“Our focus is on continuing to build our recurring service revenues through the addition of new Telguard and TankLink subscribers,” commented Joe Beatty, president and chief executive officer of Telular Corporation. “This quarter offered further evidence of the success of our strategy as we once again delivered double-digit, annual service revenue growth. Additionally, we are pleased to return to sequential product revenue growth, as product sales increased 22% from the immediately preceding quarter.”
In the fourth quarter of 2010, Telular sold 22,000 Telguard units resulting in Telguard product revenues of $3.2 million and sold 1,700 tank monitoring units resulting in TankLink product revenues of $679,000.
“During 2010, we have focused on diversifying our customer base and capitalizing on the ongoing trend towards cellular only households and believe we are seeing our success in our financial results. The increased visibility from our recurring services businesses and new product introductions give us confidence that we can deliver net income before non-cash items of $8.0 to $9.0 million in fiscal year 2011. This level of cash flow generation more than covers our anticipated $6.0 million of annualized, regular dividends, while still providing surplus cash for corporate development activities. Furthermore, we continue to expect Telguard sales of between 15,000 and 25,000 units on a quarterly basis through fiscal 2011,” concluded Mr. Beatty.
For fiscal year 2010, the Company reported revenue of $47.4 million. The Company increased fiscal year 2010 pre-tax income to $3.8 million, as compared to $2.4 million in 2009. For fiscal year 2010, the Company increased net income before non-cash items to $6.4 million, as compared to $4.3 million in 2009.
Telular’s balance sheet includes a significant amount of deferred tax assets, primarily consisting of Net Operating Loss Carryforwards, which have been fully reserved for through a valuation allowance due to the uncertainty surrounding their utilization. However, during the fourth quarter, the Company determined that based on a consistent trend of profitability, it was now more likely than not that a significant portion of its deferred tax assets would be utilized, and it expects to reverse a portion of the valuation allowance established against these assets. The Company is in the process of completing an analysis to determine the exact amount of the valuation allowance reversal, but it expects the total to range between $10.0 million and $30.0 million. The final amount of this income tax benefit is a non-cash adjustment and will be added to the net income previously referenced for the fourth quarter and the fiscal year ended September 30, 2010 prior to the filing of the Company’s Form 10-K.