Vecima Reports Q2 Fiscal 2019 Results
Vecima Reports Q2 Fiscal 2019 Results
Canada NewsWire
VICTORIA, Feb. 7, 2019
- Revenue - $22.7M, Gross Margin - 56.7%, EPS - $0.09, Adj. EBITDA - $5.5M
- Record Quarter for Content Delivery and Storage Segment
- Significant increase in global activity and customer engagement with Entra
VICTORIA, Feb. 7, 2019 /CNW/ - Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology solutions, today reported financial results for the three and six months ended December 31, 2018.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except | Q2FY19 | Q1FY19 | Q2FY18 | |
Revenue | $22.7 | $21.3 | $14.8 | |
Gross Margin | 56.7% | 52.5% | 52.3% | |
Net Income/(Loss) | $2.1 | ($1.1) | $1.3 | |
Earnings/(Loss) Per Share1 | $0.09 | ($0.05) | $0.06 | |
Adjusted EBITDA2 | $5.5 | $1.9 | $3.6 | |
Cash and Short-term Investments | $44.5 | $53.4 | $61.0 | |
Employees | 389 | 384 | 3143 | |
1 Based on weighted average number of shares outstanding. | ||||
"We achieved record results in our Content Delivery and Storage segment during the second quarter, while continuing to invest in differentiated technology solutions that position Vecima at the forefront of the large global markets we serve," said Sumit Kumar, Vecima Networks' President and CEO.
"Vecima is capitalizing on the continued build-up in the emerging IPTV market, which supports leading-edge services like time-shift TV, streaming and Cloud DVR using our innovative platforms. Our IPTV deployments continued to expand in Q2, and we see an expansive pipeline of future opportunities in the U.S., European, Latin America, and Asia-Pacific markets as the industry begins the broader transition to IPTV."
As anticipated, Content Delivery and Storage revenues in the second quarter were also bolstered by timing changes that delayed orders in Q1. Overall demand for our MediaScaleX™ platforms continued to grow.
"In our Video and Broadband segment, we made further strides in development of our Entra family of products which addresses the industry evolution to DOCSIS 3.1 distributed access architecture (DAA). We are now in lab trials with multiple MSOs, including Tier 1, 2 and 3 operators, and while the broader industry operationalization of DAA is widely acknowledged to be progressing slowly, we are on track for field trials in calendar 2019," added Mr. Kumar.
BUSINESS HIGHLIGHTS
Video and Broadband Solutions
- Progressing through lab trials with multiple MSOs
- Initiated lab trials for Entra Remote PHY Node with a European Tier 1 MSO
- On track to move to DAA field trials in calendar 2019
Content Delivery and Storage
- Achieved record quarter with revenues of $14.3 million
- MediaScaleX//Storage™ revenues hit all-time high, signifying the differentiation of Vecima's object storage technology in media-intensive environments, such as Cloud DVR and time shift
- Further expansion into accelerating IPTV market with another MSO, bringing to nine, the number of operators using Vecima platforms for core IPTV video services
Telematics
- Following shortly after the Q4FY18 contract win with City of Victoria, selected by another major Western Canadian municipality for deployment related to winter and summer equipment fleets
- Achieved initial revenue contribution from newly released Nero Equipment Tracking product which targets the asset tracking market and augments Vecima's fleet management business
Added Mr. Kumar, "Going forward, demand for gigabit internet and IPTV is creating vast new markets for Vecima. We intend to continue to invest in our leading technologies and capitalize on the strong differentiation of our products as these wide-reaching network evolutions roll out."
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 March 18, 2019 to shareholders of record as at February 22, 2019.
CONFERENCE CALL
A conference call and live audio webcast will be held today, February 7, 2019 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 and six months ended December 31, 2018 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/vecima20190207.html and will be archived on the Vecima website at www.vecima.com/shareholder-events/.
About Vecima Networks
Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world's leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high-capacity broadband network access, and streamline data analytics. For more information, please visit 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 second quarter of fiscal 2019.
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 includes the following statements: We are continuing to invest in differentiated technology solutions that position Vecima at the forefront of the large global markets we serve; we are capitalizing on the continued build-up in the emerging IPTV market, which supports leading-edge services like time-shift TV, streaming and Cloud DVR using our innovative platforms; we see an expansive pipeline of future opportunities in the U.S., European, Latin America, and Asia-Pacific markets as the industry begins the broader transition to IPTV; overall demand for our MediaScaleX™ platforms continued to grow; we made further strides in development of our Entra family of products which addresses the industry evolution to DOCSIS 3.1 distributed access architecture; while the broader industry operationalization of DAA is widely acknowledged to be progressing slowly, we are on track to move to DAA field trials in calendar 2019; demand for gigabit internet and IPTV is creating vast new markets for Vecima; we intend to continue to invest in our leading technologies and capitalize on the strong differentiation of our products as these wide-reaching network evolutions roll out.
