Foreign currency has impact on Mitel's 2015 Q2 bottom line

Mitel’s second-quarter results were “significantly impacted” by foreign currency fluctuations, the Ottawa-based company’s chief financial officer said Thursday.

“Continued focus on operational execution across the company enabled us to deliver another quarter of solid results despite ongoing currency headwinds, which impacted revenue by approximately $29 million on a constant currency basis," Steve Spooner said in a statement.

For the three months ending June 30, Mitel posted pro forma revenues of $298.3 million. Accounting for foreign currency, that is down from the $325 million posted in the second quarter a year ago, but using a constant currency, the total increased slightly from $296 million in 2014.

Mitel’s pro forma adjusted EBITDA was $32.2 million, consistent with the previous year on a constant currency basis. Its gross margin was 53.6 per cent, down from 53.4 per cent in the second quarter of 2014.

The company posted a GAAP net loss of $11.6 million, or 10 cents per share, compared with net earnings of $800,000 for the same quarter last year.

The pro forma numbers assume Mitel’s recent mobile acquisition, Mavenir, was part of the company during the second quarter of 2014. Mavenir, which became Mitel’s mobile division in April, posted year-over-year revenue growth of 35 per cent, CEO Richard McBee said.

“Three months in, I’m more convinced than ever in the value of this deal,” Mr. McBee said in a conference call. “The full opportunity is still ahead of us.”

With the first phase of Mavenir’s integration now complete, he said it was time for the second phase, transition from “growth at all cost to a profitable growth model.”

Mitel’s cloud business also continued to grow, with 235,000 cloud seats installed during the quarter. The company posted cloud revenue of $25.3 million, a 21 per cent year-over-year increase. As of June 30, Mitel had installed 1.6 million cloud seats, 700,000 more than a year ago.

Mr. McBee said the company was “well-positioned to capitalize on the cloud trend.”

Mitel (TSX: MNW) is projecting third-quarter revenue of between $275 million and $300 million with gross margins between 52 per cent and 54 per cent. In midday trading, the firm’s shares were trading at $11.13 on the Toronto Stock Exchange and $8.49 on the Nasdaq, a drop of more than 11 per cent.