Vecima Reports Q3 Fiscal 2019 Results
Vecima Reports Q3 Fiscal 2019 Results
Canada NewsWire
VICTORIA, May 9, 2019
- Revenue - $20.3M, Gross Margin 52.6%, Cash Balance: $47.2M
- Entra Remote PHY Node and Monitor driving forward in lab evaluations at multiple operators
- Q3 revenue for Video and Broadband Solutions increased 78% from Q2
VICTORIA, May 9, 2019 /CNW/ - Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology solutions, today reported financial results for the three and nine months ended March 31, 2019.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except | Q3FY19 | Q2FY19 | Q3FY18 | |
Revenue | $20.3 | $22.7 | $24.1 | |
Gross Margin | 52.6% | 56.7% | 51.3% | |
Net (Loss)/Income | ($1.5) | $2.1 | $0.7 | |
(Loss)/Earnings Per Share1 | ($0.07) | $0.09 | $0.03 | |
Adjusted (Loss)/Earnings Per Share1, 2 | ($0.07) | $0.08 | $0.03 | |
Adjusted EBITDA2 | $0.4 | $5.5 | $3.8 | |
Cash and Short-term Investments | $47.2 | $44.5 | $64.1 | |
Employees | 390 | 389 | 410 | |
1Based on weighted average number of shares outstanding. | ||||
"We made significant progress in the third quarter as we position Vecima for industry leadership both in the DOCSIS 3.1 Distributed Access Architecture ("DAA") market and in the IP video content delivery and storage space," said Sumit Kumar, Vecima Networks' President and CEO.
"Our Entra products are well along the commercialization path and provide industry leading features and performance to cable operators. We remain highly focused on realizing near-term opportunities with customers that are closest to a DAA transition. Our R&D priorities are closely aligned with this objective and we continue to see field trial activity building in calendar 2019."
"In our Content Delivery and Storage segment, third quarter sales were lower than anticipated. As is typical for this segment, revenues varied significantly from our record Q2 results, largely as a result of order timing. We expect revenue momentum to resume in Q4 and continue to anticipate strong contribution from this segment on a full-year basis."
BUSINESS HIGHLIGHTS
Video and Broadband Solutions
- Continued progress on Entra DAA family of products
- On-site lab engagement with a diverse group of Tier 1 and Tier 2 cable operators
- Entra Remote PHY Node and Remote PHY Monitor have entered next series of formal lab evaluations
- On track to move to DAA field trials with several customers
- Significant deployment of TC600E with Tier 1 customer undertaking an MPEG-4 densification program
- Market leading Terrace family of commercial video platforms continue wide adoption across largest operators
Content Delivery and Storage
- Quarterly revenue fluctuation related to order timing; revenue momentum expected to resume in Q4 as overall penetration of IPTV continues
Telematics
- Completed installation of PathView, our winter operations tracking interface, as part of our fleet management solution for the City of Victoria
Added Mr. Kumar, "Across the company we are focused on realizing the emerging opportunities in our core markets. In our Video and Broadband Solutions segment, some of the larger cable operators have been delayed in their roll out to DAA, though a number of operators are now making definitive progress toward field trials and deployment. Vecima is prepared for the first revenue opportunities as they become available."
"In our Content Delivery and Storage segment, we are also making excellent strides in the IPTV market and continue to see an expansive pipeline of new opportunities in the U.S., European, Latin American and Asia–Pacific markets."
"We intend to keep investing in Vecima's future while continuing to assess attractive acquisitions in emerging technology that will complement and augment our existing product lines, helping to drive our growth and success," 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 June 17, 2019 to shareholders of record as at May 24, 2019.
CONFERENCE CALL
A conference call and live audio webcast will be held today, May 9, 2019 at 1 p.m. ET to discuss the Company's third quarter results. Vecima's unaudited condensed consolidated financial statements and management's discussion and analysis for the three and nine months ended March 31, 2019 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/vecima20190509.html and will be archived on the Vecima website at http://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 our website at www.vecima.com.
