TMCnet News

Vecima Reports Q4 and Year-End Fiscal 2021 Results
[September 23, 2021]

Vecima Reports Q4 and Year-End Fiscal 2021 Results


Vecima Networks Inc. (TSX: VCM) today reported financial results for the three months and year ended June 30, 2021.

FINANCIAL HIGHLIGHTS





(Canadian dollars in millions except percentages, employees, and per share data)

Q4FY21

Q4FY20

 

FY2021

FY2020

Revenue

$35.3

$25.7

 

$124.2

$94.9

Gross Margin

42%

49%

 

46%

54%

Net Income (Loss)

$1.4

$(1.0)

 

$(0.3)

$1.8

Earnings (Loss) per Share1

$0.06

$(0.05)

 

$(0.02)

$0.08

Adjusted Earnings (Loss) per Share1,2,3,4

$0.06

$(0.06)

 

$(0.10)

$0.06

Adjusted EBITDA2

$5.7

$3.8

 

$12.3

$18.3

Cash and Short-term Investments

$28.9

$34.5

 

$28.9

$34.5

Employees

481

377

 

481

377

1 Based on weighted average number of shares outstanding.

2 Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See "Adjusted EBITDA and Adjusted Earnings (Loss) Per Share" below.

3 Adjusted Earnings Per Share includes non-cash share-based compensation of $(0.3) million or $(0.01) per share for the three months ended June 30, 2021, and $1.4 million or $0.06 per share for the year ended June 30, 2021. The non-cash share-based compensation primarily reflects certain performance-based vesting thresholds achieved under the Company's Performance Share Unit Plan.

4 Adjusted Earnings Per Share includes foreign exchange loss of $0.7 million or $0.03 per share for the three months ended June 30, 2021, and $3.0 million or $0.13 per share for the year ended June 30, 2021.


"Fiscal 2021 proved to be the breakout year we have long envisioned, with our leading products capturing the first wave of our industry's widescale migration to distributed access architecture or DAA," said Sumit Kumar, Vecima's President and Chief Executive Officer. "By virtue of multiple years of investment, innovation, and persistence, Vecima has emerged as a global industry leader in the rapidly growing DAA market. We now boast the industry's single strongest portfolio of high-speed data access network products for cable and fiber, a large and rapidly growing global base of Tier 1, 2, and 3 customers, and financial results that have started to reflect our momentum. This is only the beginning."

"I am very proud to report that fiscal 2021 represented the single highest year for sales in Vecima's 33-year history, with annual revenues climbing 31% to $124.2 million and fourth quarter sales increasing 37% to $35.3 million year-over-year," added Mr. Kumar. "These results were driven in large part by the tremendous momentum in our Entra portfolio as we support several of the world's largest cable operators in their transition to DAA for the networks of the future. Our record results also underscore the resounding success of our acquisition of Nokia's cable portfolio of market-ready Remote MAC-PHY, access controller, and 10G FTTH products, which further accelerated results from our Entra portfolio in fiscal 2021. As a result, our growth in the DAA market grew sequentially quarter-over-quarter through the entire year, culminating in full-year Entra sales of $42.6 million, seven times higher than fiscal 2020."

"This, in turn, drove a very strong year for our broader Video and Broadband Solutions segment, which also benefited from growing demand for our Terrace family of hospitality industry commercial video platforms, even as customers began the shift to our next-generation solutions."

"Importantly, we achieved these results against the backdrop of the COVID-19 pandemic which has created challenges across our industry and many others. In our Content Delivery and Storage segment, COVID-19 restrictions at some of our customers' operations slowed their ability to integrate and expand the record new business wins of the prior year, constraining this segment's growth in fiscal 2021. Global supply chain tightness also delayed some product lead times and weighed on our fiscal 2021 gross profit margin. We have continued to focus on managing these industry challenges strategically, including leveraging our very strong balance sheet and excellent supplier relationships to increase inventory levels."

"We ended the year in a very strong financial position with $28.9 million in cash, working capital of $44.8 million, and virtually no debt, even after investing in organic and acquisitions-based growth and continuing to reward investors with dividends of $0.22 per share in fiscal 2021," said Mr. Kumar.

