EXHIBIT 99.1
INVESTOR RELATIONS CONTACT:
Alan B. Catherall 770-485-2527
PRESS RELEASE
FOR IMMEDIATE RELEASE
NUMEREX REPORTS SECOND QUARTER RESULTS
REVENUE GROWTH EXCEEDS EXPECTATIONS RESULTING IN IMPROVED OPERATING PERFORMANCE
ATLANTA, AUGUST 5, 2004 - NUMEREX CORP. (NASDAQ: NMRX), today announced net
losses of $689 thousand for the second quarter of 2004 and $1.5 million
year-to-date. These results compare to net losses of $854 thousand and $2.0
million for the comparable periods of 2003. Fully diluted losses per share were
$(.06) for the quarter and $(.14) year-to-date. This compares to fully diluted
losses per share of $(.08) and $(.18) for the comparable periods of 2003. Net
sales were $5.8 million for the quarter and $10.5 million year-to-date, compared
to $4.7 million and $9.4 million for the comparable periods of 2003. Please see
attached financial statements for more details.
"Wireless data products and services grew steadily during the second quarter,"
stated Stratton Nicolaides, chairman and CEO of Numerex. "Our overall
Cellemetry-based M2M revenues increased by over 25% compared to the second
quarter of 2003 reflecting a positive trend in wireless network market activity
and a robust opportunity pipeline. Recurring Cellemetry-based M2M service
revenues generated during the quarter grew 28% in a year over year comparison to
second quarter last year. We view these favorable market and growth trends as
strong indicators of the future health of the business. We have also taken steps
to improve the productivity and reduce the ramp-up costs associated with our new
product launches. Specifically, MobileGuardian, our mobile tracking and security
solution, announced a contract with Southwest Dealer Services last month to
market and sell MobileGuardian units to the new car dealer market. As a result,
we expect an immediate reduction in our direct selling costs and anticipate an
improvement in sales performance by the fourth quarter when Southwest's
personnel are fully trained.
VendView, our wireless vending service, continues its successful launch in
Mexico and is on course for its US debut later this year. Unit sales to existing
customers have exceeded the 1000 unit mark, with several additional trials
underway in Mexico and the Caribbean. We expect to secure additional VendView
customers during the third quarter and balance of the year.
Our digital multimedia business experienced a strong quarter. Specifically, the
results for the quarter include the positive impact of an IBM order for video
conferencing equipment that will be used by a K-12 school district. The total
award was for over $1M with less than one-third shipped in the second quarter
leaving a substantial backlog that has recently been incremented by the order of
additional video conferencing equipment from another school district. Our
networking business also had a strong quarter with significant revenues
generated by the installation of equipment that provides E911 services for the
customers of cellular carriers.
As a result of an improvement in operating performance and working capital
efficiencies, specifically related to reduced inventory levels, which have
dropped six straight quarters in a row, Numerex was operating cash flow positive
for the quarter. Only fixed asset expenditures as well as capital lease
principal payments caused a slight decline in cash compared to the balance at
March 31, 2004. As we have noted in prior press releases, we entered into a
$4.5M term note earlier this year, which significantly strengthened our
financial position by both increasing cash and significantly reducing short-term
debt. The term note has delayed repayment terms and will require maximum cash
outlays for both principal and interest of less than $650 thousand during the
last six months of 2004. Actual cash outlays could be lower if the equity
payment feature of the note can be exercised.
Finally, with respect to third quarter of 2004, we estimate that total revenues
will range between $5.5M and $6.0M. As a result of this anticipated growth in
revenues as well as the reduction in overheads associated with new product ramp
costs, we expect a consequent reduction in operating losses in the third
quarter."
-continued-
CONFERENCE CALL AND WEBCAST INFORMATION
Numerex will conduct a conference call later today, August 5th, at 11:00 A.M.,
Eastern Daylight Time, accessible by calling 888 243-3996 in the U.S. and
Canada, or international by calling 973 935-2403. A live Webcast of the call
will also be available via Numerex's Web site at http://www.nmrx.com, under the
Investor Relations section. A replay of the conference call will be available
via Numerex's Web site beginning two hours after the call.
ABOUT NUMEREX
Numerex is a communications technology business comprised of operating
subsidiaries that utilize existing wireless or cellular, Internet and cable
infrastructure thereby enabling network access and information management
through the deployment of proprietary software and technology. Numerex
facilitates the real-time exchange of information between remote devices, people
and business systems. This provides companies the ability to remotely connect,
monitor, control and diagnose their field assets. The Company primarily markets
and sells products and services in wireless data communications through
Cellemetry(R), Uplink(SM), MobileGuardian(R), VendView(TM), and digital
multimedia through PowerPlay(TM) and IPContact(TM). These products and services
enable customers around the globe to monitor and move information for a variety
of applications from home and business security to distance learning. In
addition, the Company offers wireline alarm security products and services, as
well as telecommunications network operational support systems.
Visit the Numerex Web site for additional information at: www.nmrx.com
This press release contains, and other statements may contain, forward-looking
statements with respect to Numerex's future financial or business performance,
conditions or strategies and other financial and business matters, including
expectations regarding growth trends and activities in the wireless data
business. Forward-looking statements are typically identified by words or
phrases such as "believe," "expect," "anticipate," "intend," "estimate,"
"assume," "strategy," "plan," "outlook," "outcome," "continue," "remain,"
"trend," and variations of such words and similar expressions, or future or
conditional verbs such as "will," "would," "should," "could," "may," or similar
expressions. Numerex cautions that these forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over time. These
forward-looking statements speak only as of the date of this press release, and
Numerex assumes no duty to update forward-looking statements. Actual results
could differ materially from those anticipated in these forward-looking
statements and future results could differ materially from historical
performance.
