WPCS Reports 4th Quarter and FY2010 Results

WPCS Reports 4th Quarter and FY2010 Results

PR Newswire -- July 29, 2010



EXTON, Pa., July 29 /PRNewswire-FirstCall/ -- WPCS International Incorporated (Nasdaq: WPCS), a leader in design-build engineering services for communications infrastructure, today announced financial results for the fourth quarter and fiscal year 2010 ended April 30, 2010. For the fourth quarter, WPCS reported revenue of $29.2 million compared to $24.7 million for the same period a year ago, which represents an increase of approximately 18%, and compared to $27.0 for the third quarter of fiscal 2010, or an increase of 8% sequentially.



In the fourth quarter, WPCS generated earnings before interest, taxes, acquisition-related contingent earn-out costs, and depreciation and amortization (EBITDA) of approximately $1.1 million which represents a 46% sequential increase from the third quarter achievement of $751,000. The company generated $1.1 million in EBITDA for the same period a year ago.



For the fourth quarter, non-GAAP net income was approximately $137,000 or $0.02 per diluted share. For the year ended April 30, 2010, non-GAAP net income was approximately $979,000 or $0.14 per diluted share compared to $1.7 million or $0.23 per diluted share for the same period a year ago.



For the fiscal year ended April 30, 2010, WPCS reported total revenue of approximately $105.8 million compared to $107.1 million for the same period a year ago. WPCS reported EBITDA of approximately $4.4 million compared to $5.7 million for the same period a year ago.



From a GAAP perspective, the fourth quarter ended April 30, 2010, generated net income of approximately $12,000 or less than one penny of earnings per diluted share, which includes a non-cash charge of $125,000 recorded for fiscal year 2010 which compares to $293,000 or $0.04 per diluted share for the same period a year ago.



For the fiscal year ended April 30, 2010, WPCS reported net income of approximately $854,000 or $0.12 per diluted share, which again includes the non-cash charge of approximately $125,000 recorded for fiscal year 2010 which compares to approximately $1.7 million or $0.23 per diluted share for the same period a year ago. The non-cash charge is the result of the newly mandated accounting pronouncement regarding acquisitions that was adopted by the company this fiscal year and applied to the Pride Group acquisition in Australia.



Andrew Hidalgo, CEO of WPCS, commented, "WPCS achieved some positive results in the fourth quarter and fiscal year 2010 ended April 30, 2010. For example, WPCS increased revenue by 18% in the fourth quarter over the same quarter one year ago and increased EBITDA by 46% sequentially from the third quarter of this fiscal year. The company also generated $2.4 million in cash from operations for fiscal year 2010. The increase in fourth quarter revenue production can be attributed to the many new contracts we have been awarded recently. We are beginning to see a more active bid list which is increasing our opportunities to build backlog. This should give us a basis for increased revenue production over the next few quarters. Although fiscal year 2010 was most challenging due to the economy, WPCS continued to maintain profitability with a healthy balance sheet. The management team believes that we are positioning ourselves to deliver better earnings in the quarters ahead. We remain optimistic about our future opportunities."



As a reminder, there will be an investor conference call at 5:00 pm ET today. To participate on the conference call, please dial 888-299-4099 for calls within the U.S. or 302-709-8337 for calls from international locations. Upon reaching the operator, verbally transmit the participant code VH74313. When the overview concludes, your questions can be asked by pressing *1 and your questions can be removed from the queue by pressing the number sign. Replays of the conference call will be available for a period of five days by dialing 402-220-2946 and entering 74313 # as the program identification number.



The attached press release includes financial measures that are not in accordance with GAAP, consisting of EBITDA, non-GAAP net income and non-GAAP net income per diluted share. Management uses EBITDA, non-GAAP net income and non-GAAP net income per diluted share to evaluate the Company's operating and financial performance in light of business objectives, for planning purposes, when publicly providing our business outlook and to facilitate period-to-period comparisons. WPCS believes that these measures are useful to investors because they enhance investors' ability to review the Company's business from the same perspective as our management and to facilitate comparisons of this period's results with prior periods. These non-GAAP measures exclude the non-cash charge recorded for fiscal 2010 as a result of the newly mandated account pronouncement regarding acquisitions that was adopted by the company this fiscal year. Non-GAAP measures are used by some investors when assessing the ongoing operating and financial performance of our Company. These financial measures are not in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies. The presentation of the additional information should not be considered a substitute for net income or net income per diluted prepared in accordance with GAAP. The primary material limitations associated with the use of non-GAAP measures as compared to the most directly comparable GAAP financial measures are (i) they may not be comparable to similarly titled measures used by other companies in our industry, and (ii) they exclude financial information that some may consider important in evaluating our performance. Pursuant to the requirements of Regulation G, WPCS has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures.



About WPCS International Incorporated:



WPCS is a design-build engineering company that focuses on the implementation requirements of communications infrastructure. The company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. For more information, please visit www.wpcs.com



Statements about the company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and are subject to change at any time. The company's actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the company undertakes no obligation to update forward looking statements.





WPCS INTERNATIONAL INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended April 30, 2010 2009