Adjusted EBITDA and Adjusted (Loss)/Earnings Per Share
Adjusted EBITDA and Adjusted (Loss)/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 (Loss)/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 (Loss)/Earnings Per Share, investors should refer to Vecima's Management's Discussion and Analysis for the third 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 made significant progress in the third quarter as we position Vecima for industry leadership both in the DOCSIS 3.1 Distributed Access Architecture ("DAA") market and in the IP video content delivery and storage space; our Entra products are well along the commercialization path and provide industry leading features and performance to top Tier cable operators; we remain highly focused on realizing near-term opportunities with customers that are closest to a DOCSIS 3.1 DAA transition; our R&D priorities are closely aligned with this objective and we continue to anticipate field trials in calendar 2019; as is typical for this segment, revenues varied significantly as a result of order timing; we expect revenue momentum to resume in Q4 and continue to anticipate strong contribution from this segment on a full-year basis; we are on track to move to DAA field trials with several customers; market leading Terrace family of commercial video platforms continue wide adoption across largest operators; quarterly revenue fluctuation related to order timing; revenue momentum is expected to resume in Q4 as overall penetration of IPTV continues; we are focused on realizing the emerging opportunities in our core markets; some of the larger cable operators have been delayed in their roll out to DAA; a number of operators are now making definitive progress towards field trials and deployment; Vecima is prepared for the first revenue opportunities as they become available; we are making excellent strides in the IPTV market for and continue to see an expansive pipeline of new opportunities in the U.S., European, Latin American and Asia–Pacific markets; we intend to keep investing in Vecima's future while continuing to assess attractive acquisitions in emerging technology that will complement and augment our existing product lines, helping to drive our 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 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. | |||
Condensed Interim Consolidated Statements of Financial Position | |||
(unaudited - in thousands of Canadian dollars) | |||
March 31, | June 30, | ||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 19,033 | $ 11,034 | |
Short‑term investments | 28,143 | 46,660 | |
Accounts receivable | 15,213 | 17,997 | |
Income tax receivable | 2,453 | 2,519 | |
Inventories | 14,567 | 15,020 | |
Prepaid expenses | 2,355 | 1,658 | |
Contract assets | 216 | - | |
81,980 | 94,888 | ||
Non‑current assets | |||
Property, plant and equipment | 11,489 | 12,105 | |
Goodwill | 15,047 | 14,903 | |
Intangible assets | 67,765 | 62,324 | |
Other long‑term assets | 996 | 788 | |
Investment tax credits | 24,275 | 22,692 | |
Deferred tax asset | 2,828 | 2,339 | |
$ 204,380 | $ 210,039 | ||
Liabilities | |||
Current liabilities | |||
Accounts payable and accrued liabilities | $ 10,543 | $ 12,151 | |
Deferred revenue | 4,969 | 4,206 | |
Provisions | 349 | 520 | |
Income tax payable | 5 | 358 | |
Current portion of long‑term debt | 250 | 250 | |
16,116 | 17,485 | ||
Non‑current liabilities | |||
Deferred revenue | 824 | 524 | |
Provisions | 327 | 352 | |
Deferred tax liability | 33 | 414 | |
