International Datacasting Corporation

TSX : IDC


International Datacasting Corporation

December 11, 2012 17:00 ET

International Datacasting Corporation Announces Third Quarter FY2013 Financial Results

Attn: Business/High-Tech Editors

OTTAWA, ONTARIO--(Marketwire - Dec. 11, 2012) - International Datacasting Corporation (TSX:IDC), a global leader in digital content distribution solutions for the world's premiere broadcasters, announced its financial results today for the three and nine month periods ended October 31, 2012. All figures are in Canadian dollars unless otherwise stated.

Financial Highlights:
(In millions except for Gross Margins, Net Earnings per share)
Three Months Ended Nine Months Ended
October 31, October 31,
2012 2011 2012 2011
Revenue $ 7.1 $ 7.3 $ 23.1 $ 23.0
Gross Profit $ 3.1 $ 3.1 $ 8.7 $ 9.7
Gross Margins 44 % 43 % 38 % 42 %
Operating Expenses $ 2.6 $ 3.4 $ 8.7 $ 10.4
Adjusted EBITDA (1) $ 0.8 $ 0.1 $ 1.4 $ 0.1
Net Earnings $ 0.6 $ (0.2 ) $ - $ (0.6 )
Net Earnings per share $ 0.01 $ - $ - $ (0.01 )
(1) Adjusted earnings before income taxes, depreciation and amortization (" Adjusted EBITDA") is a non-GAAP financial measure. The reconciliation of Adjusted EBITDA to Net Income (Loss) is provided at the end of this release.

For the third quarter of fiscal 2013, total revenue was $7.1 million, down 2% from $7.3 million in the prior year. IDC Systems revenue declined 54%, while IDC Products revenue increased by 24%.

This increase in revenues from the IDC Products segment was driven by higher sales for our SuperFlex™ and STAR Pro Audio product lines resulting from large contracts in France and in Thailand. The decline in revenues from the IDC Systems segment was largely due to the completion of the first phase roll-out of the Direct-to-Home (DTH) Broadcasting project in Kenya in the first quarter of fiscal 2013.

IDC generated positive adjusted EBITDA of $782,000 during the current quarter, up from $59,000 from the comparable prior period. This improvement in EBITDA was largely due to lower operating expenses including a 19% reduction in Selling, General and Administration and a 32% decrease in Research and Development costs.

"IDC is actively reviewing and revising our global sales and distribution strategy," stated Del Lippert, Interim CEO and Chairman of the Board. "For example, our new Digital Tattoo™ offering is a prime DTH and IPTV product that is very relevant to emerging markets such as Asia and Africa. By reallocating and expanding key resources to meet the needs of Master Distributors and OEM customers in these target regions, we believe that we can directly enhance our market position and in turn stimulate the growth that our shareholders expect from IDC."

"We are pleased with the progress made in Q3 FY2013. Delivering solid revenue and margins combined with reduced operating costs translated to a net profit in the quarter and break-even for the first nine months of the fiscal year 2013," stated Rick Clements, Chief Financial Officer, IDC.

Financial Summary & Conference Call

This announcement will be followed by a Management conference call at 8:30 a.m. ET on Wednesday, December 12, 2012, to discuss the results, and to respond to questions from investors.

Del Lippert, IDC's Interim CEO, invites all interested parties to participate in the conference call.

CONFERENCE CALL DETAILS:

DATE: Wednesday, December 12, 2012
TIME: 8:30 a.m. ET
DIAL-IN NUMBERS: 613-233-1979 / 1-866-696-5910
PARTICIPANT CODE: 1746780
INSTANT REPLAY: 1-800-408-3053
Passcode: 1689868
Available until December 13, 2012 10:00 a.m. ET

WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/4021. 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

IDC is a global leader in digital content distribution for the world's premiere broadcasters in radio, television, data and digital cinema. IDC offers a broad portfolio of advanced solutions including Pro Audio, Pro Video, Pro Cinema, and Pro Data for implementing broadcast content contribution and distribution applications. IDC's products and solutions are in demand for radio and television networks, digital cinema, 3D live events, ad insertion, satellite news gathering, sport contribution, ad insertion, and IPTV among others. IDC is headquartered in Ottawa, Canada, with regional offices in Arnhem, the Netherlands and in San Diego, California. IDC has installations in over 100 countries and service offices in Thailand and Singapore with an international network of value-added partners and distributors.