BUSINESS HIGHLIGHTS

Video and Broadband Solutions (VBS)

Generated strong segment sales with annual VBS revenue increasing 110% to $75.3 million and Q4 VBS sales growing 124% to $23.5 million year-over-year

Entra Family

  • Deployments of next-generation Entra products accelerated to $42.6 million in fiscal 2021 and $16.6 million in the fourth quarter, each up seven times from the same periods in fiscal 2020
  • Successfully acquired, integrated, and operated the Nokia cable access portfolio, expanding Vecima's next-generation product offering with market-leading DAA and 10Gig FTTH solutions. The new portfolio significantly exceeded expectations, contributing strong sales of $19.7 million in fiscal 2021 and $9.2 million in the fourth quarter
  • Increased total customer engagements for Entra to 71 MSOs worldwide, as compared to 25 at the beginning of the year. Thirty-eight of these customers, including multiple Tier 1 operators, have ordered Entra products (vs three at the beginning of fiscal 2021), setting the stage for multi-year product, support and capacity increases with these customers
  • Carried out multiple Tier 1 customer deployments of Entra Remote PHY nodes, Remote MAC-PHY nodes, and 10G EPON FTTH solutions, including delivery of over 4,900 cable and fiber access nodes combined, covering over 8,900 next-generation service groups and passing 12.5 million homes
  • Delivered multiple new DAA product and software releases during the year, including the industry's first fully segmentable, double-density Remote PHY node
  • Significantly enhanced Vecima's industry-leading DAA cable access nodes (EntraPHY and EntraMAC) with numerous leading features including:
    • still higher download and upload capacity, over the multigigabit speeds already offered, driving significant cost savings by leveraging preexisting and widely deployed coaxial cable access networks;
    • localized regional variants matching unique customer needs in multiple geographies;
    • increased interoperability with network ecosystem technologies (an area that Vecima has always led); and
    • redundancy additions that further augment the mission-critical durability of our Entra DAA nodes which are being leveraged globally by customers for core broadband internet service
  • Multiple in-demand features were added to Vecima's EntraControl platforms that provide key cloud-native network configuration and management orchestration, including mass-scalability enhancements and statistics that help operators manage large access networks on a 'millions of homes' scale
  • Widened lead of EntraOptical fiber to the home DAA platforms with added regional product variants, industry-leading in-home FTTH modem ecosystem support and interoperability, and numerous other customer-specific features

Commercial Video Family

  • Increased full-year TerraceQAM sales by 34% to $17.1 million and Q4 sales by 21% to $4.4 million as the lead Tier 1 MSO continued to widen its extensive hospitality services platform built on the TerraceQAM
  • Terrace family sales provided $14.3 million of contribution in Fiscal 2021 as Tier 1 customers neared full coverage, leading to the anticipated migration to next-generation Terrace IQ platforms
  • Delivered initial orders of next-generation TerraceIQ to a North American Tier 1 customer, a deployment win tied to the unique IPTV input, transcoding and digital rights management capabilities of TerraceIQ, driving the future of commercial video services

Content Delivery and Storage (CDS)

  • Achieved annual CDS sales of $43.4 and Q4 sales of $10.4 million, despite COVID-19 related delays in project rollouts and the negative impact of global supply chain constraints
  • Grew full-year CDS services revenues by 4% year-over-year
  • Added five new customers for Vecima's MediaScaleX IPTV solutions in fiscal 2021
  • Divested ContentAgent workflow management business during the year, resulting in a pre-tax gain of approximately US $1.6 million

Telematics

  • Continued deployments with municipal government customers, with expansions adding 630 new subscribers in fiscal 2021
  • Released new software to enable optional vehicle routing for customers, expanding recurring monthly revenue from existing and new customers
  • Continued to penetrate the moveable assets market, including entry into the emergency management systems segment where assets such as defibrillators and stretchers are monitored. Added 15 new customers and 439 additional vehicle subscriptions in fiscal 2021, with the total number of moveable assets being monitored growing to over 11,000 units

"As we start off into fiscal 2022, we see an even sharper growth trajectory for our DAA solutions as an increasing number of customers, including several very large Tier 1 MSOs, ramp up scaling deployments. At the same time, a broad range of other operators are transitioning to first field deployments. We expect our strong customer relationships, leading product offering, and growing global reach will translate into increasing share in the large and rapidly growing distributed access market, a market fueled by the insatiable and ever-growing demand for internet bandwidth to homes and businesses worldwide," added Mr. Kumar.

