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Bridgewater Systems Reports Q4 & Full-Year 2010 Financial Results

Wednesday, March 2, 2011 7:01 AM


OTTAWA, March 2 /CNW/ - Bridgewater Systems (TSX: BWC), the leader in intelligent broadband control, today announced financial results for the three and 12 months ended December 31, 2010. This news release contains forward-looking statements. Reference should be made to "Forward-Looking Statements" at the end of this news release. All amounts are stated in Canadian dollars except where otherwise noted.

"Fiscal 2010 was a successful year for Bridgewater as we delivered solid financial performance and made good progress with our growth initiatives," said Ed Ogonek, CEO of Bridgewater Systems. "Among the main accomplishments, we significantly increased our customer base, grew our presence and capabilities in EMEA and APAC, and generated momentum in the important 4G/LTE markets." 

Mr. Ogonek added: "Increasingly, mobile operators want to leverage the strategic value of the independent intelligent control plane in solving the challenges caused by the explosive growth in data traffic and applications. In 2011 we will continue to expand our business internationally and deliver portfolio innovation and expansion.  Targeted investments in these areas will enable us to capture the significant long-term growth opportunities we see in our markets and fortify our position as a market leader in intelligent broadband controls."

Financial Summary

  • Revenue of $93.4 million for 2010, an increase of 40% (or 52% in USD) compared with $66.7 million for 2009. Q4 2010 revenue was $22.2 million, compared with $20.7 million in Q4 2009.

  • Gross margin for 2010 was $64.8 million (69% of revenue) versus $45.7 million (69% of revenue) in 2009.   

  • Earnings before income taxes increased to $31.3 million in 2010, versus $12.7 million in 2009. Q4 2010 earnings before income taxes rose to $15.7 million, compared with $4.3 million for the same period in 2009.

  • Net earnings for 2010 were $23.0 million, or $0.90 per share fully diluted, versus $11.2 million, or $0.44 per share fully diluted, in the prior year. For Q4 2010, net earnings were $11.8 million, or $0.46 per share fully diluted, compared to $2.5 million, or $0.10 per share fully diluted, in the fourth quarter of 2009. 

  • Non-GAAP earnings before income taxes¹, which exclude the impact of the recognition of non-refundable investment tax credits, were $20.4 million for full-year 2010 and $4.8 million for Q4 2010, compared with $12.7 million and $4.3 million in the comparable 2009 periods.

  • Non-GAAP net earnings for 2010¹, which exclude the impact of the recognition of non-refundable investment tax credits and related future tax expenses, were $14.8 million, or $0.58 per diluted share, compared with $11.2 million, or $0.44 per diluted share in 2009.  For Q4 2010, Non-GAAP net earnings were $3.6 million, or $0.14 per share, versus $2.5 million, or $0.10 per share, in Q4 2009.

  • Cash and cash equivalents, and short-term investments were $67.6 million at December 31, 2010.

Business Highlights

  • Expanded footprint with existing customers, including Verizon Wireless, Mobily and a key mobile operator in India.

  • Increased the Company's customer base, adding 42 new service provider customers in 2010. The Company also made further progress with its international expansion strategy, adding 27 new customers in EMEA and APAC.

  • Demonstrated momentum with our intelligent broadband controls portfolio. Highlights include five new LTE customers, as well as the live deployment with MetroPCS - the first operator to launch LTE services in North America.

  • Developed global channel partners, including relationships with Cisco and, subsequent to year end, the addition of Juniper Networks as a global reseller partner.

  • Broadened product and solutions portfolio, highlighted by the introduction of intelligent broadband controls "cookbook," RAN Congestion solution, and Mobile Data Offload solution.


Outlook

With the release of its 2010 results, Bridgewater provided full-year guidance based on IFRS for 2011. For 2011, the Company is expecting: 
  • Revenues of $88.0 to $100.0 million
  • Earnings before taxes of $15.0 to $20.0 million
  • Net earnings of $10.5 to $14.0 million


Factors supporting Bridgewater's annual outlook include: Canadian dollar remains at parity with US dollar, current contracted revenue and backlog; a large installed customer base with identified growth opportunities; the long-term industry trends of growth in mobile data services and applications; and continued evolution of our business model for delivering products and services to address higher transaction capacity needs.

The complete financial statements and management's discussion and analysis for the three and 12 months ended December 31, 2010 can be found at www.bridgewatersystems.com or at www.sedar.com.

