VICTORIA, BRITISH COLUMBIA--(Marketwired - May 14, 2013) - 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 March 31, 2013. All figures are in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS") unless otherwise stated.
FINANCIAL HIGHLIGHTS
| (CAD dollars in millions except percentages, headcount, and per share data) | Q3FY2013 | Q2FY2013 | Q3FY2012 | ||||||
| Revenue | $ | 21.6 | $ | 23.6 | $ | 25.8 | |||
| Gross Margin | 44 | % | 41 | % | 35 | % | |||
| EBITDA1 | $ | 4.6 | $ | 12.9 | $ | 9.6 | |||
| Adjusted EBITDA1 (removes gains on sale of assets and stock-based compensation) | $ | 4.5 | $ | 3.9 | $ | 2.7 | |||
| Net Income | $ | 2.0 | $ | 9.1 | $ | 6.2 | |||
| Earnings per share (based on weighted average number shares outstanding | $ | 0.09 | $ | 0.41 | $ | 0.28 | |||
| Cash and marketable securities | $ | 25.0 2 | $ | 41.4 | $ | 14.1 | |||
| Headcount | 596 | 617 | 612 | ||||||
| 1 EBITDA and adjusted EBITDA 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 EBITDA and adjusted EBITDA should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of our financial performance or as a measure of our liquidity and cash flows. For a reconciliation of EBITDA and adjusted EBITDA, investors should refer to Management's Discussion and Analysis for the current quarter. EBITDA and adjusted EBITDA are provided because they provide investors with an alternative measure of Vecima's financial performance. |
| 2 Cash and marketable securities totaled $25.0 million at March 31, 2013. The Company completed a special cash distribution on March 27, 2013 of approximately $22.3 million. |
"Gross margin improved to 44% and this is the third consecutive quarter with margins exceeding 40%," said Dr. Surinder Kumar, CEO of Vecima.
Adjusted EBITDA increased to $4.5 million in Q3 up from $3.9 million in Q2 despite revenue dropping by approximately $2 million as lower margin product transitioned to end of life. The improvement was primarily driven by an increase in the volume of newer, higher margin products sold. Vecima recorded earnings per share of $0.09 for the quarter.
"Our MSO Business Services products continue to be major contributors to our overall revenue. Vecima experienced an almost 50% increase in Terrace QAM sales in Q3 compared to the prior quarter," stated Kumar. At quarter end, cash and marketable securities totaled $25.0 million even after the Company completed a special cash distribution earlier in the quarter of approximately $22.3 million.
MSO BUSINESS SERVICES
Terrace Family
- Sales decreased to $5.0 million compared to $6.8 million in Q2 FY13.
- As expected, Terrace Family revenue has leveled off from its peak in FY12 which was attributed to pent up demand for a new version from our MSO customers.
Terrace QAM
- Sales increased 48% from $5.0 million in Q2 FY13 to $7.3 million this quarter. The increase is attributed to greater uptake by MSO customers who are rapidly deploying high definition video services within the hospitality market space.
CABLE HEADEND
OEM QAM Modules
- As the product continues to move towards end of life, we saw sales drop to $0.4 million in Q3.
OEM Return Path Demodulator and CableVista
- Sales for our OEM return path demodulator increased from $1.2 million to $1.5 million; while CableVista sales decreased from $1.5 million to $1.1 million from Q2 to Q3 FY13.
Digital Broadband Access Platform
- Our new digital broadband access platform progressed through multiple MSO end customer trials which were led by our OEM customer during Q3. Feedback has been very positive and we expect to start shipping in commercial volume during Q4 FY13.
FLEET MANAGEMENT - FLEETLYNX
- Subsequent to Q3, the Company hired a General Manager for its FleetLynx product line to intensify focus on the commercial rollout and to capitalize on customer opportunities.
BROADBAND WIRELESS
- Sales increased from $2.1 million in Q2 FY13 to $2.4 million this period. The increase is attributed to an improvement in software defined radio sales.
