ViXS Systems Inc.
TSX : VXS

ViXS Systems Inc.

March 25, 2015 22:05 ET

CORRECTION FROM SOURCE: ViXS Reports Fourth Quarter and Annual Fiscal 2015 Results

Fourth Consecutive Quarter of Revenue Growth; 26% Annual Revenue Growth

TORONTO, ONTARIO--(Marketwired - March 25, 2015) -

A correction from source is issued for the press release disseminated March 25th at 4:46 PM ET.

ViXS Systems Inc. (TSX:VXS) a pioneer and leader in media processing solutions, reported its fourth quarter and annual fiscal 2015 results for the period ending January 31, 2015 today. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified. ViXS reported Q4FY15 revenue of $11.2 million, total comprehensive loss of ($3.8) million and non-IFRS net loss of ($2.0) million.

Q4FY15 Financial Summary

  • Revenue of $11.2 million, a 4% sequential increase quarter over quarter and a 60% increase over the same quarter last year.

  • Gross margin of 49.2%, a 0.8% point sequential improvement quarter over quarter and 8.5% point increase over the same quarter last year.

  • IFRS Comprehensive loss of ($3.8) million, or ($0.07) per share, compared to a loss of ($2.9) million or ($0.06) per share in the previous quarter.

  • Non-IFRS net loss of ($2.0) million, a 10% improvement on a loss of ($2.2) million in the previous quarter.

  • $15.3 million of cash and equivalents, with no outstanding bank debt and an $8 million undrawn line of credit at the end of quarter.

FY15 Financial Summary

  • Revenue of $38.4 million, a 26% increase from the previous year.

  • Gross Margin of 46.2%.

  • IFRS Comprehensive loss totalled ($15.6) million, a 52% improvement over the prior year.

  • Non-IFRS net loss totalled ($12.9) million, a $2.6 million improvement over the prior year.

Customer, Product and Corporate Announcements

  • ViXS launched its XCode 6800, the world's first SoC to support High Dynamic Range (HDR) and Ultra HD 12-bit color.

  • MDS Global Technologies placed the first order for ViXS' newly launched Ethernet over Coax product.

  • Skydigita's XCode 6400-powered Ultra HD HEVC 10-Bit OTT Media Player is launched.

  • Harmonic and ViXS develop the world's first Hybrid AVC / HEVC MPEG-DASH streaming technology targeted at Pay TV and OTT operators deploying Ultra HD.

  • New General Counsel, Michael Michalyshyn, joins VIXS' management team.

"In fiscal 2015, ViXS executed on its strategy achieving four quarters of revenue growth. We successfully deployed our XCode 6400 into the marketplace with a suite of tier-one customers, while maintaining strong revenue in our XConnex product line. At the same time, ViXS continued to innovate with the announcement of our ground breaking XCode 6800," said Hugh Chow, Interim President and CEO, ViXS Systems, Inc.

Q4 and Annual FY2015 Results:

Revenues for the fourth quarter of fiscal 2015 increased by 4% sequentially to $11.2 million compared to $10.8 million in the previous quarter, and a 60% increase from the $7.0 million recognized last year in the fourth quarter of fiscal 2014. This revenue growth exiting fiscal 2015 was due to continued shipments of the new XCode 6400, higher volumes of XConnex and non-recurring engineering (NRE) revenue. Revenues for the fiscal year ended January 31, 2015 totalled $38.4 million, a 26% or $8.0 million increase over fiscal 2014.

Gross margin for the fourth quarter of fiscal 2015 was 49.2%, which represents a 0.8% point margin increase from the previous quarter's level of 48.4%, and an 8.5% point increase from fourth quarter of fiscal 2014. This increase in margin in the fourth quarter of Fiscal 2015 was primarily due to higher NRE revenue and more integrated next generation products offset by lower margin products, such as XConnex. Gross margin for the fiscal year ended January 31, 2015 was 46.2%, which represents a 0.6% point decrease from the 46.8% level over the same period last year. Excluding the effects of amortization, support contracts, SDKs, non-recurring inventory and variances, product margin was 48.6%.

Total operating expenses for the fourth quarter of fiscal 2015 were flat compared to the previous quarter at $7.7 million. Research & Development (R&D) spending decreased by $0.6 million compared to the previous quarter to $4.0 million. Selling, general and administrative expenses for the fourth quarter increased by $0.6 million compared to the third quarter of fiscal 2015. Total operating expenses for fiscal 2015 increased by $1.6 million compared to the prior year. This increase was primarily due to continued product development related costs and non-cash related reductions in favourable government assistance adjustments and investment tax credits of $1.4 million.

IFRS Comprehensive loss for the fourth quarter of fiscal 2015 was ($3.8) million, or a loss of ($0.07) per share basic and ($0.07) per share diluted. This compares with comprehensive loss of ($2.9) million in the previous quarter, and a $3.9 million improvement from the ($7.6) million loss in the fourth quarter of fiscal 2014. The sequential change in comprehensive loss was mainly due to net $0.8 million in non-recurring provisions for certain financial assets. IFRS Comprehensive loss for fiscal 2015 decreased to ($15.6) million from ($32.6) million in fiscal 2014, a 52% improvement.

