VICTORIA, BRITISH COLUMBIA--(Marketwired - Nov. 12, 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 September 30, 2013. All figures are in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS") unless otherwise stated.
"Results in the first quarter were in line with our plan for fiscal 2014. We delivered on our stated focus with very strong gross margin and EBITDA," said Sumit Kumar, President and CEO. "A new customer win for the Terrace Family and the launch of our new digital video access platform were highlights in the first quarter."
| FINANCIAL HIGHLIGHTS | |||||||||
| (CAD dollars in millions except percentages, headcount, and per share data) | Q1FY2014 | Q4FY2013 | Q1FY2013 | ||||||
| Revenue | 21.7 | 21.8 | 24.7 | ||||||
| Gross Margin | 47 | % | 45 | % | 40 | % | |||
| EBITDA1 | 4.5 | 5.3 | 4.5 | ||||||
| Net income | 5.4 | 2.7 | 5.3 | ||||||
| Earnings per share (based on weighted average number shares outstanding) | $ | 0.24 | $ | 0.12 | $ | 0.24 | |||
| Cash and marketable securities | 36.6 | 31.8 | 25.7 | ||||||
| Headcount | 555 | 571 | 619 | ||||||
| 1 EBITDA does 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 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, investors should refer to Management's Discussion and Analysis for the current quarter. EBITDA is provided because it provides investors with an alternative measure of Vecima's financial performance. | |||||||||
MSO BUSINESS SERVICES
Terrace Family
- Sales increased to $6.9 million from $5.3 million in Q4 FY13.
- As demonstrated by leaders in the industry, the conversion to all digital has proven itself to be a key driver of network evolution as MSOs prepare for next generation services. We are seeing additional MSOs begin the conversion and we added a new large MSO customer in the first quarter. Our leading MSO customer, with whom we began the all-digital program for Terrace nearly four years ago, is in the mature phase of deployment. We expect sales from that lead customer to begin to decline in calendar 2014. As additional MSOs initiate their conversions to all digital, we expect Terrace Family sales to track to the proportionate size of these new customers.
Terrace QAM
- Sales decreased from $6.6 million in Q4 FY13 to $5.5 million this quarter. Two major MSOs are deploying this solution for hospitality markets today. Depending on the end market, demand from these customers can be variable. Sales from existing customers are expected to moderately decline and level off as we work to derive new MSO customer wins.
CABLE HEADEND
Digital Video Access Platform
- The first commercial shipment of our new digital video access platform occurred in Q1 representing stocking inventory at our OEM partner. In addition to its new features, the platform affords our OEM partner's customers both power and space savings over legacy solutions. Power consumption of our platform will be reduced by more than 60% and it will occupy less than 10% of the space of a comparable legacy solution. Throughout the first quarter, final approval testing was underway at three large US MSOs resulting in normal course refinements to the software. As these MSOs await approval, they are eager to purchase and deploy the solution.
"Vecima continues to enjoy a market leading position in the MSO business services segments where we sell our products. In the current delicate macroeconomic environment, we are witnessing service provider spending plans are in flux and in some instances are getting reprioritized. Our results will be dependent on our ability to capture new MSO customers while maintaining volumes with existing MSO customers for our current product lines," indicated Sumit Kumar. "We are excited about our new digital video access platform as well as the development progress on new products that are planned for future periods."
On November 7, 2013, Vecima was pleased to announce a special cash distribution of $1 per common share. After we complete the distribution and close on the sale of real estate in downtown Saskatoon in December, we expect to have more than $28 million in cash by the end of the calendar year.
CONFERENCE CALL
A conference call and live audio webcast will be held on November 12, 2013 at 1 p.m. ET to discuss the Company's first quarter results. Vecima's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three months ended September 30, 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/vecima13112.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 26, 2013, 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) |
| September 30, | June 30, | ||||
| 2013 | 2013 | ||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $ | 5,478 | $ | 7,148 | |
| Marketable securities | 31,166 | 24,699 | |||
| Accounts receivable | 14,518 | 13,442 | |||
| Income tax receivable | 4,762 | 4,762 | |||
| Inventories | 25,596 | 28,264 | |||
| Prepaid expenses | 1,555 | 936 | |||
| 83,075 | 79,251 | ||||
| Non-current assets | |||||
| Property, plant and equipment | 21,662 | 25,006 | |||
| Assets held for resale | 3,096 | 342 | |||
| Intangible assets | 12,248 | 12,176 | |||
