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8-K - FORM 8-K - RAE SYSTEMS INC | f56526e8vk.htm |
Exhibit 99.1
For Immediate Release
Company Contact: |
IR Agency Contact: | |
Investor Relations |
Becky Herrick | |
408-952-8402 |
415-433-3777 | |
investorrelations@raesystems.com |
bherrick@lhai.com |
RAE Systems Reports Second Quarter 2010 Results
Increased Second Quarter Revenue 17% Over 2009, Posts Profitable Second Quarter and
First Half, 2010
First Half, 2010
SAN JOSE, Calif. August 4, 2010 RAE Systems Inc. (NYSE AMEX: RAE), a leader in delivering
innovative sensor solutions to serve industrial, energy, environmental, and government safety
markets worldwide, reported financial results and business highlights for the second quarter and
six months ended June 30, 2010.
Financial Results
For the second quarter of 2010, RAE Systems reported revenue of $23.3 million, an increase of
17% over the second quarter of 2009. In the second quarter of 2010, the Americas contributed 54% of
total revenue, Asia contributed 30% and Europe contributed 16% of revenue. Gross margin for the
second quarter was 59%, compared with 50% for the second quarter of 2009. Operating
expenses for the second quarter of 2010 were $11.9 million, or 51% of revenue, compared with $11.9
million, or 60% of revenue, for the second quarter of 2009. The second quarter net income was $2.0
million, or $0.04 per share, compared with a net loss of $2.3 million, or $0.03 per share, for the
second quarter of 2009.
For the six months ended June 30, 2010, revenue was $42.1 million, up from $39.0 million for the
same period in 2009. The net income for the first half of 2010 was $1.6 million, or $0.03 per
share, compared with a net loss of $3.2 million, or $0.05 per share, for the same period in 2009.
We had strong first half revenue in the Americas due to demand for our products as a result of the
Gulf of Mexico oil spill and from first responders, the military and other government agencies,
said Robert Chen, RAE Systems president and CEO. Our improved gross margin performance
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For Immediate Release
was primarily due to higher sales in the Americas and the Middle East, and an improved product
mix that included increased sales of multi-gas products, sensors and accessories.
Although our first half revenue exceeded that of 2009 by nearly 8%, we are maintaining our full
year 2010 revenue guidance of between $83 and $85 million, due to the weaker than expected
revenue contribution from China. However, we now expect to generate a small profit for the year,
Chen commented.
In June, the company met with officials from the Department of Justice and the Securities and
Exchange Commission to provide an update on the companys compliance with the Foreign Corrupt
Practices Act. The management team expects to have closure on this matter in the near future.
Business Highlights
In
response to the Gulf of Mexico oil spill the company launched web based tools to instruct
responders on the best gas detection methodology to use in a variety of situations, such as:
| Protecting cleanup workers from exposure to toxic oil by-products | ||
| Monitoring decontamination of people, equipment and wildlife | ||
| Maintaining worker safety on off-shore oil rigs | ||
| Managing area monitoring on vessels and providing worker safety on supply ships | ||
| Area monitoring of the shoreline |
These tools are useful not only to the companys Gulf Coast customers, but to its energy and
environmental management customers worldwide.
In public venue protection, the company won a contract to deliver wireless toxic gas and radiation
monitors as part of the safety and public venue protection preparations for the 16th
Annual Asian Games being held in Guangzhou, China, in November.
In the hazardous material management market, the company signed an agreement with Rosenbauer
International AG, a large German manufacturer of fire trucks, to provide its AreaRAE wireless gas
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For Immediate Release
and radiation sensor system for integration into Rosenbauers line of hazardous material
response trucks.
About RAE Systems
RAE Systems is a leading global provider of rapidly deployable connected, intelligent gas detection
systems that enable real-time safety and security threat detection. RAE Systems products are used
in more than 95 countries by many of the worlds leading corporations and government agencies.
RAE
Systems offers a full line of wirelessly enabled solutions including
personal, hand-held,
transportable, and fixed instruments designed to meet the needs of any usage scenario. Applications
include energy production, refining, industrial and environmental safety, public venue safety and
government first responder markets.
For more
information about RAE Systems, please visit raesystems.com.
Safe Harbor Statement
This presentation may contain forward-looking statements, as that term is used in Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements include, without limitation:
expressions of belief, anticipation, or expectations of management; statements as to industry
trends or future results of operations of RAE Systems and its subsidiaries; and other statements
that are not historical fact. These types of statements address matters that are subject to risks
and uncertainties, which could cause actual results to differ materially. Factors that could cause
or contribute to such differences include, but are not limited to, the general economic and
industry factors and receptiveness of the market to RAE Systems and its products. In addition, our
forward-looking statements should be considered in the context of other risk factors discussed in
our filings with the Securities and Exchange Commission, including but not limited to our annual
report on Form 10-K and Form 10-Q filings, available online at http://www.sec.gov. All
forward-looking statements are based on information available to the company on the date hereof,
and the company assumes no obligation to update such statements.
