RALEIGH, N.C., Oct. 28 /PRNewswire/ -- Sensus, a leading provider of high-value advanced metering infrastructure (AMI), Smart Grid and metering system solutions to utilities worldwide, today announced financial results for the fiscal second quarter ended September 30, 2009.
Total fiscal second quarter GAAP net sales of $153 million declined 13% on a year-over-year basis. Consolidated net loss for the quarter was $18.6 million, and included a $5.9 million loss on debt extinguishment, compared to a consolidated net loss of $5.0 million in the prior period. Adjusted Net Sales(1) increased $1.5 million, or 1% year-over-year on a constant exchange rate basis. Adjusted Gross Profit (1) margin was 26.7%, representing a 40 basis point improvement over the same period in the prior year. Adjusted EBITDA(1) of $26 million for the quarter was down $2 million. The Company continues its investment commitment in new product offerings with research and development investment as a percent of Adjusted Net Sales(1) at 5.3% for the quarter, representing a 160 basis point increase from the prior year quarter.
"Sensus continues to execute its strategy and maintain a strong financial position, despite the continued challenging economic conditions," said Peter Mainz, Chief Executive Officer and President of Sensus. "I am pleased with the results of our quarterly Adjusted Net Sales(1) which were above our prior year comparable and prior quarter results. We continue to focus on working with our customers to support their deployment plans with nearly 4 million SmartPoint((TM)) devices deployed with excellent results," he added.
"We are aggressively investing in R&D, software development and strategic acquisitions. During the quarter we announced the addition of Telemetric Corporation to provide our customers with advanced distribution automation solutions and extend the reach of our Smart Grid offerings. These investments in smart metering technologies are helping us achieve our commitment to deliver advanced technologies, products and features to our customers so they can implement AMI and Smart Grid initiatives," said Mainz.
Key Highlights for the Fiscal Second Quarter
-- Adjusted Net Sales(1) increased $1.5 million, or 1% on a constant
exchange rate basis.
-- Adjusted Net Sales(1)( )book-to-bill(2) of 1 to 1.
-- Approximately 680,000 AMI endpoints shipped during the fiscal quarter.
-- $474 million potential future revenue and 5 million endpoints from AMI
contracts.
-- Acquired certain assets and liabilities of the Telemetric Corporation.
-- Amended our senior credit facilities on July 23, 2009.
-- $34 million of cash-on-hand at September 30, 2009.
Sensus' products and solutions serve a broad range of electric, water and gas utility customers worldwide with approximately 200 AMI and Smart Grid projects in progress or completed.
Fiscal Second Quarter Earnings Conference Call
A conference call with analysts to discuss these results will be held on October 30, 2009 at 11:00 AM (EDT). To access the conference call, please dial 800-688-0796 (domestic access) or 617-614-4070 (international access) and reference Passcode: 78594127. It is recommended that you dial in five to ten minutes prior to the call to allow time for processing participant information. A replay of the call will be available until November 6, 2009 by dialing 888-286-8010 (domestic access) or 617-801-6888 (international access) and referencing Passcode: 56343402.
About Sensus
Sensus is a time-tested technology and communications company providing data collection and metering solutions for water, gas and electric utilities around the world. Sensus is a transforming force for the utilities of tomorrow through its ability to help customers optimize resources, as well as to meet conservation and customer service objectives. Sensus customers rely on the Company for expert, reliable service in order to meet challenges and exceed goals. For more information, visit www.sensus.com.
SmartPoint((TM)) is a trademark of Sensus USA Inc.
All statements in this release, other than historical facts, are made in reliance on the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties and are subject to change at any time. These statements reflect the Company's current expectations regarding its financial position, revenues, cash flow and other operating results, business strategy, financing plans, forecasted trends related to the markets in which the Company operates, legal proceedings and similar matters. The Company's expectations expressed or implied in these forward-looking statements may turn out to be incorrect. The Company's actual results could be materially different from its expectations because of various risks. These risks, some of which are discussed under the caption "Risk Factors" in the Company's Annual Report on Form 10-K (SEC File No. 333-113658) for the fiscal year ended March 31, 2009 as filed with the Securities and Exchange Commission on May 15, 2009, include the Company's susceptibility to macroeconomic downturns in the United States and abroad, conditions in the residential, commercial and industrial construction markets and in the automotive industry, the Company's dependence on new product development and intellectual property, the Company's dependence on independent distributors and third-party contract manufacturers, automotive vehicle production levels and schedules, the Company's substantial financial leverage, debt service and other cash requirements, liquidity constraints and risks related to future growth and expansion. Other important risks that could cause actual events or results to differ from those contained or implied in the forward-looking statements include, without limitation, the Company's ability to integrate acquired companies, general economic and business conditions, competition, adverse changes in the regulatory or legislative environment in which the Company operates, customer cancellations and other factors beyond the Company's control.