Conference Call and Webcast

A conference call and webcast will be held today, Wednesday, March 2, 2011 at 8:30 a.m. ET to discuss this announcement. The telephone numbers to access the call are 647-427-7450 or 1-888-231-8191. To access the live webcast, please visit www.bridgewatersystems.com or www.newswire.ca. Participants will require Windows Media Player™ to listen to the webcast.

About Bridgewater Systems

Bridgewater Systems, the leader in intelligent broadband controls, provides pre-integrated solutions for mobile and converged operators to transform their networks, optimize mobile data growth, and innovate with new services.   The Bridgewater portfolio of carrier-grade products includes Service Controller (AAA), Policy Controller (PCRF) and Home Subscriber Server (HSS), anchored by a common identity and device management system.  More than 150 leading service providers worldwide leverage Bridgewater to create and deliver profitable services to consumer, enterprise, cloud and machine markets. For more information, visit us at www.bridgewatersystems.com. 

Bridgewater, Bridgewater Systems, the Bridgewater Systems logo, WideSpan, Smart Caps, and Subscriber Data Broker are trademarks or registered trademarks of Bridgewater Systems Corporation.  All other company, product names and any registered and unregistered trademarks mentioned are used for identification purposes only and remain the exclusive property of their respective owners.

Forward-Looking Statements

Certain statements in this release, including the estimates of future revenues, earnings before taxes, and net earnings provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop such estimates include:

  • Bridgewater's ability to maintain its relationships and contracts with Tier 1 customers;
  • visibility into the deployment plans of Bridgewater's major customers;
  • Bridgewater's ability to maintain and grow its installed customer base in existing and emerging markets;
  • expectations regarding profile and timing of new customer acquisitions, with associated revenue weighted toward the second half of the year;
  • expectations regarding long-term industry trends in growth in mobile data services and applications; and
  • macroeconomic factors including expected growth in the markets served by Bridgewater


Readers are cautioned not to place undue reliance on such statements. These statements are provided to enable external stakeholders to understand Bridgewater's expectations as of the date of this release and may not be appropriate for other purposes.

Actual results, performance, achievements or developments of Bridgewater may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of Bridgewater to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in the public documents filed by Bridgewater with Canadian securities regulatory authorities, including, but not limited to Bridgewater's Annual Information Form dated March 31, 2010 and Management's Discussion & Analysis of Financial Condition and Results of Operation dated March 1, 2011, which are available at www.sedar.com, and include the following:
  • Bridgewater operates in highly competitive and continually evolving markets, and if it is not able to compete effectively, it may not be able to continue to expand its business as expected;
  • Bridgewater relies on a limited number of customers for a large percentage of its revenue, and the loss of, or significant shortfall in business from, a key customer could significantly reduce its revenue;
  • Bridgewater must continue to evolve its business models and platforms for delivery of products and services to respond to transaction capacity needs of its customers;
  • Bridgewater is exposed to risks associated with foreign exchange fluctuations, and in particular, most of Bridgewater's revenues are received in US dollars while most of its expenses are payable in Canadian dollars;
  • Bridgewater's engagements with its customers involve complex arrangements and the size, timing and contractual terms of orders for Bridgewater's products may affect when revenue is recognized;
  • Bridgewater has a lengthy and variable sales cycle; and
  • Bridgewater may engage in future acquisitions that could disrupt its business and affect its financial condition and operating results.


Bridgewater assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law.

BRIDGEWATER SYSTEMS CORPORATION          
Consolidated Statements of Earnings and          
Comprehensive Earnings          
years ended December 31, 2010 and 2009          
(expressed in Canadian dollars)          
           
           
    2010   2009  
           
           
Revenue          
  Product   $  71,198,394   $  49,372,413  
  Service and support   22,177,430   17,303,896  
    93,375,824   66,676,309  
           
Cost of sales   28,611,395   20,951,811  
           
Gross margin   64,764,429   45,724,498  
           
Expenses          
  Sales and marketing   16,336,003   13,880,517  
  Research and development   23,651,683   15,718,157  
  General and administration   4,755,982   5,428,610  
  Investment tax credit carryforwards recognized   (13,225,000)   (2,000,000)  
  Bad debt (recovery) expense   (49,929)   (158,278)  
  Stock-based compensation   885,431   370,817  
           
