Vecima Reports Q4 and Fiscal 2019 Results
Vecima Reports Q4 and Fiscal 2019 Results
Canada NewsWire
VICTORIA, Sept. 26, 2019
- FY2019 Revenue - $85.0M, Gross Margin - 53%, Cash Balance - $44.4M
- Secured first master purchase agreement covering Entra DAA products with a Tier 1 MSO
- Broadened Entra engagements, lab trials and field trials with widening set of cable operators globally
- Accelerated lead in emerging global IPTV market with technology differentiation and capturing customers on the forefront of modern IPTV rollouts
VICTORIA, Sept. 26, 2019 /CNW/ - Vecima Networks Inc. (TSX:VCM) today reported financial results for the three and twelve month periods ended June 30, 2019.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except percentages, | Q4FY19 | Q4FY18 | FY2019 | FY2018 | |
Revenue | $20.7 | $24.4 | $85.0 | $78.1 | |
Gross Margin | 49% | 55% | 53% | 54% | |
Net (Loss) / Income | $(3.0) | $0.7 | $(3.5) | $10.8 | |
(Loss) / Earnings per share1 | $(0.13) | $0.03 | $(0.15) | $0.48 | |
Adjusted (Loss) / Earnings per share1, 2, 3 | $(0.08) | $0.04 | $(0.09) | $0.17 | |
Adjusted EBITDA2 | $0.3 | $4.4 | $8.2 | $14.5 | |
Cash and Short-term Investments | $44.4 | $57.7 | $44.4 | $57.7 | |
Employees | 364 | 419 | 364 | 419 | |
1Based on weighted average number shares outstanding | |||||
2Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be | |||||
3Starting in Q4 fiscal 2019, we have changed our definition and calculation of Adjusted Earnings Per Share. For a reconciliation of Adjusted | |||||
"Fiscal 2019 was a year of concerted moves and important achievements as we broadly solidified our market position in preparation for the most profound transitions unfolding in the industry: DOCSIS Distributed Access Architecture (DAA) and IPTV," said Sumit Kumar, Vecima Networks' President and CEO.
"On the DAA front, we have now secured our first master purchase agreement covering our Entra Remote PHY Nodes and Monitor products with a Tier 1 operator entering field trials. Our DAA products are also progressing successfully through lab trials with a diverse mix of other Tier 1, Tier 2 and Tier 3 MSOs. These are important milestones on the path to commercialization of our new Entra technologies, and we anticipate deployments will initiate in fiscal 2020."
"In our Content Delivery and Storage segment, we continue to make strides in the emerging global IPTV market. During fiscal 2019, we significantly advanced our industry-leading MediaScaleX™ platform and built and expanded customer relationships with some of the world's largest MSOs. We believe our Content Delivery and Storage segment has the potential for over 20% sales growth in fiscal 2020 stemming from the pipeline of opportunities for migration to IP video networks, including linear broadcast, cloud DVR and time-shift TV."
"Vecima achieved revenues of $85.0 million in fiscal 2019, a 9% increase over last year as a result of our acquisition of the Content Delivery and Storage business. While financially, fiscal 2019 reflected the overall transition of the business translating into a net loss of $3.5 million, the results are representative of a point in time for Vecima with DAA revenue yet to come. Thanks to the strategic steps taken in fiscal 2019 to tighten our R&D priorities, streamline our administrative processes and manage our business and finances prudently, we are moving into fiscal 2020 in a very strong financial position and ready to embark on growth."
