International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

June 02, 2015 17:01 ET

International Datacasting Corporation Announces Fiscal 2016 First Quarter Results and Strategy Committee Update

OTTAWA, ONTARIO--(Marketwired - June 2, 2015) - International Datacasting Corporation ("IDC") (TSX:IDC), a technology provider for the world's premiere broadcasters, today announced its financial results for the first quarter of Fiscal 2016 ended April 30, 2015. All amounts in this release are in Canadian dollars unless otherwise stated.

Financial Highlights:

(in thousands, except for gross margin and net loss per share)

First Quarter
2015 2014
Revenues: GM GM
Products $ 2,633 61 % $ 1,938 40 %
Services 382 79 % 892 49 %
Total revenues $ 3,015 $ 2,830
Gross profit $ 1,918 64 % $ 1,205 43 %
Operating expenses $ 2,254 $ 2,768
Adjusted EBITDA (Loss) (1) $ (28 ) $ (1,206 )
Net loss $ (351 ) $ (1,566 )
Net loss per share $ (0.01 ) $ (0.03 )

(1) Adjusted EBITDA (Loss) is a non-GAAP financial measure. The reconciliation of Adjusted EBITDA (Loss) to Net Loss is provided at the end of this release.

First Quarter Results

Revenues totaled $3.0 million for the first quarter of Fiscal 2016, a 7% increase from the comparable prior period. Products revenue increased by 36% to $2.6 million, and was driven mainly by a large Digital Cinema deal with a European customer. This order represented approximately 50% of total Products revenue in the quarter. Services revenue decreased by 57% to $0.4 million due to the previously announced non-renewal of the Canadian Forces Radio and Television broadcast services contract.

Gross profit for the quarter increased to $1.9 million or 64% gross margin, compared to $1.2 million or 43% gross margin in the comparable prior period. The improved margin was driven mostly by the above-noted Digital Cinema revenue, in addition to increased software revenues compared with the prior period.

IDC's Adjusted EBITDA was approximately breakeven in the quarter, compared to a $1.2 million loss in the first quarter of Fiscal 2015. The significant improvement in operating results was driven by higher gross margins and lower operating expenses due to the cost reductions and restructuring initiatives undertaken during Fiscal 2015.

At April 30, 2015, IDC's working capital was $3.6 million, including $1.1 million in cash. Our cash position improved since January 31, 2015 as a result of closing the $1.2 million bridge financing with Pico Digital Inc. ("Pico Digital") in connection with the Asset Purchase Agreement signed on April 21, 2015 with Pico Digital (the "Agreement") for the sale of IDC's broadcast technology business and related assets.

Strategy Committee Update

As previously announced, IDC will hold an annual general and special meeting (the "Meeting") on June 12, 2015, for among other things, shareholder review and consideration of the sale of IDC's broadcast products business and its related assets to Pico Digital (the "Transaction").

As previously disclosed, the Agreement includes a number of holdbacks which affect the potential proceeds to shareholders. Based on the revenue reported for the first quarter of Fiscal 2016, no reduction to proceeds under the minimum revenue requirement is expected; under the agreement this could have led to a reduction of up to US$500,000.

IDC is also subject to a US$850,000 holdback linked to achievement of LASER MPS sales. IDC is continuing to pursue sales of its LASER targeted advertising platform; however, it is uncertain whether sufficient LASER MPS revenue will be achieved by July 31, 2015 to receive any portion of this holdback amount. IDC's current LASER pipeline includes multiple projects, some of which are large, and one of which could contribute in excess of $10 million in revenues over a 12-18 month period. IDC is one of multiple vendors competing for that project and while we believe that IDC is well positioned, there is no assurance that IDC will be successful in closing this or any other LASER contracts or that a decision by the potential customer will be reached in a timely manner.

As noted above, IDC's liquidity and working capital position has improved as a result of the Pico Digital bridge financing. If shareholders do not approve the Transaction and the Agreement is terminated by IDC or Pico Digital, the bridge financing facility and all accrued interest will become due and will have to be repaid to Pico Digital. Based on IDC's current position, there is no assurance that refinancing would be possible on acceptable terms or at all within the time period required.

The IDC Board of Directors encourages all shareholders to be present at the Meeting or be represented there if unable to attend. The Board of Directors continues to unanimously recommend that shareholders vote their shares in favor of the Transaction as well as in favor of the other matters requiring shareholder approval at the Meeting. More details are available in the Management Information Circular mailed to shareholders in connection with the Meeting and filed on SEDAR at www.sedar.com.

For further information on IDC's first quarter Fiscal 2016 results, refer to the unaudited 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 June 2, 2015.

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, statements with respect to commercial agreements related to LASER MPS and possible revenue to be generated from sales of LASER MPS, the proposed Transaction, the ability of IDC to raise funds, and the matters to be approved at the Meeting. 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 the size of possible commercial transactions involving LASER MPS, ability of IDC to consummate the proposed Transaction, the compliance of Pico Digital with the terms of the Agreement, 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: the possibility that Pico Digital will not agree with our quarterly revenue for the first quarter of Fiscal 2016, that commercial transactions with respect to LASER MPS will not materialize or will not be concluded on terms that are favorable to IDC, the amount of LASER MPS revenue expected to be realized by IDC as of July 31, 2015, the termination of the Agreement by Pico Digital if IDC suffers a material adverse effect prior to the completion of the acquisition and the satisfaction or waiver of certain other conditions contemplated by the Agreement, and the possibility that certain assumptions with respect to the proposed Transaction could prove to be inaccurate.

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, 2015, each dated April 29, 2015.

