Mitel Reports Fourth Quarter and Fiscal 2013 Financial Results

June 24, 2013

Fourth Quarter Revenue and Non-GAAP EPS Exceed Consensus

Completes Acquisition of prairieFyre

Mitel® (Nasdaq:MITL) (TSX:MNW), a leading provider of cloud and premise-based unified communications and collaboration (UCC) solutions, today announced financial results for the fourth quarter and fiscal year ended April 30, 2013. All financial results are in U.S. dollars.

"In the fourth quarter, we are pleased to have exceeded our guidance for revenue and gross margin," said Richard McBee, Chief Executive Officer, Mitel. "We had solid sequential revenue growth of 6% resulting from our continued focus on both our premise-based business and our cloud service offerings. This month, we announced and completed the acquisition of the contact center OEM supplier prairieFyre, which will allow us to capitalize on the increasing market demand for contact center solutions. We also significantly enhanced our sales leadership with the appointment of three new sales executives in the Americas."

Fiscal Fourth Quarter 2013 Financial Highlights

  • Adjusted EBITDA from continuing operations for the fourth quarter of fiscal 2013 was $25.5 million or 16.9% of revenues.
  • Non-GAAP net income from continuing operations for the fourth quarter of fiscal 2013 was $14.1 million, or $0.25 per share.
  • Net income from continuing operations for the fourth quarter of fiscal 2013 was $8.3 million, or $0.14 per share, diluted.
  • Revenue from continuing operations for the fourth quarter of fiscal 2013 was $150.9 million.
  • Gross margin from continuing operations was 56.1%.
  • Cash and cash equivalents as of April 30, 2013 were $69 million, supplemented by an available, undrawn $40 million line of credit providing $109 million of liquidity. In the fourth quarter, we used $28 million of cash to reduce our debt in conjunction with our successful debt refinancing.
  • Operating cash flows for the fourth quarter of fiscal 2013 were $6.6 million.

Fiscal 2013 Financial Highlights

  • Adjusted EBITDA from continuing operations for fiscal 2013 was $85.0 million or 14.7% of revenues.
  • Non-GAAP net income from continuing operations for fiscal 2013 was $45.6 million, or $0.81 per share.
  • Net income from continuing operations for fiscal 2013 was $9.9 million, or $0.18 per share, diluted.
  • Revenue from continuing operations for fiscal year 2013 was $576.9 million.
  • Gross margins from continuing operations for fiscal year 2013 were 55.6%.

As in prior periods, due to the announced sale of DataNet/CommSource, which was completed on March 1, 2013, the results of that business unit are presented as discontinued operations, and prior period amounts have been adjusted accordingly.

Please refer to the GAAP to non-GAAP reconciliation tables in this release and a discussion of the use of non-GAAP measures under the heading, "Non-GAAP Financial Measurements," below.

Business Unit Results

  • Mitel Communications Solutions revenues for the fourth quarter of fiscal 2013 were $125.9 million. Operating margin for the fourth quarter of fiscal 2013 was 25%. For the fiscal year 2013 revenues were $480.3 million and operating margin was 23%.
  • Mitel NetSolutions revenues for the fourth quarter of fiscal 2013 were $21.6 million. Operating margin for the fourth quarter of fiscal 2013 was 22%. For fiscal year 2013 revenues were $84.2 million and operating margin was 22%.

"Although it was a challenging year for our industry, we were successful in expanding gross margins and EBITDA margins through our disciplined execution while maintaining our technology leadership in our virtualization and cloud offerings," said Steve Spooner, Chief Financial Officer, Mitel. "Our recent acquisition of prairieFyre is a key part of our strategy to give us the opportunity to expand revenue and margins while further strengthening Mitel's position in the growing contact center market."

Business Highlights

  • Acquisition of prairieFyre in the first quarter of fiscal year 2014, in which the net cash cost to the Company was approximately $20 million.
  • Strengthened sales leadership with the appointments of Joe Vitalone as Executive Vice President of Sales in the Americas, Tim Gaines as Vice President of Sales for the U.S. and CALA, and Sandra Hill as Vice President of Channel Management and Distribution for the U.S. and CALA, and the promotions of Joe Ward to Vice President of Sales for Mitel VIP Account Customers in the U.S. and Josh Haslett to Vice President of Sales and Engineering, Americas.
  • Entered into a wholesale agreement with Sprint to deliver cloud solutions for resellers serving small- and mid-sized businesses in the U.S.
  • Continued growth of Mitel's cloud customer base with more than 33,000 new cloud users added in the fourth quarter, bringing the total installed base to more than 262,000 cloud users.
  • Release of MiVoice for Lync and MiCollab with Google integration, designed to enable customers to leverage existing technology investments by interoperating with leading IT environments.

