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Vecima Reports Q1 Fiscal 2019 Results
[November 08, 2018]

Vecima Reports Q1 Fiscal 2019 Results


  • Revenue – $21.3M, Gross Margin – 52.5%
  • Further progress on Entra platform with customer qualifications advancing
  • Introduced Entra Remote-PHY Monitor and awarded 4 Diamonds in BTR Diamond Technology Reviews
  • New Terrace DVB platform shipped for commercial deployment in Europe

VICTORIA, Nov. 8, 2018 /CNW/ - Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative network technology solutions, today reported financial results for the three months ended September 30, 2018.

FINANCIAL HIGHLIGHTS





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

Q1FY19

Q1FY18


Q4FY18

Revenue

$21.3

$14.9


$24.4

Gross Margin

52.5%

57.0%


54.5%

Net (Loss)/Income

($1.1)

$8.0


$0.7

(Loss)/Earnings Per Share1

($0.05)

$0.36


$0.03

Adjusted (Loss)/Earnings Per Share1, 2

($0.05)

$0.04


$0.04

Adjusted EBITDA2

$1.9

$2.9


$4.4

Cash and Short-term Investments

$53.4

$103.2


$57.7

Employees

384

334


419

1Based on weighted average number of shares outstanding.
2Adjusted 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 Per Share" below.


 

"The start of fiscal 2019 was a highly productive period for Vecima as we expanded our product portfolio with new offerings and features, secured supply agreements, optimized our sales and marketing operations for maximum reach and leverage, and implemented new brand initiatives," said Sumit Kumar, Vecima Networks' President and CEO.

"While we made excellent progress operationally, financially, first quarter revenues of $21.3 million and a net loss of $1.1 million underperformed our expectations. A push out of customer orders in the Content Delivery and Storage segment and restructuring charges of $0.8 million resulting from the reorganization of our manufacturing operations were the key impacts. We continue to anticipate strong contribution from our Content Delivery and Storage business unit on a full-year basis, but note that quarterly sales variances in this segment can be pronounced. Seasonally, the first quarter is also typically weakest for the Content Delivery and Storage segment," said Mr. Kumar.

BUSINESS HIGHLIGHTS

Video and Broadband Solutions

  • Continued progress with Entra DOCSIS 3.1 products:
    • Completed lab testing of Legacy QAM Adapter with a major MSO, now readying to enter field trials;
    • Introduced Entra Remote-PHY Monitor at SCTE and awarded 4 Diamonds in BTR 2018 Diamond Technology Reviews; and
    • Further advanced integration testing of Remote-PHY Access Node in Tier 1 MSO customer labs
  • Secured supply agreement and first purchase order for Terrace DVB platform with a major Tier 1 MSO in Europe

Content Delivery and Storage

  • Introduced the MediaScaleX™ trademark which organizes and integrates the Company's suite of media delivery and storage products and platforms under a common brand identity
  • Released an upgraded version of MediaScaleX//OriginTM platform
  • Achieved strong sales for MediaScaleX//StorageTM, setting an all-time record for this recently introduced product
  • Announced a major IPTV/OTT upgrade with a large European MSO which is expected to drive revenue growth with this customer for the next three years

 Telematics

  • Launched Nero Equipment Tracking, a new GPS beacon tracking system designed for smaller moveable assets used by construction and restoration companies

 "In our Video and Broadband Solutions segment, I am pleased to report that we secured our first supply agreement and initial revenue for Terrace DVB, which introduces our highly successful Terrace family of products to the European market. We also made excellent progress on our Entra family of products and are increasingly encouraged by our prospects in the emerging DOCSIS 3.1 DAA market. Our Entra products are proving themselves in customer labs and we are continuing to successfully differentiate our product offering as evidenced by our new Entra Remote-PHY Monitor product. In awarding us 4 Diamonds at the recent BTR Diamond Technology Awards, the judges noted that our product 'addresses one of the biggest missing pieces of the DAA use case and should be of great interest to anyone moving into the Remote-PHY deployment world.' "

"The first quarter also brought a number of product advances in the Content Delivery and Storage segment, including an upgrade to the MediaScaleX//OriginTM product line that decreases the latency associated with live streaming, and offers more flexibility and higher performance within a lower-cost architecture."

"Across our product families, we are creating unique 'must-have' features that are advancing our position in the expansive markets for gigabit internet and IP video. And we are ensuring we can effectively leverage our product advantages by strengthening our sales and marketing structure. Subsequent to the first quarter, we aligned Vecima and Concurrent's customer-facing sales and marketing departments to expand our global reach, increase direct engagement with customers, and leverage the combined strengths of our operations and platforms."