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 27, 2018, 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 Inc. | ||||
December 31, | June 30, | |||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 8,024 | $ | 11,034 |
Short‑term investments | 36,451 | 46,660 | ||
Accounts receivable | 19,101 | 17,997 | ||
Income tax receivable | 2,316 | 2,519 | ||
Inventories | 16,725 | 15,020 | ||
Prepaid expenses | 2,244 | 1,658 | ||
Contract assets | 414 | - | ||
85,275 | 94,888 | |||
Non‑current assets | ||||
Property, plant and equipment | 11,416 | 12,105 | ||
Goodwill | 15,234 | 14,903 | ||
Intangible assets | 66,844 | 62,324 | ||
Other long‑term assets | 1,224 | 788 | ||
Investment tax credit | 23,764 | 22,692 | ||
Deferred tax asset | 2,425 | 2,339 | ||
$ | 206,182 | $ | 210,039 | |
Liabilities | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $ | 9,491 | $ | 12,151 |
Income tax payable | 539 | 358 | ||
Provisions | 431 | 520 | ||
Deferred revenue | 3,378 | 4,206 | ||
Current portion of long‑term debt | 250 | 250 | ||
14,089 | 17,485 | |||
Non‑current liabilities | ||||
Deferred revenue | 899 | 524 | ||
Provisions | 321 | 352 | ||
Deferred tax liability | 430 | 414 | ||
Long‑term debt | 1,833 | 1,979 | ||
17,572 | 20,754 | |||
Shareholders' equity | ||||
Share capital | 1,755 | 1,756 | ||
Reserves | 4,115 | 4,041 | ||
Retained earnings | 180,686 | 182,411 | ||
Accumulated other comprehensive income | 2,054 | 1,077 | ||
188,610 | 189,285 | |||
$ | 206,182 | $ | 210,039 | |
Vecima Networks Inc. | ||||||||||||
Three months ended | Six months ended | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Sales | $ | 22,654 | $ | 14,752 | $ | 43,989 | $ | 29,634 | ||||
Cost of sales | 9,814 | 7,032 | 19,958 | 13,436 | ||||||||
Gross profit | 12,840 | 7,720 | 24,031 | 16,198 | ||||||||
Operating expenses | ||||||||||||
Research and development | 4,567 | 3,045 | 9,171 | 6,208 | ||||||||
Sales and marketing | 3,252 | 1,113 | 6,452 | 2,221 | ||||||||
General and administrative | 4,006 | 2,540 | 8,009 | 5,150 | ||||||||
Restructuring costs | - | - | 757 | - | ||||||||
Stock‑based compensation | 40 | 14 | 74 | 27 | ||||||||
Other (income) expense | (278) | (89) | (366) | (171) | ||||||||
11,587 | 6,623 | 24,097 | 13,435 | |||||||||
Operating income (loss) | 1,253 | 1,097 | (66) | 2,763 | ||||||||
Finance income | 27 | 386 | 249 | 684 | ||||||||
Foreign exchange gain (loss) | 1,593 | 300 | 1,076 | (370) | ||||||||
Income before income taxes | 2,873 | 1,783 | 1,259 | 3,077 | ||||||||
Income tax expense | 823 | 454 | 305 | 784 | ||||||||
Net income from continuing operations | 2,050 | 1,329 | 954 | 2,293 | ||||||||
Net income from discontinued operations | - | 1 | - | 7,063 | ||||||||
Net income | 2,050 | 1,330 | 954 | 9,356 | ||||||||
Other comprehensive income | ||||||||||||
Item that may be subsequently reclassed to net income | ||||||||||||
Exchange differences on translating | ||||||||||||
foreign operations | 1,395 | - | 977 | - | ||||||||
Comprehensive income | $ | 3,445 | $ | 1,330 | $ | 1,931 | $ | 9,356 | ||||
Net income per share | ||||||||||||
Continuing operations | 0.09 | 0.06 | 0.04 | 0.10 | ||||||||
Discontinued operations | - | - | - | 0.32 | ||||||||
Total basic net income per share | $ | 0.09 | $ | 0.06 | $ | 0.04 | $ | 0.42 | ||||
Continuing operations | 0.09 | 0.06 | 0.04 | 0.10 | ||||||||
Discontinued operations | - | - | - | 0.32 | ||||||||
Total diluted net income per share | $ | 0.09 | $ | 0.06 | $ | 0.04 | $ | 0.42 | ||||
Weighted average number of common shares | ||||||||||||
Shares outstanding ‑ basic | 22,368,234 | 22,447,389 | 22,370,641 | 22,413,520 | ||||||||
Shares outstanding ‑ diluted | 22,371,522 | 22,499,411 | 22,376,886 | 22,470,074 | ||||||||
Vecima Networks Inc. | ||||||||||||
Share | Reserves | Retained | Accumulated | Total | ||||||||
Balance at June 30, 2017 | $ | 803 | $ | 3,965 | $ | 177,474 | $ | - | $ | 182,242 | ||
