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SMART Reports Third Quarter 2014 Financial Results

  • Adjusted Revenue of $143.4 million, up 4% year-over-year
  • Adjusted EBITDA of $19.3 million, up 233% year-over-year
  • Adjusted Net Income of $9.0 million
  • GAAP Revenue of $158.0 million
  • GAAP Net Income of $4.1 million
  • Exit of optical touch sensor business for desktop displays

CALGARY, Alberta, Feb. 6, 2014 (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, 2013.

"Our third quarter performance was highlighted by materially improved profitability driven by new product success and reduced cash operating expenses," stated Neil Gaydon, President and CEO of SMART. "The progress we have made aligning the company's structure, strategy and culture is beginning to deliver results while the markets for our products improve."

Mr. Gaydon continued, "We are focusing on improved delivery and investment in key growth areas as we carefully manage our expenses while working through the early stages of our turnaround. In Education, sales of our interactive displays remained our mainstay and we made progress signing up content providers for our SMART amp TM software, which will be commercially available in April. In Enterprise, we are pleased with the early traction of our SMART Room System TM for Microsoft ® Lync ®. While the education market remains challenging, we are seeing a slowing decline in our sales to that market. At the same time our Enterprise business is showing early growth driven by our leadership position in interactive display technologies. We are pleased with our overall performance but remain cautious in our outlook."
GAAP Results
($ millions except per share amounts) Three months ended December 31, Nine months ended December 31,
  2013 2012 2013 2012
Revenue  $ 158.0  $ 138.9  $ 465.0  $ 484.2
Net Income (Loss)  $ 4.1  $ (50.9)  $ 24.1  $ (35.8)
EPS (diluted)  $ 0.03  $ (0.42)  $ 0.19  $ (0.30)
Non-GAAP Results
($ millions except per share amounts) Three months ended December 31, Nine months ended December 31,
  2013 2012 2013 2012
Adjusted Revenue  $ 143.4  $ 137.7  $ 449.7  $ 488.1
Adjusted EBITDA  $ 19.3  $ 5.8  $ 71.3  $ 57.6
Adjusted Net Income (Loss)  $ 9.0  $ (2.7)  $ 33.0  $ 24.3
Adjusted EPS (diluted)  $ 0.07  $ (0.02)  $ 0.26  $   0.20

The following table reconciles fiscal 2014 third quarter financial results reported in accordance with generally accepted accounting principles ("GAAP") to certain non-GAAP financial measures. We have provided this non-GAAP financial information to aid investors in better understanding the company's performance.
Three Months Ended December 31, 2013
($ millions) As Reported (GAAP) Change in Deferred Revenue (1) Other Adjustments (2) Adjusted (Non-GAAP)
Revenue  $ 158.0  $ (14.6)  $ --  $ 143.4
Net Income  $ 4.1  $ (11.0)  $ 15.9  $ 9.0
EPS (diluted)  $ 0.03  $ (0.09)  $ 0.13  $ 0.07
(1) SMART has moved to an annual software licensing model, resulting in a change to the software revenue deferral period from seven years to one year. As a result, SMART is accelerating the amortization of deferred revenue over 18 months on a straight-line basis. This has a significant impact on SMART's results for six consecutive quarters, from Q3 of fiscal 2014 through to March 31, 2015. 
(2) A full reconciliation of non-GAAP measures is available in Management's Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended December 31, 2013 and is summarized in the tables appended to this press release.

Adjusted Revenue for the third quarter of fiscal 2014 was $143.4 million, an increase of 4% compared to $137.7 million in the prior-year period. Adjusted Revenue for the quarter decreased in North America by 8% and in EMEA by 6%, and revenue in Rest of World grew by 164% year over year, driven largely by sales from our NextWindow components business. In terms of unit sales, 64,279 interactive displays were sold in the quarter, compared to 71,938 units sold in the prior-year period. Average adjusted selling price for the third quarter was $1,780, compared to $1,522 in the prior-year period.

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