Intrinsyc Software International, Inc.
TSX : ICS

Intrinsyc Software International, Inc.

August 12, 2013 16:00 ET

Intrinsyc Reports 2013 Second Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 12, 2013) - Intrinsyc Software International, Inc. ("Intrinsyc" or the "Company") (TSX:ICS), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the second quarter ended June 30, 2013. Intrinsyc achieved revenue of approximately $1.6 million in the second quarter, which increased by 33% over the previous quarter. The Company reported negative EBITDA(1) of $1,232,557 and a Net Loss of $1,133,252. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS"). The Company's results are presented in comparison to the three months ended March 31, 2013 and the three months ended June 30, 2012, also in accordance with IFRS.

"I am pleased that we were able to achieve substantial revenue growth over the previous quarter," commented Tracy Rees, President and CEO of Intrinsyc. "With the increase in revenue and gross margin, and excluding non-core business expenses related to the shareholder proxy contest and strategic activities, the Company would have achieved positive EBITDA for the quarter. The increase in revenue was a result of increased sales of DragonBoard™ Development Kits, Open-Q™ System on Modules ("SOM"), and product development services. Other positive developments include the receipt of significant orders for Machine-to-Machine ("M2M") wireless modules that will be delivered over the next year and the expansion of our embedded solution portfolio with the development of the 800 Series DragonBoard Development Kit and Open-Q 8074 SOM."

(1) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. EBITDA referenced here relates to operating loss less other operating expenses. Please refer to the reconciliation of EBITDA to reported financial results attached to this press release.

Business Highlights

Notable events, developments, and achievements during the second quarter include the following:

  • Entered into a Settlement Agreement with Stonehouse Capital Management Inc. ("Stonehouse") that terminated their proxy contest on mutually agreeable terms. The proxy contest was settled with the appointment of a new Board of Directors which was voted in at the Company's annual and special meeting on June 26, 2013. The Special Committee focused on strategic activities was dissolved with the Company currently focused on its embedded solutions business and related new products.
  • Signed orders from two customers for the DTW 200 M2M module built by AnyDATA Corporation that will exceed $1 million in revenue over the next fifteen (15) months.
  • Announced the availability of a new DragonBoard Development Kit and production-ready SOM featuring the Qualcomm Snapdragon™ 800 Series 8074 processor from Qualcomm Technologies, Inc.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of approximately $1.6 million for three months ended June 30, 2013 as compared to approximately $1.2 million for the three months ended March 31, 2013 and approximately $2.2 million in the three months ended June 30, 2012. Gross margin(2) was 48% for the three months ended June 30, 2013, which was higher than 25% for the three months ended March 31, 2013 and higher than the gross margin experienced of 43% for the three months ended June 30, 2012. The increase in gross margin percentage over the comparative periods is due to higher utilization on customer projects.

Total expenses (excluding other operating expenses)(3) for the three months ended June 30, 2013 were approximately $2.0 million which was an increase of 83% over the preceding three months ended March 31, 2013 and an 85% increase over the three months ended June 30, 2012. The increase in total operating expenses in the second quarter of fiscal 2013 was due primarily to non-core business administration costs of approx. $1.3 million incurred by the Company pertaining to the shareholder proxy contest and strategic initiatives of the Company.

EBITDA for the three months ended June 30, 2013 was ($1,232,557) compared to ($791,740) for the previous three months ended March 31, 2013 and ($143,703) for the three months ended June 30, 2012.

(2) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Margin referenced here relates to revenues less cost of sales.
(3) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Total Expenses excludes other operating expenses.

Six Month Comparative Results

The Company reported revenue of approximately $2.8 million for six months ended June 30, 2013 as compared to approximately $4.3 million for the six months ended June 30, 2012. Gross margin was 38% for the six months ended June 30, 2013, which was lower than the gross margin experienced of 41% for the six months ended June 30, 2012. The decrease in gross margin percentage over the comparative period is primarily due to lower software sales which have higher margins and a decrease in utilization of engineering resources over the same period in the prior year.

Total expenses (excluding other operating expenses) for the six months ended June 30, 2013 were approximately $3.1 million which was an increase of 45% over the six months ended June 30, 2012. The increase in total operating expenses was due primarily to the Company incurring non-core business administration costs of approximately $1.7 million pertaining to the shareholder proxy contest and strategic initiatives of the Company during the first two quarters of fiscal 2013.

EBITDA for the six months ended June 30, 2013 was ($2,024,297) compared to ($347,763) for the six months ended June 30, 2012.

Working capital(4) as of June 30, 2013 was approximately $9.1 million (which included cash and cash equivalents of approximately $5.4 million and short-term investments of approximately $4.0 million). This is compared to net working capital of approximately $11.4 million as of December 31, 2012 (which included cash and cash equivalents of approximately $6.0 million and short-term investments of approximately $5.3 million).

Financial Statements and Management Discussion & Analysis

The Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2013 and related Management Discussion & Analysis for the period have been filed on SEDAR and also at the Company's website at www.intrinsyc.com/investors/financials_and_reports.aspx.

(4) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working Capital is defined as current assets less current liabilities.

Conference call

The Company will release its fiscal second quarter financial results on Monday, August 12, 2012 at 4:00 p.m. Eastern Time (1:00 p.m. Pacific Time). The Company will hold a conference call to discuss the financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) the same day. On the call, Tracy Rees, President and Chief Executive Officer, and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed in North America, toll-free, by dialing 1-888-340-9642 or direct, and internationally by dialing +1-416-340-8530 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. The conference call will also be broadcast live over the Internet and available for replay on the Company's Investor Relations Conference Calls web page (www.intrinsyc.com/investors/conference_calls.aspx). Analysts and investors are invited to participate on the call. Questions may be submitted to invest@intrinsyc.com prior to the call.

The Audit Committee of the Company has reviewed the contents of this news release.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to Gross Margin, Total Expenses (excluding other operating expenses), EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. Total expenses excluding other operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. EBITDA is defined as operating loss less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense, share-based compensation and loss on disposal of equipment which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.

Forward-Looking Statements

This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the Company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect," "anticipate," "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company's customer's requirements; the possibility of development or deployment difficulties or delays; the dependence on the Company's customer's satisfaction; the timing of entering into significant contracts; customers' continued commitment to the deployment of the Company's solutions; the performance of the global economy and growth in software industry sales; market acceptance of the Company's products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company's reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2012. This list is not exhaustive of the factors that may affect the Company's forward-looking information.

These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

About Intrinsyc Software International, Inc.

Intrinsyc Software International, Inc. (www.intrinsyc.com) is a product development company that provides hardware, software, and service solutions that enable next-generation embedded and wireless products. Solutions span the development life cycle from concept to production and help device makers and technology suppliers create compelling differentiated products with faster time-to-market. Intrinsyc is publicly traded (TSX: ICS) and is headquartered in Vancouver, BC, Canada.

Contact Information

  • George Reznik
    Chief Financial Officer
    Intrinsyc Software International, Inc.
    greznik@intrinsyc.com
    +1-604-678-3734