OTTAWA, ONTARIO--(Marketwired - Dec. 10, 2014) - International Datacasting Corporation ("IDC") (TSX:IDC), a global technology provider for the world's premiere broadcasters, announced its financial results today for the nine months and third quarter ended October 31, 2014. All amounts in this release are in Canadian dollars unless otherwise stated.
| Financial Highlights: | |||||||
| (in thousands, except for gross margin (GM) and loss per share) | |||||||
| Three months ending October 31, | Nine months ending October 31, | |||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
| Revenues: | GM | GM | GM | GM | ||||||||||||||||
| Products | $ | 2,669 | 40 | % | $ | 1,490 | 24 | % | $ 6,824 | 41 | % | $ | 9,091 | 44 | % | |||||
| Services | 357 | 37 | % | 1,043 | 46 | % | 1,631 | 45 | % | 3,663 | 47 | % | ||||||||
| Total revenues | $ | 3,026 | $ | 2,533 | $ 8,455 | $ 12,754 | ||||||||||||||
| Gross profit | $ | 1,203 | 40 | % | $ | 839 | 33 | % | $ 3,689 | 44 | % | $ | 5,752 | 45 | % | |||||
| Operating expenses | $ | 2,302 | $ | 3,140 | $ 7,673 | $ | 8,537 | |||||||||||||
| Adjusted EBITDA (Loss) (1) | $ | (975 | ) | $ | (2,184 | ) | $ (3,396 | ) | $ | (2,342 | ) | |||||||||
| Net loss | $ | (1,094 | ) | $ | (2,259 | ) | $ (3,982 | ) | $ | (2,770 | ) | |||||||||
| Net loss per share | $ | (0.02 | ) | $ | (0.04 | ) | $ (0.07 | ) | $ | (0.05 | ) | |||||||||
| (1) | Adjusted EBITDA is a non-GAAP financial measure. The reconciliation of Adjusted EBITDA to Net Loss is provided at the end of this release. |
Third Quarter Results
Revenues totaled $3.0 million for the third quarter of Fiscal 2015, 19% higher than the prior year's third quarter. The increase was primarily due to a 79% improvement in product revenues, partially offset by a reduction in services revenues due to the non-renewal of the Canadian Forces Radio and Television service. The increase in product revenues was driven by video and data products, including large orders for digital cinema and data receivers as well as increasing shipments of the new TITAN 3 encoder. When comparing IDC's third quarter product sales with the second quarter of Fiscal 2015, revenues increased sequentially by 20%, continuing a trend that has been in place for several quarters.
The total gross margin for the quarter improved to 40% from 33% for the comparable prior period, primarily due to an increased revenue base to cover fixed expenses.
Total operating expenses decreased by 27% compared to the third quarter of Fiscal 2014, and by 10% compared to the first nine months of Fiscal 2014. Fiscal 2015's operating expenses include $0.4 million of restructuring costs. IDC incurred a net loss of $1.1 million in the third quarter of Fiscal 2015, compared to a loss of $2.3 million in Fiscal 2014.
At October 31, 2014, IDC's working capital was $4.1 million, including $0.3 million in cash. In addition, IDC's accounts receivable factoring facility remains mostly undrawn, with $0.9 million of additional capacity available.
Progress and Outlook
During the first nine months of Fiscal 2015, IDC made progress in executing our turnaround plan. Key accomplishments during this period included the following:
- We reduced IDC's cost structure, resulting in a significantly lower breakeven point. These changes included a reduction of approximately 40% in our global workforce, as well as the consolidation of manufacturing and supply chain activity in our Ottawa location.
- We put in place a new, more streamlined organization structure that will contribute to reducing cost, increasing agility, and simplifying decision making.
- We announced two new products at the National Association of Broadcasters (NAB) tradeshow in April, namely the TITAN 3 contribution encoder ("TITAN 3") and LASER Multi Program Splicer ("Laser MPS").