Long‑term debt | 1,792 | 1,979 | |
19,092 | 20,754 | ||
Shareholders' equity | |||
Share capital | 1,754 | 1,756 | |
Reserves | 4,143 | 4,041 | |
Retained earnings | 177,921 | 182,411 | |
Accumulated other comprehensive income | 1,470 | 1,077 | |
185,288 | 189,285 | ||
$ 204,380 | $ 210,039 | ||
Vecima Networks Inc. | |||||||||||||
Condensed Interim Consolidated Statements of Income | |||||||||||||
and Other Comprehensive Income | |||||||||||||
(unaudited - in thousands of Canadian dollars except net income per share data) | |||||||||||||
Three months ended | Nine months ended | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Sales | $ 20,328 | $ 24,124 | $ 64,317 | $ 53,758 | |||||||||
Cost of sales | 9,642 | 11,743 | 29,600 | 25,179 | |||||||||
Gross profit | 10,686 | 12,381 | 34,717 | 28,579 | |||||||||
Operating expenses | |||||||||||||
Research and development | 4,797 | 4,466 | 13,967 | 10,674 | |||||||||
Sales and marketing | 4,029 | 4,015 | 10,481 | 6,236 | |||||||||
General and administrative | 4,247 | 4,119 | 12,256 | 9,269 | |||||||||
Restructuring costs | - | - | 757 | - | |||||||||
Share‑based compensation | 28 | 22 | 102 | 49 | |||||||||
Other expense (income) | (69) | (54) | (435) | (225) | |||||||||
13,032 | 12,568 | 37,128 | 26,003 | ||||||||||
Operating (loss) income | (2,346) | (187) | (2,411) | 2,576 | |||||||||
Finance (loss) income | 301 | 237 | 550 | 921 | |||||||||
Foreign exchange (loss) gain | (619) | 846 | 457 | 476 | |||||||||
(Loss) income before income taxes | (2,664) | 896 | (1,404) | 3,973 | |||||||||
Income tax (recovery) expense | (1,203) | 194 | (898) | 978 | |||||||||
Net (loss) income from continuing operations | (1,461) | 702 | (506) | 2,995 | |||||||||
Net income from discontinued operations | - | 1 | - | 7,064 | |||||||||
Net (loss) income | (1,461) | 703 | (506) | 10,059 | |||||||||
Other comprehensive (loss) income | |||||||||||||
Item that may be subsequently reclassed to net income | |||||||||||||
Exchange differences on translating foreign operations | (584) | 627 | 393 | 627 | |||||||||
Comprehensive (loss) income | $ (2,045) | $ 1,330 | $ (113) | $ 10,686 | |||||||||
Net (loss) income per share | |||||||||||||
Continuing operations | (0.07) | 0.03 | (0.02) | 0.13 | |||||||||
Discontinued operations | - | - | - | 0.32 | |||||||||
Total basic net (loss) income per share | $ (0.07) | $ 0.03 | $ (0.02) | $ 0.45 | |||||||||
Continuing operations | (0.07) | 0.03 | (0.02) | 0.13 | |||||||||
Discontinued operations | - | - | - | 0.32 | |||||||||
Total diluted net (loss) income per share | $ (0.07) | $ 0.03 | $ (0.02) | $ 0.45 | |||||||||
Weighted average number of common shares | |||||||||||||
Shares outstanding ‑ basic | 22,355,755 | 22,443,158 | 22,378,195 | 22,423,255 | |||||||||
Shares outstanding ‑ diluted | 22,355,755 | 22,480,304 | 22,378,195 | 22,473,428 | |||||||||
Vecima Networks Inc. | ||||||
Condensed Interim Consolidated Statements of Changes in Equity | ||||||
(unaudited - in thousands of Canadian dollars) | ||||||
Share | Reserves | Retained | Accumulated | Total | ||
Balance at June 30, 2017 | $ 803 | $ 3,965 | $ 177,474 | $ - | $ 182,242 | |
Net income | - | - | 10,059 | - | 10,059 | |
Other comprehensive income | - | - | - | 627 | 627 | |
Dividends | - | - | (3,701) | - | (3,701) | |
Share repurchased and cancelled | (6) | - | (592) | - | (598) | |
Shares issued by exercising options | 13 | (4) | - | - | 9 | |
Shares issued in exchange for short‑term investments | 948 | - | - | - | 948 | |
Share‑based compensation | - | 49 | - | - | 49 | |
