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SMART Reports Third Quarter 2011 Financial Results

CALGARY, Alberta, February 8, 2011 (GLOBE NEWSWIRE) -- SMART Technologies Inc. (Nasdaq:SMT) (TSX:SMA), a leading provider of collaboration solutions, today announced financial results for its third quarter ended December 31, 2010.
/ Source: GlobeNewswire
  • Revenue of $180.9 million, up 16% year-over-year
  • Strong sales of attachment products, up 54% year-over-year
  • Gross margin of 48%
  • Adjusted EBITDA of $34.0 million
  • Net Income: $12.5 million GAAP; $15.9 million non-GAAP

CALGARY, Alberta, February 8, 2011 (GLOBE NEWSWIRE) -- SMART Technologies Inc. (Nasdaq:SMT) (TSX:SMA), a leading provider of collaboration solutions, today announced financial results for its third quarter ended December 31, 2010.

"We are pleased with our third-quarter results, as we continue to demonstrate the value of our full suite of collaboration solutions," stated Nancy Knowlton, President and CEO of SMART. "Our solid top-line growth, particularly in North America, was driven by increasing demand for attachment products, which grew 54% year-over-year. In addition, innovation remains a cornerstone of our strategy as we had several important product launches during the quarter, which we expect to strengthen our competitive position and enable us to drive demand in new sectors and geographies. During the quarter, we also focused on expanding our sales infrastructure, channel relationships, and research and development teams in order to support our growth and pursue additional revenue opportunities."

Knowlton continued, "We are pleased with our continued solid execution in a challenging market environment. Despite near-term headwinds in education spending, our portfolio of technology solutions and strong market leadership position in interactive whiteboards leaves us well positioned to execute our long-term growth strategy and leverage our full offering across multiple markets. In addition to focusing on our core interactive whiteboard segment, we remain committed to growing the overall business through expanding sales of our attachment products, further penetrating higher growth geographies and introducing our collaboration solutions to businesses worldwide."

Total revenue for the third quarter of fiscal 2011 was $180.9 million, an increase of 16% compared to $156.1 million in the prior-year period. Revenue growth for the quarter was particularly strong in North America, up 27% compared to the same quarter last year. In terms of unit sales, 89,705 SMART Board interactive whiteboards were sold in the quarter, compared to 93,958 units sold in the prior-year period. Total revenue for the first nine months of fiscal 2011 was $622.8 million, an increase of 26% over the prior-year period. Revenue growth in the first nine months of the year was strong in both North America and EMEA, up 27% and 23%, respectively. 

Gross profit for the third quarter of fiscal 2011 was $86.4 million, an increase of 13% compared to $76.6 million in the prior-year period. Gross margins for the third quarter were 48%, compared to 49% for the same period last year.

Adjusted EBITDA for the third quarter of fiscal 2011 was $34.0 million, representing an Adjusted EBITDA margin of 19% compared to $35.5 million in the prior-year period. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue after adding back the net impact of deferred revenue.

GAAP net income was $12.5 million for the third quarter of fiscal 2011, compared to $19.9 million in the prior-year period. GAAP EPS was $0.10 based on 123.8 million weighted average shares outstanding, compared to $0.11 based on 180.5 million weighted average shares outstanding during the same period last year. GAAP net income during the quarter ended December 31, 2010, includes a $3.2 million foreign exchange gain, partly due to the conversion of our U.S. dollar-denominated long-term debt into the company's functional currency of Canadian dollars, compared to an $8.7 million foreign exchange gain during the same period last year.

Adjusted Net Income for the third quarter of fiscal 2011 was $15.9 million, an increase of 26% compared to $12.6 million in the same period last year. Adjusted EPS was $0.13 based on 123.8 million weighted average shares outstanding, compared to $0.07 based on 180.5 million weighted average shares outstanding for the third quarter of fiscal 2010.

As of December 31, SMART had cash and cash equivalents of $130.1 million and $365.1 million of debt outstanding.

Financial Outlook for Fiscal 2011

Total revenue is expected to be in the range of $775 million to $790 million for the fiscal year ended March 31, 2011. Adjusted Net Income per share is expected to be in the range of $0.69 to $0.73.  

Conference call information

SMART will host a conference call today, February 8, 2011, at 2:30 p.m. MT (4:30 p.m. ET) to discuss the company's financial results and business outlook. To access this call, dial 877.312.5844 (North America) or 253.237.1152 (outside North America) with conference ID #39487778. A live webcast of the conference call will be accessible from the investor relations page of SMART's website at , and a replay will be archived and accessible at . A replay of this conference call may also be accessed through February 18, 2011, by dialing 800.642.1687 (North America) or 706.645.9291 (outside North America). The replay pass code is 39487778.

About SMART

SMART Technologies is a leading provider of collaboration solutions that transform the way the world works and learns. We believe that collaboration and interaction should be easy. As the global leader in interactive whiteboards, we bring more than two decades of collaboration research and development to a broad range of easy-to-use, integrated solutions that free people from their desks and computer screens, so collaborating and learning with digital resources are more natural.