"As we move forward, we are increasingly confident in our ability to capitalize on the significant growth opportunities in the DAA and IPTV markets," said Mr. Kumar. "We expect fiscal 2019 to be a year of continued investment and development as we position Vecima for industry leadership in the DOCSIS 3.1 market and the IP video content delivery and storage space. With a strong financial position, we are well positioned to pursue our product strategies while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive growth and success."

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 December 17, 2018 to shareholders of record as at November 23, 2018.

CONFERENCE CALL
A conference call and live audio webcast will be held today, November 8, 2018 at 1 p.m. ET to discuss the Company's first quarter results. Vecima's unaudited consolidated financial statements and management's discussion and analysis for the three months ended September 30, 2018 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/vecima20181108.html and will be archived on the Vecima website at www.vecima.com/shareholder-events/.

About Vecima Networks
Vecima Networks Inc. (TSX:VCM) is a globally recognized leader in creating breakthrough technology solutions that empower network service providers to connect people and enterprises to information and entertainment worldwide. Vecima products for the cable industry allow service providers a cost-effective Last Mile Solution® for both video and broadband access, especially in the demanding business services market segment. Vecima's Video Content Delivery and Storage business, operated under the Concurrent brand, includes solutions and software for industries and customers that focus on storing, protecting, transforming, and delivering high value media assets. Vecima also provides fleet managers the key information and analytics they require to optimally manage their business under the Contigo, NERO Global Tracking, and FleetLynx brands. For more information, please visit our website at www.vecima.com.

Adjusted EBITDA and Adjusted Earnings Per Share
Adjusted EBITDA and Adjusted Earnings 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 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 Per Share, investors should refer to Vecima's Management's Discussion and Analysis for the first quarter of fiscal 2018.

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:

The start of fiscal 2019 was a highly productive period for Vecima; we continue to anticipate strong contribution from our Content Delivery and Storage business unit on a full-year basis but note that quarterly sales variances in this segment can be pronounced; a major IPTV/OTT upgrade with a large European MSO is expected to drive revenue growth with this customer for the next three years; we made excellent progress on our Entra family of products; we are increasingly encouraged by our prospects in the emerging DOCSIS 3.1 DAA market; our Entra products are proving themselves in customer labs; we are continuing to successfully differentiate our product offering; we are creating unique 'must-have' features that are advancing our position in the expansive markets for gigabit internet and IP video; we are ensuring we can effectively leverage our product advantages by strengthening our sales and marketing structure; we aligned Vecima and Concurrent's customer-facing sales and marketing departments to expand our global reach, increase direct engagement with customers, and leverage the combined strengths of our operations and platforms; as we move forward, we are increasingly confident in our ability to capitalize on the significant growth opportunities in the DAA and IPTV markets; we expect fiscal 2019 to be a year of continued investment and development as we position Vecima for industry leadership in the DOCSIS 3.1 market and the IP video content delivery and storage space; with a strong financial position, we are well positioned to pursue our product strategies while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive growth and success.

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 27, 2018, 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.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited - in thousands of Canadian Dollars)



September 30,

2018


June 30,

2018

Assets





Current assets





Cash and cash equivalents

$

12,247

$

11,034

Short-term investments


41,139


46,660

Accounts receivable


15,257


17,997

Income tax receivable


2,535


2,519

Inventories


17,459


15,020

Prepaid expenses


1,972


1,658

Contract assets


435


-



91,044


94,888

Non-current assets





Property, plant and equipment


11,747


12,105

Goodwill


14,755


14,903

Intangible assets


63,758


62,324

Other long-term assets


974


788

Investment tax credit


23,321


22,692

Deferred tax asset


2,431


2,339


$

208,030

$

210,039

Liabilities





Current liabilities





Accounts payable and accrued liabilities

$

12,612

$

12,151

Provisions


576


520

Deferred revenue


3,146


4,206

Other current liabilities


1,230


358

Current portion of long-term debt


250


250



17,814


17,485

Non-current liabilities





Deferred revenue


1,086


524

Provisions


389


352

Deferred tax liability


407


414

Long-term debt


1,917


1,979



21,613


20,754

Shareholders' equity





Share capital


1,756


1,756

Reserves


4,075


4,041

Retained earnings


179,927


182,411

Accumulated other comprehensive income


659


1,077



186,417


189,285


$

208,030

$

210,039


 

VECIMA NETWORKS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME
AND OTHER COMPREHENSIVE INCOME
(unaudited - in thousands of Canadian dollars except net income per share data)







