pdvWireless, Inc. :PDVW-US: Earnings Analysis: 2016 By the Numbers : July 22, 2016

pdvWireless, Inc. reports financial results for the year ended March 31, 2016.

Highlights

  • Gross margins narrowed from 63.45% to -1.32% compared to the same period last year, operating (EBITDA) margins now -603.17% from -443.53%.
  • Change in operating cash flow of -565.13% 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:

N/A N/A 2013 2015 2016
Relevant Numbers (Annual)
Revenues N/A N/A 3.43 3.17 3.54
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings N/A N/A -1.24 -14.71 -21.83
Earnings Growth (YOY) N/A N/A N/A -1086.7 -48.35
Net Margin N/A N/A -36.18 -463.93 -616
EPS N/A N/A -9.78 -1.46 -1.54
Return on Equity N/A N/A N/A -13.94 -9.16
Return on Assets N/A N/A -143.81 -12.87 -8.7

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Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 63.45% to -1.32%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -443.53% to -603.17% in this time frame. For comparison, gross margins were 63.45% and EBITDA margins were -443.53% 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.

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 13,575.00 days, compared to last year’s level of 6,547.88 days.

Cash Versus Earnings – Sustainable Performance?

PDVW-US‘s year-on-year change in operating cash flow of -565.13% 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 -446.56% to -618.87% and (2) one-time items that contributed to a decrease in pretax margins from -463.93% to -616.00%

Access our Ratings and Scores for pdvWireless, Inc.

Company Profile

pdvWireless, Inc. engages in the provision of mobile workforce communications and location based solutions. It also involves in location based solutions focused on increasing the productivity of customers’ field-based workers and efficiency of dispatch and call center operations. The company was founded by Peter Joel Lasensky and Richard Edward Rohmann in 1997 and is headquartered in Woodland Park, NJ.

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