Echelon Reports Third Consecutive Quarterly Operating Profit, 125% Revenue Growth; $0.12 EPS Beats Street Estimates of $0.09
SAN JOSE, Calif., Jul 16, 2002 (BUSINESS WIRE) -- Echelon Corporation (ELON) today announced financial results for the second quarter ended June 30, 2002.
"Clearly this was a tremendous quarter for Echelon," said M. Kenneth Oshman, Echelon's chairman and chief executive officer. "Our revenues came in slightly higher than our guidance, our operating expenses came in at the low end of our expectations, and our gross margins exceeded our expectations. We saw good performance in our core business from all regions of the world with particular strength in Japan, and our business with Enel continued to grow as expected. We introduced several new and exciting products and we created a dedicated utility and service provider group to focus on winning business in this important market area. Even though our results exceeded our expectations this quarter and while we maintain our outlook for this year, we still see softness in the worldwide economy that will continue to put pressure on our core business in the coming quarters."
Revenues for the quarter ended June 30, 2002 were $31.3 million, an increase of 125% over revenues of $13.9 million for the same period in 2001. Net income for the quarter ended June 30, 2002 was $5,100,000, or $0.12 per share on a fully diluted basis, based on a weighted average of 40,818,000 common shares outstanding, compared to a net income of $38,000, or $0.00 per share, based on a weighted average of 41,458,000 common shares outstanding for the second quarter of 2001.
Revenues for the six-month period ended June 30, 2002 were $58.9 million, an increase of 122% over revenues of $26.5 million for the same period one year ago. Net income for the six-month period ended June 30, 2002 was $7,787,000, or $0.19 per share on a fully diluted basis, based on a weighted average of 40,812,000 common shares outstanding, compared to a net income of $60,000, or $0.00 per share, based on a weighted average of 41,154,000 common shares outstanding for the same period in 2001.
Gross margin for the quarter ended June 30, 2002 was 52.5%, compared with 54.8% for the same period in 2001. Gross margin for the six-month period ended June 30, 2002 was 51.8%, compared with 58.2% for the same period in 2001. Total operating expenses for the quarter ended June 30, 2002 were $11.9 million, compared to $9.4 million for the same period in 2001.
Echelon made a number of significant announcements during the second quarter, some of which are highlighted below:
In April, Samsung Heavy Industries announced that their LonWorks(R) based VDR, Voyage Data Recorder, had received standards clearance for European Keymark certification. Samsung already holds 20% of the world market for shipboard controls. Samsung stated that its Integrated Control & Monitoring System and Integrated Navigation System products would be migrated to LonWorks networking and combined into a unified system concept called the Integrated System. Samsung will support the Integrated System with a worldwide sales team, support alliances and service network.
In May, Echelon released its LonWorks Bundle Deployment Kit, a set of software tools based on the Open Services Gateway Initiative (OSGi) specifications that is expected to allow companies to create value-added service applications that connect service providers to LonWorks devices such as electricity meters, refrigerators, ovens, furnaces, and other everyday household electrical appliances or devices. Examples of such services could be energy savings using time of day pricing, home monitoring, and predictive warranty for appliances.
Additionally, in May, Echelon announced the formation of a new, worldwide group focused on the use of the company's products by electric utilities and other service providers such as telecommunications companies, cable operators, and Internet Service Providers (ISPs) headed by Frits Bruggink, Echelon's former senior vice president of sales and marketing. In May, Echelon also reported that the project with Enel, the Italian utility, had surpassed 1 million installed LonWorks based electricity meters. Enel plans to have over 27 million Italian homes and businesses networked with LonWorks based electricity meters by 2004.
In June, Echelon announced that it had received a Digital Innovation Award for Most Innovative Technology in the Building Infrastructure category at the third annual "Digie Awards" at Realcomm 2002 in Las Vegas, a leading trade event for the commercial real estate industry. The Digies are presented to individuals and corporations demonstrating vision, drive, passion, consistency and determination to move the commercial real estate industry into a digital model for the 21st century.
Echelon began shipping the i.LON(TM) 10 Ethernet Adapter at the end of the quarter. The i.LON 10 Adapter is well suited for use by ISPs, telephone and cable companies, planned communities, government institutions, and military facilities and is designed to be a cost-effective way to monitor and control small networks of everyday devices in homes, apartments, and buildings over the Internet. When used in conjunction with cable or DSL modems, set-top boxes, or local area networks, the i.LON 10 Adapter permits a service provider to expand the functionality of a data network to include such added-value services as appliance monitoring, alarm supervision, metering, and energy load control.
For those interested in further discussion regarding this release, Echelon's management will participate in a conference call today at 2:00 pm PDT. Interested parties may listen in on the conference call via live Webcast at echelon.com. Alternatively, the live call can be accessed by dialing 800/388-8975 (callers outside the US please use +1-973-694-2225); however, due to a limited number of available phone lines, the company asks that only those persons without Web access call this number.
Web playback of the call will be available on the Investor Relations section of Echelon's web site (www.echelon.com) from July 17th through July 26th, 2002. As usual, telephone replay will not be provided.
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