Both products have attracted significant market interest, and TITAN 3 has shipped for revenue during the second and third quarter of Fiscal 2015. - IDC has established itself as an early leader in Ultra-HD, with key milestones including the world's first 4K live event delivered to Cinema screens in July 2014, as well as a highly successful 4K live broadcast to the IBC trade show in Amsterdam in September 2014. Both of these events were delivered via the new High Efficiency Video Coding (HEVC).
- Our sales pipeline continued to develop, resulting in a sequential increase in product revenues in each quarter so far in Fiscal 2015. However, so far this growth has not met our expectations. IDC has responded by hiring a new VP, International Sales and restructuring the sales force to focus on the most promising opportunities.
- These changes, as well as the pending release of the new LASER MPS product, are expected to improve revenues in future quarters.
Doug Lowther, IDC's President and CEO, stated, "While IDC has made significant progress over the last three quarters, we have not yet returned the company to profitability. This remains our top priority and we are focused on achieving sustainable revenue growth to return the company to profitability in the near term."
For further information on IDC's third quarter results, refer to the unaudited interim condensed consolidated financial statements and Management's Discussion and Analysis that will be available on SEDAR (www.sedar.com) after the Toronto Stock Exchange closes on December 10, 2014.
Financial Summary and Conference Call
This announcement will be followed by a Management conference call at 8:30 a.m. ET on Thursday, December 11, 2014, to discuss the results, and to respond to questions from investors.
Mr. Doug Lowther, President and CEO of IDC, cordially invites all interested parties to participate in the conference call.
CONFERENCE CALL DETAILS:
| CONFERENCE DATE: | Thursday, December 11, 2014 |
| CONFERENCE TIME: | 8:30 a.m. ET |
| DIAL-IN NUMBERS: | 613-233-1979 / 888-789-9572 |
| PARTICIPANT CODE: | 6058967 |
WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/6157. This webcast will be archived here for 365 days. Please connect to the website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to access the webcast.
About International Datacasting Corporation:
International Datacasting Corporation (TSX:IDC) is a global technology provider for the world's premiere broadcasters in radio, television, data and digital cinema. IDC's products and solutions are in demand for radio and television networks, targeted ad insertion, digital cinema, 3D live events, satellite news gathering, sports contribution, VOD, and IPTV. IDC is headquartered in Ottawa, Canada, with regional offices in Arnhem, the Netherlands and in San Diego, California. For more information visit: www.datacast.com.
Forward-Looking Statements:
This press release contains certain information that may constitute "forward-looking information" and/or "forward-looking statements" within the meaning of applicable Canadian securities laws including, without limitation, management's beliefs with respect to strategy, efficiencies, results and costs savings in Fiscal 2015, management's expectations with respect to customer acceptance of, and the receipt of orders for, the company's products, and management's expectations with respect to the impact of new personnel and a restructured sales force. All forward-looking information and forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material assumptions used to develop the forward looking-statements made in this release include anticipated cost savings resulting from the initiatives taken by IDC under its action plan, anticipated impact of senior personnel, consolidation of operations and restructuring of the sales force, management's perceptions of current conditions and expected future developments, expectations regarding future shipments of IDC products, management's knowledge of the current credit, interest rate and liquidity conditions affecting IDC as well as other considerations that are believed to be appropriate in the circumstances.
All statements other than statements which are reporting results as well as statements of historical fact are forward-looking statements that may involve a number of known and unknown risks, uncertainties and other factors; many of which are beyond the ability of IDC to control or predict.
Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "design", "plan or "project" or the negative of these words or other variations on these words or comparable terminology. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that might cause actual results to differ materially include, but are not limited to: competitive developments; risks associated with IDC's growth; expectations regarding new product initiatives and timing, including the STAR Pro Audio™ Solution, LASER™ Targeted Ad Insertion Platform, and TITAN 3 Video Encoder; a lengthy and variable sales cycle for IDC's products and services; any difficulties or disputes with IDC's subcontractors, contract manufacturers and suppliers; IDC's dependence on the development and growth of the satellite services market; a lengthy and variable sales cycle for IDC's products and services; IDC's reliance on a small number of customers for a large percentage of its revenue; expectations with respect to the sufficiency of its financial resources and liquidity; regulatory risks and intellectual property infringement. Further, any incorrect identification of, or failure or delay in identifying, areas that require attention in IDC's business as part of the company's strategic review, or inability to successfully address areas requiring increased focus in accordance with IDC's action plan, could materially adversely affect the company's business, financial conditions, and results of operations as well as other key indicators.
