N@N

RAE Systems: RAE Systems Reports Second Quarter 2009 Results

^{Published on 2009-08-05 13:33:23, Last Modified on 2009-08-05 13:33:31 - Market Wire}
 

SAN JOSE, CA--(Marketwire - August 5, 2009) - RAE Systems Inc. (NYSE Amex: [ RAE ]), a leader in delivering innovative sensor solutions to serve industrial, energy, environmental, and government safety markets worldwide, reported financial results and business highlights for the second quarter ended June 30, 2009.

Financial Results

For the second quarter of 2009, RAE Systems reported revenue of $19.9 million, an increase of four percent over the first quarter of 2009 and a 19 percent decrease from the second quarter 2008 revenue of $24.6 million. For the second quarter of 2009, the Americas contributed 42 percent of total revenue, Asia contributed 41 percent and Europe contributed 17 percent of revenue. Gross margin for the second quarter was 50 percent, compared with 49 percent for the first quarter 2009 and 53 percent for the second quarter of 2008. Operating expenses for the second quarter 2009 were $11.9 million or 60 percent of revenue, compared with $12.6 million or 51 percent of revenue for the second quarter of 2008. The second quarter net loss was $2.3 million or $0.03 per share, compared with a net loss of $0.5 million or $0.01 per share for the second quarter of 2008.

For the six months ended June 30, 2009, revenue was $39.0 million, compared with $42.5 million for the same period in 2008. The net loss for the six months ended June 30, 2009 was $3.2 million, compared with $2.8 million for the same period in 2008. The net loss per share was $0.05 for both the 2009 and 2008 six month periods.

"While the global recession has impacted our global customer spending, we believe our mix of new and existing product offerings positions us well to benefit when the global economy begins to improve," said Robert Chen, RAE Systems president and CEO. "Our wireless product initiatives address the continued demand for time and life critical information. Many of our new products enable our customers to increase their productivity while benefiting from reduced operating costs."

"Due to the uncertainty of the worldwide economic outlook for 2009 combined with our first half revenue performance, as well as performance issues at RAE Fushun, we now expect full year 2009 revenue of between $83.0 million and $86.0 million and we no longer expect to be profitable for the year," Chen commented.

Business Highlights

Following are key business highlights in the company's second quarter:

 -- In the Oil and Gas market: -- Sold UltraRAE 3000 benzene monitors to multiple refineries, chemical plants and pipelines in Colorado, New Mexico and Utah. -- Received the first Americas order for the new MeshGuard, single gas wireless monitors. -- Sold wireless AreaRAE Rapid Deployment Kits to several multi-national petroleum and refining companies. -- Delivered QRAE2's and AutoRAE Lite Calibration Stations to the oil sands services sector in Canada. -- Won a major bid to provide an AreaRAE Wireless Gas-Detection Network to the Puguang Gas Field in China. -- In the Hazardous Material Management market: -- Delivered ppbRAE 3000 VOC monitors, EntryRAE 5-gas monitors, HazRAE decision support tools and wireless AreaRAE Rapid Deployment Kits to several fire departments in the Asia-Pacific region. -- In the Industrial Safety market: -- Sold ppbRAE's, MultiRAE Plus and MultiRAE IR Carbon Dioxide monitors, AutoRAE calibration stations and EntryRAE 5-gas monitors to companies in Korea, Taiwan, Canada and Malaysia. 

About RAE Systems

RAE Systems is a leading global provider of rapidly deployable sensor networks that enable customers to identify safety and security threats in real time. Products include [ disposable gas detection tubes ], [ single gas personal monitors ], [ multi-sensor chemical detection ] monitors, [ photoionization (PID) monitors ] for volatile organic compounds (VOCs), [ wireless gas detection ] systems, and [ radiation monitoring networks ] for energy production and refining, industrial and environmental safety, and public and government first responder security sectors. RAE Systems' products are used in over 95 countries by many of the world's leading corporations and by many U.S. government agencies. For more information about RAE Systems, please visit [ www.RAESystems.com ].

Safe Harbor Statement

This press release may contain "forward-looking" statements, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include, without limitation: expressions of "belief," "anticipation," or "expectations" of management; statements as to industry trends or future results of operations of RAE Systems and its subsidiaries; and other statements that are not historical fact. These types of statements address matters that are subject to risks and uncertainties, which could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the general economic and industry factors and receptiveness of the market to RAE Systems and its products. In addition, our forward-looking statements should be considered in the context of other risk factors discussed in our filings with the Securities and Exchange Commission, including but not limited to our annual report on Form 10-K and Form 10-Q filings, available online at [ http://www.sec.gov ]. All forward-looking statements are based on information available to the company on the date hereof, and the company assumes no obligation to update such statements.

