Exhibit 99.1

 

PRESS RELEASE SOURCE: WPCS International Incorporated

 

WPCS Reports 2nd Quarter FY2013 Results

 

EXTON, PA - (Marketwire - December 17, 2012) - WPCS International Incorporated (NASDAQ: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fiscal year 2013 second quarter ended October 31, 2012. In the second quarter, the WPCS domestic and international operation centers generated EBITDA of approximately $1.4 million on revenue of $9.9 million. This compares to EBITDA of $894,000 on $21.7 million of revenue for the same period in the prior year. For the six months of fiscal year 2013 ended October 31, 2012, these same operation centers generated EBITDA of approximately $2.1 million on revenue of $23.4 million. This compares to EBITDA of $2.9 million on revenue of $40.4 million for the same period in the prior year.

 

In regards to net income from continuing operations for the second quarter, WPCS reported net income from continuing operations of approximately $80,000 or $0.01 per diluted share, compared to a net loss from continuing operations of $352,000, or $0.05 per diluted share, for the same period in the prior year. In the second quarter, WPCS reported a consolidated net loss of $493,000, or $0.07 per diluted share, which includes a loss from discontinued operations of approximately $573,000 related to the asset sale of the Hartford and Lakewood Operations. This compares to a net loss of approximately $1.7 million or $0.24 per diluted share, for the same period a year ago, which includes a loss from discontinued operations of approximately $1.3 million, or $0.19 per diluted share, primarily related to the sale of the St. Louis and Sarasota Operations.

 

For the six months ended October 31, 2012, WPCS reported consolidated net income of approximately $500,000 or $0.07 per diluted share which includes income from discontinued operations of $1.1 million, or $0.16 per diluted share, related to the asset sale of the Hartford and Lakewood Operations. This compares to a net loss of $1.7 million or $0.24 per diluted share, for the same period a year ago, which includes a loss from discontinued operations of approximately $1.5 million, or $0.22 per diluted share, primarily related to the sale of the St. Louis and Sarasota Operations.

 

Andrew Hidalgo, CEO of WPCS, commented, “We are pleased to report consecutive quarters of EBITDA profitability from our operation centers. We have worked through a difficult prior fiscal year but the recent results show that we are turning around our operating performance and improving the organization. We have a healthier balance sheet, positive operating results and now we have obtained financing to support our working capital needs and growth prospects. We have made great progress and believe we can now deliver increased shareholder value. The management team is reaffirming that we remain on target to achieve revenue of $60 million and EBITDA of $1 million for this fiscal year ending April 30, 2013.”

 

As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 800-875-3456 for calls within the U.S. or 302-607-2001 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH36248. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the call will be available for a period of five days by dialing 402-220-2946 and entering 36248 as the program identification number.

 

About WPCS International Incorporated:

 

WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit 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.

________________________________________________________________________________________

 

CONTACT:

 

WPCS International Incorporated

610-903-0400 x101

ir@wpcs.com

 
 

 

 

The press release references a financial measure, EBITDA that is not in accordance with GAAP. WPCS defines EBITDA in the traditional sense of earnings before interest, income taxes, depreciation and amortization but in addition, WPCS has incurred one-time charges (credits) for the (gain) loss from discontinued operations and the strategic alternatives effort as well as non-cash charges from deferred tax asset valuation allowances, acquisition related earn-out costs and goodwill impairments. These charges are also excluded from the EBITDA calculation so that the company can provide a more meaningful perspective on the results for the continuing operations. The company uses EBITDA to evaluate its operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons. The company believes that this measure is useful to investors because it enhances investors' ability to review the Company's business from the same perspective as our management and to facilitate comparisons of this period's results with prior periods. Non-GAAP measures are used by some investors when assessing the ongoing operating and financial performance of the company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of the additional information should not be considered a substitute for net income (loss) or net income (loss) per diluted share prepared in accordance with GAAP. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. Pursuant to the Requirements of Regulation G, WPCS has included a reconciliation of EBITDA to the most directly comparable GAAP financial measure.

 

 
 

 

 

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   Three Months Ended   Six Months Ended 
   October 31,   October 31, 
   2012   2011   2012   2011 
         (Note 1)         (Note 1) 
                     
REVENUE  $9,942,161   $21,754,833   $23,386,578   $40,370,924 
                     
COSTS AND EXPENSES:                    
Cost of revenue   6,324,209    18,379,347    16,838,285    32,586,590 
Selling, general and administrative expenses   2,936,939    3,348,554    5,947,905    6,606,492 
Depreciation and amortization   320,066    441,870    681,780    881,043 
Change in fair value of acquisition-related contingent consideration   -    40,560    -    83,628 
                     
    9,581,214    22,210,331    23,467,970    40,157,753 
                     
OPERATING INCOME (LOSS)   360,947    (455,498)   (81,392)   213,171 
                     
OTHER EXPENSE (INCOME):                    
Interest expense   330,135    230,136    455,250    325,929 
Interest income   (6,161)   (23,493)   (15,959)   (31,969)
                     
Income (loss) from continuing operations before income tax provision   36,973    (662,141)   (520,683)   (80,789)
                     
Income tax (benefit) provision   (72,272)   (354,384)   62,257    57,504 
INCOME (LOSS) FROM CONTINUING OPERATIONS   109,245    (307,757)   (582,940)   (138,293)
                     
Discontinued operations                    
Loss from operations of discontinued operations, net of tax of $88,267,
$321,905, $142,431 and ($116,323), respectively
   (88,267)   (285,330)   (727,559)   (474,015)
(Loss) gain from disposal   (485,212)   (1,027,637)   1,839,419    (1,027,637)
(Loss) income from discontinued operations, net of tax   (573,479)   (1,312,967)   1,111,860    (1,501,652)
                     