"In our Content Delivery and Storage segment, demand for our IPTV and open caching solutions remains robust, and we anticipate steady improvement in our ability to integrate and expand our business wins, including the five new customers added in the past year."

"While we recognize that ongoing global supply chain challenges could temper our growth and margin potential, particularly in the near term, we are extremely confident in our market position and in Vecima's ability to capture the major opportunities ahead of us," 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 November 1, 2021 to shareholders of record as at October 8, 2021.

CONFERENCE CALL

A conference call and live audio webcast will be held today, September 23, 2021 at 1 p.m. ET to discuss the Company's fourth quarter and year-end results. Vecima's audited annual consolidated financial statements and management's discussion and analysis for the three months and year ended June 30, 2021, 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/vecima20210923.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 2021.

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 2021 proved to be the breakout year we envisioned, with our leading products capturing the first wave of our industry's widescale migration to distributed access architecture or DAA; by virtue of multiple years of investment, innovation, and persistence, Vecima has emerged as a global industry leader in the rapidly growing DAA market; we now boast the industry's single strongest portfolio of high-speed data access network products for cable and fiber, a large and rapidly growing global base of Tier 1, 2, and 3 customers, and financial results that have started to reflect our momentum; this is only the beginning; the COVID-19 pandemic has created challenges across our industry and many others; restrictions at some of our customers' operations slowed their ability to integrate and expand the record new business wins of the prior year, constraining this segment's growth in fiscal 2021; global supply chain tightness also delayed some product lead times and weighed on our fiscal 2021 gross profit margin; we have continued to focus on managing these industry challenges strategically, including leveraging our very strong balance sheet and excellent supplier relationships to increase inventory levels; the new portfolio significantly exceeded expectations; increased total customer engagements for Entra to 71 MSOs worldwide, as compared to 25 at the beginning of the year; thirty-eight of these customers, including multiple Tier 1 operators, have ordered Entra products (vs three at the beginning of fiscal 2021), setting the stage for multi-year product, support and capacity increases with these customers; durability of our Entra DAA nodes which are being leveraged globally by customers for core broadband internet service; Tier 1 customers neared full coverage leading to the anticipated migration to next generation Terrace IQ platforms; delivered initial orders of next-generation TerraceIQ to a North American Tier 1 customer, a deployment win tied to the unique IPTV input, transcoding and digital rights management capabilities of TerraceIQ, driving the future of commercial video services; continued to penetrate the moveable assets market, including entry into the emergency management systems segment where assets such as defibrillators and stretchers are monitored; as we start off into fiscal 2022, we see an even sharper growth trajectory for our DAA solutions as an increasing number of customers, including several very large Tier 1 MSOs, ramp up scaling deployments; we expect our strong customer relationships, leading product offering, and growing global reach will translate into increasing share in the large and rapidly growing distributed access market, a market fueled by the insatiable and ever-growing demand for internet bandwidth to homes and businesses worldwide; demand for our IPTV and open caching solutions remains robust and we anticipate steady improvement in our ability to integrate and expand our business wins; while we recognize that ongoing global supply chain challenges could temper our growth and margin potential, particularly in the near term, we are extremely confident in our market position and in Vecima's ability to capture the major opportunities ahead of us.

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 23, 2021, 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.
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

As at

 

 

 

June 30, 2021

 

 

June 30, 2020

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

28,909

 

$

17,350

Short-term investments

 

 

 

-

 

 

17,165

Accounts receivable

 

 

 

28,784

 

 

24,908

Income tax receivable

 

 

 

414

 

 

333

Inventories

 

 

 

15,578

 

 

17,212

Prepaid expenses

 

 

 

3,497

 

 

2,051

Contract assets

 

 

 

516

 

 

646

Total current assets

 

 

 

77,698

 

 

79,665

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

13,854

 

 

11,801

Right-of-use assets

 

 

 

3,660

 

 

4,010

Goodwill

 

 

 

14,542

 

 

15,487

Intangible assets

 

