International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

September 13, 2010 07:30 ET

International Datacasting Corporation Announces Fiscal 2011 Second Quarter Results

OTTAWA, ONTARIO--(Marketwire - Sept. 13, 2010) - International Datacasting Corporation, (TSX:IDC), a global leader in providing IP-based datacasting solutions for the distribution of broadband multimedia content announced its financial results for the three- and six-month FY2011 periods ended July 31, 2010. All figures are in Canadian dollars unless otherwise stated.

Financial Highlights: Q2 2011 vs. Q2 2010

  • Revenue of $8.6 million, up 55% from $5.5 million. Excluding the impact of foreign exchange, sales increased by 74%

  • Gross margin improved to 45% from 43%

  • EBITDA1 increased by $1.1 million to $900,000 vs. loss of $200,000

  • GAAP net income increased by $3.2 million to $200,000 vs. loss of $3.0 million

Financial Highlights: Q2 2011 vs. Q1 2011

  • Sequential revenue up 59% to $8.6 million from $5.4 million

  • Gross margin declined from 49% to 45% due primarily to changes in product mix

  • EBITDA1 increased by $2.5 million to $900,000 vs. loss of $1.6 million

  • GAAP net income increased by $2.3 million to $200,000 vs. loss of $2.1 million

Second Quarter Fiscal 2011 Financial Review

Consolidated FY2011 second quarter revenues were $8.6 million or 55% higher than in the same quarter in FY2010 and 59% higher than in the first quarter of FY2011. Excluding the impact of foreign exchange, sales increased by 74% over FY2010. The improvements in revenues were driven by increases in the Digital Cinema and IPTV product lines and the impact of the acquisition of the Tiernan and Logic Innovations product lines in the second half of fiscal 2010. EBITDA and GAAP net income realized significant improvements over FY2010 while gross margins improved to 45% from 43%. Cash levels continue to be strong with cash totaling $7.6 million at the end of the quarter, up from $4.8 million in the first quarter, with net working capital at $10.4 million, up from $9.8 million at the end of the previous quarter. 

The implementation of cost control measures along with a recovery on bad debt expense during the quarter resulted in quarter-over-quarter declines in costs, with Selling, General and Administrative ("SG&A") expenses declining by 15% to $1.9 million from $2.2 million in the first quarter, while Research and Development expenses, net of investment tax credits ("R&D"), declined by 13% to $1.2 million from $1.3 million in the first quarter. As a result of the addition of staff related to the Company's acquisition of the Tiernan and Logic Innovations' product lines, IDC's realized an increase in operating expenses relative to the same quarter in FY2010 with SG&A expenses increasing to $1.9 million from $1.7 million while R&D increased to $1.2 million from $880,000 during the same period in FY2010. 

The results for the current period do not include a contribution for the Direct-to-Home Broadcasting service that was announced on June 30, 2010 in conjunction with The Wananchi Group. The proceeds from this contract will be recognized over the next eighteen months.

"Strong demand combined with lower operating expenses enabled us to deliver a strong quarter with order levels strengthening significantly," said Fred Godard, IDC President & CEO. "This includes an uptick in all of our territories and product lines. With the recent launch of our new Seamless 3D features, the IDC Tiernan Titan video encoding platform and the IDC PROFline STR Audio Broadcast system, combined with on-going upgrades and partnerships, we remain optimistic about our outlook for the balance of the year and into fiscal 2012."

"We're forging ahead with our plan and are now realizing the initial benefits of our operational reviews," stated Adam E. Adamou, IDC Executive Chairman. "Our plan calls for additional operational improvements over the second half of fiscal 2011, a full market based assessment of the needs of our customers, and an on-going commitment to generating sustainable long term value for our shareholders."

Conference Call

A conference call will be held on Monday September 13, 2010 at 9:00 a.m. ET to discuss this announcement. The call may be accessed by dialing 1-866-696-5910 with the passcode of 2527501. A taped replay will be available for one week by dialing 1-800-408-3053 reference number 4253018. To access the live webcast, please visit http://www.gowebcasting.com/1969.

A complete set of Financial Statements and Management's Discussion and Analysis for the three and six months ended July 31, 2010 of FY2011 will be available at www.sedar.com or on the Investor Information section of IDC's website at www.datacast.com.

Forward-Looking Statements

This release may contain forward-looking statements reflecting IDC's objectives, estimates and expectations. Such statements may be marked by the use words such as "believe", "anticipate", "estimate", "looking ahead", "outlook" and "expect" as well as the conditional or future tense. Such statements involve risks and uncertainties and future results may differ materially from the Company's expectations. The forward-looking statements are subject to change and IDC disclaims any intention and assumes no obligation to update or revise any forward-looking statement whether as a result of new information or events or otherwise unless required to do so by the applicable securities legislation.