Balance at March 31, 2018 | $ 1,758 | $ 4,010 | $ 183,240 | $ 627 | $ 189,635 | |
Balance at June 30, 2018 | $ 1,756 | $ 4,041 | $ 182,411 | $ 1,077 | $ 189,285 | |
IFRS 15 transition | - | - | (102) | - | (102) | |
Adjusted balance at July 1, 2018 | 1,756 | 4,041 | 182,309 | 1,077 | 189,183 | |
Net loss | - | - | (506) | - | (506) | |
Other comprehensive income | - | - | - | 393 | 393 | |
Dividends | - | - | (3,690) | - | (3,690) | |
Share repurchased and cancelled | (2) | - | (192) | - | (194) | |
Share‑based compensation | - | 102 | - | - | 102 | |
Balance at March 31, 2019 | $ 1,754 | $ 4,143 | $ 177,921 | $ 1,470 | $ 185,288 | |
Vecima Networks Inc. | |||||
Condensed Interim Consolidated Statements of Cash Flows | |||||
(unaudited - in thousands of Canadian dollars) | |||||
Three months ended | Nine months ended | ||||
2019 | 2018 | 2019 | 2018 | ||
Cash flows from operating activities | |||||
Net (loss) income from continuing operations | $ (1,461) | $ 702 | $ (506) | $ 2,995 | |
Adjustments to reconcile net income to cash from operating activities | 1,642 | 2,790 | 6,872 | 6,299 | |
Decrease (increase) in other long‑term assets | 197 | 26 | (10) | 26 | |
Decrease in provisions | (69) | (4) | (206) | (219) | |
Increase in investment tax credit | (30) | (63) | (78) | (196) | |
Net‑change in non‑cash working capital relating to operations | 8,448 | 7,004 | 2,259 | 10,529 | |
Interest paid | (23) | (23) | (74) | (66) | |
Interest received | 242 | 260 | 773 | 907 | |
Income tax received | - | - | 409 | - | |
Income tax paid | (342) | - | (799) | - | |
Net cash provided by continuing operations | 8,604 | 10,692 | 8,640 | 20,275 | |
Net cash provided by discontinued operations | - | 1 | - | 73 | |
Net cash provided by operations | 8,604 | 10,693 | 8,640 | 20,348 | |
Cash flows from investing activities | |||||
Purchase of property, plant and equipment | (699) | (782) | (1,789) | (1,250) | |
Proceeds from sale of property, plant and equipment | 5 | 68 | 8 | 71 | |
Purchase of short‑term investments | (263) | (35,969) | (1,681) | (44,190) | |
Proceeds from sale of short‑term investments | 8,571 | 42,386 | 20,198 | 80,677 | |
Deferred development costs | (4,322) | (4,418) | (13,195) | (11,596) | |
Purchase of intangible assets | (40) | (84) | (85) | (124) | |
Business acquisition | - | (102) | - | (37,379) | |
Proceeds from sale of intangible assets | - | - | 202 | - | |
Net cash provided (used) by continuing operations | 3,252 | 1,099 | 3,658 | (13,791) | |
Net cash provided by discontinued operations | - | - | - | 8,732 | |
Net cash provided (used) by investing | 3,252 | 1,099 | 3,658 | (5,059) | |
Cash flows from financing activities | |||||
Proceeds from exercised stock options | - | 3 | - | 9 | |
Proceeds from government grants | 147 | - | 147 | 49 | |
Repurchase and cancellation of shares | (77) | (591) | (194) | (598) | |
Repayment of long‑term debt | (41) | (62) | (187) | (166) | |
Proceeds from issuing shares | - | - | - | 948 | |
Dividends paid | (1,229) | (1,234) | (3,690) | (3,701) | |
Net cash used by financing | (1,200) | (1,884) | (3,924) | (3,459) | |
Increase in cash and cash equivalents during the period | 10,656 | 9,908 | 8,374 | 11,830 | |
Effect of change in exchange rate on cash held | 353 | (406) | (375) | (406) | |
Cash and cash equivalents, beginning of period | 8,024 | 5,439 | 11,034 | 3,517 | |
Cash and cash equivalents, end of period | $ 19,033 | $ 14,941 | $ 19,033 | $ 14,941 | |
SOURCE Vecima Networks Inc.
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