 RAE Systems Inc. Condensed Consolidated Balance Sheets (in thousands, except share and par value data) (unaudited) June 30, December 31, 2009 2008 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 15,316 $ 14,845 Trade notes receivable 1,722 1,870 Accounts receivable, net of allowances of $4,840 and $3,472, respectively 19,006 20,961 Accounts receivable from affiliate 151 100 Inventories 14,510 17,604 Prepaid expenses and other current assets 4,716 4,991 Income taxes receivable 846 895 ------------ ------------ Total current assets 56,267 61,266 ------------ ------------ Property and equipment, net 15,996 14,976 Intangible assets, net 2,876 3,342 Investments in unconsolidated affiliates 334 467 Other assets 694 1,124 ------------ ------------ Total assets $ 76,167 $ 81,175 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,392 $ 6,387 Accounts payable to affiliate 76 382 Payable to Fushun shareholder 2 64 Bank lines of credit 3,741 2,584 Accrued liabilities 11,839 12,318 Notes payable to related parties, current 624 1,329 Income taxes payable 454 425 Deferred revenue, current 550 631 ------------ ------------ Total current liabilities 22,678 24,120 ------------ ------------ Deferred revenue, non-current 564 685 Deferred tax liabilities, non-current 357 83 Deferred gain on sale of real estate, non-current 4,761 5,079 Other long-term liabilities 1,362 1,292 Notes payable to related parties, non-current 729 1,219 ------------ ------------ Total liabilities 30,451 32,478 ------------ ------------ COMMITMENTS AND CONTINGENCIES (NOTE 5) SHAREHOLDERS' EQUITY: Common stock, $0.001 par value, 200,000,000 shares authorized; 59,443,914 and 59,443,914 shares issued and outstanding, respectively 59 59 Additional paid-in capital 63,272 62,549 Accumulated other comprehensive income 6,687 6,555 Accumulated deficit (29,185) (25,947) ------------ ------------ Total RAE Systems Inc. shareholders' equity 40,833 43,216 Noncontrolling interest 4,883 5,481 ------------ ------------ Total shareholders' equity 45,716 48,697 ------------ ------------ Total liabilities and shareholders' equity $ 76,167 $ 81,175 ============ ============ RAE Systems Inc. Condensed Consolidated Statements of Operations (in thousands, except share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2009 2008 2009 2008 -------- -------- -------- -------- Net sales $ 19,907 $ 24,647 $ 39,020 $ 42,516 Cost of sales 10,039 11,556 19,822 20,570 -------- -------- -------- -------- Gross profit 9,868 13,091 19,198 21,946 -------- -------- -------- -------- Operating expenses: Sales and marketing 4,849 5,421 9,231 10,801 Research and development 1,384 1,545 2,979 3,281 General and administrative 5,692 5,627 10,105 9,923 -------- -------- -------- -------- Total operating expenses 11,925 12,593 22,315 24,005 -------- -------- -------- -------- Operating (loss) income from continuing operations (2,057) 498 (3,117) (2,059) Other income (expense): Interest income 8 38 17 86 Interest expense (90) (99) (235) (201) Other, net 53 (225) (8) 82 Equity in loss of unconsolidated affiliate (66) (27) (133) (36) -------- -------- -------- -------- (Loss) income from continuing operations before income taxes (2,152) 185 (3,476) (2,128) Income tax expense (401) (469) (360) (665) -------- -------- -------- -------- Loss from continuing operations (2,553) (284) (3,836) (2,793) Gain from discontinued operations, net of tax - 5 - 15 -------- -------- -------- -------- Net loss (2,553) (279) (3,836) (2,778) Net loss (income) attributable to the noncontrolling interest 303 (188) 598 (25) -------- -------- -------- -------- Net loss attributable to RAE Systems Inc. $ (2,250) $ (467) $ (3,238) $ (2,803) ======== ======== ======== ======== Net loss per share-basic and diluted: Continuing operations $ (0.03) $ (0.01) $ (0.05) $ (0.05) Discontinued operations - - - - -------- -------- -------- -------- Net loss per share-basic and diluted $ (0.03) $ (0.01) $ (0.05) $ (0.05) ======== ======== ======== ======== Weighted-average common shares outstanding-Basic 59,359 59,178 59,351 59,089 ======== ======== ======== ======== The following table sets forth the components of our Condensed Consolidated Statements of Operations as a percentage of net sales: Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ------ ------ ------ ------ Net sales 100% 100% 100% 100% Cost of sales 50% 47% 51% 48% ------ ------ ------ ------ Gross profit 50% 53% 49% 52% ------ ------ ------ ------ Operating expenses: Sales and marketing 24% 22% 24% 26% Research and development 7% 6% 7% 8% General and administrative 29% 23% 26% 23% Adjustment to lease abandonment accrual 0% 0% 0% 0% ------ ------ ------ ------ Total operating expenses 60% 51% 57% 57% ------ ------ ------ ------ Operating (loss) income from continuing operations -10% 2% -8% -5% Other income (expense): Interest income 0% 0% 0% 0% Interest expense -1% 0% -1% 0% Other, net 0% -1% 0% 0% Equity in loss of unconsolidated affiliate 0% 0% 0% 0% ------ ------ ------ ------ (Loss) income from continuing operations before income taxes -11% 1% -9% -5% Income tax expense -2% -2% -1% -2% ------ ------ ------ ------ Loss from continuing operations -13% -1% -10% -7% Gain from discontinued operations, net of tax 0% 0% 0% 0% ------ ------ ------ ------ Net loss -13% -1% -10% -7% Net loss (income) attributable to the noncontrolling interest 2% -1% 2% 0% ------ ------ ------ ------ Net loss attributable to RAE Systems Inc. -11% -2% -8% -7% ====== ====== ====== ======