[Tables to Follow]
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RAE Systems Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)
Condensed Consolidated Balance Sheets
(in thousands, except share and par value data)
(unaudited)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 18,893 | $ | 18,528 | ||||
Restricted cash |
2,147 | 2,146 | ||||||
Trade notes receivable |
1,667 | 2,039 | ||||||
Accounts receivable, net of allowances of $5,773 and $5,380, respectively |
20,458 | 19,428 | ||||||
Accounts receivable from affiliate |
209 | 322 | ||||||
Inventories |
12,752 | 12,068 | ||||||
Prepaid expenses and other current assets |
4,511 | 3,983 | ||||||
Income taxes receivable |
| 659 | ||||||
Total current assets |
60,637 | 59,173 | ||||||
Property and equipment, net |
16,726 | 15,590 | ||||||
Intangible assets, net |
1,984 | 2,428 | ||||||
Investments in unconsolidated affiliates |
259 | 358 | ||||||
Other assets |
477 | 1,325 | ||||||
Total assets |
$ | 80,083 | $ | 78,874 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 7,294 | $ | 6,454 | ||||
Accounts payable to affiliate |
37 | 92 | ||||||
Bank debt, current |
5,492 | 4,026 | ||||||
Accrued liabilities |
15,031 | 15,753 | ||||||
Notes payable to related parties, current |
386 | 370 | ||||||
Income taxes payable |
372 | 199 | ||||||
Deferred revenue, current |
501 | 603 | ||||||
Total current liabilities |
29,113 | 27,497 | ||||||
Deferred revenue, non-current |
501 | 615 | ||||||
Deferred tax liabilities, non-current |
108 | 156 | ||||||
Bank debt, non-current |
| 1,463 | ||||||
Deferred gain on sale of real estate, non-current |
4,126 | 4,444 | ||||||
Other long-term liabilities |
863 | 781 | ||||||
Notes payable to related parties, non-current |
356 | 363 | ||||||
Total liabilities |
35,067 | 35,319 | ||||||
SHAREHOLDERS EQUITY: |
||||||||
Common stock, $0.001 par value, 200,000,000 shares authorized;
59,431,601 and 59,438,328 shares issued and outstanding, respectively |
59 | 59 | ||||||
Additional paid-in capital |
64,487 | 63,832 | ||||||
Accumulated other comprehensive income |
6,276 | 6,844 | ||||||
Accumulated deficit |
(30,097 | ) | (31,706 | ) | ||||
Total RAE Systems Inc. shareholders equity |
40,725 | 39,029 | ||||||
Noncontrolling interest |
4,291 | 4,526 | ||||||
Total shareholders equity |
45,016 | 43,555 | ||||||
Total liabilities and shareholders equity |
$ | 80,083 | $ | 78,874 | ||||
RAE Systems Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 23,300 | $ | 19,907 | $ | 42,095 | $ | 39,020 | ||||||||
Cost of sales |
9,453 | 10,039 | 18,059 | 19,822 | ||||||||||||
Gross profit |
13,847 | 9,868 | 24,036 | 19,198 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
5,199 | 4,849 | 9,857 | 9,231 | ||||||||||||
Research and development |
1,844 | 1,384 | 3,531 | 2,979 | ||||||||||||
General and administrative |
4,869 | 5,692 | 8,967 | 10,105 | ||||||||||||
Total operating expenses |
11,912 | 11,925 | 22,355 | 22,315 | ||||||||||||
Operating income (loss) |
1,935 | (2,057 | ) | 1,681 | (3,117 | ) | ||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
24 | 8 | 47 | 17 | ||||||||||||
Interest expense |
(18 | ) | (90 | ) | (69 | ) | (235 | ) | ||||||||
Other, net |
45 | 53 | 99 | (8 | ) | |||||||||||
Equity in loss of unconsolidated affiliate |
(45 | ) | (66 | ) | (96 | ) | (133 | ) | ||||||||
Income (loss) before income taxes |
1,941 | (2,152 | ) | 1,662 | (3,476 | ) | ||||||||||
Income tax expense |
(159 | ) | (401 | ) | (288 | ) | (360 | ) | ||||||||
Net income (loss) |
1,782 | (2,553 | ) | 1,374 | (3,836 | ) | ||||||||||
Net loss attributable to the noncontrolling interest |
191 | 303 | 235 | 598 | ||||||||||||
Net income (loss) attributable to RAE Systems Inc. |
$ | 1,973 | $ | (2,250 | ) | $ | 1,609 | $ | (3,238 | ) | ||||||
Basic net income (loss) per share |
$ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | ||||||
Diluted net income (loss) per share |
$ | 0.04 | $ | (0.03 | ) | $ | 0.03 | $ | (0.05 | ) | ||||||
Weighted-average common shares outstanding-Basic |
59,411 | 59,359 | 59,408 | 59,351 | ||||||||||||
Stock options and warrants |
136 | | 139 | | ||||||||||||
Weighted-average common shares outstanding-Diluted |
59,547 | 59,359 | 59,547 | 59,351 | ||||||||||||
The following table sets forth the components of our Condensed Consolidated
Statements of Operations as a percentage of net sales:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Cost of sales |
41 | % | 50 | % | 43 | % | 51 | % | ||||||||
Gross profit |
59 | % | 50 | % | 57 | % | 49 | % | ||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
22 | % | 24 | % | 24 | % | 24 | % | ||||||||
Research and development |
8 | % | 7 | % | 8 | % | 7 | % | ||||||||
General and administrative |
21 | % | 29 | % | 21 | % | 26 | % | ||||||||
Total operating expenses |
51 | % | 60 | % | 53 | % | 57 | % | ||||||||
Operating income (loss) |
8 | % | -10 | % | 4 | % | -8 | % | ||||||||
Other income (expense): |
||||||||||||||||
Interest income |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Interest expense |
0 | % | -1 | % | 0 | % | -1 | % | ||||||||
Other, net |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Equity in loss of unconsolidated affiliate |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Income (loss) before income taxes |
8 | % | -11 | % | 4 | % | -9 | % | ||||||||
Income tax expense |
-1 | % | -2 | % | -1 | % | -1 | % | ||||||||
Net income (loss) |
7 | % | -13 | % | 3 | % | -10 | % | ||||||||
Net loss attributable to the noncontrolling interest |
1 | % | 2 | % | 1 | % | 2 | % | ||||||||
Net income (loss) attributable to RAE Systems Inc. |
8 | % | -11 | % | 4 | % | -8 | % | ||||||||