Exhibit 99.1
PRESS RELEASE SOURCE: WPCS International Incorporated
WPCS Posts Record $0.20 EPS for 2nd Quarter FY2006
EXTON, PA -- (PR Newswire-First Call) - December 15, 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 second quarter, ended October 31, 2005. For the quarter ended October
31, 2005, WPCS reported total revenue of approximately $14.3 million compared to
$10.3 million for the same period a year ago, which represents an increase of
approximately 38%. For the second quarter of FY2006, the reported net income was
approximately $785,000 or $0.20 per diluted share. For the same period last
year, the reported net income was approximately $31,000 or $0.02 per diluted
share.
For the six months ended October 31, 2005, WPCS reported total revenue of
approximately $26.4 million compared to $17.6 million for the same period a year
ago, which represents an increase of approximately 50%. For the six months ended
October 31, 2005, the reported net income was approximately $1.1 million or
$0.29 per diluted share. For the same period last year, the reported net income
was approximately $108,000 or $0.06 per diluted share. For the quarter ended
October 31, 2005, EBITDA, or earnings before interest, income taxes,
depreciation and amortization was approximately $1.6 million, compared to
$172,000 for the same period in the prior year. For the six months ended October
31, 2005, EBITDA, or earnings before interest, income taxes, depreciation and
amortization was approximately $2.3 million, compared to $439,000 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.
Andrew Hidalgo, CEO of WPCS, stated: "The management team is pleased with the
efforts this quarter to produce record revenue, net income and earnings per
share for our shareholders. The company is working efficiently and is beginning
to generate the results we are capable of delivering. The results posted in the
second quarter keeps us right on track for achieving our $0.58 fiscal year
diluted EPS objective. Business remains robust and even after posting record
revenue of $14.3 million for the quarter the company still maintains a backlog
of $20 million of projects that should be recognized over the third and fourth
quarters. We also have a bid list that stands at $45 million. Currently, we do
not see any slowdown in the deployment of wireless networks and the demand for
our engineering services. With a growing customer base, WPCS has established
itself as a leader in wireless engineering services for all facets of wireless
deployment. The management team is confident in achieving its financial
objectives for FY2006 and will review its third quarter results before deciding
whether to adjust guidance for this current fiscal year."
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 Six Months Ended
October 31, October 31,
2005 2004 2005 2004
-------------- -------------- ---------------- ----------------
(Note 1,2) (Note 1,2)
REVENUE $ 14,250,243 $ 10,295,266 $ 26,421,882 $ 17,574,419
-------------- -------------- ---------------- ----------------
COSTS AND EXPENSES:
Cost of revenue 10,339,132 8,604,711 19,469,223 14,224,298
Selling, general and administrative expenses 2,351,653 1,518,421 4,615,608 2,911,112
Depreciation and amortization 209,593 124,662 421,060 246,693
-------------- -------------- ---------------- ----------------
Total costs and expenses 12,900,378 10,247,794 24,505,891 17,382,103
-------------- -------------- ---------------- ----------------
OPERATING INCOME 1,349,865 47,472 1,915,991 192,316
OTHER EXPENSE:
Interest expense 56,035 11,650 94,800 12,763
-------------- -------------- ---------------- ----------------
INCOME BEFORE INCOME TAX PROVISION 1,293,830 35,822 1,821,191 179,553
Income tax provision 509,025 4,539 721,108 71,895
-------------- -------------- ---------------- ----------------
NET INCOME $ 784,805 $ 31,283 $ 1,100,083 $ 107,658
============== ============== ================ ================
Basic net income per common share $ 0.20 $ 0.02 $ 0.29 $ 0.06
============== ============== ================ ================
Diluted net income per common share $ 0.20 $ 0.02 $ 0.29 $ 0.06
============== ============== ================ ================
Basic weighted average number of common shares
outstanding 3,853,994 1,737,498 3,837,689 1,737,498
============== ============== ================ ================
Diluted weighted average number of common shares
outstanding 3,869,522 1,777,797 3,846,313 1,804,162
============== ============== ================ ================
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, April 30,
ASSETS 2005 2005
----------------- -------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,800,224 $ 989,252
Accounts receivable, net of allowance of $93,786 and $75,786 at
October 31, 2005 and April 30, 2005, respectively 12,322,495 9,907,316
Costs and estimated earnings in excess of billings on uncompleted
contracts 1,966,928 908,955
Inventory 615,239 885,624
Prepaid expenses and other current assets 689,348 536,331
Deferred income taxes 92,000 112,000
----------------- -------------------
Total current assets
17,486,234 13,339,478
PROPERTY AND EQUIPMENT, net 1,514,489 1,560,271
CUSTOMER LISTS, net 1,009,555 1,158,388
GOODWILL 14,108,283 13,961,642
DEBT ISSUANCE COSTS, net 137,206 -
OTHER ASSETS 89,343 156,932
----------------- -------------------
Total assets $ 34,345,110 $ 30,176,711
================= ===================
WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
October 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 708 2,073
Current portion of loans payable 202,083 187,420
Accounts payable and accrued expenses 5,144,023 5,338,813
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,603,502 1,204,491
Due to shareholders 122,995 915,290
Income taxes payable 788,151 24,790
Deferred income taxes 183,000 139,000
------------------- -------------------
Total current liabilities
8,044,462 8,194,158
Borrowings under line of credit 3,000,000 -
Loans payable, net of current portion 295,467 261,455
Due to shareholders, net of current portion 927,005 927,005
Deferred income taxes 323,000 439,000
------------------- -------------------
Total liabilities
12,589,934 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, 3,883,885 and 3,821,385 shares issued and
outstanding at October 31, 2005 and April 30, 2005,
respectively 388 382
Additional paid-in capital 21,407,234 21,107,240
Retained earnings(accumulated deficit) 347,554 (752,529)
------------------- -------------------
Total shareholders' equity 21,755,176 20,355,093
------------------- -------------------
Total liabilities and shareholders' equity $ 34,345,110 $ 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.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
EBITDA:
Reconciliation of net income per the Condensed Consolidated Statements of Income
to EBITDA:
Three Months Ended Six Months Ended
October 31, October 31,
2005 2004 2005 2004
---------------- -------------- ------------------- ----------------
NET INCOME $784,805 $31,283 $1,100,083 $107,658
---------------- -------------- ------------------- ----------------
Plus:
Income tax provision 509,025 4,539 721,108 71,895
Interest expense 56,035 11,650 94,800 12,763
Depreciation and amortization 209,593 124,662 421,060 246,693
---------------- -------------- ------------------- ----------------
EBITDA $1,559,458 $172,134 $2,337,051 $439,009
================ ============== =================== ================
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 line
of credit facility.