- Revenue ─ $103.6 million
- Adjusted EBITDA ─ $6.8
million
- Net Loss ─ $1.3 million Adjusted;
$9.0 million GAAP
CALGARY, Nov. 5, 2015 /CNW/ - SMART Technologies Inc.
(NASDAQ: SMT) (TSX: SMA), a leading provider of collaboration
solutions, today announced financial results for its second quarter
ended September 30, 2015.
"Our second quarter financial results were in
line with our expectations," said Neil
Gaydon, President and CEO of SMART. "While SMART kapp
continues to receive positive reception at trade shows and with
distributors, actual sales were below our forecast. On that basis,
we have acted decisively to reduce annual expenses, many of which
were kapp-centric, by approximately $25
million on an annualized basis. We believe that these
actions have aligned our cost structure with our revised forecast,
while allowing continued investment in core Education and
Enterprise business operations and R&D to remain largely
untouched. This will help secure an effective operating model for
SMART, as well as sufficient liquidity and cash flow for fiscal
year 2017. In October we also announced the Board's decision to
undertake a strategic review of our company with a view to
increasing shareholder value. The strategic review is still in its
very early stages. We believe that the decisive steps we have
recently undertaken will play an important role in supporting
success over the longer term."
Mr. Gaydon continued, "For the third quarter, we
expect revenue of $80 million to $90
million and Adjusted EBITDA between breakeven and
$5 million."
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GAAP Results |
(US$ millions except |
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|
Three months ended
September 30, |
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|
Six months ended
September 30, |
per share amounts) |
|
|
|
|
|
2015 |
2014 |
|
|
2015 |
2014 |
Revenue |
|
|
|
|
|
$ |
103.6 |
$ |
129.2 |
|
|
$ |
202.3 |
$ |
266.7 |
Net (loss) income |
|
|
|
|
|
$ |
(9.0) |
$ |
12.3 |
|
|
$ |
(11.3) |
$ |
24.4 |
EPS (diluted) |
|
|
|
|
|
$ |
(0.07) |
$ |
0.10 |
|
|
$ |
(0.09) |
$ |
0.19 |
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|
|
|
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Non-GAAP Results |
(US$ millions except |
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Three months ended
September 30, |
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Six months ended
September 30, |
per share amounts) |
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2015 |
2014 |
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|
2015 |
2014 |
Adjusted Revenue |
|
|
|
|
|
$ |
103.6 |
$ |
113.1 |
|
|
$ |
202.3 |
$ |
234.2 |
Adjusted Gross Margin |
|
|
|
|
|
$ |
37.5 |
$ |
46.4 |
|
|
$ |
73.7 |
$ |
92.9 |
Adjusted EBITDA |
|
|
|
|
|
$ |
6.8 |
$ |
12.9 |
|
|
$ |
9.3 |
$ |
21.6 |
Adjusted Net (Loss) Income |
|
|
|
|
|
$ |
(1.3) |
$ |
4.6 |
|
|
$ |
(4.2) |
$ |
2.3 |
Adjusted EPS (diluted) |
|
|
|
|
|
$ |
(0.01) |
$ |
0.04 |
|
|
$ |
(0.03) |
$ |
0.02 |
Conference Call Information
SMART will host a conference call today,
November 5, 2015, at 2:30 p.m. MT (4:30 p.m.
ET) to discuss the company's financial results. To access
this call, dial 877.312.5844 (North
America) or 253.237.1152 (outside North America). A replay of this call
will be available through November 15,
2015, by dialing 855.859.2056 or 800.585.8367 (North America), or 404.537.3406 (outside
North America). The conference ID
and replay pass code is 57009343. A live webcast of the conference
call and supplemental slides will be accessible from the investor
relations page of SMART's website at
http://investor.smarttech.com/index.cfm, and a replay will be
archived and accessible at
http://investor.smarttech.com/events.cfm.
About SMART
SMART Technologies Inc. (NASDAQ: SMT, TSX: SMA)
is a world leader in simple and intuitive solutions that enable
more natural collaboration. We are an innovator in interactive
touch technologies and software that inspire collaboration in both
education and businesses around the globe. To learn more, visit
smarttech.com.
