ROSH HA'AYIN, Israel, August 5 /PRNewswire-FirstCall/ -- ECtel Ltd.
(NASDAQ: ECTX), a leading global provider of Integrated Revenue Management
(TM) (IRM(TM)) solutions, today reported financial results for the second
quarter of 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20010807/FLTU015LOGO )
Second Quarter Highlights
- Revenues up 34% year-over-year to $6.7 million;
- Gross margin improvement reaching 50%; Revenues for the second quarter of 2008 totaled $6.7 million, a 34%
increase, compared to $5 million in the second quarter of 2007, and
slightly up from first quarter of 2008 revenues of $6.5 million.
Non-GAAP gross margin for the second quarter of 2008 was 50.4%,
compared to the 46% margin in the second quarter 2007. Non-GAAP gross
margin in the first quarter of 2008 was 44.2%.
Non-GAAP operating loss for the second quarter of 2008 reached $1.7
million, a 22% improvement compared to a non-GAAP operating loss of $2.1
million in the second quarter of 2007, and slightly improved on the
non-GAAP operating loss for the prior quarter of $1.8 million.
Non-GAAP net loss for the second quarter of 2008 totaled $1.4 million,
or $0.08 loss per share, a 22% improvement compared with a net loss of $1.8
million, or $0.11 loss per share, in the second quarter of 2007. Non-GAAP
net loss for the first quarter 2008 totaled $1.1 million, or $0.07 per
share.
During the second quarter 2008, the Company's results were negatively
impacted by the continued weakening of the US dollar against the Israeli
shekel, which during the quarter devalued by 5.7% against the Israeli
Shekel. This directly contributed to an approximate $300 thousand decline
in the net income for the period. Results were also affected by the
contribution of two lower-margin, yet strategically important projects with
major telecom groups and potential for higher-margin follow-on business.
On a GAAP basis, gross margin for the second quarter 2008 totaled
50.2%, compared to the 45.4% margin in the second quarter of 2007, and
43.8% margin in the first quarter 2008. Operating loss for the second
quarter of 2008 reached $2.0 million, compared to an operating loss of $2.3
million in the second quarter of 2007 and an operating loss for the first
quarter of 2008 of $2 million. On a GAAP basis, net loss for the second
quarter of 2008 totaled $1.7 million or $0.10 loss per share, compared to
$1.9 million or $0.12 per share in the second quarter of 2007. Net loss for
the first quarter 2008 totaled $1.3 million or $0.08 per share.
ECtel's non-GAAP net income differs from results reported under U.S.
GAAP. This is due to adjustments made for amortization of acquisition
related intangible assets, share-based compensation expenses, expenses
related to a one-time due-diligence process and the impact of the permanent
impairment charge related to certain securities in December 2007. The
accompanying tables provide a full reconciliation from GAAP to Non-GAAP
results.
Cash, cash equivalents, and marketable bonds and securities as of June
30, 2008 were $22.8 million or $1.37 per share, compared to $28.5 million
or $1.71 per share as of March 31, 2008.
"The second quarter of 2008, was both a period of business development
in which we made a synergistic acquisition, acquiring the assets of
Compwise, as well as improved financial results- particularly in terms of
revenue and gross margins," commented Itzik Weinstein, President and CEO of
ECtel. "At the same time, we are reviewing ways to better manage our cost
structure, while improving efficiency and cutting costs particularly on the
manufacturing and procurement side, without sacrificing our growth
potential, with the aim to quickly reach the breakeven level."
"During the quarter, we completed the acquisition of Compwise's assets,
an Israeli-based provider of business analytic solutions for telecom
operators. We see the acquisition as very much aligned with our long-term
growth strategy, which focuses on solid execution, innovation and M&A
activity. We continue to work on strengthening our foundations for future
growth and execution, while reducing costs, with the goal of enhancing our
position as a major player in the integrated revenue management and
assurance space," concluded Mr. Weinstein.
