OTTAWA, ONTARIO--(Marketwired - Sept. 4, 2014) - International Datacasting Corporation ("IDC") (TSX:IDC), a technology provider for the world's premiere broadcasters, announced its financial results today for the first half and second quarter ended July 31, 2014. Total revenues and financial results decreased from the same period in Fiscal 2014, however compared with the previous quarter both product revenues and margins improved. 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 July 31, | Six months ending July 31, | |||||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
| Revenues: | GM | GM | GM | GM | ||||||||||||||||||||||||
| Products | $ | 2,217 | 50 | % | $ | 3,575 | 43 | % | $ | 4,155 | 42 | % | $ | 7,601 | 48 | % | ||||||||||||
| Services | 382 | 32 | % | 1,279 | 52 | % | 1,274 | 39 | % | 2,620 | 48 | % | ||||||||||||||||
| Total revenues | $ | 2,599 | $ | 4,854 | $ | 5,429 | $ | 10,221 | ||||||||||||||||||||
| Gross profit | $ | 1,230 | 47 | % | $ | 2,203 | 45 | % | $ | 2,253 | 41 | % | $ | 4,913 | 48 | % | ||||||||||||
| Operating expenses | $ | 2,551 | $ | 2,586 | $ | 5,136 | $ | 5,397 | ||||||||||||||||||||
| Adjusted EBITDA (Loss) (1) | $ | (1,216 | ) | $ | (222 | ) | $ | (2,421 | ) | $ | (158 | ) | ||||||||||||||||
| Net loss | $ | (1,322 | ) | $ | (409 | ) | $ | (2,888 | ) | $ | (511 | ) | ||||||||||||||||
| Net loss per share | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.01 | ) | ||||||||||||||||
| (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. |
Second Quarter Results
Revenues totaled $2.6 million for the second quarter of Fiscal 2015, 46% lower than the prior year's second quarter. The decrease was primarily due to the non-renewal of the Canadian Forces Radio and Television service, as well to the deferral of certain orders for data and digital cinema products to future quarters. The total gross margin for the quarter improved to 47% from 45% for the comparable prior period, primarily due to a more favorable mix of products sold as well as reduced overheads. IDC incurred a net loss of $1.3 million in the second quarter, compared to a loss of $0.4 million in Fiscal 2014.
When comparing IDC's second quarter product sales with the first quarter of Fiscal 2015, revenues increased by 14% and gross margins improved from 34% to 50% in the quarter. These results reflect more favorable margins from sales of newer products as well as reductions in overhead costs.
While total revenues in the first half of Fiscal 2015 decreased by 47% from the previous year, deferred revenues doubled to $1.0 million at July 31st, 2014 as compared to January 31, 2014. These deferred revenues will be recognized in future quarters.
At July 31, 2014, IDC's working capital was $5.0 million, including $1.8 million in cash. In addition, on September 3rd IDC received a commitment from a major financial institution for a new financing facility that will provide up to $1 million of additional liquidity.
Progress and Outlook
During the first half of Fiscal 2015, IDC made significant progress in executing our turnaround plan. Key accomplishments during this period included the following:
- We restructured IDC's operations to significantly reduce our overheads and operating costs, contributing to improved gross margins and to a significantly lower breakeven point.
- We put in place a new, more streamlined organization structure that will contribute to reducing cost, increasing agility, and simplifying decision making.
- We introduced the TITAN 3 Contribution Encoder, which was completed ahead of schedule and shipped to multiple customers for trials and revenue during the second quarter.
- We announced the LASER MPS, a multi-channel ad and content insertion platform suitable for digital terrestrial and satellite networks, and plan initial shipments in the fourth quarter.
- During the second quarter, we completed customer acceptance testing for a LASER™ Targeted Ad Insertion Platform for a large TV broadcaster based in Latin America.
