Exhibit 99.1
FOR IMMEDIATE RELEASE
Company Contact: | IR Agency Contact: | |
Investor Relations | Becky Herrick | |
408-952-8402 | 415-433-3777 | |
investorrelations@raesystems.com | bherrick@lhai.com |
RAE Systems Reports Second Quarter 2009 Results
Second Quarter 2009 Revenue Increased 4% Over First Quarter 2009
Second Quarter 2009 Revenue Increased 4% Over First Quarter 2009
SAN JOSE, Calif. — August 5, 2009 —RAE Systems Inc. (NYSE AMEX: RAE), a leader in delivering innovative sensor solutions to serve industrial, energy, environmental, and government safety markets worldwide, reported financial results and business highlights for the second quarter ended June 30, 2009.
Financial Results
For the second quarter of 2009, RAE Systems reported revenue of $19.9 million, an increase of four percent over the first quarter of 2009 and a 19 percent decrease from the second quarter 2008 revenue of $24.6 million. For the second quarter of 2009, the Americas contributed 42 percent of total revenue, Asia contributed 41 percent and Europe contributed 17 percent of revenue. Gross margin for the second quarter was 50 percent, compared with 49 percent for the first quarter 2009 and 53 percent for the second quarter of 2008. Operating expenses for the second quarter 2009 were $11.9 million or 60 percent of revenue, compared with $12.6 million or 51 percent of revenue for the second quarter of 2008. The second quarter net loss was $2.3 million or $0.03 per share, compared with a net loss of $0.5 million or $0.01 per share for the second quarter of 2008.
For the six months ended June 30, 2009, revenue was $39.0 million compared, with $42.5 million for the same period in 2008. The net loss for the six months ended June 30, 2009 was $3.2 million, compared with $2.8 million for the same period in 2008. The net loss per share was $0.05 for both the 2009 and 2008 six month periods.
“While the global recession has impacted our global customer spending, we believe our mix of new and existing product offerings positions us well to benefit when the global economy begins to improve,” said Robert Chen, RAE Systems president and CEO. “Our wireless product initiatives
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FOR IMMEDIATE RELEASE
address the continued demand for time and life critical information. Many of our new products enable our customers to increase their productivity while benefiting from reduced operating costs.”
“Due to the uncertainty of the worldwide economic outlook for 2009 combined with our first half revenue performance, as well as performance issues at RAE Fushun we now expect full year 2009 revenue of between $83.0 million and $86.0 million and we no longer expect to be profitable for the year,” Chen commented.
Business Highlights
Following are key business highlights in the company’s second quarter:
• | In the Oil and Gas market: |
• | Sold UltraRAE 3000 benzene monitors to multiple refineries, chemical plants and pipelines in Colorado, New Mexico and Utah. | ||
• | Received the first Americas order for the new MeshGuard, single gas wireless monitors. | ||
• | Sold wireless AreaRAE Rapid Deployment Kits to several multi-national petroleum and refining companies. | ||
• | Delivered QRAE2’s and AutoRAE Lite Calibration Stations to the oil sands services sector in Canada. | ||
• | Won a major bid to provide an AreaRAE Wireless Gas-Detection Network to the Puguang Gas Field in China. |
• | In the Hazardous Material Management market: |
• | Delivered ppbRAE 3000 VOC monitors, EntryRAE 5-gas monitors, HazRAE decision support tools and wireless AreaRAE Rapid Deployment Kits to several fire departments in the Asia-Pacific region. |
• | In the Industrial Safety market: |
• | Sold ppbRAE’s, MultiRAE Plus and MultiRAE IR Carbon Dioxide monitors, AutoRAE calibration stations and EntryRAE 5-gas monitors to companies in Korea, Taiwan, Canada and Malaysia. |
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FOR IMMEDIATE RELEASE
About RAE Systems
RAE Systems is a leading global provider of rapidly deployable sensor networks that enable customers to identify safety and security threats in real time. Products includedisposable gas detection tubes,single gas personal monitors, multi-sensor chemical detection monitors,photoionization (PID) monitors for volatile organic compounds (VOCs),wireless gas detection systems, and radiation monitoring networks for energy production and refining, industrial and environmental safety, and public and government first responder security sectors. RAE Systems’ products are used in over 95 countries by many of the world’s leading corporations and by many U.S. government agencies. For more information about RAE Systems, please visitwww.RAESystems.com.