About International Datacasting Corporation (IDC)

International Datacasting Corporation (TSX: IDC) is a global leader in providing IP-based datacasting solutions for the distribution of broadband multimedia content. IDC has a broad portfolio of advanced technology products marketed under the names SuperFlex, Datacast XD, Tiernan, Logic Innovations and PROFline for implementing a wide range of broadband content contribution and distribution networks. IDC's products are in demand for radio and television broadcast networks, distance learning, digital satellite news gathering and sport contribution, digital signage, digital cinema, IPTV distribution and other applications. IDC is headquartered in Ottawa, Canada, with regional offices in Arnhem, the Netherlands and in San Diego, California. International in scope, IDC has installations in over 100 countries and service offices in the UK, Australia, Singapore and China and an international network of value-added partners and distributors. 

  1. Earnings before interest, taxes, depreciation and amortization ("EBITDA") are a non-GAAP financial measure. EBITDA is not an earnings measure recognized by GAAP and does not carry standard prescribed significance. Our method for calculating EBITDA may differ from that used by other companies that use the same designation and the reader is advised that EBITDA should not be substituted for determining net income as an indicator of operating results or as a substitute for cash flows from operating and investing activities.

This press release contains forward-looking statements that may involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with IDC's growth, any difficulties with integrating acquired product lines into IDC's business and/or manufacturing procedures, the development of the satellite datacasting market, regulatory risks, intellectual property infringement and other factors. IDC assumes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect IDC's financial and business results is included in the public documents IDC files from time to time with Canadian securities regulatory authorities.

International Datacasting Corporation
Unaudited Consolidated Balance Sheets as at
    July 31,
2010
  January 31,
2010
 
ASSETS            
Current Assets            
  Cash $ 7,605,331   $ 4,675,868  
  Amounts receivable   5,252,886     6,171,603  
  Inventories   4,266,574     5,260,362  
  Prepaid expenses and other assets - current portion   1,702,010     527,228  
  Future tax asset   40,672     40,672  
Total Current Assets   18,867,473     16,675,733  
   
Equipment   2,364,765     2,724,108  
Prepaid expenses - long term portion   120,932     142,102  
Future tax asset - long term portion   2,059,328     2,059,328  
Intangible assets   631,208     542,792  
Goodwill   102,925     399,925  
Total Non-Current Assets   5,279,158     5,868,255  
   
Total Assets $ 24,146,631   $ 22,543,988  
   
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current Liabilities            
  Accounts payable and accrued liabilities $ 3,897,767   $ 4,238,427  
  Customer deposits   3,427,121     78,745  
  Other liabilities   -     1,814  
  Obligations under capital leases - current portion   69,632     83,542  
  Deferred revenue   1,100,499     514,096  
Total Current Liabilities   8,495,019     4,916,624  
   
Long Term Liabilities            
  Obligations under capital leases   64,632     92,930  
  Future tax liability   77,542     108,558  
Total Non-Current Liabilities   142,174     201,488  
Total Liabilities   8,637,193     5,118,112  
   
Shareholders' Equity            
  Capital stock   23,018,597     22,965,108  
  Contributed surplus   3,137,892     2,999,748  
  Accumulated other comprehensive (loss) income   (206,452 )   23,277  
  Accumulated deficit   (10,440,599 )   (8,562,257 )
Total Shareholders' Equity   15,509,438     17,425,876  
   
Total Liabilities and Shareholders' Equity $ 24,146,631   $ 22,543,988  
 
 
 
International Datacasting Corporation
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income
    For the
Six Months Ended
    For the
Three Months Ended
 