(1) Non-GAAP Measures
During the second quarter of fiscal 2010, Sensus continued the deployment of its new, advanced FlexNet(R) AMI solutions under contracts executed with several North American electric and gas utilities. These contracts, which extend up to 20 years and cover approximately 8.7 million electric and gas endpoints, contain significant hardware and software components as well as ongoing customer support. Due to the significant advanced technology and software and the absence of stand-alone customer support sales prices, customer billings and incremental direct costs related to these contracts are required to be deferred in accordance with U.S. GAAP for income statement recognition purposes and amortized ratably over the life of the contracts. This deferral has no impact on cash flow since billings to customers occur as the network infrastructure and related endpoints are deployed and the associated costs are incurred, generally over the first several years of the contract term. To enhance the comparability and usefulness of its financial information, the Company provides certain non-GAAP measures to describe more fully the results of its underlying business. Specifically, the Company utilizes the measures of Adjusted Net Sales, Adjusted EBITDA and Adjusted Gross Profit, which are defined as follows:
-- Adjusted Net Sales is defined as net sales as determined under U.S. GAAP
adjusted to add back customer billings (net of amortization) related to
multi-element contracts that have been deferred under the provisions of
Accounting Standards Codification Topic 985-605, Software - Revenue
Recognition ("ASC 985-605"), formerly SOP 97-2.
-- Adjusted EBITDA is defined as consolidated earnings before interest
expense, depreciation and amortization, and income taxes plus (a)
customer billings less the associated incremental direct costs (both net
of amortization) related to multi-element contracts that have been
deferred under ASC 985-605, (b) restructuring costs, (c) management fees
and (d) acquisition-related costs, and adjusted for other nonrecurring
items.
-- Adjusted Gross Profit is defined as gross profit as determined under
U.S. GAAP adjusted to add back customer billings less the associated
incremental direct costs (both net of amortization) related to
multi-element contracts that have been deferred under ASC 985-605 plus
acquisition-related costs, and adjusted for other nonrecurring items.
Information regarding Adjusted Net Sales, Adjusted EBITDA and Adjusted Gross Profit is provided because management considers these measures important in evaluating and understanding the Company's operating and financial performance. Management believes these measures provide useful information for investors in trending, analyzing and benchmarking the performance and value of the business. Internally, the measures of Adjusted Net Sales and Adjusted EBITDA are used in our incentive compensation plans. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by adjusting for certain items that may not be indicative of our recurring core operating results. Management also believes that Adjusted Net Sales, Adjusted EBITDA and Adjusted Gross Profit provide important performance measures to our management and investors because they reflect customer billings (net of related incremental costs, in the case of Adjusted EBITDA and Adjusted Gross Profit) that we are required to defer under ASC 985-605. These measures help our management and investors to better quantify the growth of our AMI technology solutions business. However, these metrics for measuring the Company's financial results may be different from comparable information provided by other companies and should not be used as an alternative to the Company's operating and other financial information as determined under U.S. GAAP.