Three months ended

September 30,




2018


2017

Sales


$

21,335

$

14,882

Cost of sales



10,144


6,404

Gross profit



11,191


8,478

Operating expenses






Research and development



4,604


3,163

Sales and marketing



3,200


1,108

General and administrative



4,003


2,610

Restructuring costs



757


-

Stock-based compensation



34


13

Other (income) expense



(88)


(82)




12,510


6,812

Operating (loss) income



(1,319)


1,666

Finance income



222


298

Foreign exchange loss



(517)


(670)

(Loss) income before income taxes



(1,614)


1,294

Income tax (benefit) expense



(518)


330

Net (loss) income from continuing operations



(1,096)


964

Net income from discontinued operations



-


7,062

Net (loss) income


$

(1,096)

$

8,026

Other comprehensive loss






Item that may be subsequently reclassed to net income






Exchange differences on translating foreign operations



(418)


-

Comprehensive (loss) income



(1,514)


8,026







Net (loss) income per share






Continuing operations



(0.05)


0.04

Discontinued operations



-


0.32

Total basic net (loss) income per share


$

(0.05)

$

0.36

Continuing operations



(0.05)


0.04

Discontinued operations



-


0.32

Total diluted net (loss) income per share


$

(0.05)

$

0.36







Weighted average number of common shares






Shares outstanding - basic



22,373,122


22,379,651

Shares outstanding - diluted



22,385,384


22,440,546

 


VECIMA NETWORKS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited - in thousands of Canadian dollars)



 

Share
Capital


Reserves


Retained
Earnings


Accumulated
Other
Comprehensive
Income


Total

Balance as at June 30, 2017

$

803

$

3,965

$

177,474

$

-

$

182,242

Net income


-


-


8,026


-


8,026

Dividends


-


-


(1,231)


-


(1,231)

Shares repurchased and cancelled


-


-


(7)


-


(7)

Share-based payment expense


-


13


-


-


13

Balance as at September, 2017

$

803

$

3,978

$

184,262

$

-

$

189,043












Balance as at June 30, 2018

$

1,756

$

4,041

$

182,411

$

1,077

$

189,285

IFRS 15 transition impact (Note 2)

$

-

$

-

$

(102)

$

-

$

(102)

Adjusted balance as at June 30, 2018

$

1,756

$

4,041

$

182,309

$

1,077

$

189,183

Net loss


-


-


(1,096)


-


(1,096)

Other comprehensive loss


-


-


-


(418)


(418)

Dividends


-


-


(1,230)


-


(1,230)

Shares repurchased and cancelled


-


-


(56)


-


(56)

Share-based payment expense


-


34


-


-


34

Balance as at September 30, 2018

$

1,756

$

4,075

$

179,927

$

659

$

186,417


 

VECIMA NETWORKS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - in thousands of Canadian dollars)




Three months ended
September 30,




2018


2017

Cash flows from operating activities






Net (loss) income from continuing operations


$

(1,096)

$

964

Adjustments to reconcile net income to cash from operating activities



1,991


1,610

Decrease in other long-term assets



19


-

Increase (decrease) in provisions



104


(154)

Increase in investment tax credit



(27)


(67)

Net change in non-cash operating working capital relating to operations



(410)


6,347

Interest paid



(24)


(21)

Interest received



281


319

Income tax received



262


-

Income tax paid



(351)


-

Net cash provided by continuing operations



749


8,998

Net cash provided by discontinued operations



-


75

Net cash provided by operations



749


9,073

Cash flows from investing activities






Purchase of property, plant and equipment



(740)


(218)

Proceeds from sale of property, plant and equipment



-


3

Purchase of short-term investments



(206)


(5,946)

Proceeds on sale of short-term investments



5,727


22,700

Deferred development costs



(4,343)


(3,542)

Purchase of indefinite and finite-life intangible assets



(31)


(22)

Net cash provided by continuing operations



407


12,975

Net cash provided by discontinued operations



-


8,732

Net cash provided by investing



407


21,707

Cash flows from financing activities






Proceeds from government grants



-


41

Repurchase and cancellation of shares



(56)


-

Repayment of long-term debt



(62)


(41)

Net cash used from financing



(118)


-

Increase in cash and cash equivalents during the period



1,038


30,780

Effect of movements in exchange rates on cash held



175


-

Cash, beginning of period



11,034


3,517

Cash and cash equivalents, end of period


$

12,247

$

34,297

 

SOURCE Vecima Networks Inc.


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