Conference Call
ECtel management will host a teleconference later today at 10:00 am ET
(9:00am CT, 7:00am PT, and 5:00pm Israel time) to discuss its second
quarter results.
To participate in the call, please dial one of the following numbers
and request ECtel's second quarter 2008 Earnings Results Conference call:
From the United States: 1-888-668-9141
From Israel: 03-918 0688
From the United Kingdom: 0-800-404-8418
All other international callers +972-3-918-0688
A Webcast replay of the earnings call will be available after the call
on the Company's web site at: http://www.ectel.com
About Ectel Ltd.
ECtel (NASDAQ: ECTX) is a leading global provider of Integrated Revenue
Management(TM) (IRM(TM)) solutions for communications service providers. A
pioneering market leader for nearly 20 years, ECtel offers carrier-grade
solutions that enable wireline, wireless, converged and next generation
operators to fully manage their revenue and cost processes. ECtel serves
prominent Tier One operators, and has more than 100 implementations in over
50 countries worldwide. Established in 1990, ECtel maintains offices in the
Americas and Europe. For more information, visit http://www.ectel.com
Certain statements contained in this release contain forward-looking
information with respect to plans, projections or future performance and
products of the Company, the occurrence of which involves certain risks and
uncertainties, including, but not limited to, the reoccurrence of sales to
existing customers, sales to new accounts, the ability to recognize revenue
in future periods as anticipated, the possible slow-down in expenditures by
telecom operators, the unpredictability of the telecom market, product and
market acceptance risks, ability to complete development and market
introduction of new products, the impact of competitive pricing and
offerings, fluctuations in quarterly and annual results of operations,
dependence on several large customers, commercialization and technological
difficulties, risks related to our operations in Israel and other risks
detailed in the Company's annual report on Form 20-F and other filings with
the Securities and Exchange Commission. ECtel undertakes no obligation to
publicly release any revisions to these forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
ECtel Ltd.
Consolidated Balance Sheets
$ in thousands
June 30, March 31, December 31
2008 2008 2007
Assets
Current assets
Cash and cash equivalents 4,229 8,572 5,668
Short-term investments - 1,484 5,652
Receivables:
Trade, net 8,811 7,772 8,612
Other 2,196 1,565 1,372
Related parties 100 189 17
Work in progress 657 977 282
Inventories 2,274 2,360 2,247
Total current assets 18,267 22,919 23,850
Long-term marketable securities 18,564 18,470 17,760
Long-term other assets 1,952 1,785 1,612
Property, plant and equipment,
net 2,316 2,192 2,115
Goodwill 12,792 11,322 11,322
Other intangible assets, net 912 269 292
Total assets 54,803 56,957 56,951
Liabilities and Shareholders'
Equity
Current liabilities
Trade payables 4,349 5,554 4,737
Related parties 68 82 18
Advances from customers 527 1,111 966
Other payables and accrued
liabilities 6,878 5,902 5,796
Total current liabilities 11,822 12,649 11,517
Long-term liabilities
Liability for employee severance
benefits 2,989 2,626 2,352
Total liabilities 14,811 15,275 13,869
Total shareholders' equity, net 39,992 41,682 43,082
Total liabilities and
shareholders' equity 54,803 56,957 56,951
ECtel Ltd.