A reconciliation of each of these non-GAAP measures to its most closely related U.S. GAAP measure is set out in the table below (in millions):
Fiscal Fiscal Six Six
Quarter Quarter Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
Net sales $153.3 $176.2 $298.3 $361.3
Customer billings from
contracts
deferred under ASC
985-605 (net of
amortization) 50.2 30.4 103.9 51.1
Adjusted Net Sales $203.5 $206.6 $402.2 $412.4
Fiscal Fiscal Six Six
Quarter Quarter Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
Consolidated net loss $(18.6) $(5.0) $(32.9) $(7.1)
Depreciation and
amortization 11.0 11.1 21.8 22.0
Interest expense,
net 11.7 10.0 20.7 19.8
Income tax benefit (11.0) (2.9) (19.8) (3.7)
Customer billings less
incremental direct
costs from contracts
deferred under
ASC 985-605 (net of
amortization) 21.7 12.9 44.0 21.1
Restructuring costs 3.0 0.8 9.8 2.1
Management fees 0.7 0.8 1.6 1.4
Acquisition-related
costs 0.9 - 0.9 -
Loss on debt
extinguishment 5.9 - 5.9 -
Other nonrecurring
items 0.2 - 0.2 -
Adjusted EBITDA $25.5 $27.7 $52.2 $55.6
Fiscal Fiscal Six Six
Quarter Quarter Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
Gross profit $32.5 $41.4 $62.6 $87.0
Customer billings less
incremental direct
costs from
contracts deferred
under ASC 985-605
(net of
amortization) 21.7 12.9 44.0 21.1
Acquisition-related
costs 0.2 - 0.2 -
Other nonrecurring
items - - - -
Adjusted Gross Profit $54.4 $54.3 $106.8 $108.1
(2) Book-to-bill
Book-to-bill is calculated as orders received during the quarter divided by Adjusted Net Sales.
FISCAL 2009 SECOND QUARTER UNAUDITED GAAP FINANCIAL STATEMENTS
SENSUS (BERMUDA 2) LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share and share data)
Sept. 30, March 31,
2009 2009
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $34.0 $37.9
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $1.1 and $1.2, respectively 104.7 112.8
Other 1.8 2.9
Inventories, net 66.5 66.4
Prepayments and other current assets 14.5 11.8
Deferred income taxes 7.6 6.5
Deferred costs 16.2 10.6
Total current assets 245.3 248.9
Property, plant and equipment, net 137.6 131.5
Intangible assets, net 192.4 187.3
Goodwill 428.5 394.5
Deferred income taxes 55.5 39.5
Deferred costs 143.1 88.7
Other long-term assets 24.7 21.9
Total assets $1,227.1 $1,112.3
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $79.1 $87.1
Accruals and other current liabilities 96.0 80.7
Current portion of long-term debt 22.4 38.5
Short-term borrowings 4.9 4.9
Income taxes payable - 2.9
Restructuring accruals 10.1 7.3
Deferred revenue 29.3 19.0
Total current liabilities 241.8 240.4
Long-term debt, less current portion 446.2 395.5
Pensions 49.5 44.4
Deferred income taxes 76.4 76.4
Deferred revenue 244.4 149.8
Other long-term liabilities 21.2 27.6
Total liabilities 1,079.5 934.1
STOCKHOLDER'S equity:
Common stock, par value $1.00 per share,
12,000 shares authorized, issued and
outstanding - -
Paid-in capital 253.6 245.4
Accumulated deficit (113.8) (79.3)
Accumulated other comprehensive income 3.1 0.2
Total stockholder's equity 142.9 166.3
Noncontrolling interest 4.7 11.9
Total equity 147.6 178.2
Total liabilities and equity $1,227.1 $1,112.3
SENSUS (BERMUDA 2) LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions)
(unaudited)
Fiscal Fiscal Six Six
Quarter Quarter Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2009 2008 2009 2008
NET SALES $153.3 $176.2 $298.3 $361.3
COST OF SALES 120.8 134.8 235.7 274.3
GROSS PROFIT 32.5 41.4 62.6 87.0
OPERATING EXPENSES:
Selling, general and
administrative expenses 36.6 34.4 71.9 67.8
Restructuring costs 3.0 0.8 9.8 2.1
Amortization of intangible
assets 3.0 3.6 5.8 7.2
Loss on debt extinguishment 5.9 - 5.9 -
Acquisition-related costs 0.7 - 0.7 -
Other operating expense, net 1.0 0.6 1.8 1.3
OPERATING (LOSS) INCOME (17.7) 2.0 (33.3) 8.6
NON-OPERATING (EXPENSE) INCOME:
Interest expense, net (11.7) (10.0) (20.7) (19.8)
Other (expense) income, net (0.2) 0.1 1.3 0.4
LOSS BEFORE INCOME TAXES (29.6) (7.9) (52.7) (10.8)
