Nov. 5, 2009 (PR Newswire) -- ATLANTA, Nov. 5 /PRNewswire-FirstCall/ -- Numerex Corp (Nasdaq: NMRX), a leading single source provider of secure machine-to-machine (M2M) products and services, today announced financial results for its third quarter ended September 30, 2009.

"Our strategy of streamlining the M2M deployment process for our customers is gaining traction evidenced by the strong growth in subscriptions and recurring service revenues," said Stratton Nicolaides, chairman and chief executive officer. As a result of recent customer wins, forged carrier alliances, and the positive trends in our business, we provide the following fourth quarter and full year outlook:

    --  We are re-affirming our guidance of achieving between 30% and 40% growth
in our year-over-year digital subscription base, which translates to
adding at least 69,000 subscriptions during the fourth quarter of 2009.

    --  We anticipate total revenue for the fourth quarter of 2009 will range
from $13.0 million to $13.5 million which includes service revenues of
$8.2 million to $8.5 million.

    --  We expect to achieve positive net income during the fourth quarter of
2009 excluding any unexpected extraordinary or non-recurring items.

Key financial metrics for the third quarter of 2009 include:

    --  Subscriptions (recurring M2M network and application service
connections) to our network and application platforms continue to
increase at a robust pace with total subscriptions, excluding analog,
reaching 843,000 at the end of the third quarter. This compares with
652,000 recorded at the end of the third quarter last year, reflecting a
29% growth rate. We added 44,000 net incremental subscriptions during
the quarter.

    --  Total consolidated revenues during the third quarter of 2009 were $11.6
million compared to $19.0 million during the same period last year.  The
decrease was due to lower hardware revenues as the Company continues to
de-emphasize hardware only sales.  Numerex's total consolidated service
revenues increased to $7.6 million in the third quarter of 2009 from
$7.3 million in the same period last year.

    --  Gross margin during the third quarter of 2009 was 44.2% compared to
35.2% during the same period last year.  The improvement was primarily
due to the growth of higher margin service revenues.

    --  During the third quarter of 2009, adjusted EBITDA, excluding stock-based
compensation expense and litigation related legal fees, was $0.8 million
compared to $1.9 million during the same period last year.  The decrease
was primarily due to the decline in lower margin hardware revenues. A
reconciliation of GAAP to non-GAAP results has been provided in the
financial tables included in the press release.

    --  Numerex ended the quarter with $5.9 million in cash equivalents and $3.9
million in debt. Subsequent to the end of the quarter, the Company has
retired all but $500,000 of its remaining structured debt by paying $1.5
million in cash and converting $2.047 million into 440,350 shares of
Class A Common Stock. As a result, the Company's net cash position and
debt to equity ratio have improved.

Specific accomplishments since our last results press release in early August this year include:

    --  AT&T agreement extension to provide turnkey services for M2M enterprise
markets. The expanded agreement gives Numerex the possibility to offer
its M2M solutions to AT&T's business customers as the carrier looks to
drive its wireless capabilities into a wide variety of devices beyond
traditional handsets for businesses,

    --  Program expansion with the Federal Emergency Management Agency (FEMA) in
partnership with QinetiQ, one of the world's leading defense and
security technology companies; which includes the following three
revenue components:  a technology refresh which replaces all of the
existing devices in the field with new hardware; a managed service
component which will add to monthly recurring revenue; and a messaging
component,

    --  Wholesale data agreement with Sprint will allow Numerex to offer
additional CDMA-based network capabilities to its customer base.  The
agreement will build on Sprint's recent formation of the Emerging
Solutions business unit with a singular focus on accelerating the
delivery of M2M and mobile computing solutions to businesses and
consumers.

For the quarter ended September 30, 2009, Numerex reported consolidated revenue of $11.6 million compared to $19.0 million in the third quarter of 2008. During the quarter, the Company reported service revenues of $7.6 million and hardware revenues of $4.0 million compared to $7.3 million in service revenues and $11.6 million in hardware revenues, respectively, during the same period last year. The year-over-year decrease in hardware revenues was due primarily to the completion of the analog to digital transition and strategy to de-emphasize hardware only sales.

Gross margin for the three months ended September 30, 2009 was 44.2% compared to 35.2% during the same period last year. The continuing increase in wireless service revenues drives an overall margin improvement since service revenues have a significantly higher gross margin than those achieved through the sale of hardware.

Total operating expenses were $5.5 million during the quarter ended September 30, 2009 compared to $6.2 million during the third quarter of 2008. Excluding litigation related legal fees and non-cash stock option compensation charges, selling, general and administrative expenses were 11% lower during the quarter compared to the same period last year, reflecting reductions in administrative headcount as well as related costs.

GAAP loss from operations and pre-tax net loss were $367,000 and $862,000, respectively, which included $290,000 as a result of the early extinguishment of debt compared to a GAAP income from operations of $528,000 and a pre-tax net income of $202,000 in the third quarter of 2008. GAAP pre-tax basic/diluted loss per share was ($0.06) for the quarter ended September 30, 2009, compared with earnings per share of $0.01 in the same period last year.

For the quarter ended September 30, 2009, adjusted EBITDA, which excludes stock-based compensation expense and legal fees associated with litigation, was $0.8 million compared to $1.9 million in the same period last year. Non-GAAP basic/diluted loss per share was ($0.02) for the quarter ended September 30, 2009 compared to net income per share of $0.05 in the same period last year. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in this press release.

Numerex ended the third quarter of 2009 with cash and equivalents balance of $5.9 million compared to $10.0 million in the second quarter of 2009. The decrease in the cash balance was due primarily to debt repayment and an increase in inventory during the quarter. Days sales outstanding (DSO) improved to 36 days from 40 days during the third quarter of 2009.

Mr. Nicolaides concluded, "The execution of our strategy is on track. We are in a sound financial and technical position to take advantage of the growing and diverse M2M market needs. We have built a robust sales pipeline, which we anticipate will lead to increased subscriptions and subsequent growth in recurring service revenues."

Quarterly Conference Call

Numerex will discuss its quarterly results via teleconference today at 9:00 a.m. Eastern Time. Please dial (866) 792-1873 or if outside the U.S., (904) 520-5760, to access the conference call at least five minutes prior to the 9:00 a.m. ET start time. A live webcast and replay of the call will also be available at http://www.numerex.com under the Investor Relations section. An audio replay will be available via the Numerex web site beginning two hours after the call end.

About Numerex

Numerex Corp.