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 and which are available on SEDAR at www.sedar.com, including, without limitation, IDC's Annual Information Form and MD&A for the year ended January 31, 2014, each dated April 29, 2014, and our MD&A for the quarter ended October 31, 2014.
Except as expressly required by applicable law, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Forward- looking statements are provided to assist external stakeholders in understanding IDC's expectations as at the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements.
| INTERNATIONAL DATACASTING CORPORATION |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
| As of October 31, 2014 and January 31, 2014 |
| (Canadian dollars) | |||||||
| October 31, 2014 | January 31, 2014 | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash | $ | 330,044 | $ | 2,734,655 | |||
| Restricted short-term investments | 80,000 | 72,500 | |||||
| Accounts receivable | 2,850,624 | 3,289,596 | |||||
| Inventories | 3,598,476 | 3,793,347 | |||||
| Other assets | 230,515 | 438,268 | |||||
| Total Current Assets | 7,089,659 | 10,328,366 | |||||
| Non-Current Assets | |||||||
| Capital assets | 545,943 | 536,057 | |||||
| Total Non-Current Assets | 545,943 | 536,057 | |||||
| TOTAL ASSETS | $ | 7,635,602 | $ | 10,864,423 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 1,217,601 | $ | 1,159,025 | |||
| Secured borrowings | 121,331 | - | |||||
| Accrued liabilities | 825,838 | 1,545,234 | |||||
| Customer deposits | 63,301 | 30,654 | |||||
| Deferred revenue - current portion | 489,545 | 349,870 | |||||
| Provisions | 311,803 | 254,575 | |||||
| Current tax liability | 8,678 | 9,496 | |||||
| Total Current Liabilities | 3,038,097 | 3,348,854 | |||||
| Non-Current Liabilities | |||||||
| Deferred tax liability | 14,506 | 14,551 | |||||
| Deferred revenue | 349,019 | 129,568 | |||||
| Total Non-Current Liabilities | 363,525 | 144,119 | |||||
| TOTAL LIABILITIES | 3,401,622 | 3,492,973 | |||||
| Shareholders' Equity | |||||||
| Capital stock | 24,034,398 | 23,637,259 | |||||
| Contributed surplus | 3,848,577 | 3,401,345 | |||||
| Accumulated other comprehensive loss | (229,729 | ) | (229,729 | ) | |||
| Accumulated deficit | (23,419,266 | ) | (19,437,425 | ) | |||
| TOTAL SHAREHOLDERS' EQUITY | 4,233,980 | 7,371,450 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 7,635,602 | $ | 10,864,423 | |||
| INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||||||||||
| FOR THE THREE AND NINE MONTH PERIODS ENDED OCTOBER 31, 2014 and 2013 | |||||||||||||
| (Canadian dollars, except for share data) | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| October 31, 2014 | October 31, 2013 | October 31, 2014 | October 31, 2013 | ||||||||||
| REVENUE | |||||||||||||
| Products | $ | 2,669,198 | $ | 1,490,120 | $ | 6,823,877 | $ | 9,090,634 | |||||
| Services | 357,235 | 1,043,390 | 1,631,257 | 3,663,087 | |||||||||
| Total revenue | 3,026,433 | 2,533,510 | 8,455,134 | 12,753,721 | |||||||||
| COST OF REVENUE | 1,823,484 | 1,694,467 | 4,765,717 | 7,001,286 | |||||||||
| GROSS PROFIT | 1,202,949 | 839,043 | 3,689,417 | 5,752,435 | |||||||||
| OPERATING EXPENSES | |||||||||||||
| Selling, general and administrative | 1,332,280 | 1,946,453 | 3,940,897 | 5,243,671 | |||||||||
