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Espial Reports 2014 Second Quarter Results(Canada Newswire Via Acquire Media NewsEdge) OTTAWA, July 22, 2014 /CNW/ - Espial® Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the delivery of on-demand TV software and services, today announced its second quarter financial results for the three and six month periods ended June 30, 2014. Espial Q2 Highlights Q2 revenue increased 107% to $4.7 million from $2.3 million last year. Q2 EBITDA income increased to $0.6 million compared to a loss of $1.5 million last year. For the six months ended June 30, 2014 revenue increased 101% to $9.7 million, from $4.8 million last year. For the six months ended June 30, 2014, EBITDA income increased to $1.9 million compared to a loss of $3.9 million last year. Announced a joint RDK solution with Samsung Electronics to provide a home entertainment HTML5 user experience, combining Samsung's IP set-top box and home media gateway with the Espial STB Client. Selected by a global top 5 TV manufacturer to power its next generation smart TVs. Completed a $10 million equity offering. "Q2 was another strong quarter for us and we are pleased with our growth. We believe our progress is a result of our commitment and focus to deliver world-class products based on open technologies. In Q2, we saw growing momentum for open platforms like ours - that are based on RDK and HTML5 - that allow TV service providers to rapidly introduce innovative services and rich user experiences. We recently announced a partnership with Samsung to provide a joint RDK and HTML5 solution on Samsung set-top-boxes", said Jaison Dolvane, CEO, Espial. "Samsung is a major consumer TV brand and this partnership reinforces Espial's leadership as RDK continues to gain momentum. During the quarter, we also continued to make progress with major operators globally who are undertaking RDK evaluation projects with us. On the Smart TV front, we secured a top five TV manufacturer win and further expanded our footprint in an existing customer to increase use of Espial software across a broader range of TV models." Financial Summary For the three-month period ended June 30, 2014, the Company reported revenue of $4.7 million compared with revenue of $2.3 million for the three months ended June 30, 2013. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the second quarter of fiscal 2014 was income of $0.6 million compared to a loss of $1.5 million in the second quarter of fiscal 2013. Net income for the quarter was $0.1 million or $0.00 per share, compared with a net loss of $2.1 million last year, or $0.15 per share. Q2 Financial Results Revenue for the second quarter of fiscal 2014 was $4,712,514 compared with revenue of $2,279,506 in the same period a year ago. Second quarter software license revenue was $1,109,268 compared with software license revenue of $949,471 in the second quarter of fiscal 2013. Professional services revenue for the second quarters of 2014 and 2013 were $2,411,387 and $254,777 respectively. Maintenance and support revenue for the second quarter was $1,191,859 compared with $1,075,258 last year. North American revenue was $2,371,417 in the second quarter of fiscal 2014 compared to $812,923 in 2013. Asia revenue was $1,113,030 in the second quarter of 2014 compared to $463,787 in 2013. European revenue was $1,228,067 in the second quarter of 2014 compared to $1,002,796 in 2013 Gross margin for the second quarter of fiscal 2014 was 72 percent compared with 78 percent in the second quarter of fiscal 2013. Operating expenses for the second quarter of fiscal 2014 were $3,157,315 compared with $3,738,296 in the second quarter of fiscal 2013. Earnings for the second quarter of fiscal 2014 before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) was income of $601,952 compared to a loss of $1,480,644 in the second quarter of fiscal 2013. Net income in the second quarter was $90,571 compared with a loss of $2,132,914 last year. A complete set of financial statements and management's discussion and analysis for the period ended June 30, 2014 will be available at http://www.sedar.com. Conference Call The Company will be hosting a conference call to discuss the Q2 2014 financial results on July 22, 2014 at 10:00 a.m. Eastern Time (ET). The phone number to join the results discussion is: Toll free line (Canada/US) - +1 888-390-0605 Toll line (international/local) - +1 416-764-8609 The playback for the call will be available until 11:59pm ET on August 23, 2014, at the following numbers and passcode: Toll line: +1 416-764-8677, Passcode: 151923 Toll-free line: +1-888-390-0541, Passcode: 151923 About Espial (www.espial.com) Espial is a leading supplier of digital TV and IPTV software and solutions to cable MSOs and telecommunications operators as well as consumer electronics manufacturers. Espial's middleware, video-on-demand, and browser products power a diverse range of pay-TV and Internet TV business models. Over 35 million licenses of its patented software are in use across the world. Espial is headquartered in Ottawa, Canada and has offices in the United States, Europe, and Asia. Visit www.espial.com or contact via phone at +1 613 230 4770. Forward Looking Statement This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements or assumptions about, , economic conditions, benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial's objectives (and strategies to achieve such objectives), future expectations, beliefs, goals or prospects are or involve forward-looking information. Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to changing conditions and other risks associated with the on-demand TV software industry and the market segments in which Espial operates, competition, Espial's ability to effectively develop its distribution channels and generate increased demand for its products, economic conditions, technological change, unanticipated changes in our costs, regulatory changes, litigation, the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge. Additional risks and uncertainties affecting Espial can be found in Management's Discussion and Analysis of Results of Operations and Financial Condition and its Annual Information Form for the fiscal year ended December 31, 2013 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein and our current objectives or strategies may change. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Non-IFRS Financial Measures Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) is a non-IFRS financial measure that does not have any prescribed meaning by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Management believes that this non-IFRS financial measure, when taken together with the corresponding consolidated IFRS measures, increases the transparency of the Company's current results and enables investors to more fully understand trends in its current and future performance. A reconciliation of net loss to earnings before interest, foreign exchange, taxes, stock compensation, dividends on redeemable preferred shares, depreciation and amortization is as follows: June 30, 2014 June 30, 2013June 30, 2014 June 30, 2013 (3 months)(3 months)(6 months)(6 months) (unaudited)(unaudited)(unaudited)(unaudited) Net income (loss) and Comprehensive loss $90,571 ($2,132,915) $1,119,146 ($5,405,084) Add Stock compensation 150,584 37,268 184,345 80,050 Depreciation of property and equipment 46,115 51,652 85,816 100,937 Amortization of intangibles 160,770 393,556 321,539 755,517 448,040 (1,650,439) 1,710,846 (4,468,580) Less (add) Net interest income (expense) (10,913) (133,210) (94,619) (267,572) Foreign exchange gain (loss) (92,321) 22,253 21,460 (201,030) Income taxes (50,678) (58,837) (123,765) (102,681) Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization$601,952($1,480,645) $1,907,771($3,897,297) Q2 Consolidated Statements of Income (Loss) Three Months Ended Six Months Ended June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue Software $ 1,109,268 $ 949,471 $4,536,619 $ 2,338,915 Professional services 2,411,387 254,777 2,771,781 502,596 Support and maintenance 1,191,859 1,075,258 2,378,938 1,980,053 Total revenue 4,712,514 2,279,506 9,687,338 4,821,564 Cost of revenue 1,310,717 504,330 2,064,848 1,017,647 Gross margin 3,401,797 1,775,176 7,622,490 3,803,917 Expenses Sales and marketing 924,620 992,918 1,846,921 2,128,341 General and administrative 637,026 545,775 1,180,964 1,134,283 Research and development 1,434,899 1,806,048 2,956,995 3,570,356 Business restructuring charges - - - 1,049,222 Amortization of intangible assets 160,770 393,556 321,539 755,517 3,157,315 3,738,297 6,306,419 8,637,719 Income (loss) before other income (expense) 244,482 (1,963,121) 1,316,071 (4,833,802) Interest income 6,469 2,749 11,544 10,467 Foreign exchange (loss) gain (92,321) 22,253 21,458 (201,030) Interest expense (17,381) (135,959) (106,163) (278,038) Income (loss) before taxes 141,249 (2,074,078) 1,242,910 (5,302,403) Income tax expense (50,678) (58,837) (123,765) (102,681) Net income (loss) and comprehensive income (loss) $ 90,571 $ (2,132,915) $1,119,145 $ (5,405,084) Income (loss) per common share - basic $0.00 $ (0.15) $ 0.06 $ (0.38) Weighted average number of common shares outstanding - basic 20,629,280 14,106,829 20,218,270 14,106,829 Income (loss) per common share - diluted $ 0.00 $ (0.15) $ 0.05 $ (0.38) Weighted average number of common shares outstanding - diluted 23,960,897 14,106,829 23,018,360 14,106,829 Consolidated Balance Sheets June 30, 2014 December 31, 2013 CURRENT ASSETS Cash and cash equivalents $ 14,427,985 $ 7,407,093 Accounts receivable 3,970,236 2,057,222 Investment tax credits receivable 462,460 312,027 Prepaid expenses and other assets 758,234 502,990 19,618,915 10,279,332 Equipment 517,262 539,348 Intangible assets 1,802,528 2,099,398 Goodwill 3,340,808 3,340,808 $ 25,279,513 $ 16,258,886 CURRENT LIABILITIES Accounts payable and accrued liabilities $ 2,539,355 $ 1,872,505 Provisions 290,153 281,813 Deferred revenue 4,024,649 4,052,700 Term Debt - 2,442,056 6,854,157 8,649,074 Provisions 220,304 363,132 Total Liabilities 7,074,461 9,012,206 SHAREHOLDERS' EQUITY Share capital 87,298,111 77,781,292 Warrants 1,574,067 1,436,004 Share based payments reserve 12,309,425 12,125,080 Deficit (82,976,551) (84,095,696) 18,205,052 7,246,680 $ 25,279,513 $ 16,258,886 Statements of Cash Flows Six Months Ended June 30, 2014 June 30, 2013 (unaudited) (unaudited) CASH PROVIDED BY (USED IN) OPERATING Net income (loss) $1,119,145 $ (5,405,084) Items not affecting cash Depreciation of property and equipment 85,816 100,938 Amortization of intangible assets 321,539 755,517 Share-based compensation expense 184,345 80,051 Interest accretion on term debt 57,945 81,139 Provisions (134,488) 454,316 1,634,302 (3,933,123) Changes in non-cash operating working capital items (1,679,892) 580,828 (45,590) (3,352,295) INVESTING Purchase of property and equipment (63,730) (21,501) Purchase of intangible software (24,669) (5,255) Purchase of business - (2,120,412) Redemption of short- term investments - 8,054,551 (88,399) 5,907,383 FINANCING Operating line draw (repayment) - (2,008,384) Repayment of term debt (2,500,000) - Options exercised 2,960 - Warrants exercised 474,582 - Proceeds from equity financing 10,000,080 - Costs of share issuance (822,741) - 7,154,881 (2,008,384) Net cash and cash equivalents inflow 7,020,892 546,704 Cash and cash equivalents, beginning of period 7,407,093 3,055,644 Cash and cash equivalents, end of period $14,427,985 $ 3,602,348 SOURCE Espial Group |