- In July 2014, IDC partnered with Sony and Vue Entertainment to successfully deliver world's first 4K live event broadcasts of the 2014 FIFA World Cup™ matches to cinemas in London, United Kingdom.
- Our sales pipeline continued to develop in line with our stated guidance to reach operating profitability in the second half of Fiscal 2015.
Doug Lowther, IDC's President and CEO, stated, "While IDC's net loss has decreased over the last three quarters, this has primarily been achieved as a result of cost controls. In the second half of Fiscal 2015, our focus will be on revenue growth. We believe that our new and enhanced products will enable IDC to increase product revenues from those achieved in the last few quarters, and continue to anticipate a return to profitability during the second half of Fiscal 2015."
For further information on IDC's second 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 September 4, 2014.
Financial Summary and Conference Call
This announcement will be followed by a Management conference call at 8:30 a.m. ET on Friday, September 5, 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: | Friday September 5, 2014 |
| CONFERENCE TIME: | 8:30 a.m. ET |
| DIAL-IN NUMBERS: | 613-233-1979 / 888-789-9572 |
| PARTICIPANT CODE: | 8669963 |
| WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/5870. 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, and our MD&A for the quarter ended July 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 July 31, 2014 and January 31, 2014 | |||||||||
| (Canadian dollars) | |||||||||
| July 31, 2014 | January 31, 2014 | ||||||||
| ASSETS | |||||||||
| Current Assets | |||||||||
| Cash | $ | 1,835,752 | $ | 2,734,655 | |||||
| Short-term investments | - | 72,500 | |||||||
| Accounts receivable | 2,425,416 | 3,289,596 | |||||||
| Inventories | 3,931,284 | 3,793,347 | |||||||
| Other assets | 436,335 | 438,268 | |||||||
| Total Current Assets | 8,628,787 | 10,328,366 | |||||||
| Non-Current Assets | |||||||||
| Capital assets | 550,316 | 536,057 | |||||||
| Total Non-Current Assets | 550,316 | 536,057 | |||||||
| TOTAL ASSETS | $ | 9,179,103 | $ | 10,864,423 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
| Current Liabilities | |||||||||
| Accounts payable | $ | 1,371,674 | $ | 1,159,025 | |||||
| Accrued liabilities | 1,095,602 | 1,545,234 | |||||||
| Customer deposits | 37,793 | 30,654 | |||||||
| Deferred revenue - current portion | 626,876 | 349,870 | |||||||
| Provisions | 464,565 | 254,575 | |||||||
| Current tax liability | 12,660 | 9,496 | |||||||
| Total Current Liabilities | 3,609,170 | 3,348,854 | |||||||
| Non-Current Liabilities | |||||||||
| Deferred tax liability | 15,087 | 14,551 | |||||||
| Deferred revenue | 371,267 | 129,568 | |||||||
| Total Non-Current Liabilities | 386,354 | 144,119 | |||||||
| TOTAL LIABILITIES | 3,995,524 | 3,492,973 | |||||||
| Shareholders' Equity | |||||||||
| Capital stock | 24,034,398 | 23,637,259 | |||||||
| Contributed surplus | 3,704,185 | 3,401,345 | |||||||
| Accumulated other comprehensive loss | (229,729 | ) | (229,729 | ) | |||||
| Accumulated deficit | (22,325,275 | ) | (19,437,425 | ) | |||||
| TOTAL SHAREHOLDERS' EQUITY | 5,183,579 | 7,371,450 | |||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 9,179,103 | $ | 10,864,423 | |||||