 

 

72,224

 

 

69,200

Other long-term assets

 

 

 

1,267

 

 

1,301

Investment tax credits

 

 

 

24,344

 

 

24,374

Deferred tax assets

 

 

 

7,143

 

 

4,460

Total assets

 

 

$

214,732

 

$

210,298

Liabilities and shareholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

$

22,259

 

$

17,105

Provisions

 

 

 

1,439

 

 

492

Income tax payable

 

 

 

454

 

 

130

Deferred revenue

 

 

 

7,137

 

 

4,960

Current portion of long-term debt

 

 

 

1,617

 

 

1,698

Total current liabilities

 

 

 

32,906

 

 

24,385

Non-current liabilities

 

 

 

 

 

 

 

Provisions

 

 

 

397

 

 

400

Deferred revenue

 

 

 

2,398

 

 

602

Deferred tax liability

 

 

 

4

 

 

536

Long-term debt

 

 

 

4,107

 

 

4,613

Total liabilities

 

 

 

39,812

 

 

30,536

Shareholders' equity

 

 

 

 

 

 

 

Share capital

 

 

 

7,299

 

 

3,161

Reserves

 

 

 

3,407

 

 

3,838

Retained earnings

 

 

 

165,312

 

 

170,665

Accumulated other comprehensive (loss) income

 

 

 

(1,098)

 

 

2,098

Total shareholders' equity

 

 

 

174,920

 

 

179,762

Total liabilities and shareholders' equity

 

 

$

214,732

 

$

210,298

VECIMA NETWORKS INC.
Consolidated Statements of Comprehensive (Loss) Income
(in thousands of Canadian dollars, except per share amounts)

Years ended June 30,

 

 

2021

 

2020

Sales

 

$

124,177

$

94,882

Cost of Sales

 

 

67,535

 

43,605

Gross Profit

 

 

56,642

 

51,277

Operating expenses

 

 

 

 

 

Research and development

 

 

26,247

 

21,595

Sales and marketing

 

 

13,720

 

13,304

General and administrative

 

 

17,937

 

15,869

Share-based compensation

 

 

1,420

 

59

Other income

 

 

(1,512)

 

(479)

Total operating expenses

 

 

57,812

 

50,348

Operating (loss) income

 

 

(1,170)

 

929

Finance income

 

 

69

 

636

Foreign exchange (loss) gain

 

 

(2,973)

 

1,328

(Loss) income before income taxes

 

 

(4,074)

 

2,893

Income tax (recovery) expense

 

 

(1,889)

 

391

Net (loss) income from continuing operations

 

 

(2,185)

 

2,502

Net income (loss) from discontinued operations

 

 

1,854

 

(696)

Net (loss) income

 

$

(331)

$

1,806

Other comprehensive (loss) income

 

 

 

 

 

Item that may be subsequently reclassed to net income

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

(3,196)

 

1,088

Comprehensive (loss) income

 

$

(3,527)

$

2,894

Net (loss) income per share

 

 

 

 

 

Continuing operations - basic

 

$

(0.10)

$

0.11

Discontinued operations - basic

 

 

0.08

 

(0.03)

Total basic net (loss) income per share

 

$

(0.02)

$

0.08

Continuing operations - diluted

 

$

(0.10)

$

0.11

Discontinued operations - diluted

 

 

0.08

 

(0.03)

Total diluted net (loss) income per share

 

$

(0.02)

$

0.08

Weighted average number of common shares

 

 

 

 

 

Shares outstanding - basic

 

 

22,748,826

 

22,411,612

Shares outstanding - diluted

 

 

22,748,826

 

22,444,806

VECIMA NETWORKS INC.
Consolidated Statements of Change in Equity
(in thousands of Canadian dollars)

 

 

 

Share
capital

 

Reserves

 

Retained
earnings

 

Accumulated
other
comprehensive
(loss) income

 

Total

Balance as at June 30, 2019

 

$

1,916

$

4,104

$

173,898

$

1,010

$

180,928

Net income

 

 

-

 

-

 

1,806

 

-

 

1,806

Other comprehensive income

 

 

-

 

-

 

-

 

1,088

 

1,088

Dividends

 

 

-

 

-

 

(4,932)

 