Consolidated Statements of Operations - GAAP
$ in thousands except share and per share data
Three months Six months Three months
ended ended ended
June 30, June 30, March 31,
2008 2007 2008 2007 2008
Revenues 6,655 4,964 13,160 8,515 6,505
Cost of revenues 3,313 2,709 6,967 4,784 3,654
Gross profit 3,342 2,255 6,193 3,731 2,851
Research and development
costs, net 1,304 1,212 2,493 2,506 1,189
Selling and marketing
expenses 2,261 2,100 4,008 4,359 1,747
General and administrative
expenses 1,709 1,191 3,559 3,342 1,850
Amortization of
acquisition-related
intangible assets 23 23 46 46 23
Operating loss (1,955) (2,271) (3,913) (6,522) (1,958)
Financial income, net 278 353 519 635 241
Other income, net (*) - 430 430
Net (loss) income (1,677) (1,918) (2,964) (5,887) (1,287)
Basic (loss) earnings per
share (0.10) (0.12) (0.18) (0.35) (0.08)
Diluted (loss) earnings per
share (0.10) (0.12) (0.18) (0.35) (0.08)
Weighted average
number of shares
outstanding used to
compute basic
(loss) earnings per
share 16,686,401 16,663,746 16,686,401 16,656,576 16,686,401
Weighted average
number of shares
outstanding used to
compute diluted
(loss) earnings per
share 16,686,401 16,663,746 16,686,401 16,656,576 16,686,401
(*) includes $450 thousand gain on sale of patent.
ECtel Ltd.
Consolidated Statements of Operations - NON-GAAP
$ in thousands except share and per share data
To supplement the consolidated financial results prepared in accordance
with GAAP, we include Pro-forma Net Income (Loss), Pro-forma Basic Net
Earnings (Loss) Per Share and Pro-forma Diluted Net Earnings (Loss) Per
Share, which are non-GAAP financial measures. These non-GAAP financial
measures consist of GAAP financial measures adjusted for acquisition
related amortization of intangible assets, expenses related to a
due-diligence process which was carried out in the framework of an
examination of a potential acquisition which had reached advanced stages
and share-based compensation expenses. These non-GAAP financial measures
exclude the effects of aforesaid elements because we believe these excluded
costs are not related to our operating performance and measures. Also, it
provides consistent and comparable measures to help investors understand
our current and future operating performance that our management uses as a
basis for planning and forecasting future periods.
These non-GAAP financial measures may differ materially from the
non-GAAP financial measures used by other companies and should not be
regarded as a replacement for corresponding GAAP measures.
The following table reconciles Pro-forma Net Income (Loss), Pro-forma
Basic Net Earnings (Loss) Per Share and Pro-forma Diluted Net Earnings
(Loss) Per Share to Net Income (Loss), Basic Net Earnings (Loss) Per Share
and Diluted Net Earnings (Loss) Per Share, and the line items contributing
to such figures, respectively, in each case the most directly comparable
GAAP measure, ($ in thousands, except share and per share data).
Three months ended Six months ended
June 30, 2008 June 30, 2008
GAAP Adj. NON-GAAP GAAP Adj. NON-GAAP
Revenues 6,655 6,655 13,160 13,160
Cost of revenues 3,313 (13) (*) 3,300 6,967 (34) (*) 6,933
Gross profit 3,342 13 3,355 6,193 34 6,227
Research and
development costs,
net 1,304 (1) (*) 1,303 2,493 (6) (*) 2,487
Selling and
marketing expenses 2,261 (28) (*) 2,233 4,008 (57) (*) 3,951
General and
administrative
expenses 1,709 (233) (*)(**) 1,476 3,559 (314) (*)(**) 3,245
Amortization of
acquisition-related
intangible assets 23 (23) - 46 (46) -
Operating loss (1,955) 298 (1,657) (3,913) 457 (3,456)
Financial income,
net 278 - 278 519 - 519
Other income
(expenses) - - - 430 - 430
Net loss (1,677) 298 (1,379) (2,964) 457 (2,507)
Basic loss
per share (0.10) (0.08) (0.18) (0.15)
Diluted loss
per share (0.10) (0.08) (0.18) (0.15)
Weighted average
number of shares
outstanding used to
compute basic loss
per share 16,686,401 16,686,401 16,686,401 16,686,401
Weighted average
number of shares
outstanding used
to compute
diluted loss
per share 16,686,401 16,686,401 16,686,401 16,686,401
(*) Share-based compensation expenses
(**)Including expenses related to a due-diligence process in amount of
$118 thousands
ECtel Ltd.