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 at April 30, 2015 and January 31, 2015
(Canadian dollars)
April 30, 2015 January 31, 2015
ASSETS
Current Assets
Cash $ 1,108,641 $ 615,403
Restricted short-term investments 80,000 80,000
Accounts receivable 2,551,906 1,464,828
Inventories 3,316,217 3,603,125
Other assets 135,168 176,336
Total Current Assets 7,191,932 5,939,692
Non-Current Assets
Capital assets 481,904 541,794
Total Non-Current Assets 481,904 541,794
TOTAL ASSETS $ 7,673,836 $ 6,481,486
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 742,993 $ 838,531
Secured borrowings 1,206,400 144,406
Accrued liabilities 729,685 648,615
Customer deposits 209,052 50,712
Deferred revenue - current portion 589,119 275,483
Provisions 147,712 145,947
Current tax liability 14,786 10,450
Total Current Liabilities 3,639,747 2,114,144
Non-Current Liabilities
Deferred tax liability 8,275 8,793
Deferred revenue 296,418 323,230
Total Non-Current Liabilities 304,693 332,023
TOTAL LIABILITIES 3,944,440 2,446,167
Shareholders' Equity
Capital stock 24,241,037 24,131,627
Contributed surplus 3,837,108 3,901,345
Accumulated other comprehensive loss (229,729 ) (229,729 )
Accumulated deficit (24,119,020 ) (23,767,924 )
TOTAL SHAREHOLDERS' EQUITY 3,729,396 4,035,319
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,673,836 $ 6,481,486
INTERNATIONAL DATACASTING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED APRIL 30, 2015 and 2014
(Canadian dollars, except for share data)
2015 2014
REVENUE
Products $ 2,633,262 $ 1,937,937
Services 382,127 891,825
Total revenue 3,015,389 2,829,762
COST OF REVENUE 1,097,685 1,625,198
GROSS PROFIT 1,917,704 1,204,564
OPERATING EXPENSES
Selling, general and administrative 1,361,073 1,160,119
Research and development, net of investment tax credits 849,450 1,270,008
Restructuring charges - 318,650
Foreign exchange loss 43,867 18,789
Total operating expenses 2,254,390 2,767,566
OPERATING LOSS BEFORE OTHER ITEMS (336,686 ) (1,563,002 )
Interest Income - 4,624
Interest expense (10,060 ) -
LOSS BEFORE INCOME TAXES (346,746 ) (1,558,378 )
Income tax recovery (expense):
Current (4,868 ) (7,035 )
Deferred 518 (718 )
NET AND COMPREHENSIVE LOSS $ (351,096 ) $ (1,566,131 )
NET LOSS PER SHARE
Basic $ (0.01 ) $ (0.03 )
Diluted $ (0.01 ) $ (0.03 )
Weighted average number of shares outstanding - basic 64,771,493 58,505,804
Weighted average number of shares outstanding - diluted 64,771,493 58,505,804
INTERNATIONAL DATACASTING CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 2015 and 2014
(Canadian dollars)
2015 2014
OPERATING ACTIVITIES
Net loss $ (351,096 ) $ (1,566,131 )
Add items not requiring an outlay of cash:
Depreciation of capital assets 59,918 38,644
Deferred tax adjustments (518 ) 718
Unrealized loss on derivatives - (8,945 )
Stock-based compensation 52,340 82,417
(239,356 ) (1,453,297 )
Net change in non-cash working capital:
Accounts receivable (1,087,078 ) 600,975
Inventories 286,908 394,179
Other assets 41,168 174,268
Accounts payable and accrued liabilities (14,496 ) (890,212 )
Customer deposits 158,340 5,627
Deferred revenue 286,824 357,970
Provisions 1,765 237,532
Current tax liability 4,336 (2,014 )
Net cash applied to operating activities (561,589 ) (574,972 )
INVESTING ACTIVITIES
Redemption of short-term investment - 22,500
Purchase of capital assets - (10,243 )
Net cash provided by investing activities - 12,257
FINANCING ACTIVITIES
Advances from secured lenders 1,293,070 -
Repayments of secured borrowings (231,076 ) -
Payments made on vested RSU's (7,167 ) -
Net cash provided by financing activities 1,054,827 -
Net increase (decrease) in cash during the period 493,238 (562,715 )
CASH AND CASH EQUIVALENTS - Beginning of period 615,403 2,734,655
CASH AND CASH EQUIVALENTS - End of period $ 1,108,641 $ 2,171,940
International Datacasting Corporation
NON-GAAP FINANCIAL MEASURE RECONCILIATION
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION
FOR THE THREE MONTHS ENDED APRIL 30, 2015 and 2014
(Canadian dollars)
2015 2014
Net loss reported under IFRS (unaudited) $ (351,096 ) $ (1,566,131 )
Add (subtract):
Transaction costs 248,679 -
Depreciation expense 59,918 38,814
Interest expense 10,060 -
Income tax expense 4,350 7,753
Restructuring charges - 318,650
Net investment income - (4,624 )
Adjusted EBITDA Loss $ (28,089 ) $ (1,205,538 )

In this release, IDC has presented Adjusted EBITDA (Loss), which is a "non-GAAP financial measure" and accordingly it is not an earnings measure recognized by IFRS and does have a standardized meaning prescribed under IFRS. Moreover, IDC's method for calculating Adjusted EBITDA (Loss) may differ from that used by other companies using the same designation and is unlikely to be comparable to similar measures presented by other companies. Accordingly, we caution readers that Adjusted EBITDA (Loss) 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 (Loss) is a meaningful and useful financial metric to investors and analysts for measuring and predicting our operating performance by excluding income taxes, depreciation and amortization as well as unusual and/or non-recurring charges as noted in the above table.

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