Vecima Reports Q1 Fiscal 2018 Results
- Revenue - $14.9M, Gross Margin - 57%, EPS - $0.36
- Cash balances reach $103.2M
- Significant progress on Entra DOCSIS 3.1 platform
VICTORIA, British Columbia, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the three months ended September 30, 2017.
FINANCIAL HIGHLIGHTS
| (Canadian dollars in millions except percentages, employees, and per share data) | Q1FY18 | Q1FY17 | Q4FY17 | |||||||
| Revenue | $ | 14.9 | $ | 20.9 | $ | 14.6 | ||||
| Gross Margin | 57 | % | 52 | % | 51 | % | ||||
| Net Income | $ | 8.0 | $ | 4.0 | $ | (0.1 | ) | |||
| Earnings Per Share1 | $ | 0.36 | $ | 0.18 | $ | (0.01 | ) | |||
| Adjusted Earnings Per Share1, 2 | $ | 0.04 | $ | 0.17 | $ | 0.00 | ||||
| Adjusted EBITDA2 | $ | 2.9 | $ | 7.1 | $ | 2.4 | ||||
| Cash and Short-term Investments | $ | 103.2 | $ | 82.8 | $ | 89.2 | ||||
| Employees | 334 | 451 | 352 | |||||||
| 1Based on weighted average number of shares outstanding. 2Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See “Adjusted EBITDA and Adjusted Earnings Per Share” below. | ||||||||||
BUSINESS HIGHLIGHTS
- Entra Developments:
- Demonstrated Entra Remote PHY node interoperability at industry events with the top two converged cable access platform (CCAP) vendors
- Delivered Entra Legacy QAM Adapter solution into customer labs for evaluation
- Subsequent to the quarter end, Entra Access Switch, Entra Distributed Access Platform and Terrace DVB Commercial Video Gateway received top industry recognition in BTR’s (Broadband Technology Report) 2017 Diamond Technology Reviews - Began sales of the Digital Video Access Platform (DVAP) software upgrade enabling platform to support distributed access architecture
- Completed the sale of YourLink’s Saskatchewan assets for proceeds of $8.7 million
- Declared a quarterly dividend of $0.055 per share
- Subsequent to quarter end, Vecima signed an asset purchase agreement to acquire the video and content delivery business of Concurrent Computer Corporation (“Concurrent”), a US-based software and solutions company operating in the Video on Demand and IP Video Content Delivery, for US$29.0 million in cash subject to certain closing adjustments relating to working capital.
“Fiscal 2018 is off to a productive start with excellent progress on our Entra DOCSIS 3.1 distributed access architecture solution,” said Sumit Kumar, Vecima Networks’ President and CEO. “Significant recent milestones included successfully demonstrating the interoperability of our Entra Remote-PHY Distributed Access node, this after having the product shortlisted by a Tier 1 MSO customer as part of a major RFP. We are also excited to see the continued validation of our solutions by the industry, including the recognition of Entra last month by BTR Diamond Technology Reviews. The judges described the Entra platform as a ‘game changer’ that leads the way towards a software-defined future by improving flexibility and ultimately lowering the total cost of ownership.”
“We made a strategic move to acquire Concurrent’s video and content delivery business that will further enhance Vecima’s growth opportunities. The future of our industry is tied to two rapidly growing technologies that feed off each other – gigabit broadband internet together with IP video. Adding Concurrent’s talent and leading IPTV technology to Vecima’s strong team and powerful portfolio of gigabit broadband platforms ideally positions us to thrive collectively by serving the industry with an end-to-end, massively scalable video and data solution.”
“Financially, we achieved revenues of $14.9 million and Adjusted EBITDA of $2.9 million, which were in line with our expectations for the first quarter of this 2018 transition year. With receipt of the final proceeds from the YourLink Saskatchewan sale, we closed the first quarter with cash balances of $103.2 million, which is available to fund continued development and future acquisitions,” said Mr. Kumar.
As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on December 18, 2017 to shareholders of record as at November 24, 2017.
OUTLOOK FOR FISCAL 2018
Vecima anticipates a year of transition as the North American cable industry prepares for the DOCSIS 3.1 standard. Based on current customer feedback, field trials of various components of Vecima’s new Entra family of DOCSIS 3.1 products are expected to commence in calendar year 2018. Management notes, however, that the plans and priorities of major MSOs continue to evolve, making it difficult to project timelines with certainty.
Demand for some of Vecima’s legacy products is expected to taper off as market saturation is reached and customers focus on next generation products and technologies. Management expects fiscal 2018 to be a year of continued investment and development as it positions Vecima for industry leadership in the emerging DOCSIS 3.1 market and the IP video and content delivery space.
With a strong financial foundation, Vecima is well positioned to pursue its product strategies while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive the Company’s growth and success.