| Investment tax credit asset | 31,128 | 30,286 | |||
| Deferred tax asset | 6,907 | 7,729 | |||
| $ | 158,116 | $ | 154,790 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | $ | 7,972 | $ | 9,973 | |
| Provisions | 911 | 957 | |||
| Income tax payable | 346 | 281 | |||
| Deferred revenue | 1,380 | 1,331 | |||
| Current portion of long-term debt | 250 | 250 | |||
| 10,859 | 12,792 | ||||
| Non-current liabilities | |||||
| Other long-term liabilities | 259 | 306 | |||
| Provisions | 1,260 | 1,314 | |||
| Long-term debt | 3,146 | 3,229 | |||
| 15,524 | 17,641 | ||||
| Shareholders' equity | |||||
| Share capital | 12,183 | 12,183 | |||
| Reserves | 2,810 | 2,803 | |||
| Retained earnings | 127,599 | 122,163 | |||
| 142,592 | 137,149 | ||||
| $ | 158,116 | $ | 154,790 | ||
| 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, |
||||||
| 2013 | 2012 | |||||
| Sales | $ | 21,656 | $ | 24,668 | ||
| Cost of sales | 11,438 | 14,685 | ||||
| Gross margin | 10,218 | 9,983 | ||||
| Operating expenses | ||||||
| Research and development | 2,181 | 1,898 | ||||
| Sales and marketing | 1,457 | 1,141 | ||||
| General and administrative | 3,922 | 4,267 | ||||
| Stock-based compensation | 7 | 17 | ||||
| Other (income) | (3,943 | ) | (4,136 | ) | ||
| 3,624 | 3,187 | |||||
| Operating income | 6,594 | 6,796 | ||||
| Finance costs | 41 | 235 | ||||
| Finance income | 229 | 39 | ||||
| Income before income taxes | 6,782 | 6,600 | ||||
| Income tax expense | 1,346 | 1,290 | ||||
| Net income andtotal comprehensive income | $ | 5,436 | $ | 5,310 | ||
| Net income per share | ||||||
| Basic | $ | 0.24 | $ | 0.24 | ||
| Diluted | $ | 0.24 | $ | 0.24 | ||
| Weighted average number of common shares | ||||||
| Shares outstanding - basic | 22,322,422 | 22,317,339 | ||||
| Shares outstanding - diluted | 22,332,312 | 22,323,849 | ||||
| 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, 2012 | $ | 34,482 | $ | 2,761 | $ | 103,001 | $ | 140,244 |
| Net income and total comprehensive income | - | - | 5,310 | 5,310 | ||||
| Shares issued by exercising options | 2 | - | - | 2 | ||||
| Stock-based compensation | - | 17 | - | 17 | ||||
| Balance as at September 30, 2012 | $ | 34,484 | $ | 2,778 | $ | 108,311 | $ | 145,573 |
| Balance as at June 30, 2013 | $ | 12,183 | $ | 2,803 | $ | 122,163 | $ | 137,149 |
| Net income and total comprehensive income | - | - | 5,436 | 5,436 | ||||
| Stock-based compensation | - | 7 | - | 7 | ||||
| Balance as at September 30, 2013 | $ | 12,183 | $ | 2,810 | $ | 127,599 | $ | 142,592 |
| VECIMA NETWORKS INC. | |||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (unaudited - in thousands of Canadian dollars) | |||||||
| Three months ended September 30, |
|||||||
| 2013 | 2012 | ||||||
| Cash flows from operating activities | |||||||
| Net income | $ | 5,436 | $ | 5,310 | |||
| Add (deduct) items not requiring cash | |||||||
| Gain on sale of property, plant and equipment | (5 | ) | - | ||||
| Gain on sale of assets held for resale | (3,736 | ) | (3,590 | ) | |||
| Gain on sale of intangible assets | - | (353 | ) | ||||
| Depreciation of property, plant and equipment | 786 | 1,175 | |||||
| Amortization of deferred development costs | 600 | 555 | |||||
| Amortization of finite-life intangible assets | 37 | 37 | |||||
| Stock-based compensation | 7 | 17 | |||||
| Income tax expense | 524 | 60 | |||||
| Deferred income tax expense | 822 | 1,230 | |||||
| Interest expense | 41 | 58 | |||||
| Interest income | (109 | ) | (40 | ) | |||
| (Decrease) increase in other long-term liabilities | (47 | ) | 146 | ||||
| Decrease in provisions | (100 | ) | (101 | ) | |||
| Increase in investment tax credit asset | (165 | ) | (182 | ) | |||
| Net change in non-cash working capital relating to operations | (889 | ) | 1,220 | ||||
| Interest paid | (27 | ) | (46 | ) | |||
| Interest received | 108 | 37 | |||||
| Income tax paid | (550 | ) | (887 | ) | |||
| 2,733 | 4,646 | ||||||
| Cash flows used in investing activities | |||||||
| Purchase of property, plant and equipment | (589 | ) | (638 | ) | |||
| Proceeds from sale of property, plant and equipment | 45 | - | |||||
| Proceeds from sale of intangible assets | - | 363 | |||||
| Proceeds from sale of assets held for resale | 4,078 | 3,988 | |||||
| Purchase of marketable securities | (8,470 | ) | (14,008 | ) | |||
| Proceeds on sale of marketable securities | 2,003 | - | |||||
| Deferred development costs | (1,377 | ) | (2,114 | ) | |||
| Purchase of indefinite and finite-life intangible assets | (10 | ) | (3 | ) | |||
| (4,320 | ) | (12,412 | ) | ||||
| Cash flows used in financing activities | |||||||
| Proceeds from shares issued on the exercise of options | - | 2 | |||||
| Repayment of long-term debt | (83 | ) | (62 | ) | |||
| (83 | ) | (60 | ) | ||||
| Decrease in cash during the period | (1,670 | ) | (7,826 | ) | |||
| Cash and cash equivalents, beginning of period | 7,148 | 19,549 | |||||
| Cash and cash equivalents, end of period | $ | 5,478 | $ | 11,723 | |||
Contact Information:
Investor Relations
250-881-1982
invest@vecima.com
www.vecima.com