International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

December 06, 2010 17:52 ET

International Datacasting Corporation Announces Fiscal 2011 Third Quarter Results

OTTAWA, ONTARIO--(Marketwire - Dec. 6, 2010) - International Datacasting Corporation, (TSX:IDC), a global leader in IP-based datacasting solutions for the distribution of broadband multimedia content, today announced its financial results for the three and nine-month FY2011 periods ended October 31, 2010. All figures are in Canadian dollars unless otherwise stated.

Financial Highlights: Q3 2011 vs. Q3 2010

  • Revenue of $ 8.9 million, up 53% from $ 5.8 million. Excluding the impact of foreign exchange, sales increased by 67%

  • Gross margin improved to 45% from 40%

  • EBITDA1 increased to $ 1.1 million vs. a loss of $ 0.2 million making it the highest EBITDA quarter in the Company's history

  • GAAP net income increased from $ 0.1 million to $ 0.9 million

Financial Highlights: Q3 2011 vs. Q2 2011

  • Sequential revenue up by 4% from $ 8.6 million to $ 8.9 million

  • Gross margin remained consistent at 45%

  • EBITDA1 increased by 29% to $ 1.14 million from $ 0.9 million

  • GAAP net income increased by $ 0.6 million

Third Quarter Fiscal 2011 Financial Review

Consolidated FY2011 third quarter revenues were $ 8.9 million or 53% higher than in the same quarter in FY2010 and 4% higher than in the second quarter of FY2011. Excluding the impact of foreign exchange, sales increased by 67% over FY2010. These improvements in revenues were driven by increased sales in the Radio market, the roll out of Digital Cinema in European and North American markets, and greater demand for IPTV product lines. EBITDA, GAAP net income and gross margin realized significant improvements over FY2010. Cash levels continue to be strong with cash totaling $ 8.3 million at the end of the third quarter, up from $7.6 million in the second quarter, with net working capital at $ 11.5 million, up from $ 10.4 million at the end of the previous quarter.

Research and development expenses, net of investment tax credits ("R&D"), declined by 7% to $ 1.1 million from $ 1.2 million in the second quarter. Selling, general and administrative ("SG&A") expenses increased slightly due to timing of customer tradeshows from $ 1.9 million in the second quarter to $ 2.0 million in third quarter. As a result of the implementation of cost control measures during the first quarter 2011, IDC realized a decrease in operating expenses relative to the same quarter in FY2010 with SG&A expenses decreasing from $ 2.3 million to $ 2.0 million in 2011, while R&D remained the same at $ 1.1 million for the same period in FY2010.

The results for the current period include a contribution for the Direct-to-Home Broadcasting service that was announced June 30, 2010 regarding The Wananchi Group. In the third quarter, revenues from this contract totaled $ 0.9 million, with the balance expected to be realized over the next four quarters.

"Our continued focus on delivering innovative broadband solutions for our global customer base resulted in significant orders in all of our product lines and territories," said Fred Godard, IDC President & CEO. "I am pleased with our fiscal and operational accomplishments and maintain our optimistic outlook for the balance of the year and into fiscal 2012. Increased revenue combined with lower operating costs have generated the strongest EBITDA quarter in the Company's history."

"We are pleased to announce, year to date, the highest revenue in IDC's history," stated Adam Adamou, IDC Executive Chairman. "Management believes the Company is only beginning to realize the benefits of our operational enhancements made over the past three quarters. Our strategic planning process includes continuing operational improvements well into fiscal 2012, a full market based assessment of the present and future 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 Tuesday, December 7, 2010 at 9:00 a.m. ET to discuss this announcement. The call may be accessed by dialing 1-613-233-1979 / 1-866-696-5910 with the pass code 8611450. A taped replay will be available until December 8, 2010 at 10:00 p.m. by dialing 1-800-408-3053 and reference the pass code 7810186. To access the live webcast, please visit http://www.gowebcasting.com/2102.

A complete set of Financial Statements and Management's Discussion and Analysis for the three and nine months ended October 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 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 Australia, Singapore and China and an international network of value-added partners and distributors.