CONSOLIDATED NET (LOSS) INCOME   (464,234)   (1,620,724)   528,920    (1,639,945)
                     
Net income attributable to noncontrolling interest   29,152    44,604    28,605    60,060 
                     
NET (LOSS) INCOME ATTRIBUTABLE TO WPCS  ($493,386)   ($1,665,328)   $500,315    ($1,700,005)
                     
Basic and diluted net income (loss) per common share attributable to WPCS:                    
Income (loss) from continuing operations attributable to WPCS  $0.01   ($0.05)  ($0.09)  ($0.02)
(Loss) income from discontinued operations attributable to WPCS  ($0.08)  ($0.19)  $0.16   ($0.22)
Basic and diluted net income (loss) per common share attributable to WPCS  ($0.07)  ($0.24)  $0.07   ($0.24)
                     
Basic weighted average number of common shares outstanding   6,954,766    6,954,766    6,954,766    6,954,766 
Diluted weighted average number of common shares outstanding   6,963,737    6,954,766    6,954,766    6,954,766 

 

  

(1)The prior year financial statements contain certain reclassifications to present discontinued operations.

 

 

 
 

 

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

   October 31,   April 30, 
ASSETS  2012   2012 
   (Unaudited)     
CURRENT ASSETS:          
           
Cash and cash equivalents  $921,206   $811,283 
Accounts receivable, net of allowance of $1,682,840 and $1,794,729 at October 31, 2012 and April 30, 2012, respectively   11,263,660    22,343,304 
Costs and estimated earnings in excess of billings on uncompleted contracts   1,096,883    1,340,379 
Inventory   -    1,475,266 
Prepaid expenses and other current assets   2,113,824    2,142,191 
Prepaid income taxes   48,586    137,279 
Deferred tax assets   453,455    307,550 
Total current assets   15,897,614    28,557,252 
           
PROPERTY AND EQUIPMENT, net   3,003,768    4,309,450 
           
OTHER INTANGIBLE ASSETS, net   316,422    382,852 
           
GOODWILL   1,933,921    1,930,826 
           
DEFERRED TAX ASSETS   254,146    243,999 
           
OTHER ASSETS   73,378    371,020 
           
Total assets  $21,479,249   $35,795,399 

 

 

 
 

 

WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

  

LIABILITIES AND EQUITY  October 31,   April 30, 
   2012   2012 
   (Unaudited)     
CURRENT LIABILITIES:          
           
Current portion of loans payable  $38,438   $143,514 
Borrowings under line of credit   1,034,323    4,964,140 
Current portion of capital lease obligations   877    15,465 
Accounts payable and accrued expenses   4,931,005    16,669,621 
Billings in excess of costs and estimated earnings on uncompleted contracts   1,980,538    3,594,193 
Deferred revenue   759,909    790,270 
Due joint venture partner   781,268    3,314,708 
Other payable   2,391,151    - 
Short term bank loan   2,404,545    - 
Income taxes payable   309,924    194,963 
Total current liabilities   14,631,978    29,686,874 
           
Loans payable, net of current portion   65,919    223,561 
Total liabilities   14,697,897    29,910,435 
           
           
COMMITMENTS AND CONTINGENCIES          
           
WPCS EQUITY:          
Preferred stock - $0.0001 par value, 5,000,000 shares authorized, none issued   -    - 
Common stock - $0.0001 par value, 25,000,000 shares authorized, 6,954,766 shares issued and outstanding at October 31, 2012 and April 30, 2012   695    695 
Additional paid-in capital   50,835,855    50,477,543 
Accumulated deficit   (46,643,347)   (47,143,662)
Accumulated other comprehensive income on foreign currency translation   1,434,828    1,433,066 
           
Total WPCS equity   5,628,031    4,767,642 
           
Noncontrolling interest   1,153,321    1,117,322 
           
Total equity   6,781,352    5,884,964 
           
Total liabilities and equity  $21,479,249   $35,795,399 

 

 

 
 

 

Reconciliation of GAAP to Non-GAAP Financial Measure (Unaudited)

 

(1) Reconciliation of Non-GAAP EBITDA:

  

   Three Months Ended   Six Months Ended 
   October 31,   October 31,   October 31, 
   2012   2011   2012   2011 
                 
NET (LOSS) INCOME ATTRIBUTABLE TO WPCS, GAAP  ($493,386)  ($1,665,328)  $500,315   ($1,700,005)
                     
Plus:                    
Net income attributable to noncontrolling interest   29,152    44,604    28,605    60,060 
Loss from discontinued operations, net of tax   88,267    285,330    727,559    474,015 
Loss (gain) from disposal of discontinued operations   485,212    1,027,637    (1,839,419)   1,027,637 
Income tax (benefit) provision   (72,272)   (354,384)   62,257    57,504 
Interest expense   330,135    230,136    455,250    325,929 
Interest income   (6,161)   (23,493)   (15,959)   (31,969)
Change in fair value of acquisition-related contingent consideration   -    40,560    -    83,628 
One-time strategic costs   -    76,842    -    140,512 
Depreciation and amortization   320,066    441,870    681,780    881,043 
                     
Consolidated EBITDA, Non-GAAP   681,013    103,774    600,388    1,318,354 
Plus:                    
Corporate operating expenses   747,673    790,574    1,523,416    1,596,638 
                     
EBITDA of Continuing Operation Centers, Non-GAAP  $1,428,686   $894,348   $2,123,804   $2,914,992