SMT-F
Forward-looking Statements
Certain statements made in this press release
are forward-looking statements within the meaning of the U.S.
federal and applicable Canadian securities laws. Forward-looking
statements are sometimes identified by the use of forward-looking
terminology such as "expect", "intend", "plan", "predict",
"believe", "project", "estimate", "anticipate", "may", "will",
"should", "could", "risk", "continue", "further", "seek",
"ongoing", "commit" or similar words or statements or by
discussions of strategy, plans, objectives, goals, future events or
intentions. This press release contains forward-looking
statements pertaining to future events and our business, financial
condition, financial performance (including guidance regarding
third quarter FY16 revenue, and Adjusted EBITDA), results of
operations and plans and, in particular, the future performance of
the company, our ability to ensure continued investment in core
Education and Enterprise business operations and R&D remain
largely untouched, our ability to secure an effective operating
model for SMART, as well as sufficient liquidity and cash flow for
fiscal year 2017, expectation that we will achieve annualized cost
savings of $25 million on a go
forward basis, and our expected third quarter revenue of
$80 million to $90 million and
Adjusted EBITDA between breakeven and $5
million.
All forward-looking statements address matters
that involve known and unknown risks, uncertainties and
assumptions, many of which are beyond our control.
Accordingly, there are or will be important factors and assumptions
that could cause our actual results and other circumstances and
events to differ materially from those indicated in these
statements. We believe that these factors and assumptions include,
but are not limited to, those described under "Risk Factors" in our
Annual Report on Form 20-F for the fiscal year ended March 31, 2015, which can be accessed on the
SEDAR website at www.sedar.com or on the website of the U.S.
Securities and Exchange Commission at www.sec.gov.
Although we believe that the assumptions
inherent in the forward-looking statements contained in this
presentation and the accompanying verbal presentation are
reasonable, undue reliance should not be placed on these
statements, which only apply as of the date hereof. We
undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
Non-GAAP measures
In the second quarter of fiscal 2016, we changed
our definition of Adjusted Revenue from revenue adjusted for the
change in deferred revenue balances during the period to revenue
adjusted for the accelerated deferred revenue recognized as a
result of the change in accounting estimate as discussed below.
We calculate Adjusted Gross Margin by
subtracting cost of sales from Adjusted Revenue.
We define Adjusted Net (Loss) Income as net
(loss) income before stock-based compensation, costs of
restructuring, foreign exchange gains or losses, accelerated
deferred revenue recognized, amortization of intangible assets,
gains or losses related to the liquidation of foreign subsidiaries
and gains or losses related to the sale of long-lived assets, all
net of tax.
We calculate Adjusted Net (Loss) Income per
share by dividing Adjusted Net (Loss) Income by the average number
of basic and diluted shares outstanding during the period.
We define Adjusted EBITDA as Adjusted Net Income
before interest expense, income taxes, depreciation and other
income.
Adjusted Revenue, Adjusted Gross Margin,
Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted Net (Loss)
Income per share are non-GAAP measures and should not be considered
as alternatives to net income or any other measure of
financial performance calculated and presented in accordance with
GAAP. Adjusted Revenue, Adjusted Gross Margin, Adjusted EBITDA,
Adjusted Net (Loss) Income and other non-GAAP measures have
inherent limitations, and the reader should therefore not place
undue reliance on them.
Due to the change in accounting estimate as a
result of the reduction in the support period for previously sold
products discussed in Note 1(a) in the unaudited interim
consolidated financial statements, we chose to use the non-GAAP
measures Adjusted Revenue and Adjusted Gross Margin. The
significant impact in prior years related to this change in
accounting estimate ended in the fourth quarter of fiscal 2015.
Although this will no longer have a significant impact on our
fiscal 2016 financial results, we will continue to use Adjusted
Revenue and Adjusted Gross Margin for comparative purposes. We use
Adjusted Revenue and Adjusted Gross Margin as key measures to
provide additional insights into the operational performance of the
Company and to help clarify trends affecting the Company's
business.