Forward-Looking Statements

This press release contains forward-looking statements reflecting the current Board and management's operating and strategic plans, next steps and vision for IDC; and IDC's objectives, estimates and expectations, including statements about expected revenue impacts. All of these forward-looking statements are subject to risks and uncertainties. IDC's actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Factors that might cause actual results to differ materially include, but are not limited to, IDC's ability to successfully recruit new Board members and identify, hire, integrate and/or retain senior personnel and other key employees, competitive developments; risks associated with IDC's growth and the development and implementation of the Company's strategies; any difficulties with integrating acquired product lines into IDC's business and/or manufacturing procedures; any difficulties or disputes with IDC's subcontractors, contract manufacturers and suppliers; IDC's dependence on the development and growth of the satellite datacasting 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; regulatory risks and intellectual property infringement. IDC assumes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof, except as expressly required by applicable law. Forward-looking statements are provided to assist external stakeholders in understanding the current Board and management'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. 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 dated April 30, 2012.

International Datacasting Corporation
Unaudited Condensed Consolidated Statements of Financial Position
As at October 31, 2012 and January 31, 2012
(Canadian dollars)
October 31, 2012 January 31, 2012
ASSETS
Current Assets
Cash $ 5,167,748 $ 4,914,766
Short-term investments 75,000 2,336,800
Available-for-sale investments 1,996,170 -
Accounts receivable 6,123,101 4,673,727
Inventories 2,933,872 4,247,470
Other assets 508,150 722,882
Total Current Assets 16,804,041 16,895,645
Non-Current Assets
Other assets 84,231 631,607
Capital assets 1,576,953 1,852,739
Deferred taxes 2,800,000 2,800,000
Total Non-Current Assets 4,461,184 5,284,346
TOTAL ASSETS $ 21,265,225 $ 22,179,991
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 3,515,581 $ 3,128,708
Customer deposits 246,772 755,761
Deferred revenue - current portion 743,062 882,827
Provisions 423,855 660,474
Obligations under capital leases - current portion 11,887 36,714
Current tax liability 17,537 -
Total Current Liabilities 4,958,694 5,464,484
Non-Current Liabilities
Deferred tax liability 26,283 -
Deferred revenue 61,661 -
Obligations under capital leases - 3,002
Total Non-Current Liabilities 87,944 3,002
TOTAL LIABILITIES 5,046,638 5,467,486
Shareholders' Equity
Capital stock 23,406,260 23,977,481
Contributed surplus 3,263,245 3,212,923
Accumulated other comprehensive loss (233,549 ) (229,729 )
Accumulated deficit (10,217,369 ) (10,248,170 )
TOTAL SHAREHOLDERS' EQUITY 16,218,587 16,712,505
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 21,265,225 $ 22,179,991
International Datacasting Corporation
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the periods ended October 31, 2012 and 2011
(Canadian dollars, except for share data)
Three months ended Nine months ended
October 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
REVENUE $ 7,111,096 $ 7,254,171 $ 23,086,247 $ 22,989,576
COST OF REVENUE 4,006,235 4,113,037 14,359,724 13,297,569
GROSS PROFIT 3,104,861 3,141,134 8,726,523 9,692,007
OPERATING EXPENSES
Selling, general and administrative 1,628,968 2,003,991 5,595,347 6,029,205
Research and development, net of investment tax credits 914,360 1,346,790 3,062,304 4,341,088
Foreign exchange loss 8,967 17,428 2,273 11,305
Total operating expenses 2,552,295 3,368,209 8,659,924 10,381,598
OPERATING INCOME (LOSS) BEFORE OTHER ITEMS 552,566 (227,075 ) 66,599 (689,591 )
Realized gain (loss) on sale of short-term investments - - (27,220 ) -
Net interest income:
Interest income 2,614 12,222 47,589 25,498