Business Outlook

Mitel has set the following financial performance guidance for the first quarter of fiscal year 2014 ending July 31, 2013. 

  • Revenue from continuing operations is expected to be in the range of $140 to $145 million.
  • Gross margin percentage from continuing operations is expected to be in the range of 55.0 to 56.0 percent.
  • Non-GAAP operating expenses as a percentage of revenue from continuing operations are expected to be in the range of 45.0 to 46.0 percent. Non-GAAP operating expenses include SG&A and R&D expenses but exclude estimated amortization of $5.6 million for acquisition-related intangible assets and estimated stock-based compensation expense of $1.1 million. 

Conference Call Information

Mitel will host an investor conference call and live webcast today at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss its financial results for the fourth quarter and fiscal year ended April 30, 2013. To access the conference call, dial 866-322-1159. Callers outside the U.S. and Canada should dial 416-640-3404. A replay of the conference call will be available through Saturday, June 29, 2013. To access the replay, please dial 888-203-1112 and enter pass code 2171897. Callers outside the U.S. and Canada should dial 647-436-0148 and enter pass code 2171897. The live webcast will be accessible on Mitel's investor relations website at http://investor.mitel.com/ and will be archived and available on this site for at least three months.

Non-GAAP Financial Measurements

This press release includes references to non-GAAP financial measures including adjusted EBITDA, non-GAAP income, non-GAAP income per share and non-GAAP operating expenses. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. We use these non-GAAP financial measures to assist management and investors in understanding our past financial performance and prospects for the future, including changes in our operating results, trends and marketplace performance, exclusive of unusual events or factors which do not directly affect what we consider to be our core operating performance. Non-GAAP measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods. Investors are cautioned that non-GAAP financial measures should not be relied upon as a substitute for financial measures prepared in accordance with generally accepted accounting principles. Please see the reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measure attached to this release. In addition, where this press release references "consensus," consensus is considered to be the average analyst estimates as summarized on Thomson Reuters Knowledge on June 23, 2013.

Forward-Looking Statements

Some of the statements in this presentation are forward-looking statements (or forward-looking information) within the meaning of applicable U.S. and Canadian securities laws. These include statements using the words target, outlook, may, will, should, could, estimate, continue, expect, intend, plan, predict, potential, project and anticipate, and similar statements which do not describe the present or provide information about the past. Actual results may differ materially from those presented in forward-looking statements. Material risks that could cause actual results to differ include: our ability to achieve or sustain profitability in the future; fluctuations in our quarterly and annual revenues and operating results; fluctuations in foreign exchange rates; current and ongoing global economic instability; intense competition; our reliance on channel partners for a significant component of our sales; our dependence upon a small number of outside contract manufacturers to manufacture our products; our ability to successfully implement our restructuring plans; our ability to successfully integrate the prairieFyre acquisition; and, our ability to implement and achieve our business strategies successfully. Additional risks are described under the heading "Risk Factors" in Mitel's Annual Report on Form 10-K. We have made assumptions regarding, among other things: no unforeseen changes occurring in the competitive landscape that would affect our industry generally or Mitel in particular; a stable or recovering economic environment; no significant event occurring outside the ordinary course of our business; our ability to successfully implement our restructuring plans; and, stable foreign exchange and interest rates. Forward-looking information is intended to help you understand management's current views of our future prospects, and it may not be appropriate for other purposes. Except as required by law, Mitel will not necessarily update forward-looking statements.

A propos de Mitel

Parmi les leaders mondiaux dans le domaine des communications d’entreprise en rendant possibles plus de 2 milliards de connexions chaque jour, Mitel permet aux entreprises de se connecter, de collaborer et aux fournisseurs de services de proposer des services innovants à leurs clients.

Pour en savoir plus, visitez notre site https://www.mitel.com/fr-fr ou suivez-nous @Mitel_FR sur Twitter

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