BUSINESS HIGHLIGHTS
Video and Broadband Solutions
- Neared commercial roll-out of Entra family of Distributed Access Architecture products
- In various phases of lab and field trials with a total of 16 Tier 1, 2 & 3 operators in North America, Central and Latin America, Europe and Asia
- Significantly broadened Entra products portfolio to include Entra Remote PHY Monitor, which provides industry-leading service assurance for DAA, and Entra video QAM manager, a solution that allows service providers to maintain today's primary video services within DAA architecture at the lowest cost in the industry
- Signed master purchase agreement covering Entra Remote PHY nodes and Remote PHY Monitor with a Tier 1 MSO
- Market-leading Terrace family of commercial video platforms enjoyed continued wide adoption among some of the world's largest cable operators
- Supported a Tier 1 customer's MPEG-4 network expansion with the TC600E
- Secured initial revenue with a leading European MSO for next-generation Terrace DVB
Content Delivery and Storage
- Continued expansion into IPTV market with 17 operators now using Vecima platforms to deliver IP video
- Expanded relationship with NOS, one of the largest communications and entertainment groups in Europe, to deploy the MediaScaleX™ platform
- Secured agreements with two global resellers for transcoding and storage solutions
- Partnered with one of the world's top five MSOs to use the MediaScaleX™ platform to expand services to over 75% of its footprint and more efficiently serve on-demand video across its network of cable providers
- Total of six customers have deployed, or are in the process of deploying, our cloud DVR solution
- On May 31, 2019, expanded Vecima's end-to-end solutions capability by acquiring the assets of Root6, a UK-based software and solutions company specializing in the video ingest and delivery automation solutions used by some of the world's leading content creators
Telematics
- Continued incremental growth in fleet management market
- Entered the movable assets market, securing initial customers in the restoration segment of the construction industry
Mr. Kumar concluded, "Fiscal 2020 promises to be a significant year for Vecima. We firmly believe we are one of the vendors best able to take advantage of near-term opportunities in the DAA and IPTV markets and we are sharply focused on supporting our customers' deployment plans with highly differentiated, world-class technologies."
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 November 1, 2019 to shareholders of record as at October 11, 2019.
CONFERENCE CALL
A conference call and live audio webcast will be held today, September 26, 2019 at 1 p.m. ET to discuss the Company's fourth quarter and full year results. Vecima's audited annual consolidated financial statements and management's discussion and analysis for the three months and year ended June 30, 2019 are available under the Company's profile at www.SEDAR.com, and at https://vecima.com/investor-relations/financial-reports/
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/vecima20190926.html and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/
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 Earnings / (Loss) Per Share
Adjusted EBITDA and Adjusted Earnings / (Loss) 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 / (Loss) 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 / (Loss) Per Share, investors should refer to Vecima's Management's Discussion and Analysis for the fourth 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: Fiscal 2019 was a year of concerted moves and important achievements as we broadly solidified our market position in preparation for the most profound transitions unfolding in the industry: DOCSIS Distributed Access Architecture (DAA) and IPTV; Our DAA products are also progressing successfully through lab trials with a diverse mix of other Tier 1, Tier 2 and Tier 3 MSOs. These are important milestones on the path to commercialization of our new Entra technologies, and we anticipate deployments will initiate in fiscal 2020; In our Content Delivery and Storage segment, we continue to make strides in the emerging global IPTV market; During fiscal 2019, we significantly advanced our industry-leading MediaScaleX™ platform and built and expanded customer relationships with some of the world's largest MSOs; We believe our Content Delivery and Storage segment has the potential for over 20% sales growth in fiscal 2020 stemming from the pipeline of opportunities for migration to IP video networks, including linear broadcast, cloud DVR and time-shift TV; While financially, fiscal 2019 reflected the overall transition of the business translating into a net loss, the results are representative of a point in time for Vecima with DAA revenue yet to come; Thanks to the strategic steps taken in fiscal 2019 to tighten our R&D priorities, streamline our administrative processes and manage our business and finances prudently, we are moving into fiscal 2020 in a very strong financial position and ready to embark on growth; Fiscal 2020 promises to be a significant year for Vecima; We firmly believe we are one of the vendors best able to take advantage of near-term opportunities in the DAA and IPTV markets and we are sharply focused on supporting our customers' deployment plans with highly differentiated, world-class technologies.