YOURLINK
- Revenue remained relatively flat at $3.2 million for Q3 FY13.
OUTLOOK
We expect our FY13 gross margins will be above our historical range of 35 to 40%. As a result of improving margins and controlling costs, we expect our FY13 adjusted EBITDA will improve by over 40% versus FY12. We are lowering our estimate for capital expenditures for FY13 to be in the range of $2.8 million to $3.5 million.
We expect our cash position to further strengthen in future quarters.
CONFERENCE CALL
A conference call and live audio webcast will be held on May 14, 2013 at 1 p.m. ET to discuss the Company's second quarter results. Vecima's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2013 are available under the Company's profile at www.SEDAR.com, and at http://www.vecima.com/financials_ir.php.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-5340. The webcast will be available in real time at http://services.choruscall.ca/links/vecima140513.html and will be archived on the Vecima website at http://www.vecima.com/events_ir.php.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima's hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima's solutions to deliver services to a converging worldwide broadband market, including what are commonly known as "triple play" (voice, video and data) and "quadruple play" (voice, video, data and wireless) services. Vecima's solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end users, commonly referred to as "the last mile", by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima's products are directed at two principal markets: Converged Wired Solutions and Broadband Wireless. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video. More information is available at our website at www.vecima.com.
Forward-Looking Statements
Certain statements in this press release may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements regarding management's intentions, belief or current expectations with respect to market and general economic conditions, future sales, future shipping volumes, future cash position, revenue expectations, future costs, future operating performance, plans to sell non-core assets, and plans to continue to explore opportunities to maximize shareholder value, including the possibility of future cash dividends and distributions. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include, but are not limited to, the current significant general economic uncertainty and credit and financial market volatility and the distinctive characteristics of Vecima's operations and industry and customer demand that may have a material impact on, or constitute risk factors in respect of Vecima's future financial performance, as set forth under the heading "Risk Factors" in the Company's Annual Information Form dated September 28, 2012, a copy of which is available at www.sedar.com. In addition, although the forward-looking statements in this press release are based on what management believes are reasonable assumptions, such assumptions may prove to be incorrect. Consequently, readers should not place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Vecima disclaims any intention or obligation to update or revise any forward-looking statements, as a result of new information, future events or otherwise, except as required by law.
| VECIMA NETWORKS INC. | |||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||
| (unaudited - in thousands of Canadian dollars) | |||||
| |
|
March 31, 2013 |
|
June 30, 2012 |
|
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 14,471 | $ | 19,549 | |
| Marketable securities | 10,577 | - | |||