Non-IFRS net loss for the current quarter (as defined in the Non-IFRS Financial Measures section) totalled ($2.0) million, as compared to a ($2.2) million loss in the previous quarter. Non-IFRS net loss for the fiscal year ended January 31, 2015 totalled ($12.9) million, a $2.6 million improvement as compared to the ($15.4) million loss the previous year. This continued year-over-year decrease in non-IFRS net loss from operations reflects higher volumes, a better product mix, and cost efficiencies to our operations implemented in fiscal 2014 and early fiscal 2015.

ViXS finished the quarter with total cash and cash equivalents of $15.3 million, a $1.3 million sequential decrease, with no bank debt outstanding as of January 31, 2015.

For More Information

In conjunction with this announcement, ViXS management will be holding a conference call on Wednesday March 25, 2015, at 5:00 P.M. Eastern Time to discuss the Company's results for Q4 and annual fiscal 2015.

FISCAL 4Q15 AND ANNUAL CONFERENCE CALL DETAILS:

DATE:
Wednesday March 25, 2015

TIME:
5:00 P.M. EST

DIAL IN NUMBER:
Local / International: 416-850-9144
North American Toll: Free: 1-866-400-3310

REPLAY NUMBER:
Local / International: 416-915-1035
North American Toll: Free: 1-866-245-6755
Passcode: 203209

WEBCAST:
http://public.viavid.com/index.php?id=113069
The webcast will be archived for 90 days

WEBSITE: To view the press release or any additional financial information, please visit the Investor Relations section of the ViXS website at: http://investor.vixs.com/investor-relations/

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected consolidated financial information derived from the Company's unaudited condensed consolidated interim financial statements for the three and twelve month periods ended January 31, 2015. The selected financial information was prepared in accordance with IFRS in a manner consistent with the Company's annual financial statements. The following information should be read in conjunction with these statements and the accompanying notes.

Three-month Period Ended Fiscal Year Ended
January 31, October 31, January 31, January 31, January 31,
Dollar amounts in U.S. dollars 2015 2014 2014 2015 2014
Amounts in thousands , except (loss) pershare
Revenue $ 11,229 $ 10,757 $ 7,039 $ 38,416 $ 30,416
Cost of sales 5,708 5,552 4,173 20,660 16,180
Gross margin 5,521 5,205 2,866 17,756 14,236
Operating expenses
Research and development 4,026 4,669 4,548 16,605 17,180
Selling, general and administrative 3,697 3,077 4,358 15,275 13,056
Total operating expenses (1) 7,723 7,746 8,906 31,880 30,236
Loss before finance costs and income, currency gain, convertible preferred share revaluation adjustment and income taxes (2,202 ) (2,541 ) (6,040 ) (14,124 ) (16,000 )
Other income (expense):
Finance costs 217 (33 ) (152 ) 127 (21,493 )
Share offering costs - - - - -
Finance income 19 19 33 84 184
Currency gains/(losses) (1,686 ) (302 ) (1,450 ) (1,461 ) (1,578 )
Convertible preferred share revaluation adjustment - - - 0 6,365
Total other income (expense) (1,450 ) (316 ) (1,569 ) (1,250 ) (16,522 )
Loss before taxes $ (3,652 ) $ (2,857 ) $ (7,609 ) $ (15,374 ) $ (32,522 )
Income tax recovery (expense) (78 ) (22 ) (10 ) (105 ) (61 )
Loss for the period (3,730 ) (2,879 ) (7,619 ) (15,479 ) (32,583 )
Exchange difference on translating foreign operations (35 ) (27 ) - (79 ) (31 )
Comprehensive loss for the period $ (3,765 ) $ (2,906 ) $ (7,619 ) $ (15,558 ) $ (32,614 )
Loss per share attributed to common equity holders
Basic $ (0.07 ) $ (0.06 ) $ (0.15 ) $ (0.31 ) $ (1.01 )
Diluted $ (0.07 ) $ (0.06 ) $ (0.15 ) $ (0.31 ) $ (1.01 )
Weighted average number of common shares outstanding
Basic 50,376 50,375 50,225 50,370 32,401
Diluted 50,376 50,375 50,225 50,370 32,401
(1) Includes share-based transaction expense of:
Research and development
Selling, general and administrative
Thousands of USD As at January 31, As at October 31, As at January 31, As at April 30,
2015 2014 2014 2013
Cash and cash equivalents 15,289 16,607 25,588 2,069
Trade accounts receivable 4,104 5,597 6,959 6,544
Inventories 2,868 3,392 5,293 2,175
Total assets 35,844 37,661 47,359 22,304
Trade payables 6,465 4,998 4,744 6,807
Accrued liabilities 6,656 6,686 6,274 3,501
Deferred revenues 168 218 27 141
Total liabilities 16,525 15,201 15,048 132,006
Total liabilities and shareholders' equity 35,844 37,661 47,359 22,304

