'Strong execution' behind solid third quarter: Mitel CEO

Mitel announced third quarter results Thursday that beat its revenues and earning forecasts, and CEO Rich McBee credited his team for its strong execution of the company’s disciplined strategy.

Revenues for the three months ending Sept. 30 was $272.4 million, up from the same quarter last year, when on a pro forma basis – including Aastra revenue – it was $270.1 million.

Mitel completed the acquisition of Aastra Technologies on Jan. 31.

“We’ve seen in a very disciplined way that the integration management office that we run … has done just a great job from getting synergies out of the business sooner,” said Mr. McBee.

Adjusted earnings were $34.6 million compared with pro forma earnings of $30.6 million in the third quarter of 2013.

Gross margin also improved to 52.5 per cent in the quarter compared to 50.4 per cent in the same quarter last year.

The cloud continues to be an area of growth for Mitel, with a recurring year-over-year seat growth of 111 per cent.

“The cloud business is all about growth and it is a profitable business for us but we really optimize that for growth,” said Mr. McBee.

Mr. McBee said the Mitel rebrand launched early last month has gone far better than he expected.

“We’re just winding up a 35-city road tour. The employees are really motivated by it. They feel a sense of newness in the company and our partners are seeing it and feeling it too.”

Looking ahead, Mitel is forecasting fourth-quarter revenues of between $290 and $310 million, with gross margin between 52 per cent and 53.5 per cent.

Currency headwinds will be the main challenge in the next quarter, said Mr. McBee.

“Fifty per cent of our business now is in Europe and there has been some radical shifts in currency,” he said. “One thing we can’t control is currency headwinds. They are what they are.”

He said without currency issues, things might have been “really off the page.”

Mr. McBee says Mitel is still reviewing its options as its takeover offer for ShoreTel is on the table until Nov. 20.

“We hope their management will talk with us. We’re certainly open to that.”