Powerwave Technologies (



Q4 2011 Earnings Call

February 14, 2012 5:00 p.m. ET


Tom Spaeth – VP, Treasurer

Ron Buschur – President and CEO

Kevin Michaels – CFO and Secretary


Michael Walkley – Canaccord

Steve O'Brien – JPMorgan

Jason North - Jefferies

Arun Seshadri - Credit Suisse

Matt [Swope] - Gleacher


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Good day, ladies and gentlemen, and welcome to the fourth quarter 2011 Powerwave Technologies earnings call. [Operator instructions.] I would now like to turn the call over to Mr. Tom Spaeth, Powerwave’s treasurer. Please proceed.

Tom Spaeth

Thank you. Good afternoon and welcome to Powerwave Technologies’ fourth quarter 2011 financial results conference call. I am Tom Spaeth, Powerwave's treasurer. Joining us on today's call will be Ron Buschur, president and chief executive officer, and Kevin Michaels, chief financial officer.

Before starting, I would like to point out that various remarks we make about future expectations, plans, and prospects for Powerwave, including, but not limited to, anticipated revenues and revenue growth rates; the split between operator and OEM sales; operating margins; gross profit margins; earnings per share levels; operating expense targets; cash flow projections; revenue composition; supply chain constraints and shortages; manufacturing levels; improvements in cost structure; future cost savings related to our cost reduction activities; the timing of restructuring actions and associated cost savings; our ability to reduce our use of cash; demand levels for the company's product lines, including demand for the company’s advanced technology products in government markets; projected growth in various markets including government, public safety, and defense; trends in the wireless infrastructure market, including adoption of 4G capabilities and increases in spending by North American operators on their networks; the timing of product deliveries and future orders; the company's ability to grow its core wireless business and enter into, and compete in, vertical markets for its products such as government and defense markets, the energy sector, and health and medical fields; common stock prices; the company's ability to resolve new product production issues; debt purchases; the success of new products and market acceptance in new vertical markets; expense levels; capital expenditure rates; inventory turns; tax rates; and days sales outstanding are all forward-looking statements, which are intended to qualify for the Safe Harbor from liability established by the Private Securities Reform Act of 1995.

These statements are subject to numerous risks and uncertainties that could cause Powerwave's actual results to be materially different from those projected or implied. Some of the risks and uncertainties include our ability to accurately forecast and anticipate customer orders; our ability to increase sales and conserve cash; our reliance on a limited number of customers; our ability to control operating costs and conserve cash; our ability to realize anticipated cost savings and synergies; execute restructuring activities in a timely fashion without negatively impacting our business; the negative impact on demand for our products due to the macroeconomic environment; reduced demand due to industry consolidation among our major customers; delays or cancellations of wireless network capacity expansions and buildouts for both existing networks and new 4G networks; fluctuations in foreign currencies; the ability to accurately forecast cash flows and credit collections; the ability to enter into new markets for our products and solution; the impact of competitive products and pricing; economic and political conditions; and the loss of one or more significant customer accounts.

Please refer to our press release, Powerwave's annual report on Form 10-K for the fiscal year ended January 2, 2011, our quarterly report our Form 10-Q for the quarterly period ended October 2, 2011, and other filings, which are on file with the Securities and Exchange Commission for additional information on factors which could cause our actual results to be different from those projected or implied.

In addition, on this call we will discuss non-GAAP financial information. A reconciliation of the non-GAAP financial information to our financial statements as prepared under GAAP is included in our press release dated today, which can be found at our website at powerwave.com and on Business Wire. The press release also has detailed information concerning several of the significant items impacting our results and we urge you to review that information.

Now I'm going to turn the call over to Kevin Michaels, Powerwave's chief financial officer.

Kevin Michaels

Thank you Tom. With all these risk factors in mind, I would like to start by reviewing our financial results, which are also summarized in our press release. Net sales for the fourth quarter of 2011 were $60.1 million, and we reported a GAAP net loss of $42.6 million, which equates to a basic loss per share of $1.34.

This includes a total of $1.3 million of net cash debt discount amortization and interest accretion expense related to certain of our outstanding convertible notes, $1.6 million of net cash pre-tax stock based compensation expense, and $4.7 million of restructuring expense in the quarter. All of these charges and amortization totaled approximately $7.6 million for the fourth quarter.

On a pro forma basis, excluding the restructuring charges, the debt-related charges, and the stock-based compensation expenses for the quarter, our pro forma net loss was $30 million, which equates to a pro forma net loss of $0.95 per share.

I do want to note that our per share amounts reflect the impact of the one for five reverse common stock split that was effective as of October 28, 2011. The total shares outstanding for the fourth quarter were approximately 31.7 million shares.

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