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 26, 2019, 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. | |||||
As at June 30, | 2019 | 2018 | |||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | $ | 19,834 | $ | 11,034 | |
Short‑term investments | 24,569 | 46,660 | |||
Accounts receivable | 15,154 | 18,047 | |||
Income tax receivable | 437 | 2,519 | |||
Inventories | 12,724 | 15,020 | |||
Prepaid expenses | 2,235 | 1,608 | |||
Contract assets | 187 | - | |||
75,140 | 94,888 | ||||
Non‑current assets | |||||
Property, plant and equipment | 12,526 | 12,105 | |||
Goodwill | 15,131 | 14,903 | |||
Intangible assets | 67,887 | 62,324 | |||
Other long‑term assets | 1,017 | 788 | |||
Investment tax credits | 24,355 | 22,692 | |||
Deferred tax asset | 4,714 | 2,339 | |||
$ | 200,770 | $ | 210,039 | ||
Liabilities | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | $ | 11,699 | $ | 12,151 | |
Provisions | 804 | 520 | |||
Income tax payable | 55 | 358 | |||
Deferred revenue | 4,046 | 4,206 | |||
Current portion of long‑term debt | 250 | 250 | |||
16,854 | 17,485 | ||||
Non‑current liabilities | |||||
Deferred revenue | 763 | 524 | |||
Provisions | 332 | 352 | |||
Deferred tax liability | 324 | 414 | |||
Long‑term debt | 1,729 | 1,979 | |||
20,002 | 20,754 | ||||
Shareholders' equity | |||||
Share capital | 1,916 | 1,756 | |||
Reserves | 4,104 | 4,041 | |||
Retained earnings | 173,738 | 182,411 | |||
Accumulated other comprehensive income | 1,010 | 1,077 | |||
180,768 | 189,285 | ||||
$ | 200,770 | $ | 210,039 | ||
Vecima Networks Inc. | |||||
Years ended June 30, | |||||
2019 | 2018 | ||||
Sales | $ | 85,032 | $ | 78,104 | |
Cost of sales | 40,155 | 36,254 | |||
Gross profit | 44,877 | 41,850 | |||
Operating expenses | |||||
Research and development | 18,973 | 15,101 | |||
Sales and marketing | 14,112 | 10,463 | |||
General and administrative | 16,596 | 13,248 | |||
Impairment of intangible assets | - | 22 | |||
Restructuring costs | 2,176 | - | |||
Share‑based compensation | 112 | 80 | |||
Other (income) expense | (418) | (317) | |||
51,551 | 38,597 | ||||
Operating (loss) income | (6,674) | 3,253 | |||
Finance income | 879 | 1,132 | |||
Foreign exchange (loss) gain | (66) | 930 | |||
(Loss) income before income taxes | (5,861) | 5,315 | |||
Income tax (recovery) expense | (2,402) | 1,532 | |||
Net (loss) income from continuing operations | (3,459) | 3,783 | |||
Net income from discontinued operations | - | 7,019 | |||
Net (loss) income | (3,459) | 10,802 | |||
Other comprehensive (loss) income | |||||
Item that may be subsequently reclassed to net income | |||||
Exchange differences on translating foreign operations | (67) | 1,077 | |||
Comprehensive (loss) income | $ | (3,526) | $ | 11,879 | |
Net (loss) income per share | |||||
Continuing operations | (0.15) | 0.17 | |||
Discontinued operations | - | 0.31 | |||
Total basic net (loss) income per share | $ | (0.15) | $ | 0.48 | |
Continuing operations | (0.15) | 0.17 | |||
Discontinued operations | - | 0.31 | |||
Total diluted net (loss) income per share | $ | (0.15) | $ | 0.48 | |
Weighted average number of common shares | |||||
Shares outstanding ‑ basic | 22,362,031 | 22,414,944 | |||
Shares outstanding ‑ diluted | 22,362,031 | 22,456,821 | |||
Vecima Networks Inc. | |||||||||||
Share | Reserves | Retained | Accumulated | Total | |||||||
Balance as at June 30, 2017 | $ | 803 | $ | 3,965 | $ | 177,474 | $ | - | $ | 182,242 | |
Net income | - | - | 10,802 | - | 10,802 | ||||||
Other comprehensive income | - | - | - | 1,077 | 1,077 | ||||||