    32,354,170   33,239,823  
           
Earnings before undernoted items   32,410,259   12,484,675  
           
Foreign exchange loss   (1,484,212)   (189,619)  
Interest and other income   486,204   543,585  
Loss on disposal of property, equipment and intangible assets   (133,855)   (130,820)  
           
Earnings before income taxes   31,278,396   12,707,821  
           
Current income tax expense   2,325,000   2,000,000  
Future income tax expense (recovery)   5,958,000   (496,000)  
           
NET EARNINGS AND COMPREHENSIVE EARNINGS   $  22,995,396   $  11,203,821  
           
           
Net earnings per share - basic   $  0.93   $  0.46  
           
Net earnings per share - diluted   $  0.90   $  0.44  
           
Weighted average number of shares outstanding - basic   24,671,459   24,179,224  
           
Weighted average number of shares outstanding - diluted   25,586,245   25,248,147  
           

BRIDGEWATER SYSTEMS CORPORATION        
Consolidated Balance Sheets        
as at December 31, 2010 and 2009        
(expressed in Canadian dollars)        
         
         
    2010   2009
         
         
CURRENT ASSETS        
         
  Cash and cash equivalents   $  61,711,508   $  53,828,859
  Short-term investments   5,886,942   13,459,190
  Accounts receivable   22,076,889   24,879,197
  Unbilled receivables   2,699,631   1,360,741
  Deferred cost of sales   3,140,423   12,324,813
  Prepaid expenses and other assets   2,984,933   3,229,227
  Investment tax credit recoverable   1,600,000  
  Future income tax asset   1,775,000   5,113,000
         
    101,875,326   114,195,027
         
INVESTMENT TAX CREDIT RECOVERABLE   9,300,000   -
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS   2,576,371   3,604,811
FUTURE INCOME TAX ASSET   1,083,000   3,703,000
RECOVERABLE TAXES   394,641   -
         
    $  115,229,338   $  121,502,838
         
CURRENT LIABILITIES        
         
  Accounts payable and accrued liabilities   $  7,043,848   $  9,617,441
  Deferred revenue   15,677,226   44,288,403
         
    22,721,074   53,905,844
         
SHAREHOLDERS' EQUITY        
         
  Share capital   71,055,409   69,872,842
  Contributed surplus   1,641,501   908,194
  Retained earnings (Deficit)   19,811,354   (3,184,042)
         
    92,508,264   67,596,994
         
    $  115,229,338   $  121,502,838
         

BRIDGEWATER SYSTEMS CORPORATION          
Consolidated Statements of Cash Flows          
years ended December 31, 2010 and 2009          
(expressed in Canadian dollars)          
           
           
      2010   2009
           
NET INFLOW (OUTFLOW) OF CASH RELATED          
TO THE FOLLOWING ACTIVITIES:          
           
OPERATING          
  Net earnings     $  22,995,396   $  11,203,821
  Items not affecting cash          
    Bad debt expense       332,461
    Stock-based compensation     885,431   370,817
    Foreign exchange loss on cash held in foreign currency     1,378,972   3,658,289
    Loss on disposal of property, equipment and intangibles     133,855   130,820
    Future income tax expense (recovery)     5,958,000   (496,000)
    Investment tax credits recoverable     (10,900,000)  
    Amortization of property, equipment and intangible assets     1,347,579   1,494,768
           
      21,799,233   16,694,976
           
  Recoverable taxes paid     (394,641)  
  Changes in non-cash operating working          
    capital items     (20,196,188)   5,531,388
           
      1,208,404   22,226,364
           
  INVESTING          
    Redemption (purchase) of short-term investments     7,572,248   (13,459,190)
    Purchases of property, equipment and intangible assets     (549,474)   (1,778,444)
           
      7,022,774   (15,237,634)
           
  FINANCING          
    Proceeds from issuance of common shares     1,030,443   2,621,796
    Repurchase of shares under normal course issuer bid       (2,487,149)
           
      1,030,443   134,647
           
Foreign exchange loss on cash held in foreign currency     (1,378,972)   (3,658,289)
           
NET CASH INFLOW     7,882,649   3,465,088
           
CASH AND CASH EQUIVALENTS,          
BEGINNING OF PERIOD     53,828,859   50,363,771
           
CASH AND CASH EQUIVALENTS,          
END OF PERIOD     $  61,711,508   $  53,828,859
           
Supplementary information:          
           