Interest expense (1,827 ) (1,474 ) (11,149 ) (5,799 )
INCOME (LOSS) BEFORE INCOME TAXES 553,353 (216,327 ) 75,819 (669,892 )
Income tax recovery (expense):
Current (10,782 ) 15,692 (18,735 ) 46,694
Deferred - - (26,283 ) -
NET INCOME (LOSS) $ 542,571 $ (200,635 ) $ 30,801 $ (623,198 )
OTHER COMPREHENSIVE LOSS, NET OF TAXES
Change in fair value of available-for-sale investments (3,820 ) - (3,820 ) -
Total other comprehensive loss, net of taxes (3,820 ) - (3,820 ) -
COMPREHENSIVE INCOME (LOSS) $ 538,751 $ (200,635 ) $ 26,981 $ (623,198 )
NET EARNINGS (LOSS) PER SHARE
Basic $ 0.01 $ (0.00 ) $ 0.00 $ (0.01 )
Diluted $ 0.01 $ (0.00 ) $ 0.00 $ (0.01 )
Weighted average number of shares outstanding - basic 57,502,268 58,410,946 58,082,876 57,018,768
Weighted average number of shares outstanding - diluted 57,506,101 58,410,946 58,089,327 57,018,768
International Datacasting Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
For the periods ended October 31, 2012 and 2011
(Canadian dollars)
Three months ended Nine months ended
October 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
OPERATING ACTIVITIES
Net income (loss) $ 542,571 $ (200,635 ) $ 30,801 $ (623,198 )
Add items not requiring an outlay of cash:
Depreciation and amortization 122,739 239,136 401,229 771,018
Deferred and current taxes 17,537 (15,508 ) 43,820 (46,525 )
Realized loss on sale of short-term investment - - 27,220 -
Realized and unrealized losses on derivatives 111,727 30,299 125,296 181,562
Stock-based compensation 21,452 20,705 42,744 127,198
816,026 73,997 671,110 410,055
Net change in non-cash working capital:
Accounts receivable (250,873 ) 1,483,787 (1,449,374 ) 4,259,490
Inventories 547,296 (458,735 ) 1,313,598 (1,081,114 )
Other assets 31,894 (102,873 ) 116,428 (185,048 )
Accounts payable and accrued liabilities 3,790 112,940 355,257 (1,578,166 )
Customer deposits (782,773 ) (245,760 ) (508,989 ) (1,094,020 )
Deferred revenue 252,902 (200,077 ) (78,104 ) 231,658
Provisions (50,937 ) 26,370 (236,619 ) (73,020 )
Net cash provided by operating activities 567,325 689,649 183,307 889,835
INVESTING ACTIVITIES
Purchase of capital assets (13,291 ) (121,448 ) (125,443 ) (454,663 )
Proceeds from redemption of short-term investment 2,309,580 - 2,309,580 -
Purchase of short-term investment - - (75,000 ) -
Purchase of available-for-sale investments (1,999,990 ) - (1,999,990 ) -
Net cash provided by (applied to) investing activities 296,299 (121,448 ) 109,147 (454,663 )
FINANCING ACTIVITIES
Repayments of obligations under capital leases (9,036 ) (13,780 ) (27,829 ) (42,079 )
Issue of common shares, net of issue costs - 1,375 4,481 151,137
Repurchase of common shares, net of costs - - (16,124 ) -
Net cash provided by (applied to) financing activities (9,036 ) (12,405 ) (39,472 ) 109,058
Net increase in cash during the period 854,588 555,796 252,982 544,230
CASH - Beginning of period 4,313,160 6,691,058 4,914,766 6,702,624
CASH - End of period $ 5,167,748 $ 7,246,854 $ 5,167,748 $ 7,246,854
International Datacasting Corporation
Non-GAAP Financial Measure Reconciliation
Adjusted Earnings Before Income Taxes, Depreciation, and Amortization (EBITDA)
For the periods ended October 31, 2012 and 2011
(Canadian dollars)
Three months ended Nine months ended
October 31, 2012 October 31, 2011 October 31, 2012 October 31, 2011
Net income (loss) $ 542,571 $ (200,635 ) $ 30,801 $ (623,198 )
Add back:
Shareholder dissent expense 10,000 - 413,439 -
Incremental external business acquisition expense - - 213,940 -
Depreciation and amortization expense 122,739 239,136 401,229 771,018
Restructuring expense 96,377 35,851 287,665 35,851
Income tax expense (recovery) 10,782 (15,692 ) 45,018 (46,694 )
Adjusted EBITDA $ 782,469 $ 58,660 $ 1,392,092 $ 136,977

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 income taxes, depreciation and amortization as well as unusual charges (shareholder dissent, and incremental external business acquisition costs), and restructuring.

Contact Information

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