NON-IFRS FINANCIAL MEASURES

In addition to disclosing results in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), the Company also provides supplementary non-IFRS financial measures as a method of evaluating the Company's performance. These non-IFRS measures are disclosed as a supplement to financial results prepared in accordance with IFRS in order to provide a further understanding of ViXS' results of operations from management's perspective. In particular, ViXS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and highlight trends in its core business that may not otherwise be readily apparent solely from IFRS measures. ViXS management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess ViXS' ability to meet its future capital expenditure and working capital requirements. ViXS believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

Non-IFRS net income (loss) is defined as total comprehensive income (loss) before share-based transaction expense, exchange difference related to translating foreign operations, unrealized currency gains/losses and non-recurring or one-time items such as: share offering costs, listing fees, convertible preferred share revaluation adjustment, fair value adjustment on warrant liability and provision for repayable government assistance. Non-IFRS net income (loss) does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Non-IFRS net income (loss) from operations should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS.

ViXS has provided a comparison of comprehensive income (loss) to non-IFRS net loss in the following table:

Three Month Period Ended Fiscal Year Ended
(in thousands of U.S. dollars) January 31, October 31, January 31, January 31, January 31,
2015 2014 2014 2015 2014
Comprehensive (loss) for the period $ (3,765 ) $ (2,906 ) $ (7,619 ) $ (15,558 ) $ (32,614 )
R&D adjustments
Stock-based compensation expense 55 251 250 757 1,013
Provision for repayment of government assistance - (14 ) - (419 ) (627 )
Selling, general and administrative
Stock based compensation expense 317 156 251 1,132 785
Legal fee settlement (297 ) - 165 (297 ) -
Other Income/Expense adjustments
Listing Fees - - 15 - 2,411
Share offering costs - - 165 - 165
Fair value adjustment on warranty liability - - - - 18,219
Unrealized currency loss 1,701 304 1,472 1,446 1,571
Other adjustments -
Convertible preferred share revaluation - - - - (6,365 )
Exchange differences on translating foreign operations 35 27 - 80 31
Non-IFRS net loss $ (1,954 ) $ (2,182 ) $ (5,301 ) $ (12,859 ) $ (15,411 )

FORWARD LOOKING STATEMENTS

Statements in this press release that are not historical facts constitute "forward-looking statements" within the meaning of applicable securities laws. Such statements include, but are not limited to: statements regarding ViXS' projected revenues, gross margins, earnings, growth rates, the impact of new product design wins, market penetration and product plans. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause ViXS' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements.
Factors that could cause results or events to differ materially from current expectations express or implied by forward looking statements continued herein include, but are not limited to, our history of losses and the risks associated with not achieving or sustaining profitability; the Company's dependence on a limited number of customers for a substantial portion of revenues; fluctuating revenue and expense levels arising from changes in customer demand, sales cycles, product mix, average selling prices, manufacturing costs and timing of product introductions; risks associated with competing against larger and more established companies; competitive risks and pressures from further consoldiation amongst competitors, customers, and suppliers; market share risks and timing of revenue recognition associated with product transitions; risks associated with changing industry standards such as HEVC (High Efficiency Video Codec), risks related to intellectual property, including third party licensing or patent infringement claims; risks associated with adverse economic conditions in Asia; our dependence on a limited number of supply chain partners for the manufacture of our products; and other factors discussed in the "Risk Factors" section of ViXS Systems Inc.'s Annual Information Form dated May 7, 2014, a copy of which is available on SEDAR at www.sedar.com. All forward-looking statements are qualified in their entirety by this cautionary statement, except as may be required by applicable securities laws. ViXS is providing this information as of the current date and does not undertake any obligation to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

About ViXS Systems Inc.

ViXS is the pioneer and market leader in designing revolutionary media processing semiconductor solutions for video over IP streaming solutions, with over 503 patents issued and pending worldwide, numerous industry awards for innovation and over 30 million media processors shipped to date. ViXS is driving the transition to Ultra HD 4K across the entire content value chain by providing professional and consumer grade chipsets that support the new High Efficiency Video Coding (HEVC) standard up to Main 12 Profile, reducing bandwidth consumption by 50% while providing the depth of color and image clarity needed to take advantage of higher-resolution content. ViXS' XCodePro 300 family is ideal for Ultra HD 4K infrastructure equipment, and the XCode 6000 family of system-on-chip (SoC) products achieve unprecedented levels of integration that enable manufacturers to create cost-effective consumer entertainment devices.

ViXS is headquartered in Toronto, Canada with offices in Europe, Asia and North America. VIXS, the ViXS® logo, XCode®, XCodePro™, XConnex™ and Xtensiv™ are trademarks and/or registered trademarks of ViXS. Other trademarks are the property of their respective owners. For more information on ViXS, visit our website: www.vixs.com.

Contact Information

  • Charlie Glavin
    ViXS Systems Inc.
    T: +1 416 646-2000
    cglavin@vixs.com

    Nicole Marchand
    Investor Relations, Consultant
    T: +1 416 646-2000 ext. 3
    ir@vixs.com