  Cash on hand and bank balances     $ 16,151,440   $ 17,485,505
  Cash equivalents     45,560,068   36,343,354
           
  Total cash and cash equivalents     $ 61,711,508   $  53,828,859
           
  Interest received     $ 481,085   $ 485,749
  Taxes paid     $ 394,641   $ -
             

BRIDGEWATER SYSTEMS CORPORATION                  
Consolidated Statements of Shareholders' Equity                  
years ended December 31, 2010 and 2009                  
(expressed in Canadian dollars)                  
                   
                   
  Common Shares   Contributed   Retained Earnings   Shareholders'
  Number   Amount   Surplus   (Deficit)   Equity
                   
                   
                   
                   
Balance at December 31, 2008 22,969,701   $  68,444,332   $  834,041   $  (13,390,664)   $  55,887,709
                   
Stock-based compensation     370,817     370,817
Repurchase of shares under normal course issuer bid (528,485)   (1,489,950)     (997,199)   (2,487,149)
Exercise of stock options 1,991,252   2,918,460   (296,664)     2,621,796
Net earnings       11,203,821   11,203,821
                   
Balance at December 31, 2009 24,432,468   $  69,872,842   $  908,194   $  (3,184,042)   $  67,596,994
                   
Stock-based compensation     885,431     885,431
Exercise of stock options 453,507   1,182,567   (152,124)     1,030,443
Net earnings       22,995,396   22,995,396
                   
Balance at December 31, 201024,885,975   $  71,055,409   $  1,641,501   $  19,811,354   $  92,508,264
                   

(1) Non-GAAP Financial Measures

The following table shows non-GAAP financial measures for the three and twelve month periods ended December 31, 2010 and 2009. These non-GAAP financial measures which are used internally by management to evaluate the Company's ongoing performance exclude the impact of the Company recognizing the balance of non-refundable investment tax credits of $10.9 million as investment tax credits recoverable and related future income tax expense of $2.7 million (referred to as "Excluded items").  The Company provides these non-GAAP financial measures as it is in the Company's view that the recognition of the investment tax credit recoverable is (i) not part of its normal day-to-day operations and (ii) represents a "non-cash" accounting benefit that do not increase its cash resources.  Accordingly, the Company believes that such financial measures may also be useful to investors in enhancing their understanding of the Company's operating performance.  The following non-GAAP measures are not recognized under Canadian GAAP and do not have a standardized meaning prescribed by Canadian GAAP.  Therefore it is unlikely to be comparable to similarly titled measures reported by other issuers.  Non-GAAP financial measures should be considered in the context of the Company's GAAP results. 

  Three months ended December 31, Fiscal year ended December 31,
  2010 2009 2010 2009
  (unaudited)      
  (in thousands of dollars, except percentages and per share amounts) 
           
Net earnings before income taxes $ 15,671 $ 4,342 $ 31,278 $ 12,708
Excluded items        
  Investment tax credits recognized (10,900) - (10,900) -
Non-GAAP net income before income taxes $ 4,771 $ 4,342 $20,378 $12,708
         
       
  Three months ended December 31, Fiscal year ended December 31,
  2010 2009  2010 2009
  (unaudited)      
  (in thousands of dollars, except percentages and per share amounts)
           
Net earnings $ 11,770 $ 2,525 $ 22,995 $ 11,204
Excluded items        
  Investment tax credits recognized (10,900) - (10,900) -
  Future tax expense 2,700 - 2,700 -
Non-GAAP net earnings $ 3,570 $ 2,525 $ 14,975 $ 11,204
         
         
Diluted earnings per share 0.46 0.10 0.90 0.44
  Impact of excluded items on diluted earnings per share (0.32) - (0.32) -
Non-GAAP diluted earnings per share 0.14 0.10 0.58 0.44

Investor Relations
Kim Butler, Chief Financial Officer
Bridgewater Systems
kim.butler@bridgewatersystems.com
+1 613-591-9104 extension 6023

Craig Armitage
The Equicom Group Inc.
carmitage@equicomgroup.com
+1 416-815-0700 extension 278

Media Relations
Ann Hatchell, Director Solutions & Partner Marketing
Bridgewater Systems
Ann.Hatchell@bridgewatersystems.com
+1 613-591-9104 extension 2030

(Source: CNW )
(Source: Quotemedia)

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