Mitel Reports First Quarter Fiscal 2014 Financial Results

August 29, 2013

Mitel® (Nasdaq:MITL) (TSX:MNW), a leading provider of cloud and software-based unified communications and collaboration (UCC) solutions, today announced financial results for the first quarter of fiscal 2014 ended July 31, 2013. All financial results are in U.S. dollars.

"We are pleased to have achieved year-over-year revenue growth and record gross margins in the first quarter," said Richard McBee, Chief Executive Officer, Mitel. "Our operating results reflect the growing traction of our cloud business as well as the strength of our unified communications software solutions, which serve as the foundation for us to grow in our target markets."

"During the quarter we completed the acquisition of prairieFyre, our OEM-provider of contact center solutions, for a net cash cost of $20.0 million. The acquisition was accretive during the quarter and we have been pleased with the results to date. We look forward to capitalizing further on the growing market demand for contact centers with a fully integrated solution."

Fiscal First Quarter 2014 Financial Highlights

  • Revenue for the first quarter of fiscal 2014 was $141.6 million.
  • Gross margin for the first quarter of fiscal 2014 was 56.6%.
  • Adjusted EBITDA for the first quarter of fiscal 2014 was $20.6 million, or 14.5% of revenues.
  • Non-GAAP net income for the first quarter of fiscal 2014 was $9.3 million, or $0.17 per share.
  • Net loss for the first quarter of fiscal 2014 was $3.8 million, or $0.07 per share, diluted.
  • Cash and cash equivalents as of July 31, 2013 were $55.3 million.
  • Operating cash flows for the first quarter of fiscal 2014 were $13.2 million.

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 first quarter of fiscal 2014 were $117.9 million. Operating margin for the first quarter of fiscal 2014 was 24%.
  • Mitel NetSolutions revenues for the first quarter of fiscal 2014 were $21.7 million. Operating margin or the first quarter of fiscal 2014 was 21%.

"This quarter we delivered top line growth, record gross margins, strong cash flow from operations and expanded EBITDA margins year-over-year, as a result of our continued commitment to operating a leveraged business model," said Steve Spooner, Chief Financial Officer, Mitel.

Business Highlights

  • Signed a new partnership agreement with Vidyo to bring video to the cloud by delivering a single integrated HD video and telepresence capability across Mitel's entire line of UCC products. Through this agreement, Mitel's global channel partners will be able to offer end-to-end UCC video conferencing solution.
  • Continued cloud momentum and demand for MiCloud solutions with the completion of multiple new agreements with nation-wide service providers in the U.S. and Canada, including announcements that Windstream, Black Box and RackForce will all offer cloud-based Unified Communications as a Service (UCaaS) powered by Mitel.
  • Ongoing customer demand for Mitel's core unified communications solutions with the Rock and Roll Hall of Fame deploying Mitel's cost-effective and cutting edge MiVoice solution across the legendary museum. In addition, the Philadelphia Zoo, the oldest zoo in the U.S., has deployed MiContact Center enabling the organization to expand its contact center operations from five to seven days a week.

Business Outlook

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

  • Revenue is expected to be in the range of $142 to $148 million.
  • Gross margin percentage is expected to be in the range of 57 to 58 percent.
  • Non-GAAP operating expenses as a percentage of revenue are expected to be in the range of 44.5 to 45.5 percent. Non-GAAP operating expenses include SG&A and R&D expenses but exclude estimated amortization of $6.4 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 first quarter ended July 31, 2013. To access the conference call, dial 800-820-0231. Callers outside the U.S. and Canada should dial 416-640-5926. A replay of the conference call will be available through Monday, September 2, 2013. To access the replay, please dial 888-203-1112 and enter pass code 3811976. Callers outside the U.S. and Canada should dial 647-436-0148 and enter pass code 3811976. 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 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.

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 acquisitions; 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.

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Mitel est une marque déposée de Mitel Networks Corporation.

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Contact

Sandrine Quinton, Mitel

Tel: +33 1 30 96 43 01

Email: [email protected]

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