The following factors, among others, could cause actual results to differ
materially from forward-looking statements or historical performance: the
failure to realize improvements on our digital multimedia and networking
business; variations in quarterly operating results, delays in the development,
introduction and marketing of new wireless products and services; customer
acceptance of products and services; economic conditions; changes in financial
and capital markets; the inability to attain revenue and earnings growth in our
wireless data business; changes in interest rates; inflation; the introduction,
withdrawal, success and timing of business initiatives and strategies;
competitive conditions; the inability to realize revenue enhancements; and
extent and timing of technological changes. Numerex's SEC reports identify
additional factors that can affect forward-looking statements.
-continued -
NUMEREX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTH FOR THE SIX MONTH
PERIOD ENDED JUNE 30, PERIOD ENDED JUNE 30,
2004 2003 2004 2003
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------- ---------- ---------- ----------
NET SALES:
Product $ 2,271 $ 1,640 $ 4,165 $ 3,210
Service 3,482 3,080 6,358 6,196
---------- ---------- ---------- ----------
TOTAL NET SALES 5,753 4,720 10,523 9,406
Cost of product sales (excluding depreciation) 1,858 1,309 3,481 2,529
Cost of services (excluding depreciation and amortization) 1,288 960 2,205 2,195
Depreciation and amortization 100 174 209 353
---------- ---------- ---------- ----------
GROSS PROFIT 2,507 2,277 4,628 4,329
43.6% 48.2% 44.0% 46.0%
Selling, general, and administrative expenses 2,404 2,234 4,728 4,621
Research and development expenses 202 284 479 581
Depreciation and amortization 409 505 833 994
---------- ---------- ---------- ----------
OPERATING PROFIT / (LOSS) (508) (746) (1,412) (1,867)
Interest income and (expense), net (150) (131) (283) (151)
Profit on sale of business -- -- 250 --
Other income and (expense), net (29) 36 (31) 79
---------- ---------- ---------- ----------
LOSS BEFORE TAXES (687) (841) (1,476) (1,939)
Provision for income taxes 2 13 (1) 32
---------- ---------- ---------- ----------
NET PROFIT (LOSS) $ (689) $ (854) $ (1,475) $ (1,971)
========== ========== ========== ==========
BASIC EARNINGS (LOSS) PER COMMON SHARE $ (0.06) $ (0.08) $ (0.14) $ (0.18)
DILUTED EARNINGS (LOSS) PER COMMON SHARE $ (0.06) $ (0.08) $ (0.14) $ (0.18)
Number of shares used in per share calculation
Basic 10,796 10,785 10,794 11,083
Diluted 10,796 10,785 10,794 11,083
-continued -
NUMEREX CORP.
SUPPLEMENTAL SALES INFORMATION
(IN THOUSANDS)
FOR THE THREE MONTH FOR THE SIX MONTH
PERIOD ENDED JUNE 30, PERIOD ENDED JUNE 30,
2004 2003 2004 2003
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
Net sales:
Wireless Data Communications
Product $ 1,309 $ 1,073 $ 2,732 $ 2,100
Service 2,143 2,081 4,133 3,939
------------ ------------ ------------ ------------
Sub-total 3,452 3,154 6,865 6,039
Digital Multimedia and Networking
Product 819 395 1,139 899
Service 1,153 809 1,862 1,851
------------ ------------ ------------ ------------
Sub-total 1,972 1,204 3,001 2,750
Wireline Security
Product 143 172 294 211
Service 186 190 363 406
------------ ------------ ------------ ------------
Sub-total 329 362 657 617
Total net sales
Product 2,271 1,640 4,165 3,210
Service 3,482 3,080 6,358 6,196
------------ ------------ ------------ ------------
Total net sales 5,753 4,720 10,523 9,406
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-continued -
NUMEREX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2004 2003
(UNAUDITED)
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,289 $ 734
Accounts receivable, net 3,782 3,093
Notes Receivable 91 99
Inventory 2,432 3,461
Prepaid expenses and other current assets 708 700
------------ ------------
TOTAL CURRENT ASSETS 8,302 8,087
PROPERTY AND EQUIPMENT, NET 1,062 1,296
GOODWILL, NET 15,014 15,014
OTHER INTANGIBLES, NET 7,612 7,979
SOFTWARE, NET 668 825
OTHER ASSETS 892 769
------------ ------------
TOTAL ASSETS $ 33,550 $ 33,970
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,919 $ 2,498
Other current liabilities 1,170 1,487
Note payable, current 1,146 3,500
Deferred revenues 845 775
Obligations under capital leases, current portion 197 282
------------ ------------
TOTAL CURRENT LIABILITIES 6,277 8,542
LONG TERM LIABILITIES
Obligations under capital leases and other long term liabilities 2 62
Note Payable 3,193 --
------------ ------------
TOTAL LONG TERM LIABILITIES 3,195 62
SHAREHOLDERS' EQUITY
Preferred stock - no par value; authorized 3,000,000; none issued -- --
Class A common stock - no par value; authorized 30,000,000; issued
13,188,114 and 13,181,547 shares, respectively 36,810 36,793
Additional paid-in-capital 680 439
Treasury stock, at cost, 2,391,400 shares on June 30, 2004 and
December 31, 2003 (10,197) (10,197)
Class B common stock - no par value; authorized 5,000,000; none issued -- --
Accumulated other comprehensive income 26 97
Retained earnings (3,241) (1,766)
------------ ------------
24,078 25,366
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 33,550 $ 33,970
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