Exhibit 99.1
PRESS RELEASE SOURCE: WPCS International Incorporated
WPCS Reports Record Revenue and Net Income in First Quarter FY2006
EXTON, PA -- (PR Newswire-First Call) - September 14, 2005 - NASDAQ: WPCS -
News) WPCS International Incorporated (WPCS), a leader in wireless
infrastructure services and specialty communication systems, has reported its
financial results for the first quarter ended July 31, 2005.
For the quarter ended July 31, 2005, WPCS reported total revenue of
approximately $12.2 million compared to $7.3 million for the same period a year
ago, which represents an increase of approximately 67%. For the first quarter of
FY2006, the reported net income was approximately $315,000 or $0.08 per share.
For the same period last year, the reported net income was approximately $76,000
or $0.04 per share.
For the quarter ended July 31, 2005, EBITDA, or earnings before interest, income
taxes, depreciation and amortization was approximately $778,000, compared to
$267,000 for the same period in the prior year. The reconciliation of net income
per the Condensed Consolidated Statements of Income to the non-GAAP financial
measure of EBITDA is included herein.
Other First Quarter Highlights Include:
o The announcement of over $17 million in new projects.
o A contract to design the wireless distribution system for the new
World Trade Center Building.
o A contract from a major wireless carrier for services spanning 4,700
remote cell sites in 15 states.
o The finalization of a $5 million credit facility with a commercial
bank.
o The completion of the business insurance consolidation program for
cost savings.
Andrew Hidalgo, CEO of WPCS, stated: "This has obviously been a milestone
quarter for WPCS, in which we have set a record in both revenue and net income.
Even after a record revenue quarter, the backlog remains healthy and continues
to be replenished with new contract awards. Our backlog is currently at $21
million, which we expect to recognize over the next eight months. In addition,
we currently have pending bids totaling $36 million. The management team is
confident that we remain on track for achieving our FY2006 financial
objectives."
About WPCS International Incorporated:
WPCS International Incorporated is an engineering company that focuses on the
implementation requirements of wireless technology and specialty communication
systems. The company provides a range of services including site design, product
integration, security, structured cabling, construction and project management.
The company has an extensive customer base that includes many major
corporations, government entities and educational institutions. For more
information, please visit our website at 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.
Condensed consolidated statements of income and condensed consolidated balance
sheets follow.
- --------------------------------------------------------------------------------
Contact:
Heather Tocket / Corporate Communications Manager
WPCS International Incorporated
610-903-0400 x102
ir@wpcs.com
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
July 31,
2005 2004
----------- -----------
(Note 1, 2)
REVENUE $12,171,639 $ 7,279,153
----------- -----------
COSTS AND EXPENSES:
Cost of revenue 9,130,091 5,619,587
Selling, general and administrative expenses 2,263,955 1,392,691
Depreciation and amortization 211,467 122,031
----------- -----------
Total costs and expenses 11,605,513 7,134,309
----------- -----------
OPERATING INCOME 566,126 144,844
OTHER EXPENSE:
Interest expense 38,765 1,113
----------- -----------
INCOME BEFORE INCOME TAX PROVISION 527,361 143,731
Income tax provision 212,083 67,356
----------- -----------
NET INCOME $ 315,278 $ 76,375
=========== ===========
Basic net income per common share $ 0.08 $ 0.04
=========== ===========
Diluted net income per common share $ 0.08 $ 0.04
=========== ===========
Basic weighted average number of common shares outstanding 3,821,385 1,737,498
=========== ===========
Diluted weighted average number of common shares outstanding 3,835,335 1,768,783
=========== ===========
2
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 31, APRIL 30,
ASSETS 2005 2005
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2,308,740 $ 989,252
Accounts receivable, net of allowance of $75,786 at July 31, 2005 and April 30, 2005 9,784,349 9,907,316
Costs and estimated earnings in excess of billings on uncompleted contracts 1,429,122 908,955
Inventory 818,662 885,624
Prepaid expenses and other current assets 835,410 536,331
Deferred income taxes 77,000 112,000
----------- -----------
Total current assets 15,253,283 13,339,478
PROPERTY AND EQUIPMENT, net 1,574,813 1,560,271
CUSTOMER LISTS, net 1,083,972 1,158,388
GOODWILL 14,027,312 13,961,642
DEBT ISSUANCE COSTS, net 150,174 -
OTHER ASSETS 167,044 156,932
----------- -----------
Total assets $32,256,598 $30,176,711
=========== ===========
3
WPCS INTERNATIONAL INCORPRATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 31, APRIL 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2005 2005
------------ ------------
(Unaudited)
CURRENT LIABILITIES:
Borrowings under line of credit $ - $ 382,281
Current portion of capital lease obligation 1,399 2,073
Current portion of loans payable 192,316 187,420
Accounts payable and accrued expenses 4,752,684 5,338,813
Billings in excess of costs and estimated earnings on uncompleted contracts 1,478,919 1,204,491
Due to shareholders 172,995 915,290
Income taxes payable 287,151 24,790
Deferred income taxes 170,000 139,000
------------ ------------
Total current liabilities 7,055,464 8,194,158
Borrowings under line of credit 3,000,000 -
Loans payable, net of current portion 290,758 261,455
Due to shareholders, net of current portion 927,005 927,005
Deferred income taxes 313,000 439,000
------------ ------------
Total liabilities 11,586,227 9,821,618
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock - $0.0001 par value, 5,000,000 shares authorized, none issued - -
Common Stock - $0.0001 par value, 75,000,000 shares authorized, 3,821,385 shares issued
and outstanding at July 31, 2005 and April 30, 2005 382 382
Additional paid-in capital 21,107,240 21,107,240
Accumulated deficit (437,251) (752,529)
------------ ------------
Total shareholders' equity 20,670,371 20,355,093
------------ ------------
Total liabilities and shareholders' equity $ 32,256,598 $ 30,176,711
============ ============
Note 1. Reflects the retroactive effect of the January 10, 2005 one-for-twelve
reverse stock split.
Note 2. Certain reclassifications have been made to prior period financial
statements to conform to current presentation.
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Reconciliation of Non-GAAP Financial Measures (Unaudited)
EBITDA:
Reconciliation of net income per the Condensed Consolidated Statements of Income
to EBITDA:
Quarter ended Quarter ended
July 31, 2005 July 31, 2004
------------- --------------
Net income $315,278 $ 76,375
Plus:
Income tax provision 212,083 67,356
Interest expense 38,765 1,113
Depreciation & amortization 211,467 122,031
------------- --------------
EBITDA $777,593 $266,875
============= ==============
EBITDA is defined as earnings before interest expense, income taxes, and
depreciation and amortization. Our measure of EBITDA may not be comparable to
similarly titled measures of other companies. WPCS management believes that the
non-GAAP financial information provides investors a useful indicator to
understand our operating results. WPCS management uses such non-GAAP financial
measures internally to evaluate the Company's operating performance and to
determine compliance with debt covenants under the credit facility.
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