"Solid" 2015 Q1 for Mitel: McBee

The first quarter of 2015 was another solid one for Ottawa-based Mitel, “despite significant foreign exchange headwinds,” CEO Rich McBee said Thursday.

 “Our operational discipline ensures that our premise business remains consistently profitable, a source of financial strength and cash generation which we are reinvesting in strategic growth initiatives,” Mr. McBee said in a statement.

The business communications firm posted revenue of $248.1 million for the three months ending March 31, up 2.7 per cent from the first quarter of 2014.

It’s non-GAAP net income was $16.5 million, or 16 cents per share compared with $19.8 million or 22 cents a share for the same period last year.

Mitel’s adjusted EBITDA for the first quarter of 2015 was $30.4 million compared to $35.6 million in the first quarter of 2014, “driven largely by the impact of unfavorable foreign exchange effects,” the company said.

As the company continues to transition to a recurring revenue model, Mr. McBee said demand for Mitel’s cloud communications solutions remain strong, noting the addition of 35,000 new recurring seats during the quarter.

Mitel now has 304,956 recurring cloud seats, more than double what it had after the first quarter of last year.

Mitel added just under 100,000 total cloud seats in the quarter. It now has more than 1.1 million total cloud seats, compared with 625,699 at this time last year.

Another highlight of the quarter was the successful acquisition of Texas-based Mavenir, a software-based networking solutions provider.

“The acquisition, which was completed last week, provides Mitel with an immediate revenue growth engine that uniquely positions the company to capitalize on the convergence of enterprise and mobile markets now rapidly transitioning to common IP network technology,” Mr. McBee said, adding reaction from the mobile customer community has been “overwhelmingly favourable.”

Mitel’s pro forma revenue, which assumes Mitel and Mavenir had operated together the entire quarter, was down 10.6 per cent to $277.4 million, due mostly to foreign exchange rates and the transition to the recurring revenue model, the company said. Gross margins improved to 52.6 per cent from 51.9 per cent. It is forecasting second-quarter pro forma revenue to be between $280 million and $305 million and gross margins to be between 52 per cent and 54 per cent.