We use Adjusted EBITDA as a key measure to
assess the core operating performance of our business after
removing the effects of both our leveraged capital structure and
the volatility associated with the foreign currency exchange rates
on our U.S. dollar-denominated debt. We also use Adjusted Net
(Loss) Income to assess the performance of the business after
removing the after-tax impact of stock-based compensation, costs of
restructuring, foreign exchange gains and losses, accelerated
deferred revenue recognized, amortization of intangible assets and
gains or losses related to the sale of long-lived assets. We use
both of these measures to assess business performance when we
evaluate our results in comparison to budgets, forecasts,
prior-year financial results and other companies in our industry.
Many of these companies use similar non-GAAP measures to supplement
their GAAP disclosures, but such measures may not be directly
comparable to ours. In addition to its use by management in the
assessment of business performance, Adjusted EBITDA is used by our
Board of Directors in assessing management's performance and is a
key metric in the determination of payments made under our
incentive compensation plans. We believe Adjusted EBITDA and
Adjusted Net Income may be useful to investors in evaluating our
operating performance because securities analysts use metrics
similar to Adjusted EBITDA and Adjusted Net (Loss) Income as
supplemental measures to evaluate the overall operating performance
of companies.
Adjusted EBITDA and Adjusted Net (Loss) Income
are not affected by the change in accounting estimate related to
revenue recognition.
SMART Technologies Inc. |
|
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|
|
|
|
Unaudited Consolidated Condensed
Statements of Operations |
|
|
|
|
|
|
|
|
|
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|
|
|
|
(millions of U.S. dollars, except for shares and
per share amounts) |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30, |
|
|
Six months ended
September 30, |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
103.6 |
|
|
$ |
129.2 |
|
|
$ |
202.3 |
|
|
$ |
266.7 |
|
Cost of sales |
|
66.1 |
|
|
|
66.7 |
|
|
|
128.6 |
|
|
|
141.3 |
|
Gross margin |
|
37.5 |
|
|
|
62.5 |
|
|
|
73.7 |
|
|
|
125.4 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, marketing and administration |
|
22.3 |
|
|
|
25.2 |
|
|
|
47.1 |
|
|
|
53.2 |
|
|
Research and development |
|
9.4 |
|
|
|
10.0 |
|
|
|
20.6 |
|
|
|
22.7 |
|
|
Depreciation and amortization |
|
2.3 |
|
|
|
2.9 |
|
|
|
4.8 |
|
|
|
6.0 |
|
|
Restructuring costs |
|
0.7 |
|
|
|
0.0 |
|
|
|
0.9 |
|
|
|
2.3 |
|
Operating income |
|
2.7 |
|
|
|
24.4 |
|
|
|
0.3 |
|
|
|
41.1 |
|
Non-operating expenses (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
4.7 |
|
|
|
5.1 |
|
|
|
9.3 |
|
|
|
10.2 |
|
|
Foreign exchange loss |
|
7.1 |
|
|
|
4.6 |
|
|
|
5.2 |
|
|
|
0.0 |
|
|
Other income |
|
(0.0) |
|
|
|
(0.0) |
|
|
|
(0.1) |
|
|
|
(0.6) |
|
(Loss) income before income taxes |
|
(9.1) |
|
|
|
14.7 |
|
|
|
(14.1) |
|
|
|
31.5 |
|
Income tax (recovery)
expense |
|
(0.1) |
|
|
|
2.4 |
|
|
|
(2.8) |
|
|
|
7.1 |
|
Net (loss) income |
$ |
(9.0) |
|
|
$ |
12.3 |
|
|
$ |
(11.3) |
|
|
$ |
24.4 |
|
(Loss) earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.07) |
|
|