| INTERNATIONAL DATACASTING CORPORATION | |||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||||||||||||||
| FOR THE THREE AND SIX MONTH PERIODS ENDED JULY 31, 2014 and 2013 | |||||||||||||||||
| (Canadian dollars, except for share data) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| July 31, 2014 | July 31, 2013 | July 31, 2014 | July 31, 2013 | ||||||||||||||
| REVENUE | |||||||||||||||||
| Products | $ | 2,216,742 | $ | 3,574,741 | $ | 4,154,679 | $ | 7,600,514 | |||||||||
| Services | 382,197 | 1,278,661 | 1,274,022 | 2,619,697 | |||||||||||||
| Total revenue | 2,598,939 | 4,853,402 | 5,428,701 | 10,220,211 | |||||||||||||
| COST OF REVENUE | 1,369,025 | 2,650,009 | 3,176,130 | 5,306,819 | |||||||||||||
| GROSS PROFIT | 1,229,914 | 2,203,393 | 2,252,571 | 4,913,392 | |||||||||||||
| OPERATING EXPENSES | |||||||||||||||||
| Selling, general and administrative | 1,448,498 | 1,507,504 | 2,608,617 | 3,297,218 | |||||||||||||
| Research and development, net of investment tax credits | 1,100,651 | 1,087,536 | 2,507,402 | 2,121,277 | |||||||||||||
| Foreign exchange loss (gain) | 1,536 | (9,291 | ) | 20,325 | (21,530 | ) | |||||||||||
| Total operating expenses | 2,550,685 | 2,585,749 | 5,136,344 | 5,396,965 | |||||||||||||
| OPERATING LOSS BEFORE OTHER ITEMS | (1,320,771 | ) | (382,356 | ) | (2,883,773 | ) | (483,573 | ) | |||||||||
| Realized (loss) on sale of investments | - | (25,344 | ) | - | (25,344 | ) | |||||||||||
| Interest Income | 4,944 | 13,185 | 9,568 | 34,213 | |||||||||||||
| Interest expense | (858 | ) | - | (858 | ) | (1,182 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | (1,316,685 | ) | (394,515 | ) | (2,875,063 | ) | (475,886 | ) | |||||||||
| Income tax recovery (expense): | |||||||||||||||||
| Current | (5,216 | ) | (21,676 | ) | (12,251 | ) | (42,680 | ) | |||||||||
| Deferred | 182 | 7,505 | (536 | ) | 7,505 | ||||||||||||
| NET LOSS | $ | (1,321,719 | ) | $ | (408,686 | ) | $ | (2,887,850 | ) | $ | (511,061 | ) | |||||
| COMPREHENSIVE LOSS | $ | (1,321,719 | ) | $ | (408,686 | ) | $ | (2,887,850 | ) | $ | (511,061 | ) | |||||
| NET LOSS PER SHARE | |||||||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.01 | ) | |||||
| Diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.01 | ) | |||||
| Weighted average number of shares outstanding - basic | 58,599,366 | 58,484,642 | 58,553,360 | 58,101,769 | |||||||||||||
| Weighted average number of shares outstanding - diluted | 58,599,366 | 58,484,642 | 58,553,360 | 58,101,769 | |||||||||||||
| INTERNATIONAL DATACASTING CORPORATION | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||||||
| FOR THE THREE AND SIX MONTH PERIODS ENDED JULY 31, 2014 and 2013 | ||||||||||||||||
| (Canadian dollars) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| July 31, 2014 | July 31, 2013 | July 31, 2014 | July 31, 2013 | |||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||
| Net loss | $ | (1,321,719 | ) | $ | (408,686 | ) | $ | (2,887,850 | ) | $ | (511,061 | ) | ||||
| Add items not requiring an outlay of cash: | ||||||||||||||||
| Depreciation and amortization | 53,097 | 160,157 | 91,741 | 325,332 | ||||||||||||
| Deferred tax adjustments | (182 | ) | (7,505 | ) | 536 | (7,505 | ) | |||||||||
| Realized loss on sale of available-for-sale investments | - | 25,344 | - | 25,344 | ||||||||||||
| Unrealized loss (gain) on derivatives | 8,968 | (58,643 | ) | 8,968 | (32,024 | ) | ||||||||||