Consolidated Statements of Cash Flows
$ in thousands
Three months Six months Three
ended ended months
June 30, June 30, ended
March 31,
2008 2007 2008 2007 2008
Cash flows from operating
activities
Net loss for the period (1,677) (1,918) (2,964) (5,887) (1,287)
Adjustments to reconcile net
(loss) income to
cash provided by (used in)
operating activities:
Depreciation and amortization 164 156 301 306 137
Loss on sale of long-term
marketable securities - - 20 - 20
Loss on disposal of property,
plant and equipment - - 20 - 20
Premium amortization of
long-term
marketable securities - - (21) 7 (21)
(Increase) decrease in trade
receivables (1,014) (1,347) (174) 1,662 840
(Increase) decrease in other
receivables (637) 196 (788) 122 (150)
Share-based compensation
expenses 157 125 293 970 136
Decrease (increase) in
inventories 86 356 (27) 229 (113)
Decrease (increase) in work in
progress 320 (66) (375) (130) (695)
(Decrease) increase in trade
payables (1,099) (409) (444) (844) 655
(Increase) decrease in advances
from customers (584) 262 (439) 146 145
Decrease (increase) in related
parties, net 75 288 (33) 314 (108)
Increase (decrease) in other
payables and accrued liabilities 159 (888) 217 (1,535) 57
Decrease (increase) in liability
for employee severance benefits 293 (146) 581 (572) 288
Net cash used in operating
activities (3,757) (3,391) (3,833) (5,212) (76)
ECtel Ltd.
Consolidated Statements of Cash Flows (cont'd)
$ in thousands
Three months Six months Three
ended ended months
ended
June 30, June 30 March 31,
2008 2007 2008 2007 2008
Cash flows from investing
activities
Investment in short-term
investments, net - - 8,130 - 8,130
Investment in on property, plant
and equipment (332) (102) (381) (141) (49)
Payments in consideration with
acquisition of the assets of
Compwise (1,313) - (1,313) - -
Payments in consideration with
acquisition of newly
consolidated subsidiaries - - - (158) -
Long-term deposits withdrawal
(funding) 55 17 46 32 (9)
Deposits in respect of employee
severance obligations (216) 49 (388) 133 (172)
Proceeds from maturity of
long-term marketable
securities 2,970 4,500 5,150 8,442 2,180
Investment in long-term
marketable securities (1,750) (2,688) (8,850) (2,688) (7,100)
Net cash (used in) provided by
investing activities (586) 1,776 2,394 5,620 2,980
Cash flows from financing
activities
Issuance of ordinary shares - 29 - 912 -
Net cash provided by financing
activities - 29 - 912 -
Net (decrease) increase in cash
and cash equivalents (4,343) (1,586) (1,439) 1,320 2,904
Cash and cash equivalents at
beginning of the year 8,572 17,317 5,668 14,411 5,668
Cash and cash equivalents at
end of the year 4,229 15,731 4,229 15,731 8,572
Company Contacts:
Mickey Neumann, Senior Vice President and CFO
Tel: +972-3-9002115
Email: Mickeyne@ectel.com; ir@ectel.com
IR Contacts:
Ehud Helft \ Kenny Green
GK Investor Relations
Tel: +1-617-418-3096 \ +1-646-201-9246
Email: info@gkir.com
SOURCE ECtel Ltd
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Photo Notes:http://www.newscom.com/cgi-bin/prnh/20010807/FLTU015LOGO
CONTACT:
Company Contacts: Mickey Neumann, Senior Vice
President and CFO, Tel: +972-3-9002115, Email:
Mickeyne@ectel.com; ir@ectel.com. IR Contacts: Ehud Helft \ Kenny
Green, GK Investor Relations, Tel: +1-617-418-3096 \
+1-646-201-9246, Email: info@gkir.com
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