Dividends | - | - | (4,932) | - | (4,932) | ||||||
Share repurchased and cancelled | (8) | - | (933) | - | (941) | ||||||
Shares issued by exercising options | 13 | (4) | - | - | 9 | ||||||
Shares issued in exchange for | 948 | - | - | - | 948 | ||||||
short‑term investments | |||||||||||
Share‑based payment expense | - | 80 | - | - | 80 | ||||||
Balance as at June 30, 2018 | $ | 1,756 | $ | 4,041 | $ | 182,411 | $ | 1,077 | $ | 189,285 | |
Balance as at June 30, 2018 | $ | 1,756 | $ | 4,041 | $ | 182,411 | $ | 1,077 | $ | 189,285 | |
IFRS 15 transition | - | - | (102) | - | (102) | ||||||
Adjusted balance at June 30, 2018 | 1,756 | 4,041 | 182,309 | 1,077 | 189,183 | ||||||
Net loss | - | - | (3,459) | - | (3,459) | ||||||
Other comprehensive loss | - | - | - | (67) | (67) | ||||||
Dividends | - | - | (4,920) | - | (4,920) | ||||||
Share repurchased and cancelled | (2) | - | (192) | - | (194) | ||||||
Shares issued by exercising options | 162 | (49) | - | - | 113 | ||||||
Share‑based payment expense | - | 112 | - | - | 112 | ||||||
Balance as at June 30, 2019 | $ | 1,916 | $ | 4,104 | $ | 173,738 | $ | 1,010 | $ | 180,768 | |
Vecima Networks Inc. | |||||
Years ended June 30, | |||||
2019 | 2018 | ||||
Operating activities | |||||
Net (loss) income from continuing operations | $ | (3,459) | $ | 3,783 | |
Adjustments to reconcile net (loss) income to cash | 8,413 | 9,574 | |||
Decrease in other long‑term assets | (10) | (13) | |||
Increase (decrease) in provisions | 265 | (214) | |||
Increase in investment tax credits | (67) | (238) | |||
Net change in non‑cash working capital relating to operations | 3,672 | 7,506 | |||
Interest paid | (98) | (92) | |||
Interest received | 1,047 | 1,174 | |||
Income tax received | 2,413 | - | |||
Income tax paid | (741) | (503) | |||
Increase in long‑term contract assets | 7 | - | |||
Cash provided by continuing operations | 11,442 | 20,977 | |||
Cash provided by discontinued operations | - | 63 | |||
Cash provided by operating activities | 11,442 | 21,040 | |||
Investing activities | |||||
Purchase of property, plant and equipment | (2,868) | (1,816) | |||
Proceeds from sale of property, plant and equipment | 25 | 80 | |||
Purchase of short‑term investments | (2,007) | (54,434) | |||
Proceeds on sale of short‑term investments | 24,098 | 93,449 | |||
Deferred development costs | (16,057) | (16,407) | |||
Purchase of indefinite and finite‑life intangible assets | (86) | (134) | |||
Business acquisitions | (823) | (37,379) | |||
Proceeds from the sale of intangible assets | 202 | - | |||
Cash provided by (used in) continuing operations | 2,484 | (16,641) | |||
Cash provided by discontinued operations | - | 8,732 | |||
Cash provided by (used in) investing activities | 2,484 | (7,909) | |||
Financing activities | |||||
Proceeds from government grants | 221 | 49 | |||
Repurchase and cancellation of shares | (194) | (941) | |||
Repayment of long‑term debt | (250) | (229) | |||
Dividends paid | (4,920) | (4,932) | |||
Proceeds from shares issued through exercised options | 113 | 9 | |||
Proceeds from issuance of share capital | - | 948 | |||
Cash used by financing activities | (5,030) | (5,096) | |||
Increase in cash and cash equivalents, net | 8,896 | 8,035 | |||
Effect of change in exchange rates on cash held | (96) | (518) | |||
Cash and cash equivalents, beginning of year | 11,034 | 3,517 | |||
Cash and cash equivalents, end of year | $ | 19,834 | $ | 11,034 | |
SOURCE Vecima Networks Inc.
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