Great Earnings Report Again...
Thursday October 19, 4:10 pm Eastern Time
Press Release
Somera Reports Record Third-Quarter Results
Q3 2000 Net Income Increases 96% Versus Q3 1999
SANTA BARBARA, Calif.--(BUSINESS WIRE)--Oct. 19, 2000--Somera Communications Inc. (Nasdaq:SMRA - news):
Highlights:
Net income increases 96% on 68% revenue gains versus Q3 99
56% gain in earnings per share to 14 cents versus 9 cents (pro forma) in Q3 99
International expansion continues ``on plan''
Outlook for Q4 2000-2001: 35% to 40% top line organic growth and EPS growth of 30% to 35%
Return on Invested Capital Grows to 35%
Somera Communications Inc. (Nasdaq:SMRA - news), a leading global provider of telecommunications and Internet infrastructure equipment and support services, today announced that due to strong organic growth, expanded client relationships and new partnerships, its net income increased 96 percent on a 68 percent increase in quarterly revenues for the quarter ended September 30, 2000, compared with the quarter ended September 30, 1999.
Earnings per share for the third quarter of 2000 rose to 14 cents per share, up from pro forma 9 cents per share for the same quarter last year.
``We are very pleased with our record results this quarter,'' said Dan Firestone, Chief Executive Officer and Chairman of Somera Communications.
``Our consistent track record of strong financial performance, including this quarter's record results, validates our unique value proposition as a leading provider of telecommunications support services. We believe that Somera is exceptionally well-positioned to continue to benefit from strong industry dynamics, particularly with our upcoming launch of our e-commerce initiative, the advancement of our OneSource(SM) service offerings, and our overseas expansion plans. In addition, we have further strengthened our data networking product availability and expertise with the recent acquisition of MSI Communications, Inc.''
Outlook
Commenting on recent industry trends, Firestone added: ``While we are hearing that some OEMs are reporting a slow down in growth and a tightening of capital budgets by some carriers, we have experienced and expect to continue to experience strong demand from our customers for our cost-effective solutions. Coupled with the initiatives mentioned above, we expect to achieve organic revenue growth in 2001 in the 35 to 40 percent range and earnings per share growth of 30 to 35 percent.
Financial Results
Revenue for the quarter increased 68 percent to a record $57.6 million from the $34.2 million reported in the comparable period of 1999. Net income for the quarter increased 96 percent to $6.6 million, or 14 cents per share, compared with adjusted net income of $3.4 million, or 9 cents per share, in the third quarter of 1999.
Revenue for the first nine months of 2000 was $149.5 million, up 72 percent from the $87.0 million reported in the same period of 1999. Net income for the nine months increased 79 percent to $18.0 million, or 37 cents per share, compared with adjusted net income of $10.0 million, or 26 cents per share, in the same period of 1999.
Adjusted net income for 1999 reflects a pro forma tax charge of 40 percent as a result of the conversion of the company from a limited liability company to a `C' Corporation. As a limited liability company, Somera Communications was not subject to federal and state income taxes.
Pre-tax return on invested capital (ROIC) increased to 35 percent for the trailing four quarters ended September 30, 2000, continuing a steady upward trend from 29 percent for 1999. Stockholders' equity increased 21 percent to $105.4 million, compared with $86.8 million at December 31, 1999, substantially due to retained earnings.
Key Performance Factors
``During the third quarter, we continued to successfully implement our strategy of providing solutions to telecommunications service providers to enable them to rapidly and cost effectively build out and expand their networks to meet demand,'' said Firestone.
``For the third quarter, we also improved our margins over the comparative quarter last year. We achieved a gross margin of 36 percent and an operating margin of 19 percent. Strong demand for wireless equipment resulted in a 93 percent growth year on year for the quarter in sales to the sector and brought wireless equipment to approximately 50 percent of our overall sales. The key elements driving our revenue increases included continued strong sales of transmission equipment, increases in power amplifiers and microwave sales, and results from the growth in international business.''
The company added 60 new customers to its active customer base of more than 850 companies, many world-class, with no one customer representing more than 10 percent of revenues in the past 12 months. The company's number of employees now exceeds 275, including MSI Communications.
``Relationships established during this third quarter with Cisco Systems and Redback Networks have enabled us to expand our product offerings. These relationships, together with our recently announced acquisition of MSI Communications, have expanded our access and ability to service Internet Service Providers, Application Service Providers and Web hosting companies, as well as meet the data networking equipment requirements of our traditional telecom carrier customers,'' explained Firestone.
``We are also excited about our expansion into European, Latin American and Asian markets. The establishment of our European headquarters in the Netherlands planned during this fourth quarter should greatly facilitate growth on the international front and we expect to see a contribution from these activities beginning next year.''
Conference Call
Today's third-quarter earnings conference call is available to everyone. It begins at 1:30 p.m. Pacific time/4:30 p.m. Eastern time. To participate, dial 888/422-3780 five minutes before the start time. The call will also be transmitted on a live Webcast, accessible at somera.com in the investor relations section.
About Somera Communications
As a leading global provider of telecommunications equipment and support services, Somera configures, engineers, and deploys wireless, wireline and data networking solutions that enable carriers to build, expand, and maintain their networks faster and more cost-effectively. Somera is vendor independent and offers a broad range of infrastructure solutions from more than 250 manufacturers. With Somera OneSource(SM) Services, the company provides a complete suite of services for Materials Management, Technical Support and Asset Recovery.
Founded in 1995, Somera has grown to more than 275 employees and developed an impressive base of world-class customers, including the industry leaders from each segment of the telecommunications market. Somera was recently ranked as the second ``Hottest Growth Company'' by BusinessWeek. In the first nine months of 2000, Somera reported revenues of $150 million, a 72% increase over the same period last year. Visit Somera on the Web at www.somera.com.
This news release contains forward-looking statements regarding Somera's future revenue and earnings growth, future inventory levels, and its planned expansion into international markets. Forward-looking statements involve a number of risks and uncertainties, including, but not limited to, general conditions in the telecommunications industry; the impact of competition in the market for supplying equipment to telecommunications carriers; the risk of a potential shortage of product supply; Somera's timely implementation of and the market acceptance of its B2B e-commerce solution; Somera's ability to successfully expand its international operations; and other risk factors more fully described in the company's reports to the Securities and Exchange Commission, including Somera's report on Form 10-K for the fiscal year ended December 31, 1999, and Somera's quarterly reports filed on Form 10-Q. Actual results may differ materially from the statements contained in this news release. Somera does not undertake to update any oral or written forward-looking statements that may be made by or on behalf of the company.
All references to earnings per share are diluted earnings per share. |
