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Axesstel Reports Fourth Quarter and 2008 Results - Exceeds Management?s Annual Guidance and Achieves Annual Record Levels

^{Published on 2009-02-26 04:23:09, Last Modified on 2009-02-26 04:26:11 - Market Wire}
 

SAN DIEGO--([ BUSINESS WIRE ])--Axesstel, Inc. (AMEX:AFT), a leader in the design and development of fixed wireless voice and broadband data products, reported December 31, 2008 results for the fourth quarter and a record breaking year.

Clark Hickock, chief executive officer for Axesstel, stated, "In 2008, we accomplished our goals of expanding our customer base, diversifying our product line, increasing gross margin and improving our financial foundation. As a result, our team established records for annual total revenue, revenue from data products, revenue in two of our three regions, gross margins and EPS. Compared to 2007, we grew total revenue 33% to $109.6 million. Sales of data products grew 78% to $62.0 million, and contributed 57% of total revenue for the year. We also achieved significant penetration in the EMEA region growing revenue 140% year over year to $38.0 million and 35% of total revenue. With a focus on data products, as well as increased margins on phone products, we posted overall gross margins of 24%. We improved net income from a loss of $9.0 million last year to net income of $1.4 million in 2008, representing a $10.4 million year-over-year improvement.

"More importantly, our efforts have better positioned us for the future. We are entering 2009 with the most comprehensive product portfolio to date after launching 12 new innovative products in 2008. Our full line of data and voice products for 2G and 3G GSM and CDMA networks enables us to further penetrate emerging markets globally, such as expanding our footprint in the Americas with our new lines of GSM phones and modems as well as our HSUPA (High-Speed Uplink Packet Access) enabled devices for high speed internet access and data transfer. In our established regions, we have a strong base to grow market share. For example, we are marketing AxessGuard™I, our new M-2-M security alarm system that can be integrated with a simple download to our installed base of over three million phone and/or terminal device users.

"While we are not immune to the new realities of the global economy, our diverse range of products combined with our strong localized sales organization enables us to pursue niche opportunities in the markets we serve. We continue to focus on creating innovative fixed wireless and broadband data solutions. In 2009, we will execute on the same business fundamentals that achieved our aggressive 2008 turnaround," concluded Hickock.

Financial Results

Revenues for the fourth quarter of 2008 were $23.3 million, including data products revenue of $13.7 million. This compares to revenues of $13.8 million, including $8.0 million from data products, in the fourth quarter of 2007. Gross margin for the fourth quarter was $5.2 million, or 22 percent of revenue, compared to $2.9 million, or 21 percent of revenue for the same period last year. Net loss was $469,000, or $0.02 per share, compared to a net loss of $5.0 million, or $0.22 per share, in the fourth quarter of 2007.

"While we showed a loss for the quarter, our fourth quarter was negatively impacted by reserves of $635,000 for bad debt and $125,000 for obsolete inventory as well as a $75,000 income tax provision related to a new California tax law," stated, Pat Gray, Axesstel's chief financial officer. "Importantly, we grew full year revenue by $27.2 million, increased gross profit by $8.7 million and lowered operating expenses $3.3 million for the year, resulting in a $11.9 million operating income year-over-year improvement."

For the year ended December 31, 2008, the company reported revenues of $109.6 million, which included data products revenue of $62.0 million. This compares to $82.4 million of total revenue and $34.9 million of data product revenue for 2007. Gross margin for the year was 24% compared to 21% for 2007. Net income was $1.4 million for 2008, or $0.06 per diluted share, compared to a 2007 net loss of $9.0 million, or $0.39 per share.

"Our balance sheet reflects the significant progress made in 2008. Cash and cash equivalents balance increased to $1.7 million at December 31, 2008, compared to $555,000 one year ago. At December 31, 2008 our working capital improved to $241,000 as compared to negative working capital of $2.9 million a year ago. In addition, our 2008 stockholders' equity more than doubled."