| Accounts receivable | 14,588 | 23,818 | |||
| Income tax receivable | 4,459 | 13,600 | |||
| Inventories | 29,922 | 29,663 | |||
| Prepaid expenses | 1,127 | 1,076 | |||
| 75,144 | 87,706 | ||||
| Non-current assets | |||||
| Property, plant and equipment | 26,160 | 28,158 | |||
| Assets held for resale | - | 385 | |||
| Intangible assets | 12,287 | 10,819 | |||
| Investment tax credit asset | 36,416 | 30,384 | |||
| Deferred tax asset | 2,313 | 5,129 | |||
| $ | 152,320 | $ | 162,581 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | $ | 9,721 | $ | 13,653 | |
| Provisions | 761 | 974 | |||
| Income tax payable | 568 | 806 | |||
| Deferred revenue | 1,477 | 1,311 | |||
| Current portion of long-term debt | 250 | 250 | |||
| 12,777 | 16,994 | ||||
| Non-current liabilities | |||||
| Other long-term liabilities | 355 | 342 | |||
| Provisions | 1,478 | 1,522 | |||
| Long-term debt | 3,292 | 3,479 | |||
| 17,902 | 22,337 | ||||
| Shareholders' equity | |||||
| Share capital | 12,183 | 34,482 | |||
| Reserves | 2,800 | 2,761 | |||
| Retained earnings | 119,435 | 103,001 | |||
| 134,418 | 140,244 | ||||
| $ | 152,320 | $ | 162,581 | ||
| The accompanying notes are an integral part of these condensed interim 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 March 31, |
Nine months ended March 31, |
|||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Sales | $ | 21,630 | $ | 25,838 | $ | 70,133 | $ | 67,055 | ||||
| Cost of sales | 12,010 | 16,709 | 40,746 | 42,775 | ||||||||
| Gross margin | 9,620 | 9,129 | 29,387 | 24,280 | ||||||||
| Operating expenses | ||||||||||||
| Research and development | 1,823 | 2,893 | 5,976 | 8,741 | ||||||||
| Sales and marketing | 1,369 | 1,567 | 3,748 | 3,814 | ||||||||
| General and administrative | 4,462 | 4,585 | 13,442 | 14,130 | ||||||||
| Stock-based compensation | 9 | 16 | 39 | 66 | ||||||||
| Other (income) | (266 | ) | (7,118 | ) | (13,635 | ) | (15,543 | ) | ||||
| 7,397 | 1,943 | 9,570 | 11,208 | |||||||||
| Operating income | 2,223 | 7,186 | 19,817 | 13,072 | ||||||||
| Finance costs | 52 | 58 | 333 | 272 | ||||||||
| Finance income | 556 | 220 | 894 | 835 | ||||||||
| Income before income taxes | 2,727 | 7,348 | 20,378 | 13,635 | ||||||||
| Income tax expense | 711 | 1,192 | 3,944 | 2,023 | ||||||||
| Net income and | ||||||||||||
| total comprehensive income | $ | 2,016 | $ | 6,156 | $ | 16,434 | $ | 11,612 | ||||
| Net income per share | |||||||||||||
| Basic | $ | 0.09 | $ | 0.28 | $ | 0.74 | $ | 0.52 | |||||
| Diluted | $ | 0.09 | 0.28 | $ | 0.73 | $ | 0.52 | ||||||
| Weighted average number of Common | |||||||||||||
| Shares outstanding - basic | 22,322,328 | 22,316,767 | 22,322,328 | 22,316,767 | |||||||||
| Shares outstanding - diluted | 22,455,545 | 22,316,767 | 22,455,545 | 22,316,767 | |||||||||
| The accompanying notes are an integral part of these condensed interim 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, 2011 | $ | 34,482 | $ | 2,678 | $ | 89,735 | $ | 126,895 | ||
| Net income and total comprehensive income | - | - | 11,612 | 11,612 | ||||||
| Share-based payment expense | - | 66 | - | 66 | ||||||
| Balance as at March 31, 2012 | $ | 34,482 | $ | 2,744 | $ | 101,347 | $ | 138,573 | ||
| Balance as at June 30, 2012 | $ | 34,482 | $ | 2,761 | $ | 103,001 | $ | 140,244 | ||
| Net income and total comprehensive income | - | - | 16,434 | 16,434 | ||||||
| Shares issued by exercising options | 23 | - | - | 23 | ||||||
| Return of capital to shareholders | (22,322 | ) | - | - | (22,322 | ) | ||||
| Share-based payment expense | - | 39 | - | 39 | ||||||