| Research and development, net of investment tax credits | 907,756 | 1,202,367 | 3,278,415 | 3,323,644 | |||||||||
| Restructuring charges | 70,919 | - | 441,559 | - | |||||||||
| Foreign exchange loss (gain) | (8,584 | ) | (9,197 | ) | 11,741 | (30,727 | ) | ||||||
| Total operating expenses | 2,302,371 | 3,139,623 | 7,672,612 | 8,536,588 | |||||||||
| OPERATING LOSS BEFORE OTHER ITEMS | (1,099,422 | ) | (2,300,580 | ) | (3,983,195 | ) | (2,784,153 | ) | |||||
| Realized (loss) on sale of investments | - | - | - | (25,344 | ) | ||||||||
| Interest Income | 1,373 | 11,836 | 10,941 | 46,049 | |||||||||
| Interest expense | (866 | ) | - | (1,724 | ) | (1,182 | ) | ||||||
| LOSS BEFORE INCOME TAXES | (1,098,915 | ) | (2,288,744 | ) | (3,973,978 | ) | (2,764,630 | ) | |||||
| Income tax recovery (expense): | |||||||||||||
| Current | 4,924 | 26,255 | (7,327 | ) | (16,425 | ) | |||||||
| Deferred | - | 3,321 | (536 | ) | 10,826 | ||||||||
| NET AND COMPREHENSIVE LOSS | $ | (1,093,991 | ) | $ | (2,259,168 | ) | $ | (3,981,841 | ) | $ | (2,770,229 | ) | |
| NET LOSS PER SHARE | |||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.07 | ) | $ | (0.05 | ) | |
| Diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.07 | ) | $ | (0.05 | ) | |
| Weighted average number of shares outstanding - basic | 62,787,777 | 58,484,642 | 59,979,860 | 58,230,796 | |||||||||
| Weighted average number of shares outstanding - diluted | 62,787,777 | 58,484,642 | 59,979,860 | 58,230,796 | |||||||||
| INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| FOR THE THREE AND NINE MONTH PERIODS ENDED OCTOBER 31, 2014 and 2013 | |||||||||||||
| (Canadian dollars) | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| October 31, 2014 | October 31, 2013 | October 31, 2014 | October 31, 2013 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net loss | $ | (1,093,991 | ) | $ | (2,259,168 | ) | $ | (3,981,841 | ) | $ | (2,770,229 | ) | |
| Add items not requiring an outlay of cash: | |||||||||||||
| Depreciation and amortization | 53,881 | 116,675 | 145,622 | 442,007 | |||||||||
| Deferred tax adjustments | (581 | ) | (3,321 | ) | (45 | ) | (10,826 | ) | |||||
| Realized loss on sale of available-for-sale investments | - | - | - | 25,344 | |||||||||
| Unrealized loss on derivatives | - | 57,200 | - | 25,176 | |||||||||
| Stock-based compensation | 144,392 | 48,870 | 447,232 | 71,631 | |||||||||
| (896,299 | ) | (2,039,744 | ) | (3,389,032 | ) | (2,216,897 | ) | ||||||
| Net change in non-cash working capital: | |||||||||||||
| Accounts receivable | (425,208 | ) | 1,541,968 | 438,972 | 2,468,290 | ||||||||
| Inventories | 332,808 | (1,183,867 | ) | 194,871 | (2,111,581 | ) | |||||||
| Other assets | 205,820 | 297,413 | 207,753 | (128,396 | ) | ||||||||
| Accounts payable and accrued liabilities | (423,837 | ) | 28,231 | (658,006 | ) | (718,300 | ) | ||||||
| Customer deposits | 25,508 | (18,101 | ) | 32,647 | (346,492 | ) | |||||||
| Deferred revenue | (159,579 | ) | (116,742 | ) | 359,126 | 40,218 | |||||||
| Provisions | (152,762 | ) | 16,787 | 57,228 | 55,407 | ||||||||
| Current tax liability | (3,982 | ) | (27,196 | ) | (818 | ) | (18,658 | ) | |||||
| Net cash applied to operating activities | (1,497,531 | ) | (1,501,251 | ) | (2,757,259 | ) | (2,976,409 | ) | |||||
