Impressive Results for Nighthawk Systems in 2008!
The gloom and doom of 2008 did not hurt Nighthawk Systems in 2008 as we added a much recognized name to our list of clients better known as ESPN!
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SAN ANTONIO--(BUSINESS WIRE)--Nighthawk Systems, Inc. (OTCBB: NIHK), a leading provider of wireless and IP-based control devices and solutions, reported record financial results for the year ended December 31, 2008 with the filing of its Form 10-K with the Securities and Exchange Commission yesterday. The Company generated more revenue during 2008 than in any previous fiscal year in the Company’s history, nearly doubling revenues from 2007. Increased revenues, coupled with reduced manufacturing costs, led to record gross profits during 2008, more than doubling the total from 2007. Selling, general and administrative costs fell from 2007 to 2008, helping the Company improve its operating cash flow results by more than 50% between years.
Revenues generated during 2008 were $3.3 million as compared to $1.7 million for 2007. While sales of the Company’s high-definition set top boxes contributed significantly to the record results, sales of its legacy power control products also produced record results during the 2008 year.
As a result of improvements made in the manufacturing of its set top boxes during the last half of 2008, the Company’s gross margin increased from 23% to 27% from 2007 to 2008, and the Company produced more gross profit, $889,150, during 2008 than in any previous fiscal year in the Company’s history. The Company expects the improved margins on the set top boxes to continue going forward. The Company also expects to generate improvement in margins on the sale of power control products in the coming months as it nears completion of new circuit boards to be used in those products.
Selling, general and administrative expenses declined 14% from $2.5 million in 2007 to $2.1 million in 2008. As a result, the Company’s cash loss from operations was reduced from $2.1 million in 2007 to $925,000 in 2008, an improvement of 60%. The Company’s EBITDA loss improved from $2.1 million in 2007 to $1.2 million in 2008, an improvement of 43% between years.
The Company’s recognized an impairment charge to the carrying value of its set top box operations at December 31, 2008 of approximately $1.6 million. The Company’s evaluation of the business at year end included a reduction in anticipated cash flows from the set top box operation during 2009 due to the negative impact the economy is having on technology purchases within the hospitality industry. While the Company anticipates that set top box purchases may accelerate during the latter half of 2009, actual sales have declined from 2008 levels during the first few months of 2009, and the Company recognized an impairment in the value of goodwill originally recorded when it purchased the set top box operation in 2007. Primarily as a result of this impairment charge, the Company’s net loss increased from $3.3 million in 2007 to $4.1 million in 2008. Excluding the impairment charge of $1.6 million from 2008 results, the net loss was reduced 24% from 2007 to 2008.
H. Douglas Saathoff, Nighthawk’s CEO, commented, “We accomplished many great things at Nighthawk during 2008 as the results show, producing twice the revenue than in the previous year. Improved revenues had a positive impact on cash flows, as we also increased margins and cut overhead expenses at the same time. As I have stated previously, there is much cause for optimism at the Company in spite of the impact the economy has had on business early in 2009, and positive cash flows remain a realistic near term goal for the Company. Alongside our new relationship with Itron, we have started introducing new products to the utility industry in 2009 that firmly position the Company as a provider of Smart Grid solutions, further enhancing the Company’s standing with the electric utility industry. We began to build a significant backlog of business again during the first quarter of 2009, and I expect great results from the electric utility industry in 2009.”
Mr. Saathoff continued, “I also expect to see improvement during the year from the set top box operations as our customers adjust to the economic environment. During the latter stages of 2008, we began exposing our products to new potential customers in an effort to strengthen our customer base and lessen our dependency on the hospitality industry. I expect those efforts to pay off throughout 2009. A recent sale of our IP3000 set top boxes to ESPN validates these efforts, as well as our superior technology. ESPN chose Nighthawk’s set top box technology for use in displaying 1080p broadcasts within their new, state-of-the-art LA Live campus, which opened with a live broadcast of ESPN’s Sportscenter on April 9, 2009. ESPN’s Los Angeles studio is the first in the world capable of 1080p production, the best resolution for high definition broadcasting available. ESPN purchased Nighthawk boxes to enable the display of the 1080p broadcasts throughout the studio facilities, and I expect them to expand their use to other ESPN-owned facilities in the future.”
AI