| Balance as at March 31, 2013 | $ | 12,183 | $ | 2,800 | $ | 119,435 | $ | 134,418 | ||
| VECIMA NETWORKS INC. | |||||||||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| (unaudited - in thousands of Canadian dollars) | |||||||||||||
| Three months ended March 31, |
Nine months ended March 31, |
||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||
| Cash flows from operating activities | |||||||||||||
| Net income | $ | 2,016 | $ | 6,156 | $ | 16,434 | $ | 11,612 | |||||
| Add (deduct) items not requiring cash | |||||||||||||
| Gain on the sale of property, plant and equipment | (44 | ) | (5 | ) | (30 | ) | (275 | ) | |||||
| Gain on the sale of assets held for resale | - | - | (3,604 | ) | - | ||||||||
| Gain on sale of intangible assets | - | (6,896 | ) | (9,358 | ) | (14,619 | ) | ||||||
| Depreciation of property, plant and equipment | 1,201 | 1,401 | 3,621 | 4,009 | |||||||||
| Amortization of deferred development costs | 559 | 779 | 1,676 | 3,299 | |||||||||
| Amortization of finite-life intangible assets | 37 | 23 | 110 | 106 | |||||||||
| Stock-based compensation | 9 | 16 | 39 | 66 | |||||||||
| Deferred income tax expense | 820 | 310 | 2,816 | 483 | |||||||||
| Income tax (recovery) expense | (109 | ) | 882 | 1,128 | 1,540 | ||||||||
| Interest expense | 52 | 58 | 156 | 272 | |||||||||
| Interest income | (220 | ) | (25 | ) | (325 | ) | (70 | ) | |||||
| (Decrease) increase in other long-term liabilities | (53 | ) | 149 | 13 | 306 | ||||||||
| (Decrease) increase in provisions | (64 | ) | (44 | ) | (257 | ) | 272 | ||||||
| Increase in investment tax credit asset | (125 | ) | (335 | ) | (3,401 | ) | (968 | ) | |||||
| Net change in non-cash working capital relating to operations | (1,520 | ) | (5,997 | ) | 8,116 | (6,621 | ) | ||||||
| Interest paid | (25 | ) | (67 | ) | (120 | ) | (261 | ) | |||||
| Income tax paid | (237 | ) | - | (1,366 | ) | - | |||||||
| Interest received | 219 | 25 | 320 | 67 | |||||||||
| Income tax received | 6,148 | - | 6,148 | - | |||||||||
| 8,664 | (3,570 | ) | 22,116 | (782 | ) | ||||||||
| Cash flows provided by investing activities | |||||||||||||
| Purchase of property, plant and equipment | (469 | ) | (772 | ) | (1,725 | ) | (2,483 | ) | |||||
| Proceeds from the sale of property, plant and equipment | 71 | 12 | 132 | 1,572 | |||||||||
| Proceeds from the sale of assets held for resale | - | - | 3,989 | - | |||||||||
| Proceeds from the sale of intangible assets | - | 7,262 | 9,738 | 15,509 | |||||||||
| Purchase of marketable securities | (26,276 | ) | - | (42,250 | ) | - | |||||||
| Proceeds from the sale of marketable securities | 31,673 | - | 31,673 | 4 | |||||||||
| Deferred development costs | (2,255 | ) | (1,168 | ) | (6,245 | ) | (4,403 | ) | |||||
| Purchase of indefinite and finite-life intangible assets | (12 | ) | (191 | ) | (20 | ) | (205 | ) | |||||
| 2,732 | 5,143 | (4,708 | ) | 9,994 | |||||||||
| Cash flows used in financing activities | |||||||||||||
| Proceeds from shares issued through exercised options | 18 | - | 23 | - | |||||||||
| Return of capital to shareholders | (22,322 | ) | - | (22,322 | ) | - | |||||||
| Repayment of long-term debt | (41 | ) | (62 | ) | (187 | ) | (187 | ) | |||||
| (22,345 | ) | (62 | ) | (22,486 | ) | (187 | ) | ||||||
| (Decrease) increase in cash during the year | (10,949 | ) | 1,511 | (5,078 | ) | 9,025 | |||||||
| Cash and cash equivalents, beginning of year | 25,420 | 12,609 | 19,549 | 5,095 | |||||||||
| Cash and cash equivalents, end of year | $ | 14,471 | $ | 14,120 | $ | 14,471 | $ | 14,120 | |||||
Contact Information:
Investor Relations
250-881-1982
invest@vecima.com
www.vecima.com