Net income | - | - | 9,356 | - | 9,356 | |||||||
Dividends | - | - | (2,467) | - | (2,467) | |||||||
Share repurchased and cancelled | - | - | (75) | - | (75) | |||||||
Shares issued by exercising options | 9 | (3) | - | - | 6 | |||||||
Shares issued in exchange for | - | |||||||||||
short‑term investments | 948 | - | - | 948 | ||||||||
Share‑based payment expense | - | 27 | - | - | 27 | |||||||
Balance at December 31, 2017 | $ | 1,760 | $ | 3,989 | $ | 184,288 | $ | - | $ | 190,037 | ||
Balance at June 30, 2018 | $ | 1,756 | $ | 4,041 | $ | 182,411 | $ | 1,077 | $ | 189,285 | ||
IFRS 15 transition impact | - | - | (102) | - | (102) | |||||||
Adjusted balance at June 30, 2018 | 1,756 | 4,041 | 182,309 | 1,077 | 189,183 | |||||||
Net income | - | - | 954 | - | 954 | |||||||
Other comprehensive income | - | - | - | 977 | 977 | |||||||
Dividends | - | - | (2,461) | - | (2,461) | |||||||
Share repurchased and cancelled | (1) | - | (116) | - | (117) | |||||||
Share‑based payment expense | - | 74 | - | - | 74 | |||||||
Balance at December 31, 2018 | $ | 1,755 | $ | 4,115 | $ | 180,686 | $ | 2,054 | $ | 188,610 | ||
Vecima Networks Inc. | |||||||||
Three months ended | Six months ended | ||||||||
2018 | 2017 | 2018 | 2017 | ||||||
Cash flows from operating activities | |||||||||
Net income from continuing operations | $ | 2,050 | $ | 1,329 | $ | 954 | $ | 2,293 | |
Adjustments to reconcile net income to cash from | 3,239 | 1,899 | 5,230 | 3,509 | |||||
Increase in other long‑term assets | (198) | - | (179) | - | |||||
Decrease in provisions | (241) | (61) | (137) | (215) | |||||
Increase in investment tax credit | (21) | (66) | (48) | (133) | |||||
Net‑change in non‑cash working capital | (5,807) | (2,823) | (6,217) | 3,525 | |||||
Interest paid | (26) | (22) | (50) | (43) | |||||
Interest received | 250 | 328 | 531 | 647 | |||||
Income tax received | 147 | - | 409 | - | |||||
Income tax paid | (106) | - | (457) | - | |||||
Net cash (used) provided by continuing operations | (713) | 584 | 36 | 9,583 | |||||
Net cash (used) provided by discontinued operations | - | (3) | - | 72 | |||||
Net cash (used) provided by operations | (713) | 581 | 36 | 9,655 | |||||
Cash flows from investing activities | |||||||||
Purchase of property, plant and equipment | (350) | (250) | (1,090) | (468) | |||||
Proceeds from sale of property, plant | 3 | - | 3 | 3 | |||||
Purchase of short‑term investments | (1,212) | (2,275) | (1,418) | (8,221) | |||||
Proceeds on sale of short‑term investments | 5,900 | 15,591 | 11,627 | 38,291 | |||||
Deferred development costs | (4,530) | (3,636) | (8,873) | (7,178) | |||||
Purchase of intangible assets | (14) | (18) | (45) | (40) | |||||
Business acquisition | - | (37,277) | - | (37,277) | |||||
Proceeds from sale of intangible assets | 202 | - | 202 | - | |||||
Net cash (used) provided by continuing operations | (1) | (27,865) | 406 | (14,890) | |||||
Net cash provided by discontinued operations | - | - | - | 8,732 | |||||
Net cash (used) provided by investing | (1) | (27,865) | 406 | (6,158) | |||||
Cash flows from financing activities | |||||||||
Proceeds from exercised stock options | - | 6 | - | 6 | |||||
Proceeds from government grants | - | 9 | - | 49 | |||||
Repurchase and cancellation of shares | (61) | (7) | (117) | (7) | |||||
Repayment of long‑term debt | (84) | (63) | (146) | (104) | |||||
Proceeds from issuing shares | - | 948 | - | 948 | |||||
Dividends paid | (2,461) | (2,467) | (2,461) | (2,467) | |||||
Net cash used by financing | (2,606) | (1,574) | (2,724) | (1,575) | |||||
(Decrease) increase in cash and cash | (3,320) | (28,858) | (2,282) | 1,922 | |||||
Effect of change in exchange rate on cash held | (903) | - | (728) | - | |||||
Cash, beginning of period | 12,247 | 34,297 | 11,034 | 3,517 | |||||
Cash, end of period | $ | 8,024 | $ | 5,439 | $ | 8,024 | $ | 5,439 | |
SOURCE Vecima Networks Inc.
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