| Stock-based compensation | 220,423 | 16,660 | 302,840 | 22,761 | ||||||||||||
| (1,039,413 | ) | (272,673 | ) | (2,483,765 | ) | (177,153 | ) | |||||||||
| Net change in non-cash working capital: | ||||||||||||||||
| Accounts receivable | 263,205 | 328,661 | 864,180 | 926,322 | ||||||||||||
| Inventories | (532,116 | ) | (745,449 | ) | (137,937 | ) | (927,714 | ) | ||||||||
| Other assets | (172,335 | ) | (266,814 | ) | 1,933 | (425,809 | ) | |||||||||
| Accounts payable and accrued liabilities | 658,834 | (470,081 | ) | (243,137 | ) | (746,531 | ) | |||||||||
| Customer deposits | 1,512 | (63,317 | ) | 7,139 | (328,391 | ) | ||||||||||
| Deferred revenue | 160,735 | (40,095 | ) | 518,705 | 156,960 | |||||||||||
| Provisions | (27,542 | ) | 12,690 | 209,990 | 38,620 | |||||||||||
| Current tax liability | 5,178 | 22,022 | 3,164 | 8,538 | ||||||||||||
| Net cash applied to operating activities | (681,942 | ) | (1,495,056 | ) | (1,259,728 | ) | (1,475,158 | ) | ||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
| Redemption of short-term investment | 50,000 | - | 72,500 | - | ||||||||||||
| Proceeds from sale of available-for-sale investments | - | 1,974,646 | - | 1,974,646 | ||||||||||||
| Purchase of capital assets | (95,757 | ) | (42,572 | ) | (106,000 | ) | (141,701 | ) | ||||||||
| Net cash applied to investing activities | (45,757 | ) | 1,932,074 | (33,500 | ) | 1,832,945 | ||||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Repayments of obligations under capital leases | - | - | - | (2,999 | ) | |||||||||||
| Issuance of common shares | 394,325 | - | 394,325 | 231,000 | ||||||||||||
| Net cash provided by financing activities | 394,325 | - | 394,325 | 228,001 | ||||||||||||
| Net increase (decrease) in cash during the period | (333,374 | ) | 437,018 | (898,903 | ) | 585,788 | ||||||||||
| CASH - Beginning of period | 2,169,126 | 5,091,795 | 2,734,655 | 4,943,025 | ||||||||||||
| CASH - End of period | 1,835,752 | $ | 5,528,813 | $ | 1,835,752 | $ | 5,528,813 | |||||||||
| International Datacasting Corporation | |||||||||||||||||
| NON-GAAP FINANCIAL MEASURE RECONCILIATION | |||||||||||||||||
| ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION | |||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2014 and 2013 | |||||||||||||||||
| (Canadian dollars) | |||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| July 31, 2014 | July 30, 2013 | July 31, 2014 | July 30, 2013 | ||||||||||||||
| Net loss reported under IFRS (unaudited) | $ | (1,321,719 | ) | $ | (408,686 | ) | $ | (2,887,850 | ) | $ | (511,061 | ) | |||||
| Add (subtract): | |||||||||||||||||
| Restructuring expense | 51,990 | - | 370,640 | - | |||||||||||||
| Depreciation expense | 53,097 | 160,157 | 91,741 | 325,332 | |||||||||||||
| Interest expense | 858 | - | 858 | 1,182 | |||||||||||||
| Income tax expense | 5,034 | 14,171 | 12,787 | 35,175 | |||||||||||||
| Net investment income | (4,944 | ) | 12,159 | (9,568 | ) | (8,869 | ) | ||||||||||
| Adjusted EBITDA (Loss) | $ | (1,215,684 | ) | $ | (222,199 | ) | $ | (2,421,392 | ) | $ | (158,241 | ) | |||||
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 unusual and/or non-recurring charges as noted in the above table.
Contact Information:
Doug Lowther
President & CEO
+1 613 596 4120 ext. 2211
dlowther@datacast.com
www.datacast.com