CONFERENCE CALL
A conference call and live audio webcast will be held today, November 9, 2017 at 1 p.m. ET to discuss the Company’s first quarter results. Vecima’s unaudited consolidated financial statements and management’s discussion and analysis for the three months ended September 30, 2017 are available under the Company’s profile at www.SEDAR.com, and at www.vecima.com/financials/.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20171109.html and will be archived on the Vecima website at www.vecima.com/shareholder-events/.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) is a globally recognized leader in creating breakthrough technology solutions that empower network service providers to connect people and enterprises to information and entertainment worldwide. Vecima products for the cable industry allow service providers a cost-effective Last Mile Solution® for both video and broadband access, especially in the demanding business services market segment. Vecima also provides fleet managers the key information and analytics they require to optimally manage their business under the Contigo, NEROglobal, and Fleetlynx brands. For more information, please visit our website at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings Per Share
Adjusted EBITDA and Adjusted Earnings Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted Earnings Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company’s financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2018.
Forward-Looking Statements
This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words “believes”, “may”, “plans”, “will”, “anticipates”, “intends”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such expressions. Forward-looking information in this news release include the following statements: Fiscal 2018 is off to a productive start with excellent progress on Entra; Vecima sees the continued validation of our solutions by the industry; Vecima leads the way towards a software-defined future; DVAP software upgrade enables platform to support distributed access architecture; Vecima’s asset purchase agreement to acquire the video and content delivery business of Concurrent is subject to certain closing adjustments relating to working capital; Vecima’s strategic move to acquire Concurrent will further enhance growth opportunities; the future of our industry is tied to two rapidly growing technologies – gigabit broadband internet and IP video; adding Concurrent’s talent and leading IPTV technology to Vecima’s strong team and powerful portfolio of gigabit broadband platforms ideally positions us to thrive collectively by serving the industry with an end-to-end, massively scalable video and data solution; we have cash balances available to fund continued development and future acquisitions; the dividend payable on December 18, 2017 to shareholders of record as at November 24, 2017; Vecima anticipates a year of transition in fiscal 2018 as the North American cable industry prepares for the DOCSIS 3.1 standard; based on current customer feedback, field trials of various components of Vecima’s new Entra family of DOCSIS 3.1 products are expected to commence in calendar year 2018; management notes that the plans and priorities of major MSOs continue to evolve, making it difficult to project timelines with certainty; demand for some of Vecima’s legacy products is expected to taper off as market saturation is reached and customers focus on next generation products and technologies; management expects fiscal 2018 to be a year of continued investment and development as it positions Vecima for industry leadership in the emerging DOCSIS 3.1 market and IP video and content delivery space; Vecima is well positioned to pursue its product strategies, while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive the Company’s growth and success.
A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading “Risk Factors” in the Company’s Annual Information Form dated September 25, 2017, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
Vecima Networks
Investor Relations - 250-881-1982
[email protected]
| VECIMA NETWORKS INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (unaudited - in thousands of Canadian Dollars) | ||||||||||
| September 30, 2017 | June 30, 2017 | |||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 34,297 | $ | 3,517 | ||||||
| Short-term investments | 68,921 | 85,675 | ||||||||
| Accounts receivable | 7,977 | 12,972 | ||||||||
| Income tax receivable | 2,011 | 2,011 | ||||||||
| Inventories | 13,360 | 13,928 | ||||||||
| Assets held for sale | - | 641 | ||||||||
| Prepaid expenses | 1,049 | 1,258 | ||||||||
| 127,615 | 120,002 | |||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 10,901 | 11,109 | ||||||||
| Goodwill | 6,111 | 6,111 | ||||||||
| Intangible assets | 34,210 | 32,566 | ||||||||
| Investment tax credit | 19,863 | 20,141 | ||||||||
| Deferred tax asset | 3,783 | 4,066 | ||||||||
| $ | 202,483 | $ | 193,995 | |||||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | $ | 7,765 | $ | 6,377 | |
| Dividends payable | 1,231 | - | |||
| Provisions | 537 | 692 | |||
| Deferred revenue | 1,490 | 2,226 | |||
| Current portion of long-term debt | 250 | 250 | |||
| 11,273 | 9,545 | ||||
| Non-current liabilities | |||||
| Long-term debt | 2,167 | 2,208 | |||
| 13,440 | 11,753 | ||||
| Shareholders' equity | |||||
| Share capital | 803 | 803 | |||
| Reserves | 3,978 | 3,965 | |||
| Retained earnings | 184,262 | 177,474 | |||
| 189,043 | 182,242 | ||||
| $ | 202,483 | $ | 193,995 | ||
The accompanying notes are an integral part of these consolidated financial statements.