BENEFIT FOR INCOME TAXES (11.0) (2.9) (19.8) (3.7)
CONSOLIDATED NET LOSS (18.6) (5.0) (32.9) (7.1)
LESS: NET INCOME ATTRIBUTABLE
TO THE NONCONTROLLING INTEREST (0.8) (0.7) (1.6) (1.1)
NET LOSS ATTRIBUTABLE TO
CONTROLLING INTEREST $(19.4) $(5.7) $(34.5) $(8.2)
SENSUS (BERMUDA 2) LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Six Months
Ended Ended
Sept. 30, Sept. 30,
2009 2008
OPERATING ACTIVITIES:
Consolidated net loss $(32.9) $(7.1)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 12.7 13.9
Amortization of intangible assets 5.8 7.2
Amortization of software development costs 3.3 0.9
Amortization of deferred financing costs 1.5 1.7
Deferred income tax (17.8) -
Net gain on foreign currency transactions (0.5) (0.4)
Loss on debt extinguishment 5.9 -
Changes in assets and liabilities used in
operations, net of effects of acquisitions:
Accounts receivable 12.7 (6.4)
Inventories 3.2 (2.2)
Other current assets 2.6 0.1
Accounts payable, accruals and other
current liabilities (15.3) (2.3)
Income taxes payable (6.2) (5.8)
Deferred revenue less deferred costs
primarily from long-term AMI electric
and gas contracts 44.0 21.3
Other (0.8) 0.7
Net cash provided by operating activities 18.2 21.6
INVESTING ACTIVITIES:
Expenditures for property, plant and
equipment (14.4) (12.7)
Purchases of intangible assets (3.9) -
Software development costs (4.4) (3.6)
AMDS contingent payments (13.4) (4.6)
Telemetric acquisition (6.8) -
Net cash used in investing activities (42.9) (20.9)
FINANCING ACTIVITIES:
Increase in short-term borrowings - 0.2
Proceeds from debt issuance 35.0 -
Debt issuance costs (8.8) -
Purchase of PDC Rongtai noncontrolling
interest (6.0) -
Principal payments on debt (0.4) (11.2)
Net cash provided by (used in) financing
activities 19.8 (11.0)
Effect of exchange rate changes on cash 1.0 0.1
DECREASE IN CASH AND CASH EQUIVALENTS (3.9) (10.2)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR $37.9 $37.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD $34.0 $27.4
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid during the period for:
Interest $18.5 $17.9
Income taxes, net of refunds $4.2 $2.1
SENSUS (BERMUDA 2) LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Fiscal Quarter Fiscal Quarter
Ended Ended
Sept. 30, Sept. 30,
2009 2008
OPERATING ACTIVITIES:
Consolidated net loss $(18.6) $(5.0)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 6.4 7.0
Amortization of intangible assets 3.0 3.6
Amortization of software development costs 1.6 0.5
Amortization of deferred financing costs 0.8 1.0
Deferred income taxes (17.8) -
Net loss on foreign currency transactions 0.5 0.1
Loss on debt extinguishment 5.9 -
Changes in assets and liabilities used
in operations, net of effects of acquisitions:
Accounts receivable 9.7 (0.2)
Inventories 3.7 (1.4)
Other current assets 1.5 4.5
Accounts payable, accruals and other
current liabilities (4.0) (1.2)
Income taxes payable 4.8 (5.8)
Deferred revenue less deferred costs
primarily from long-term AMI electric
and gas contracts 21.7 13.1
Other 0.8 0.2
Net cash provided by operating activities 20.0 16.4
INVESTING ACTIVITIES:
Expenditures for property, plant
and equipment (7.9) (6.7)
Purchases of intangible assets (3.9) -
Software development costs (2.1) (1.7)
AMDS contingent payments (13.4) (4.6)
Telemetric acquisition (6.8) -
Net cash used in investing activities (34.1) (13.0)
FINANCING ACTIVITIES:
Increase in short-term borrowings - 0.1
Proceeds from debt issuance 35.0 -
Debt issuance costs (8.8) -
Purchase of PDC Rongtai
noncontrolling interest (6.0) -
Principal payments on debt (0.4) (4.2)
Net cash provided by (used in)
financing activities 19.8 (4.1)
Effect of exchange rate changes on cash 0.4 (0.5)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 6.1 (1.2)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD $27.9 $28.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD $34.0 $27.4
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid during the period for:
Interest $5.9 $3.1
Income taxes, net of refunds $2.2 $1.6
Sensus
