pdvWireless, Inc. Earnings Analysis: Q3, 2016 By the Numbers

pdvWireless, Inc. reports financial results for the quarter ended December 31, 2015.

Highlights

  • Summary numbers: Revenues of USD 0.94 million, Net Earnings of USD -5.24 million, and Earnings per Share (EPS) of USD -0.36.
  • Gross margins narrowed from 63.10% to 0.05% compared to the same period last year, operating (EBITDA) margins now -543.45% from -419.51%.
  • Change in operating cash flow of -398.39% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2014-12-31 2015-03-31 2015-06-30 2015-09-30 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 0.84 0.82 0.84 0.81 0.94
Revenue Growth (%YOY) N/A -14.11 -6.68 30.98 12.54
Earnings (mil) -3.53 -5.58 -4.35 -5.46 -5.24
Earnings Growth (%YOY) N/A -1552.59 -68.15 -80.8 -48.72
Net Margin (%) -421.94 -684.52 -517.45 -672.69 -557.62
EPS -0.28 -0.44 -0.32 -0.38 -0.36
Return on Equity (%) -6.49 -10.38 -7.1 -7.97 -7.78
Return on Assets (%) -6.23 -9.84 -6.78 -7.69 -7.47

Access our Ratings and Scores for pdvWireless, Inc.

Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, PDVW-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if PDVW-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 15.89% and earnings by 3.94% compared to the previous period.

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 63.10% to 0.05%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -419.51% to -543.45% in this time frame. For comparison, gross margins were 36.27% and EBITDA margins were -666.68% in the previous period.

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

PDVW-US‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 15,594.36 days, compared to last year’s level of 13,324.47 days.

Cash Versus Earnings – Sustainable Performance?

PDVW-US‘s year-on-year change in operating cash flow of -398.39% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -422.53% to -560.30% and (2) one-time items that contributed to a decrease in pretax margins from -421.94% to -557.62%

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for pdvWireless, Inc.

Company Profile

pdvWireless, Inc. provides mobile workforce communications and location based solutions that increase the productivity of field-based workers and the efficiency of their dispatch and call center operations. Its patented and industry-validated technology improves team communication and field documentation across a wide array of industries including transportation, distribution, construction, hospitality, waste management and field service. The company is run by Brian McAuley, Morgan O’Brien and John Pescatore and is headquartered in Woodland Park, NJ.

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