Safe Harbor Statement
This press release may contain “forward-looking” statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, without limitation: expressions of “belief,” “anticipation,” or “expectations” of management; statements as to industry trends or future results of operations of RAE Systems and its subsidiaries; and other statements that are not historical fact. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE Systems and its products. In addition, our forward-looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and Form 10-Q filings, available online at http://www.sec.gov. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.
[Tables to Follow]
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RAE Systems Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)
June 30, | December 31, | |||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 15,316 | $ | 14,845 | ||||
Trade notes receivable | 1,722 | 1,870 | ||||||
Accounts receivable, net of allowances of $4,840 and $3,472, respectively | 19,006 | 20,961 | ||||||
Accounts receivable from affiliate | 151 | 100 | ||||||
Inventories | 14,510 | 17,604 | ||||||
Prepaid expenses and other current assets | 4,716 | 4,991 | ||||||
Income taxes receivable | 846 | 895 | ||||||
Total current assets | 56,267 | 61,266 | ||||||
Property and equipment, net | 15,996 | 14,976 | ||||||
Intangible assets, net | 2,876 | 3,342 | ||||||
Investments in unconsolidated affiliates | 334 | 467 | ||||||
Other assets | 694 | 1,124 | ||||||
Total assets | $ | 76,167 | $ | 81,175 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,392 | $ | 6,387 | ||||
Accounts payable to affiliate | 76 | 382 | ||||||
Payable to Fushun shareholder | 2 | 64 | ||||||
Bank lines of credit | 3,741 | 2,584 | ||||||
Accrued liabilities | 11,839 | 12,318 | ||||||
Notes payable to related parties, current | 624 | 1,329 | ||||||
Income taxes payable | 454 | 425 | ||||||
Deferred revenue, current | 550 | 631 | ||||||
Total current liabilities | 22,678 | 24,120 | ||||||
Deferred revenue, non-current | 564 | 685 | ||||||
Deferred tax liabilities, non-current | 357 | 83 | ||||||
Deferred gain on sale of real estate, non-current | 4,761 | 5,079 | ||||||
Other long-term liabilities | 1,362 | 1,292 | ||||||
Notes payable to related parties, non-current | 729 | 1,219 | ||||||
Total liabilities | 30,451 | 32,478 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 5) | ||||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Common stock, $0.001 par value, 200,000,000 shares authorized; 59,443,914 and 59,443,914 shares issued and outstanding, respectively | 59 | 59 | ||||||
Additional paid-in capital | 63,272 | 62,549 | ||||||
Accumulated other comprehensive income | 6,687 | 6,555 | ||||||
Accumulated deficit | (29,185 | ) | (25,947 | ) | ||||
Total RAE Systems Inc. shareholders’ equity | 40,833 | 43,216 | ||||||
Noncontrolling interest | 4,883 | 5,481 | ||||||
Total shareholders’ equity | 45,716 | 48,697 | ||||||
Total liabilities and shareholders’ equity | $ | 76,167 | $ | 81,175 | ||||
RAE Systems Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales | $ | 19,907 | $ | 24,647 | $ | 39,020 | $ | 42,516 | ||||||||
Cost of sales | 10,039 | 11,556 | 19,822 | 20,570 | ||||||||||||
Gross profit | 9,868 | 13,091 | 19,198 | 21,946 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 4,849 | 5,421 | 9,231 | 10,801 | ||||||||||||