Outlook

The uncertainties related to the global economic slowdown and the disruption in the financial markets has impacted management's visibility on the business outlook. However, management believes 2009 revenues will again exceed $100 million and currently expects to achieve annual profitability based on the turnaround accomplished in 2008.

Recent Highlights

Corporate

• Appointed industry and finance expert Richard M. Gozia to the Board of Directors and named Osmo Hautanen Chairman of the Board.
• Ranked fourteenth in Deloitte's Technology Fast 50 Program for San Diego.

New Products

• Extended its 3G modem line with the MV200 Series wireless broadband USB dongle.
• Secured initial order for its first M2M product: the AxessGuard^™I security alarm system.
• Demonstrated newly launched HSUPA products at the GSMA Mobile World Congress held February 16 to 19 in Barcelona, Spain:
  • SJE10 HSUPA Wi-Fi Gateway with ExpressCard/34– a compact portable, personal gateway targeting mobile business personnel.
  • MU430 HSUPA Wi-Fi Gateway - an easy to use, plug-and-play desktop networking device with wireless broadband data access and Wi-Fi router.
• Exhibited HSUPA ExpressCard/34 and the entire suite of broadband data and fixed wireless phones supporting Arabic language user interface at GiTex 2008 held October 19 to 23 in Dubai.

Conference Call

Axesstel will host a conference call at 8:00 a.m. PT (11:00 a.m. ET) to discuss its fourth quarter and annual 2008 results. Participating in the call will be Clark Hickock, chief executive officer and Patrick Gray, chief financial officer.

The call will be webcast and can be accessed from the "Investor Relations" section of the company's website at [ http://www.axesstel.com ]. Alternatively, you may dial the following number ten minutes prior to the scheduled conference call time: 1-877-663-9622. International callers should dial 00-1-973-200-3973. The conference ID will be #85080254.

If you are unable to participate in the call at this time, the webcast will be archived on the Axesstel website. In addition, a telephonic replay will be available on Thursday, February 26, at 2:00 p.m. ET through Monday, March 2 at 11:59 p.m. ET. To access the replay, please dial 1-800-642-1687. International callers should dial 00-1-706-645-9291. The pass code will be 85080254.

About Axesstel, Inc.

Axesstel (AMEX:AFT) is a recognized industry leader in the design and development of fixed wireless voice and broadband data products. Axesstel's best in class product portfolio includes broadband modems, 3G gateways, machine to machine applications, voice/data terminals, fixed wireless desktop phones and public call office phones for high-speed data and voice calling services. The company delivers innovative fixed wireless solutions to leading telecommunications operators and distributors worldwide. Axesstel is headquartered in San Diego, California with a research and development center in Seoul, South Korea. For more information on Axesstel, visit [ www.axesstel.com ].

© 2009 Axesstel, Inc. All rights reserved. The Axesstel logo is a trademark of Axesstel, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the statements set forth above include forward-looking statements relating to market penetration and conditions, product capabilities and the timing of new product introductions which may affect future results and the future viability of Axesstel. Axesstel wishes to caution readers that actual results could differ materially from those suggested by the forward-looking statements due to risks and uncertainties and a number of important risk factors. Those factors include but are not limited the risk factors noted in Axesstel's filings with the Securities and Exchange Commission, such as to the need for additional working capital; economic and political instability in developing markets served by Axesstel; unforeseen manufacturing difficulties, unanticipated component shortages, competitive pricing pressures and the rapidly changing nature of technology and frequent introductions of new products and enhancements by competitors; the competitive nature of the markets for Axesstel's products; product and customer mix, Axesstel's need to gain market acceptance for its products; dependence on a limited number of large customers; potential intellectual property-related litigation; Axesstel's need to attract and retain skilled personnel; and Axesstel's reliance on its primary contract manufacturer. All forward-looking statements are qualified in their entirety by this cautionary statement, and Axesstel undertakes no obligation to revise or update this press release to reflect events or circumstances occurring after this press release.