International Datacasting Corporation            
Unaudited Consolidated Balance Sheets as at            
  October 31, 2010   January 31, 2010  
ASSETS            
Current Assets            
  Cash $ 8,303,716   $ 4,675,868  
  Amounts receivable   6,836,654     6,171,603  
  Inventories   3,774,095     5,260,362  
  Prepaid expenses and other assets - current portion   1,896,985     527,228  
  Future tax asset - current portion   40,672     40,672  
Total Current Assets   20,852,122     16,675,733  
   
Equipment   2,192,540     2,724,108  
Prepaid expenses - long term portion   187,849     142,102  
Future tax asset - long term portion   2,059,328     2,059,328  
Intangible assets   533,603     542,792  
Goodwill   102,925     399,925  
Total Non-Current Assets   5,076,245     5,868,255  
   
Total Assets $ 25,928,367   $ 22,543,988  
   
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current Liabilities            
  Accounts payable and accrued liabilities $ 4,779,883   $ 4,238,427  
  Customer deposits   3,816,364     78,745  
  Other liabilities   -     1,814  
  Obligations under capital leases - current portion   61,806     83,542  
  Deferred revenue   681,177     514,096  
Total Current Liabilities   9,339,230     4,916,624  
   
Long Term Liabilities            
  Obligations under capital leases   50,853     92,930  
  Future tax liability   62,033     108,558  
Total Non-Current Liabilities   112,886     201,488  
Total Liabilities   9,452,116     5,118,112  
   
Shareholders' Equity            
  Capital stock   23,106,561     22,965,108  
  Contributed surplus   3,160,163     2,999,748  
  Accumulated other comprehensive (loss) income   (206,452 )   23,277  
  Accumulated deficit   (9,584,021 )   (8,562,257 )
Total Shareholders' Equity   16,476,251     17,425,876  
   
Total Liabilities and Shareholders' Equity $ 25,928,367   $ 22,543,988  
                         
                         
                         
International Datacasting Corporation                        
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income              
   
    For the Nine Months Ended     For the Three Months Ended  
  October 31, 2010   October 31, 2009   October 31, 2010   October 31, 2009  
                 
Revenue $ 22,868,799   $ 16,441,652   $ 8,901,659   $ 5,810,288  
Cost of revenue   12,397,732     9,242,545     4,911,383     3,490,026  
Gross profit   10,471,067     7,199,107     3,990,276     2,320,262  
Operating expenses                        
Selling, general and administrative   6,118,553     5,934,416     2,001,423     2,262,604  
Research and development, net of investment tax credits   3,543,978     3,009,812     1,072,328     1,096,994  
Amortization   957,792     921,844     304,640     296,313  
Goodwill impairment   -     2,491,030     -     -  
Restructuring costs (Note 8)   673,131     -     -     -  
    11,293,454     12,357,102     3,378,391     3,655,911  
Operating (loss) income   (822,387 )   (5,157,995 )   611,885     (1,335,649 )
Interest income (expense)                        
  Long-term   (10,086 )   (15,688 )   (4,226 )   (4,474 )
  Short-term   23,142     51,299     13,244     37,588  
Realized gain on sale of available-for-sale investment   -     437,384     -     437,384  
Realized gain on sale of held-for-trading investment   -     427,038     -     326,944  
Foreign exchange gain (loss)   261,506     (116,225 )   220,399     29,409  
(Loss) income before income taxes and extraordinary (loss) income   (547,825 )   (4,374,187 )   841,302     (508,798 )
Income tax (expense) recovery   (25,426 )   88,525     15,276     15,509  
(Loss) income before extraordinary (loss) income   (573,251 )   (4,285,662 )   856,578     (493,289 )
Extraordinary (loss) income (Note 9)   (448,513 )   591,886     -     591,886  
Net (loss) income $ (1,021,764 ) $ (3,693,776 ) $ 856,578   $ 98,597  
   