Research and development | 1,384 | 1,545 | 2,979 | 3,281 | ||||||||||||
General and administrative | 5,692 | 5,627 | 10,105 | 9,923 | ||||||||||||
Total operating expenses | 11,925 | 12,593 | 22,315 | 24,005 | ||||||||||||
Operating (loss) income from continuing operations | (2,057 | ) | 498 | (3,117 | ) | (2,059 | ) | |||||||||
Other income (expense): | ||||||||||||||||
Interest income | 8 | 38 | 17 | 86 | ||||||||||||
Interest expense | (90 | ) | (99 | ) | (235 | ) | (201 | ) | ||||||||
Other, net | 53 | (225 | ) | (8 | ) | 82 | ||||||||||
Equity in loss of unconsolidated affiliate | (66 | ) | (27 | ) | (133 | ) | (36 | ) | ||||||||
(Loss) income from continuing operations before income taxes | (2,152 | ) | 185 | (3,476 | ) | (2,128 | ) | |||||||||
Income tax expense | (401 | ) | (469 | ) | (360 | ) | (665 | ) | ||||||||
Loss from continuing operations | (2,553 | ) | (284 | ) | (3,836 | ) | (2,793 | ) | ||||||||
Gain from discontinued operations, net of tax | — | 5 | — | 15 | ||||||||||||
Net loss | (2,553 | ) | (279 | ) | (3,836 | ) | (2,778 | ) | ||||||||
Net loss (income) attributable to the noncontrolling interest | 303 | (188 | ) | 598 | (25 | ) | ||||||||||
Net loss attributable to RAE Systems Inc. | $ | (2,250 | ) | $ | (467 | ) | $ | (3,238 | ) | $ | (2,803 | ) | ||||
Net loss per share-basic and diluted: | ||||||||||||||||
Continuing operations | $ | (0.03 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.05 | ) | ||||
Discontinued operations | — | — | — | — | ||||||||||||
Net loss per share-basic and diluted | $ | (0.03 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.05 | ) | ||||
Weighted-average common shares outstanding-Basic | 59,359 | 59,178 | 59,351 | 59,089 | ||||||||||||
The following table sets forth the components of our Condensed Consolidated Statements of Operations as a percentage of net sales:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Cost of sales | 50 | % | 47 | % | 51 | % | 48 | % | ||||||||
Gross profit | 50 | % | 53 | % | 49 | % | 52 | % | ||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 24 | % | 22 | % | 24 | % | 26 | % | ||||||||
Research and development | 7 | % | 6 | % | 7 | % | 8 | % | ||||||||
General and administrative | 29 | % | 23 | % | 26 | % | 23 | % | ||||||||
Adjustment to lease abandonment accrual | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Total operating expenses | 60 | % | 51 | % | 57 | % | 57 | % | ||||||||
Operating (loss) income from continuing operations | -10 | % | 2 | % | -8 | % | -5 | % | ||||||||
Other income (expense): | ||||||||||||||||
Interest income | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Interest expense | -1 | % | 0 | % | -1 | % | 0 | % | ||||||||
Other, net | 0 | % | -1 | % | 0 | % | 0 | % | ||||||||
Equity in loss of unconsolidated affiliate | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
(Loss) income from continuing operations before income taxes | -11 | % | 1 | % | -9 | % | -5 | % | ||||||||
Income tax expense | -2 | % | -2 | % | -1 | % | -2 | % | ||||||||
Loss from continuing operations | -13 | % | -1 | % | -10 | % | -7 | % | ||||||||
Gain from discontinued operations, net of tax | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Net loss | -13 | % | -1 | % | -10 | % | -7 | % | ||||||||
Net loss (income) attributable to the noncontrolling interest | 2 | % | -1 | % | 2 | % | 0 | % | ||||||||
Net loss attributable to RAE Systems Inc. | -11 | % | -2 | % | -8 | % | -7 | % | ||||||||