QIS Update #9 - 2019 - NTG Clarity Networks releases Q1 financial results and receives purchase orders - May 23rd 2019
Included in this update:
- NTG Clarity Releases Q1 Financial and Operating Results
- NTG Clarity Announces 4 Renewal Purchase Orders
We are nearing the end of the first quarter reporting period and results from the companies we follow have been mixed as expected. NTG Clarity's numbers showed very good improvement over Q4 numbers and was the most profitable quarter in several years.
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NTG Clarity Networks Inc. (NCI:TSX-V)
Current Price: $0.04 (coverage commenced Feb. 4/10 - $0.045)
NTG Clarity Networks Announces Q1 2019 Financial Results
NTG Clarity Networks Inc. has released its first quarter results for the period ended March 31, 2019.
Significant recent company milestones include:
- - In February, 2019, closed a shares for debt private placement which reduced payables by $360,000;
- - Returned the company to profitability in Q1 2019;
- - Income from operations of $452,078;
- - Subsequent to quarter end, in May, 2019, the company issued a series of press releases, starting with the announcement of a new sales model, and then announcing a new project with a new customer worth $2.4-million.
Consolidated revenue for the three months ended March 31, 2019, was $3,616,344, compared with $4,049,061 for the same period in 2018, and is made up of product-related revenue, professional services and a small amount for hardware. Professional service revenue continues to be an important strategic source of revenue for the company, given its generally reoccurring nature (71 per cent). The contribution of product-related revenue increased to 19 per cent in Q1 2019 as the company works to make product sales a more balanced part of NTG's revenue stream.
Gross margin for Q1 2019 was $1,583,959 or 44 per cent compared with $1,547,831 or 38 per cent for the same period in 2018. The company continues to work in all regions to optimize the cost of sales for its revenue growth.
General and administrative expenses for the three months ended March 31, 2019, were $584,195 compared with $621,086 in Q1 2018, as management worked to reduce expenses. This 6 per cent reduction was due to the continued reduction of salaries as the company reduce staff and salaries as contracts allow.
Selling expenses were also reduced by 6 per cent during Q1 2019 and totalled $398,995 compared with $423,523 during the first quarter of 2018. Selling and marketing expenses consist primarily of sales staff remuneration, commissions, travel, advertising, consulting and trade show costs.
During the first quarter of 2019 the corporation recorded net income of $304,719 as compared with net income of $160,482 in Q1 2018. This is a substantial improvement, and the company continues to work to optimize costs for its current revenue.
Working capital as at March 31, 2019, was ($4,081,521) compared with ($4,861,655) as at Dec. 31, 2018. The company has no long-term debt.
Looking toward the future, NTG is very pleased with having returned the company to profitability in Q1 2019. It has already experienced success with its new sales model, announced on May 6, and it expects to announce a number of additional contracts under this model as they are received.
The company is also optimistic that Saudi Arabia, its principal operating region where NTG Clarity has been doing business for over 13 years, is starting to show signs of recovery. Although the company's Saudi Arabia revenue decreased significantly in 2018, the spending reduction in the government sector seems to be improving in 2019, and the company looks forward to winning new projects accordingly.
NTG Clarity's cost cutting measures implemented over the last couple of years have shown significant improvement in the bottom line performance of the company but the more meaningful cuts in this regard are now coming to an end. The company is now focusing on improving revenue through legacy sales channels as well as through new sales partnerships which are already showing significant promise. The company would like to thank all of its shareholders who have supported the company over the last couple of very challenging years and look forward to returning the company to solid sales growth and profitability.
NTG CLARITY RECEIVES 4 PURCHASE ORDERS IN EGYPT ESTIMATED TO BE 6.355 EGYPTIAN POUNDS (APPROX $500K CAD)
NTG Clarity Networks Inc. has received four purchase orders in Egypt. These purchase orders are for a one-year term and are estimated at a value of 6.355 Egyptian pounds (around $500,000). This is for the renewal of services provided to this major telecom provider under previous work orders.
Egypt has been a growth area for NTG in the last few years and the company looks forward to continuing this growth in 2019.
"We are very pleased with these new POs as it demonstrates the continuing trust of our customer. This also reflects the increasing satisfaction and confidence of our customers with regards to our extensive expertise in telecom systems and operator requirements," said Kristine Lewis, president of NTG Clarity.
QIS CAPITAL: The first quarter of 2019 was the most profitable quarter for NTG Clarity in the last several years. The company has returned to its historical profit margins and with cost cutting measures put in place over the last couple of years, NTG Clarity is now generating good profit on marginally lower revenues. The company has recently announced two sets of new contract wins and expects to be announcing additional purchase orders in the near future.
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