The SMART Technologies logo is available at

Certain statements made in this press release are forward-looking statements within the meaning of the U.S. federal and applicable Canadian securities laws. Statements that include the words "expanding," "expect," "increasing," "intend," "plan," "believe," "project," "estimate," "anticipate," "may," "will," "continue," further," "seek," and similar words or statements of a future or forward-looking nature identify forward-looking statements. In particular and without limitation, this press release contains forward-looking statements pertaining to the continuing adoption of our core solutions, the increasing demand for attachment products, the belief that interactive whiteboard products will remain a priority for school districts, the attainment of financial objectives, the execution of our growth strategy, the cross-selling of technology solutions, the expansion of our presence with business and government organizations, the leveraging of our touch technology, and the investment in our sales and research and development activities.

All forward-looking statements address matters that involve risks, uncertainties and assumptions. Accordingly, there are or will be important factors and assumptions that could cause our actual results and other circumstances and events to differ materially from those indicated in these statements. We believe that these factors and assumptions include, but are not limited to, those described under "Risk Factors" in our Registration Statement on Form F-1, our final Canadian prospectus and in our interim management's discussion and analysis, as well as the following: 

  • Our ability to manage our growth;
  • Competition in our industry;
  • Our ability to successfully obtain patents or registration for other intellectual property rights or protect, maintain and enforce such rights;
  • Third-party claims of infringement or violation of, or other conflicts with, intellectual property rights by us;
  • Our ability to enhance current products and develop and introduce new products;
  • The development of the market for interactive learning and collaboration products;
  • Reduced spending by our customers due to changes in the spending policies or budget priorities for government funding;
  • Our ability to grow our sales in foreign markets;
  • Our ability to manage risks inherent in foreign operations;
  • Our ability to protect our brand;
  • Our ability to obtain components and products from suppliers on a timely basis and on favorable terms;
  • Our ability to manage our component and product manufacturing and logistical services successfully;
  • The reliability of component manufacturing, product assembly and logistical services provided by third parties;
  • Possible changes in the demand for our products;
  • Our ability to successfully execute our strategy to grow in the business and government markets;
  • Our ability to integrate the operations of the various businesses we acquire, including NextWindow;
  • Our ability to establish new relationships and to build on our existing relationships with our dealers and distributors; and
  • Our ability to manage cash flow, foreign exchange risk and working capital.

The forward-looking statements speak only as of the date they are made. Except as may be required by applicable law, we do not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Non-GAAP financial measures

This release includes the non-GAAP financial measures Adjusted EBITDA and Adjusted Net Income. We define Adjusted EBITDA as net income before interest, income taxes, depreciation and amortization, as well as adjusting for the following items:  foreign exchange gains or losses, net change in deferred revenue, stock-based compensation, acquisition costs and other (income) loss. We define Adjusted Net Income as net income before stock-based compensation, acquisition costs, foreign exchange gains or losses, net change in deferred revenue and amortization of intangible assets, all net of tax.

Adjusted EBITDA and Adjusted Net Income are non-GAAP measures and should not be considered as an alternative to net income or any other measure of financial performance calculated and presented in accordance with GAAP. Adjusted EBITDA, Adjusted Net Income and other non-GAAP measures have inherent limitations, and therefore you should not place undue reliance on them.

We use Adjusted EBITDA as a key measure to assess the core operating performance of our business removing the effects of our leveraged capital structure and the volatility associated with the foreign exchange on our U.S. dollar-denominated debt. We also use Adjusted Net Income to assess the performance of the business removing the after-tax impact of stock-based compensation, acquisition costs, foreign exchange gains and losses, revenue deferral and amortization of intangible assets. We use both of these measures to assess business performance when we evaluate our results in comparison to budgets, forecasts, prior-year financial results and other companies in our industry. Many of these companies use similar non-GAAP measures to supplement their GAAP disclosures but such measures may not be directly comparable. In addition to its use by management in the assessment of business performance, Adjusted EBITDA is used by our Board of Directors and by our lenders in assessing management's performance and is a key metric in the determination of incentive plan payments. In addition, we believe Adjusted EBITDA and Adjusted Net Income may be useful to investors in evaluating our operating performance because securities analysts use metrics similar to Adjusted EBITDA and Adjusted Net Income as supplemental measures to evaluate the overall operating performance of companies.

© 2011 SMART Technologies Inc. The SMART Board, SMART logo and smarttech are trademarks or registered trademarks of SMART Technologies in the U.S. and/or other countries.

CONTACT: Media contact Marina Geronazzo Manager, Public Relations SMART Technologies Inc. 1.403.407.5088 MarinaGeronazzo@smarttech.com Investor contact Seth Potter ICR 1.877.320.2241 ir@smarttech.com