.1M

$  105.5M

$    11.1M

$      9.3M

$  93.3M

$  13.8M

$    6.2M

Total$109.8M$  125.9M$113.3M
* 4Q 2010 revenues in this column are pro forma to include Enfora pre-merger results for this period.

Gross margin was 23.4 percent of revenue on a GAAP basis. On a non-GAAP basis, gross margin was 24.5 percent, an increase of approximately 460 basis points over the fourth quarter of 2010, and exceeding our guidance of 23.0 percent.

GAAP net loss was $3.4 million for the quarter. On a non-GAAP basis, which excludes the items identified in the attached reconciliation schedule, net income for the quarter was $1.5 million, or five cents per share, versus essentially breakeven in the comparable quarter in 2010.

Adjusted EBITDA (see “Reconciliation of GAAP Loss before Income Taxes to Adjusted EBITDA”) was $3.7 million in the fourth quarter.

Fourth Quarter and Full Year Segment Results
GAAP financial results by operating segment were as follows:

4Q 20114Q 2010FY 2011FY 2010
Mobile Computing Products$  99.8M$112.8M$358.1M$332.4M
M2M Products and Solutions$  10.0M$    6.5M$  44.8M$    6.5M
Operating Income (Loss)
Mobile Computing Products$   0.6M$(3.9M)$( 13.7M)$( 23.0M)
M2M Products and Solutions$(  3.1M)$(2.0M)$( 20.0M)$(   2.0M)
Total$(  2.5M)$(5.9M)$( 33.7M)$( 25.0M)

Recent Business Highlights

  • Novatel Wireless announced the global-ready 4G LTE MiFi® 4620L, the next generation of MiFi Intelligent Mobile Hotspot for Verizon Wireless. The MiFi 4620L creates a personal Wi-Fi cloud, capable of sharing high-speed 4G LTE and 3G mobile broadband Internet connectivity with up to 10 Wi-Fi-enabled devices. With the global-ready MiFi 4620L, Verizon Wireless customers will have access to wireless data service in more than 205 countries.
  • TELUS, a leading telecommunications company in Canada, launched the Novatel Wireless Ovation™ MC679 4G LTE Mobile Internet Key on their new 4G LTE network. The slim and compact Ovation MC679 USB modem will give TELUS customers their first chance to experience the LTE difference on their laptops, and enjoy downloading music, video and work files in the blink of an eye.
  • Novatel Wireless announced the expansion of its machine-to-machine (M2M) portfolio with two new modules, Enabler HS 3001 and HS 3002, which add CDMA2000 1X and HSDPA capabilities to the portfolio. Expected to be available later in 2012, these modules are fully compatible with Novatel Wireless’ service delivery platform — the N4A Communications and Management Software (CMS) solution. The robust CMS solution allows device provisioning, monitoring, and remote configuration from anywhere in the world.
  • At the Consumer Electronics Show in January, Verizon Wireless showcased an array of mobile computing, mobile Internet, and media platforms utilizing the Novatel Wireless Expedite® E362 PCI Express Mini Card running on the Verizon Wireless 4G LTE network. The 10 showcased applications utilizing Novatel Wireless’ embedded modules are the result of collaborations fostered at Verizon Wireless’ LTE Innovation Center.  The Expedite™ E362 first-to-market LTE embedded module is optimized for power efficiency, thermal performance and weight.
  • Also at the Consumer Electronics Show, Novatel Wireless announced its first connected car solution with the MiFi 3352 Intelligent Mobile Hotspot into new Lexus and Toyota vehicles. The solution is sold through Abdul Latif Jameel Co. Ltd. (ALJ), the sole distributor of Toyota, Lexus and Daihatsu vehicles in Saudi Arabia. The solution is branded L!nk™ WiFi by ALJ and is integrated with the vehicle power supply directly from the car battery and powered upon ignition.

First Quarter 2012 Business Outlook
The following statements are forward-looking and actual results may differ materially.  Please see the section titled, “Cautionary Note Regarding Forward-Looking Statements” at the end of this press release.  A more detailed description of risks related to our business is included in reports filed by the company with the Securities and Exchange Commission.

Our guidance for the first quarter of 2012 reflects current business indicators and expectations as of the date of this release. The wide guidance range is due to the uncertain timing of a major product launch.  All figures are approximations based on management’s beliefs and assumptions as of the date of this release.

First Quarter 2012
Revenue$ 85 – $110 million
Non-GAAP Gross Margin24% – 25%
Non-GAAP EPS$(0.18) – $ 0.06
Novatel Wireless, Inc. is a leader in the design and development of intelligent wireless solutions based on 2G, 3G and 4G technologies providing wireless connectivity. The company delivers specialized wireless solutions to carriers, distributors, retailers, OEMs and vertical markets worldwide. Novatel Wireless’ Intelligent Mobile Hotspot products, software, USB modems, embedded modules and smart M2M modules provide innovative anywhere, anytime communications solutions for consumers and enterprises. Headquartered in San Diego, Novatel Wireless is listed on NASDAQ: NVTL. For more information please visit (NVTLF)

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