$ |
0.10 |
|
|
$ |
(0.09) |
|
|
$ |
0.20 |
|
|
Diluted |
$ |
(0.07) |
|
|
$ |
0.10 |
|
|
$ |
(0.09) |
|
|
$ |
0.19 |
|
Weighted-average number of shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
122,019,418 |
|
|
121,592,503 |
|
|
121,923,927 |
|
|
121,443,284 |
|
|
Diluted |
122,019,418 |
|
|
126,729,300 |
|
|
121,923,927 |
|
|
126,873,353 |
|
Period end number of shares
outstanding |
122,429,920 |
|
|
121,599,011 |
|
|
122,429,920 |
|
|
121,599,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in this table may not sum due to
rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
SMART Technologies Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Consolidated Condensed Balance
Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
(millions of U.S. dollars) |
|
|
|
|
|
|
|
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|
|
|
|
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|
Sept 30, 2015 |
|
|
|
|
Mar 31, 2015 |
ASSETS |
|
|
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|
|
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|
|
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Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
$ |
31.1 |
|
|
$ |
|
54.5 |
|
Trade receivables, net of allowance for
receivables of $3.3 and $4.4 |
|
|
|
|
|
|
65.0 |
|
|
|
|
61.6 |
|
Income taxes recoverable |
|
|
|
|
|
|
7.6 |
|
|
|
|
7.4 |
|
Inventory |
|
|
|
|
|
|
86.1 |
|
|
|
|
51.6 |
|
Deferred income taxes |
|
|
|
|
|
|
10.0 |
|
|
|
|
8.1 |
|
Other current assets |
|
|
|
|
|
|
6.5 |
|
|
|
|
6.5 |
|
|
|
|
|
|
|
206.3 |
|
|
|
|
189.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
|
|
|
|
47.4 |
|
|
|
|
54.7 |
Deferred income taxes |
|
|
|
|
|
|
9.3 |
|
|
|
|
8.3 |
Deferred financing fees |
|
|
|
|
|
|
1.9 |
|
|
|
|
2.5 |
Other long-term assets |
|
|
|
|
|
|
0.5 |
|
|
|
|
0.6 |
|
|
|
|
|
|
$ |
265.4 |
|
|
$ |
|
255.8 |
|
|
|
|
|
|
|
|
|
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|
|
LIABILITIES AND SHAREHOLDERS'
(DEFICIT) EQUITY |
|
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|
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Current liabilities |
|
|
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|
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|
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|
|
Accounts payable |
|
|
|
|
|
$ |
37.8 |
|
|
$ |
|
18.7 |
|
Accrued and other current liabilities |
|
|
|
|
|
|
42.5 |
|
|
|
|
44.3 |
|
Deferred revenue |
|
|
|
|
|
|
15.1 |
|
|
|
|
13.1 |
|
Current portion of capital lease obligation |
|
|
|
|
|
|
1.1 |
|
|
|
|
1.1 |
|
Current portion of long-term debt |
|
|
|
|
|
|
11.7 |
|
|
|
|
10.2 |
|
|
|
|
|
|
|
108.2 |
|
|
|
|
87.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
95.9 |
|
|
|
|
96.3 |
Capital lease obligation |
|
|
|
|
|
|
50.3 |
|
|
|
|
53.8 |
Deferred revenue |
|
|
|
|
|
|
13.5 |
|
|
|
|
11.8 |
Other long-term liabilities |
|
|
|
|
|
|
0.7 |
|
|
|
|
0.9 |
|
|
|
|
|
|
|
268.5 |
|
|
|
|
250.3 |
Shareholders' (deficit) equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
|
695.7 |
|
|
|
|
695.3 |
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
4.0 |
|
|
|
|
2.7 |
|
Additional paid-in capital |
|
|
|
|
|
|
49.7 |
|
|
|
|
48.6 |
|
Accumulated deficit |
|
|
|
|
|
|
(752.4) |
|
|
|
|
(741.2) |
|
|
|
|
|
|
|
(3.1) |
|
|
|
|
5.5 |
|
|