-

 

(4,932)

Shares repurchased and cancelled

 

 

(2)

 

-

 

(107)

 

-

 

(109)

Shares issued by exercising options

 

 

1,247

 

(325)

 

-

 

-

 

922

Share-based payment expense

 

 

-

 

59

 

-

 

-

 

59

Balance as at June 30, 2020

 

$

3,161

$

3,838

$

170,665

$

2,098

$

179,762

Balance as at June 30, 2020

 

$

3,161

$

3,838

$

170,665

$

2,098

$

179,762

Net loss

 

 

-

 

-

 

(331)

 

-

 

(331)

Other comprehensive loss

 

 

-

 

-

 

-

 

(3,196)

 

(3,196)

Dividends

 

 

-

 

-

 

(5,022)

 

-

 

(5,022)

Shares issued by exercising options

 

 

3,154

 

(813)

 

-

 

-

 

2,341

Subscription for common shares

 

 

713

 

-

 

-

 

-

 

713

PSUs settled in common shares

 

 

1,038

 

(1,038)

 

-

 

-

 

-

Withholding taxes on PSUs

 

 

(767)

 

-

 

-

 

-

 

(767)

Share-based payment expense

 

 

-

 

1,420

 

-

 

-

 

1,420

Balance as at June 30, 2021

 

$

7,299

$

3,407

$

165,312

$

(1,098)

$

174,920

VECIMA NETWORKS INC.
Consolidated Statements of Change in Equity
(in thousands of Canadian dollars)

Years ended June 30,

 

 

2021

 

2020

OPERATING ACTIVITIES

 

 

 

 

 

Net (loss) income from continuing operations

 

$

(2,185)

$

2,502

Adjustments for non-cash items:

 

 

 

 

 

Gain on sale of property, plant and equipment

 

 

(302)

 

(455)

Depreciation and amortization

 

 

14,755

 

16,000

Share-based compensation

 

 

1,420

 

59

Income tax expense (recovery)

 

 

1,451

 

(50)

Deferred income tax (recovery) expense

 

 

(3,340)

 

441

Interest expense

 

 

225

 

295

Interest income

 

 

(163)

 

(731)

Net change in working capital

 

 

8,032

 

(7,821)

Increase in other long-term assets

 

 

(135)

 

(186)

Decrease in provisions

 

 

(54)

 

(274)

Increase in investment tax credits

 

 

(149)

 

(201)

Income tax received

 

 

174

 

173

Income tax paid

 

 

(456)

 

(485)

Interest received

 

 

163

 

728

Interest paid

 

 

(40)

 

(66)

Cash provided by (used in) discontinued operations

 

 

651

 

(96)

Cash provided by operating activities

 

 

20,047

 

9,833

INVESTING ACTIVITIES

 

 

 

 

 

Capital expenditures, net

 

 

(2,377)

 

(1,075)

Purchase of short-term investments

 

 

(295)

 

(6,083)

Proceeds from sale of short-term investments

 

 

17,460

 

13,487

Deferred development costs

 

 

(16,235)

 

(11,971)

Business acquisition

 

 

(5,871)

 

-

Cash provided by (used in) discontinued operations

 

 

2,323

 

(321)

Cash used in investing activities

 

 

(4,995)

 

(5,963)

FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from government grants

 

 

-

 

98

Principal repayments of lease liabilities

 

 

(1,557)

 

(1,628)

Repayment of long-term debt

 

 

(250)

 

(271)

Repurchase and cancellation of shares

 

 

-

 

(109)

Dividends paid

 

 

(5,022)

 

(4,932)

Proceeds from issuing shares

 

 

713

 

-

Issuance of shares through exercised options

 

 

2,341

 

922

Withholding taxes on PSUs

 

 

(767)

 

-

Cash used in discontinued operations

 

 

(64)

 

(47)

Cash used in financing activities

 

 

(4,606)

 

(5,967)

Net increase (decrease) in cash and cash equivalents

 

 

10,446

 

(2,097)

Effect of change in exchange rates on cash

 

 

1,113

 

(387)

Cash and cash equivalents, beginning of year

 

 

17,350

 

19,834

Cash and cash equivalents, end of year

 

$

28,909

$

17,350

 


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