    July 31, 2010     July 31, 2009     July 31, 2010     July 31, 2009  
                         
Revenue $ 13,967,140   $ 10,631,364   $ 8,571,084   $ 5,521,161  
Cost of revenue   7,486,349     5,752,519     4,748,816     3,126,610  
Gross profit   6,480,791     4,878,845     3,822,268     2,394,551  
Operating expenses                        
Selling, general and administrative   4,117,130     3,671,812     1,892,093     1,711,361  
Research and development, net of investment tax credits   2,471,650     1,912,816     1,152,757     880,759  
Amortization   653,153     625,531     349,174     303,444  
Goodwill impairment   -     2,491,030     -     2,491,030  
Restructuring costs (Note 8)   673,131     -     2,524     -  
    7,915,064     8,701,189     3,396,548     5,386,594  
Operating (loss) income   (1,434,273 )   (3,822,344 )   425,720     (2,992,043 )
Interest income (expense)                        
Long-term   (5,860 )   (11,214 )   (2,084 )   (5,396 )
Short-term   9,898     13,711     2,670     (2,604 )
Unrealized gain on revaluation of held-for-trading investment   -     100,094     -     51,486  
Foreign exchange gain (loss)   41,108     (145,634 )   106,605     (37,211 )
(Loss) income before income taxes and extraordinary loss   (1,389,127 )   (3,865,387 )   532,911     (2,985,768 )
Income tax (expense) recovery   (40,702 )   73,016     (31,640 )   12,822  
(Loss) income before extraordinary loss   (1,429,829 )   (3,792,371 )   501,271     (2,972,946 )
Extraordinary loss (Note 9)   (448,513 )   -     (274,364 )   -  
Net (loss) income $ (1,878,342 ) $ (3,792,371 ) $ 226,907   $ (2,972,946 )
   
Other comprehensive (loss) income                        
Unrealized gain on revaluation of available-for-sale investment $ -   $ 318,564   $ -   $ 141,667  
Unrealized loss on translation of self-sustaining                        
foreign operations   (229,729 )   (55,343 )   (15,385 )   (62,631 )
Other comprehensive (loss) income   (229,729 )   263,221     (15,385 )   79,036  
   
Comprehensive (loss) income $ (2,108,071 ) $ (3,529,150 ) $ 211,522   $ (2,893,910 )
   
Net (loss) earnings per share                        
Basic $ (0.03 ) $ (0.07 ) $ 0.00   $ (0.05 )
Diluted $ (0.03 ) $ (0.07 ) $ 0.00   $ (0.05 )
Net (loss) earnings per share before extraordinary loss                        
Basic $ (0.02 ) $ (0.07 ) $ 0.01   $ (0.05 )
Diluted $ (0.02 ) $ (0.07 ) $ 0.01   $ (0.05 )
                         
Weighted average number of shares outstanding                        
  Basic (Note 10)   57,468,381     56,751,747     57,043,663     56,762,413  
  Diluted (Note 10)   57,599,114     56,751,747     57,172,133     58,195,326  
 
 
 
International Datacasting Corporation
Unaudited Consolidated Statements of Cash Flows
    Six months ended     Three months ended  
    July 31, 2010     July 31, 2009     July 31, 2010     July 31, 2009  
   
Operating activities                        
  Net (loss) income $ (1,878,342 ) $ (3,792,371 ) $ 226,907   $ (2,972,946 )
  Add items not requiring an outlay of cash:                        
    Goodwill impairment   -     2,491,030     -     2,491,030  
    Amortization   653,153     625,531     349,174     303,444  
    Unrealized gain on revaluation of held-for-trading investment   -     (100,094 )   -     (51,486 )
    Future income taxes   (31,016 )   (77,929 )   (15,508 )   (15,508 )
    Stock-based compensation   155,835     189,668     105,069     121,819  
    Extraordinary loss   448,513     -     274,364     -  
    Net change in operating components of working capital net of effects of business acquisition of Tiernan (Note 7)   3,704,037     816,832     1,891,615     366,198  
   
Cash provided by operating activities   3,052,180     152,667     2,831,621     242,551  
   
Investing activities                        
Additions to equipment   (106,089 )   (201,125 )   (31,991 )   (54,036 )
Purchase of available-for-sale investment   -     (198,103 )   -     -  
Purchase of held-for-trading investment   -     (51,897 )   -     -  
   
Cash applied to investing activities   (106,089 )   (451,125 )   (31,991 )   (54,036 )
   
Financing activities                        
Repayments of obligations under capital leases   (42,208 )   (91,092 )   (21,269 )   (40,784 )
Issue of common shares, net of issue costs   35,798     56,411     30,298     -  
   
Cash (applied to) provided by financing activities   (6,410 )   (34,681 )   9,029     (40,784 )
   
Effect of foreign exchange rate changes on cash   (10,218 )   (29,545 )   33,186     (20,828 )
   
Increase (decrease) in cash during the period   2,929,463     (362,684 )   2,841,845     126,903  
   
Cash - Beginning of period   4,675,868     7,554,296     4,763,486     7,064,709  
   
Cash - End of period $ 7,605,331   $ 7,191,612   $ 7,605,331   $ 7,191,612  
   
Interest paid   7,266     11,214     3,490     5,396  
Income taxes paid   139,010     4,913     -     2,686  

Contact Information

  • International Datacasting Corporation
    Debbie Cass
    613-596-4120 x 2220
    dcass@datacast.com