| INVESTING ACTIVITIES | |||||||||||||
| Purchase of short-term investment | (80,000 | ) | (87,000 | ) | (80,000 | ) | (87,000 | ) | |||||
| Redemption of short-term investment | - | - | 72,500 | - | |||||||||
| Proceeds from sale of available-for-sale investments | - | - | - | 1,974,646 | |||||||||
| Purchase of capital assets | (49,508 | ) | (12,055 | ) | (155,508 | ) | (153,756 | ) | |||||
| Net cash applied to (provided by) investing activities | (129,508 | ) | (99,055 | ) | (163,008 | ) | 1,733,890 | ||||||
| FINANCING ACTIVITIES | |||||||||||||
| Issuance of common shares | - | - | 394,325 | 231,000 | |||||||||
| Proceeds from secured borrowings (net) | 121,331 | - | 121,331 | - | |||||||||
| Repayments of obligations under capital leases | - | - | - | (2,999 | ) | ||||||||
| Net cash provided by financing activities | 121,331 | - | 515,656 | 228,001 | |||||||||
| Net decrease in cash during the period | (1,505,708 | ) | (1,600,306 | ) | (2,404,611 | ) | (1,014,518 | ) | |||||
| CASH AND CASH EQUIVALENTS - Beginning of period | 1,835,752 | 5,528,813 | 2,734,655 | 4,943,025 | |||||||||
| CASH AND CASH EQUIVALENTS - End of period | $ | 330,044 | $ | 3,928,507 | $ | 330,044 | $ | 3,928,507 | |||||
| INTERNATIONAL DATACASTING CORPORATION | ||||||||||||||
| NON-GAAP FINANCIAL MEASURE RECONCILIATION | ||||||||||||||
| ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION | ||||||||||||||
| FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 2014 and 2013 | ||||||||||||||
| (Canadian dollars) | ||||||||||||||
| Three months ended | Nine months ended | |||||||||||||
| October 31, 2014 | October 31, 2013 | October 31, 2014 | October 31, 2013 | |||||||||||
| Net loss reported under IFRS (unaudited) | $ | (1,093,991 | ) | $ | (2,259,168 | ) | $ | (3,981,841 | ) | $ | (2,770,229 | ) | ||
| Add (subtract): | ||||||||||||||
| Restructuring charges | 70,919 | - | 441,559 | - | ||||||||||
| Depreciation expense | 53,881 | 116,675 | 145,622 | 442,007 | ||||||||||
| Income tax expense (recovery) | (4,924 | ) | (29,576 | ) | 7,863 | 5,599 | ||||||||
| Interest expense | 866 | - | 1,724 | 1,182 | ||||||||||
| Net investment income | (1,373 | ) | (11,836 | ) | (10,941 | ) | (20,705 | ) | ||||||
| Adjusted EBITDA (Loss) | $ | (974,622 | ) | $ | (2,183,905 | ) | $ | (3,396,014 | ) | $ | (2,342,146 | ) | ||
In this release, IDC has presented Adjusted EBITDA, which is a "non-GAAP financial measure" and accordingly it is not an earnings measure recognized by IFRS and does not carry standard prescribed significance. Moreover, IDC's method for calculating Adjusted EBITDA may differ from that used by other companies using the same designation. Accordingly, we caution readers that Adjusted EBITDA should not be substituted for determining net income (loss) as an indicator of operating results or as a substitution for cash flows from operating and investing activities.
We believe Adjusted EBITDA is a meaningful and useful financial metric to investors and analysts for measuring and predicting its operating performance by excluding interest expense and income, income taxes, depreciation and amortization as well as restructuring charges as noted in the above table.
Contact Information:
International Datacasting Corporation
+1 613 596 4120 ext. 2211
dlowther@datacast.com