Other comprehensive (loss) income                        
                         
Unrealized gain on revaluation of available-for-sale investment $ -   $ 446,897   $ -   $ 128,333  
arising during the period                        
Reclassification adjustment for gains included in net income   -     (446,897 )   -     (446,897 )
Change in unrealized gain on available-for-sale investment   -     -     -     (318,564 )
Unrealized (loss) gain on translation of self-sustaining   (229,729 )   49,484     -     104,827  
foreign operations                        
Other comprehensive (loss) income   (229,729 )   49,484     -     (213,737 )
   
Comprehensive (loss) income $ (1,251,493 ) $ (3,644,292 ) $ 856,578   $ (115,140 )
   
Net (loss) earnings per share                        
Basic $ (0.02 ) $ (0.07 ) $ 0.01   $ 0.00  
Diluted $ (0.02 ) $ (0.07 ) $ 0.01   $ 0.00  
                         
Net (loss) earnings per share before extraordinary (loss) income                        
Basic $ (0.01 ) $ (0.08 ) $ 0.01   $ (0.01 )
Diluted $ (0.01 ) $ (0.08 ) $ 0.01   $ (0.01 )
                         
Weighted average number of                        
shares outstanding                        
  Basic (Note 10)   57,393,701     56,755,340     57,241,823     56,762,413  
  Diluted (Note 10)   57,393,701     57,667,840     57,241,823     58,072,492  
                         
                         
                         
International Datacasting Corporation                        
Unaudited Consolidated Statements of Cash Flows                        
    Nine months ended     Three months ended  
  October 31, 2010   October 31, 2009   October 31, 2010   October 31, 2009  
   
Operating activities                        
  Net (loss) income $ (1,021,764 ) $ (3,693,776 ) $ 856,578   $ 98,597  
  Add items not requiring an outlay of cash:                        
    Goodwill impairment   -     2,491,030     -     -  
    Amortization   957,792     921,844     304,640     296,313  
    Bad debt expense (recovery)   -     38,357     -     (6,894 )
    Gain on sale of available-for-sale investment   -     (437,384 )   -     (437,384 )
    Gain on sale of held-for-trading investment   -     (427,038 )   -     (326,944 )
    Future income taxes   (46,525 )   (93,437 )   (15,509 )   (15,509 )
    Stock-based compensation   204,831     278,319     48,996     88,651  
    Extraordinary loss (income)   448,513     (591,886 )   -     (591,886 )
Net change in operating components of working capital net of                        
effects of business acquisition of Tiernan (Note 7)   3,171,812     1,237,253     (522,008 )   495,216  
   
Cash provided by (applied to) operating activities   3,714,659     (276,718 )   672,697     (399,840 )
   
Investing activities                        
Additions to equipment   (120,035 )   (350,378 )   (13,946 )   (149,253 )
Proceeds on disposition of available-for-sale investment   -     635,487     -     635,487  
Proceeds on disposition of held-for-trading investment   -     624,778     -     624,778  
Business acquisition of Tiernan   -     (1,870,135 )   -     (1,870,135 )
Purchase of available-for-sale investment   -     (198,103 )   -     -  
Purchase of held-for-trading investment   -     (197,740 )   -     (145,843 )
   
Cash applied to investing activities   (120,035 )   (1,356,091 )   (13,946 )   (904,966 )
   
Financing activities                        
Repayments of obligations under capital leases   (63,813 )   (127,209 )   (21,605 )   (36,117 )
Issue of common shares, net of issue costs   97,037     56,411     61,239     -  
   
Cash provided by (applied to) financing activities   33,224     (70,798 )   39,634     (36,117 )
   
Increase (decrease) in cash during the period   3,627,848     (1,703,607 )   698,385     (1,340,923 )
   
Cash - Beginning of period   4,675,868     7,554,296     7,605,331     7,191,612  
   
Cash - End of period $ 8,303,716   $ 5,850,689   $ 8,303,716   $ 5,850,689  
   
Interest paid   10,086     15,688     4,226     4,474  
Income taxes paid   139,010     4,913     -     -  

(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.

Contact Information

  • International Datacasting Corporation
    Christine Rozak
    Director, Marketing and Communications
    613-596-4120 x 2215
    crozak@datacast.com