|
|
|
|
$ |
265.4 |
|
|
$ |
|
255.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in this table may not sum due to
rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
SMART Technologies Inc. |
|
|
|
|
|
|
|
|
|
|
|
Unaudited Consolidated Condensed Statements of Cash
Flows |
|
|
|
|
|
|
|
|
|
|
|
(millions of U.S. dollars) |
|
|
|
|
|
|
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|
|
|
|
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|
|
|
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|
|
|
|
|
|
Six months ended
September 30, |
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|
|
|
|
|
|
2015 |
|
|
|
2014 |
Cash (used in) provided by |
|
|
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|
|
|
|
|
|
|
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
|
|
|
|
$ |
(11.3) |
|
|
$ |
24.4 |
|
Adjustments to
reconcile net (loss) income to cash (used in) provided by
operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
6.7 |
|
|
|
8.8 |
|
|
Amortization of deferred financing fees |
|
|
|
|
|
|
0.5 |
|
|
|
0.5 |
|
|
Amortization of long-term debt discount |
|
|
|
|
|
|
0.8 |
|
|
|
0.5 |
|
|
Stock-based compensation expense |
|
|
|
|
|
|
1.3 |
|
|
|
1.9 |
|
|
Unrealized loss (gain) on foreign exchange |
|
|
|
|
|
|
4.2 |
|
|
|
(2.2) |
|
|
Deferred income tax (recovery) expense |
|
|
|
|
|
|
(3.9) |
|
|
|
8.0 |
|
|
Gain on liquidation of foreign subsidiary |
|
|
|
|
|
|
- |
|
|
|
(0.4) |
|
|
Other |
|
|
|
|
|
|
(0.0) |
|
|
|
0.0 |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
|
|
|
|
(3.5) |
|
|
|
15.8 |
|
|
Inventory |
|
|
|
|
|
|
(39.9) |
|
|
|
14.7 |
|
|
Other current assets |
|
|
|
|
|
|
(0.9) |
|
|
|
1.5 |
|
|
Income taxes recoverable |
|
|
|
|
|
|
(0.9) |
|
|
|
(4.6) |
|
|
Accounts payable, accrued and other current
liabilities |
|
|
|
|
|
|
20.6 |
|
|
|
(34.1) |
|
|
Deferred revenue |
|
|
|
|
|
|
5.3 |
|
|
|
(25.1) |
Cash (used in) provided by operating
activities |
|
|
|
|
|
|
(21.0) |
|
|
|
9.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
(2.1) |
|
|
|
(4.1) |
|
Proceeds from sale of long-lived
assets |
|
|
|
|
|
|
- |
|
|
|
0.1 |
Cash used in investing activities |
|
|
|
|
|
|
(2.1) |
|
|
|
(4.0) |
|
|
|
|
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
|
|
|
|
5.0 |
|
|
|
5.0 |
|
Repayment of long-term debt |
|
|
|
|
|
|
(4.7) |
|
|
|
(9.7) |
|
Repayment of capital lease
obligation |
|
|
|
|
|
|
(0.5) |
|
|
|
(0.6) |
|
Participant Equity Loan Plan |
|
|
|
|
|
|
0.0 |
|
|
|
0.2 |
|
Other |
|
|
|
|
|
|
- |
|
|
|
0.0 |
Cash used in financing activities |
|
|
|
|
|
|
(0.2) |
|
|
|
(5.0) |
|
Effect of exchange rate changes on
cash and cash equivalents |
|
|
|
|
|
|
(0.0) |
|
|
|
(0.6) |
Net (decrease) increase in cash and
cash equivalents |
|
|
|
|
|
|
(23.3) |
|
|
|
0.0 |
Cash and cash equivalents, beginning
of period |
|
|
|
|
|
|
54.5 |
|
|
|
58.1 |
Cash and cash equivalents, end of
period |
|
|
|
|
|
$ |
31.0 |
|
|
$ |
58.2 |
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in this table may not sum due to
rounding. |
© 2015 SMART Technologies. SMART kapp, kapp iQ, SMART Board
6065, SMART amp, Notebook Advantage, SMART Room System, the
SMART logo and smarttech are trademarks or registered trademarks of
SMART Technologies in the U.S. and/or other countries.
SOURCE SMART Technologies Inc.