| VECIMA NETWORKS INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - in thousands of Canadian dollars except net income per share data) | ||||||
| Three months ended September 30, | ||||||
| 2017 | 2016 | |||||
| Sales | $ | 14,882 | $ | 20,886 | ||
| Cost of sales | 6,404 | 10,017 | ||||
| Gross profit | 8,478 | 10,869 | ||||
| Operating expenses | ||||||
| Research and development | 3,163 | 2,849 | ||||
| Sales and marketing | 1,108 | 1,297 | ||||
| General and administrative | 2,610 | 2,464 | ||||
| Stock-based compensation | 13 | 68 | ||||
| Other (income) expense | (82 | ) | 3 | |||
| 6,812 | 6,681 | |||||
| Operating income | 1,666 | 4,188 | ||||
| Finance income | 298 | 253 | ||||
| Foreign exchange (loss) gain | (670 | ) | 483 | |||
| Income before income taxes | 1,294 | 4,924 | ||||
| Income tax expense | 330 | 1,368 | ||||
| Net income and comprehensive income from continuing operations | 964 | 3,556 | ||||
| Net income and comprehensive income from discontinued operations | 7,062 | 487 | ||||
| Net income and comprehensive income | $ | 8,026 | $ | 4,043 | ||
| Net income per share Continuing operations | 0.04 | 0.16 | ||||||||
| Discontinued operations | 0.32 | 0.02 | ||||||||
| Total basic net income per share | $ | 0.36 | $ | 0.18 | ||||||
| Continuing operations | 0.04 | 0.16 | ||||||||
| Discontinued operations | 0.32 | 0.02 | ||||||||
| Total diluted net income per share | $ | 0.36 | $ | 0.18 |
| Weighted average number of common shares | |||
| Shares outstanding - basic | 22,379,651 | 22,402,904 | |
| Shares outstanding - diluted | 22,440,546 | 22,449,479 |
The accompanying notes are an integral part of these consolidated financial statements.
| VECIMA NETWORKS INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited - in thousands of Canadian dollars) | |||||||||||
| Share Capital | Reserves | Retained Earnings | Total | ||||||||
| Balance as at June 30, 2016 | $ | 739 | $ | 3,662 | $ | 164,642 | $ | 169,043 | |||
| Net income and comprehensive income | - | - | 4,043 | 4,043 | |||||||
| Dividends | - | - | (1,232 | ) | (1,232 | ) | |||||
| Shares issued by exercising options | 4 | (1 | ) | - | 3 | ||||||
| Share-based payment expense | - | 68 | - | 68 | |||||||
| Balance as at September 30, 2016 | $ | 743 | $ | 3,729 | $ | 167,453 | $ | 171,925 | |||
| Balance as at June 30, 2017 | $ | 803 | $ | 3,965 | $ | 177,474 | $ | 182,242 | |||
| Net income and comprehensive income | - | - | 8,026 | 8,026 | |||||||
| Dividends | - | - | (1,231 | ) | (1,231 | ) | |||||
| Shares repurchased and cancelled | - | - | (7 | ) | (7 | ) | |||||
| Share-based payment expense | - | 13 | - | 13 | |||||||
| Balance as at September 30, 2017 | $ | 803 | $ | 3,978 | $ | 184,262 | $ | 189,043 | |||
The accompanying notes are an integral part of these consolidated financial statements.
| VECIMA NETWORKS INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited - in thousands of Canadian dollars) | |||||||
| Three months ended | |||||||
| September 30, | |||||||
| 2017 | 2016 | ||||||
| Cash flows from operating activities Net income and total comprehensive income | $ | 964 | $ | 3,556 | |||
| Adjustments to reconcile net income to cash from operating activities | 1,610 | 2,877 | |||||
| Decrease in other long-term liabilities | - | (5 | ) | ||||
| (Decrease) increase in provisions | (154 | ) | 20 | ||||
| Increase in investment tax credit | (67 | ) | (34 | ) | |||
| Net change in non-cash working capital relating to operations | 6,347 | 4,057 | |||||
| Interest paid | (21 | ) | (22 | ) | |||
| Interest received | 319 | 242 | |||||
| Income tax received | - | 11 | |||||
| Income tax paid | - | (13 | ) | ||||
| Net cash provided by continuing operations | 8,998 | 10,689 | |||||
| Net cash provided by discontinued operations | 75 | 396 | |||||
| Net cash provided by operations | 9,073 | 11,085 | |||||
| Cash flows used in investing activities Purchase of property, plant and equipment | (218 | ) | (388 | ) | |||
| Proceeds from sale of property, plant and equipment | 3 | - | |||||
| Purchase of short-term investments | (5,946 | ) | (10,253 | ) | |||
| Proceeds on sale of short-term investments | 22,700 | 1,000 | |||||
| Deferred development costs | (3,542 | ) | (2,846 | ) | |||
| Purchase of indefinite and finite-life intangible assets | (22 | ) | (16 | ) | |||
| Net cash provided (used) by continuing operations | 12,975 | (12,503 | ) | ||||
| Net cash provided by discontinued operations | 8,732 | 181 | |||||
| Net cash provided (used) by investing | 21,707 | (12,322 | ) | ||||
| Cash flows used in financing activities Proceeds from exercised stock options | - | 4 | |||||
| Proceeds from government grants | 41 | 112 | |||||
| Repayment of long-term debt | (41 | ) | (62 | ) | |||
| Net cash provided by continuing operations | - | 54 | |||||
| Net cash provided by discontinued operations | - | 660 | |||||
| Net cash provided by financing | - | 714 | |||||
| Increase (decrease) in cash and cash equivalents during the period | 30,780 | (523 | ) | ||||
| Cash and cash equivalents, beginning of period | 3,517 | 22,222 | |||||
| Cash and cash equivalents, end of period | $ | 34,297 | $ | 21,699 | |||
The accompanying notes are an integral part of these consolidated financial statements.
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