Product category:
Wireless Communications
News Release from: Hemisphere GPS
Edited by the Electronicstalk Editorial
Team on 21 March 2005
Seventh straight year of growth for CSI
CSI Wireless reports record financial performance during 2004, with $4.3 million profit on $82 million revenue.
CSI Wireless reports record financial performance during 2004, with $4.3 million profit on $82 million revenue "It's a pleasure to announce the most profitable year in the company's history", stated Stephen Verhoeff, CSI Wireless' President and CEO
This article was originally published on Electronicstalk on 12 Feb 2002 at 8.00am (UK)
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"This marks our seventh straight year of revenue growth".
"I am also pleased to report that we closed 2004 as the market leader in GPS-based agricultural guidance, and as the number one supplier of TDMA-based desktop cellular telephones in Latin America".
For the fourth quarter ended 31st December 2004, consolidated revenues rose 145% to a record $24.5 million - a dramatic increase from revenues of $10 million in the fourth quarter of 2003.
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Gross margins of $6.6 million for the quarter were an increase of 83% over gross margins of $3.6 million in the fourth quarter of 2003.
Year-over-year gross margins were 27% as compared with 36% in the comparable quarter due to record volume sales of CSI's lower-margin wireless products in the revenue mix.
Operating income for the quarter was $1.7 million.
After depreciation, amortisation, foreign exchange loss, and taxes, net earnings were $904,000 in the quarter, or $0.03 per share, compared with a net loss of $590,000, or ($0.03) per share, in the fourth quarter of 2003 - an improvement of $1.5 million.
The company incurred a foreign exchange loss in the fourth quarter of $600,000, reducing earnings per share by approximately $0.02.
The reduction is a result of the continued weakening of US dollar relative to the Canadian dollar during the quarter.
This foreign exchange loss primarily results from the impact of the weakening US dollar on US dollar working capital carried with respect to US-based operations.
CSI's GPS Business Unit achieved record fourth-quarter revenues of $7.8 million in 2004, an increase of 42% compared with $5.5 million in 2003.
This increase is primarily a result of the continuing strength of the Outback product line being distributed through the company's partner RHS into the agricultural guidance markets.
GPS gross margins in the quarter were 49%, compared with 48% in the fourth quarter of 2003.
The company's Wireless Business Unit produced significant year-over-year revenue growth, with an increase of 277% to $16.7 million from $4.4 million in the fourth quarter of 2003.
Volume sales of CSI's TDMA desktop cellular telephones in Latin America reached their highest level ever during the quarter.
In addition, the company commenced commercial shipments of GSM desktop cellular phones during the fourth quarter.
Gross margins in the Wireless Unit for the fourth quarter were 17%, compared with 20% in the fourth quarter of 2003, primarily as a result of lower margins realised on GSM desktop cellular phones during the initial ramp-up of production.
Fourth-quarter operating expenses increased 25% to $5.0 million from $4.0 million in 2003.
Research and development expenses increased by 26% over the fourth quarter of 2003 as a result of the development of the two new GSM-based wireless products.
In addition, operating expenses increased by $198 thousand due to the implementation of the newly issued accounting standard for stock-based compensation in 2004 and by $230 thousand as a result of increased depreciation expense on newly acquired GSM test equipment.
"2004 represented an intensive period of investment in new product development for CSI, especially in relation to the company's new GSM-based wireless products", said Verhoeff.
"We expect to realise returns on this investment in 2005 through new product sales".
"The returns will continue for several years as a result of the substantial markets these products address".
During the fourth quarter, CSI recorded current income tax expense of $145 thousand.
This amount represents US alternative minimum tax (AMT) that is payable in spite of the availability of tax losses which fully shelter the company's US taxable income.
These taxes will be creditable against future US corporate income taxes.
Under generally accepted accounting principles, it is necessary to report this AMT as a current tax expense.
For the year ended 31st December 2004, the company achieved revenues of $82 million, representing an increase of 15% from $71 million in 2003.
Revenue growth is both from an increase in sales in CSI's GPS Business Unit and from increased sales of the company's Motorola-branded desktop cellular telephones in Latin America.
CSI reported net earnings in 2004 of $4.3 million, or $0.13 per share basic and diluted.
The 2004 performance is the best the company has ever delivered and is a significant improvement from a net loss of $553 thousand or ($0.02) per share, for 2003.
CSI's GPS Business Unit delivered ahead of plan in 2004 as all key customers increased orders for the year compared with the prior year.
GPS revenues were $32 million in 2004, an increase of 26% compared with $25.3 million in 2003.
GPS gross margins in the year were 49%, compared with 48% in 2003.
These improvements were primarily a result of the strength of the Outback product being distributed through RHS into the agricultural guidance markets.
The Outback products, distributed exclusively through RHS, command a leading market share in the precision farming market.
Initially sold only in North America, the Outback line is now being sold by RHS in several international markets including South America, Europe and Australia, as the Outback brand continues to become known and respected worldwide.
"We believe the agricultural guidance market will continue to rapidly expand, as GPS is adopted as mainstream technology given it has a significant cost-benefit to the farmers around the world", stated Verhoeff.
"We believe that auto-steering has enormous potential during the next decade, and CSI Wireless is one of very few companies in the world that has developed this hands-free technology for tractors and other self-propelled agricultural equipment".
CSI's Wireless Business Unit also achieved its best sales performance ever in 2004.
Sales from wireless products contributed 61% of the company's total revenues for the year.
Sales of CSI's TDMA-based desktop cellular telephones in Latin America increased steadily throughout 2004, holding the largest share in this market and achieving record volumes in the fourth quarter.
The company's Wireless Business Unit produced year-over-year revenue growth 8% to $49.6 million from $45.8 million in 2003.
Sales of CSI's desktop cellular telephones in Latin America increased steadily throughout 2004.
Volume shipments of the telephones achieved new levels during the fourth quarter.
Gross margins in the Wireless Unit for 2004 were 20%, compared with 16% in 2003.
This increase is primarily a result of manufacturing- and design-related cost reductions achieved on the TDMA-based phones put in place early in the year.
During the year CSI added to its desktop cellular product portfolio, developing two GSM-based phones to address the global markets.
Commercial shipments of GSM phones commenced in the fourth quarter on a limited basis, and in February 2005, the company announced that it had received branding, testing and GSM standards approval to sell its GSM phones worldwide.
Verhoeff commented: "Although our TDMA phones have been driving our desktop wireless revenues to date, 2005 will be the year in which our GSM phones become the major revenue driver".
After developing its first wireless device in 1998, CSI reached an important corporate milestone last October when it shipped its 500,000th wireless device through the combined sales of desktop cellular telephones and telematics products.
As a result of high demand, the company expects it will ship its one-millionth wireless device before the end of 2005.
At 31st December 2004, CSI held cash of $10.3 million, an increase compared with 31st December 2003, when the company had no cash and bank indebtedness of $2.6 million.
The increase in the company's cash position is the result of positive cash flow from operations during the year and from a financing completed during the first quarter for gross proceeds of $16.25 million.
A portion of the proceeds was used for working capital and capital investments required to support the company's current and future growth.
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