NTG Clarity Networks Announces 2014 Year-End Financial Results, Record Revenues.
Wednesday, April 08, 2015
Toronto, ON / TheNewswire / April 8, 2015 / NTG Clarity Networks Inc. (TSX.V:NCI) , a leader in providing IT and infrastructure solutions in the telecom market, today reported its year end results for the fiscal year ended December 31, 2014 (all figures in Canadian Dollars).
Annual and quarterly highlights:
-2014 record revenues of $15.5M
-working capital of $6.2M ($0.17 per share) and no long-term debt
-opened new sales offices in Qatar and Kuwait
-strong order backlog
-targeting continuing strong revenue growth in 2015
2014 continued the positive growth for NTG Clarity as the company generated revenues of $15.5M, exceeding management's projections of $14M for the year. The Corporation reported a 47% increase in revenues for 2014 and has more than tripled revenues since 2012. The revenue increase in 2014 resulted from renewals, new orders, and contribution from our new office in Qatar. Revenue consisted of 54% professional services and 46% product related sales.
For the three months ended December 31, 2014, revenue was $4,116,456, an increase of 30% over the same period in 2013. Fourth quarter revenue consisted of 41% professional services and 59% product related sales.
In 2014, we continued our focus on delivering the Network & Telecom System (NTS) - our Operations Support System/Business Support System (OSS/BSS) product, and the associated consulting services and training to implement the product.
At year-end, NTG was advised to write-down some of its receivables and business assets to reduce exposure to a customer and to improve cash flow. These write-downs included a bad debt provision of $442,788 and an impairment/loss of $119,366 for the Mi-World investment. After these items, Q4 2014 showed a loss after taxes of ($304,975) compared to a net profit of $47,492 in Q4 2013. Without these write-downs, the net income for Q4 2014 would have exceeded $200,000.The Company is working diligently to collect on the bad debt provision from these insured receivables. Also, note the impairment of Mi-World could be reversed in the future once it begins to generate revenues.
In 2014, our Gross Margin was 40% compared to 46% in 2013. The aggressive growth in 2014, start-up costs incurred during the year in Kuwait and Qatar, and the marketing and sales activities led to the decreased margin. In 2015 we plan to work on balancing between the growth and expenses to ensure increased margins.
Pre-tax net income for 2014 (after write-down and impairment) was $1.9M, which was consistent with last year. After deducting income taxes of $665K in 2014 ($84K in 2013), net income for the year was $1,241,923 ($0.034 per share) compared to $1,863,628 ($0.060 per share) in 2013. The differences are due primarily to the bad debt booked in Q4 2014, the impairment/loss on the Mi-World investment, and the additional taxes paid.
The Company was able to continue to strengthen its balance sheet during 2014 and ended the year with positive working capital of $6.2M ($0.17 per share) and no long-term debt.
Overall expenses as a percentage of revenue were fairly stable throughout 2014. Total operating expenses were $2,610,796 (16.8% of revenues) in 2014, and were $1,786,608 (16.9% of revenues) in 2013. Other expenses, which include the bad debt provision and impairment charges, were $1,632,499 (10.5% of revenues) in 2014, compared to $1,151,093 (10.9% of revenues) in 2013.
Selling expenses increased to $979,243 from $866,681 in 2013. Our selling efforts are increasing as we expand into new markets. General and administration expenses increased to $1,717,775 from $1,117,671 in 2013 due to an increase in salary and wages, new offices, and increased consulting and professional fees. Other general and administration expenses; such as rents, insurance, telecommunications, and supplies remained constant over the year. The Company reported a smaller 2014 foreign exchange gain of $86,222 compared to $197,744 in 2013. This was due mainly to the decreased value of the Egyptian pound compared to the Canadian dollar and losses incurred when converting currencies as we transfer between various branches.
Other expenses include amortization and depreciation which increased to $440,693 compared to $400,091, a bad debt expense of $442,788 compared to $6,921 in 2013, interest expense of $151,571 compared to $154,821, share based compensation of $391,832 from $513,261, impairment of $109,102 compared to nil, and foreign taxes of $86,249 from $67,426 in 2013.
NTG enters 2015 with a strong backlog of work and is targeting a continuing strong growth for the year. We remain committed to our growth strategy and continue to focus on growing organic operations, expanding our marketing reach geographically and enhancing our product offering. In addition to existing customers and projects, we will also continue to focus on our new offices in Qatar and Kuwait as well as expanding projects in Oman. We will be aggressively looking for an acquisition to increase our customer base, revenue and geographical presence. As in the past, our ability to generate positive operating cash flows, and report strong revenues and earnings are all critical to successfully executing this strategy. We are confident that we have the management team with the experience and resources to fulfill this vision.
About NTG Clarity Networks Inc.
NTG Clarity Networks' vision is to be a global leader in providing networking solutions. As a Canadian company established in 1992, NTG Clarity has delivered networking, IT and network enabled application software solutions to network service providers and large enterprises. More than 300 network professionals provide design, engineering, implementation, software development and security expertise to the industry's leading network service providers and enterprises.
